Singamas lays off 4,000 workers as demand falls

PUBLISHED : Tuesday, 10 March, 2009, 12:00am
UPDATED : Tuesday, 10 March, 2009, 12:00am

Singamas Container Holdings, the world's second-largest container manufacturer, said it had laid off about 4,000 workers at its mainland factories to cope with falling demand.

Singamas had extended the suspension at seven factories to two months ended February from the traditional one month in light of lukewarm demand, vice-chairman Teo Siong Seng said yesterday.

There were almost no orders from clients for containers between December and last month, he said.

Three of the factories resumed operations this month while four remained closed, pushing the utilisation at its 10 factories down to 30 per cent, on the basis of 700,000-teu (20-foot equivalent units) annual capacity, the company said.

The factories cut peak season shifts to one from two, resulting in 4,000 workers being disengaged, it said. Singamas had 12,000 employees nationwide before the reduction.

'The intra-Asia trade is picking up. I expect the market will slowly recover in the second half,' Mr Teo said.

Some trading companies had started placing orders for 20-foot containers, which are mainly used for intra-Asia trade, but major customers such as shipping companies and container leasing companies were still holding off, he said.

'There are about 3 million teu containers laid up in depots all over China, equivalent to two months' consumption,' he said. 'If the global trade resumes the momentum of that in 2008, an additional 3 million teu containers are needed, compared with 28 million teu in the global fleet.'

Singamas had proposed a rights issue to raise HK$492 million on March 4.

Shares in the company have since fallen nearly 49 per cent. The stock lost 4.88 per cent to close at 39 HK cents yesterday.

The company ruled out an alternative plan to issue convertible bonds and raise funds from banks. At the end of June, its net debt-equity ratio topped 140 per cent. If the rights issue is fully subscribed, the ratio will fall to below 90 per cent.