Swire Group

Swire denies closure of HUD repair business

PUBLISHED : Thursday, 02 May, 2013, 12:00am
UPDATED : Thursday, 07 May, 2015, 4:04pm


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Hongkong United Dockyards, jointly owned by Swire Pacific and Hutchison Whampoa, has stopped taking ship-repair business but a Swire director denied industry speculation that ship-repair operations were being closed and equipment sold.

Swire executive director John Rae-Smith said "HUD has temporarily stopped taking bookings" because its floating dry dock needed repairing.

"A large amount of steel deck plate needs to be replaced by the end of the year. This is normal for a 20-year-old dock, but it does mean that the yard can't accept third-party business while the work is being done," he said.

Key customers at the complex on Tsing Yi near the Tsing Ma Bridge include Star Cruises and the Hapag-Lloyd container line.

Rae-Smith said: "HUD has had a land-side engineering business for 20 years. While the dock is being docked, management is looking at other areas to use the skills of existing staff. A small number of administrative staff have been made redundant … [reflecting] the pressures to cut costs in the shipping industry and an increase in automation in certain administrative processes.

"HUD is definitely still in the ship-repair business. We have no plans to get out of it and indeed are looking at seeing what opportunities the downturn in the maritime business presents."

Rae-Smith was responding to questions after industry insiders speculated about the future of HUD, which made a pre-tax loss of HK$61 million last year on ship repairs.

One source said: "Apparently HUD made trips to Europe to see clients to tell them to go elsewhere. Hapag-Lloyd for the last couple of months has been going to Yiu Lian Dockyards in Shekou and Hong Kong. I understand the floating dock has been sold to Yiu Lian and is shifting to Xiamen."

HUD management floated a plan last year to build a second dry dock to handle larger container ships that would double the size of the workforce. But the scheme has yet to be approved by HUD's joint Swire and Hutchison board. "Swire wanted to invest in a bigger floating dock and Hutchison didn't want to do so, thus leading to the decision to shut shop," a source said.

The existing facility can repair 35 to 40 ships a year but HUD estimated it was losing 10 ships a year because it was unable to repair larger vessels. The firm is also facing a shortage of skilled workers, including welders, which would be exacerbated by the second-dock project. HUD hoped to solve the problem by being allowed to import foreign workers.