SUBIC, Zambales—Like giant fishes out of water, the two ships awaiting completion here on Drydock 6 of Hanjin’s Redondo Peninsula shipyard mirror the sad state of the Korean-owned facility that had once put the Philippines on the map as the fifth largest shipbuilding country in the world.
The vessels being built, respectively known as Project 166 and Project 167, are crude oil tankers reminiscent of the bulkers that Hanjin-Subic annually turned out by the dozen until just two years ago.
Insiders said one of the vessels is already 85 percent finished, while the other 65 percent complete. But these could very well be the last ships that Hanjin would build here before the financially troubled operation is taken over by another investor. Or totally goes under.
It has been one year since Hanjin Heavy Industries Corp.-Philippines (HHIC-Phil) stumbled and fell hard.
Then the biggest foreign company in the Subic Bay Freeport Zone with foreign direct investments totaling $2.3 billion, HHIC-Phil went to court on January 8, 2019, and filed for voluntary rehabilitation under Republic Act 10142, otherwise known as “An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals.”
Rise and fall
The move stunned shipyard workers and caught even the Subic Bay Metropolitan Authority (SBMA), the manager of the Subic Bay Freeport Zone, by surprise. More significantly, it sent shockwaves across the Philippine business community, which had watched, and, as it turned out, partly financed the meteoric rise of the South Korean shipbuilder since it broke ground here in 2006.
As the BusinessMirror reported a day after Hanjin’s fateful court visit, the company “still sounded optimistic” barely two months earlier when it announced the delivery of two units of 114,000-deadweight crude oil tankers to its Singapore-based client, Eastern Pacific Shipping (EPS).
At about that time, Hanjin also reported on its website that it would provide EPS “two more tankers of the same kind for delivery in the first quarter of 2019.”
Having delivered 123 vessels since July 2008, HHIC-Phil was considered a behemoth too big to fail. But as SBMA Chairman Wilma T. Eisma would confirm after Hanjin went to court, the firm owed some $400 million in outstanding loans from Philippine banks, aside from $900 million in debts with lenders in South Korea.
“The bottom line is that the company said it does not have enough cash to repay its loans, and that it cannot continue with its operations under these circumstances,” Eisma, who had met with a top HHIC-Phil official days before, said then.
And while the company had, at that time, six pending multimillion-dollar new building projects, these may have to be canceled if a rehabilitation plan does not materialize, Eisma also said then.
Financial disaster
When giants fall, ordinary mortals get crushed under.
And while HHIC-Phil has effectively availed itself of court relief from its creditors, its financial ruin had produced a domino of fallouts that had financially dislocated shipyard workers and crippled local downstream businesses as well.
Following Hanjin’s filing for rehabilitation in January last year, the BusinessMirror spoke to some of the 7,000 newly laid-off workers at the Hanjin Village in Castillejos, Zambales, and learned that most did not have prospects for alternative sources of livelihood.
“Hindi na rin kami magtatagal dito kung ganito [We won’t last much longer in this condition],” Jose Gardoce Jr., one of the displaced workers then, said, as he expressed his fear of losing his house that he could no longer pay for.
The same fate awaited 3,000 others who were dismissed from work in the first quarter of 2019, when Hanjin opted to retain just about 300 local workers and a few Korean supervisors to maintain the 326-hectare shipbuilding facility.
“Para kaming binalian ng pakpak [It’s like our wings were clipped],” Gardoce now said a year after.
Gardoce, who worked as a crane maintenance man at the shipyard, is now a full-time tricycle driver. But as his earnings were just enough for their daily household needs, he had agreed for his wife Weng to work as househelp in Angeles City so they can continue sending their three children to school.
At one time Gardoce tried working in a shoe factory in the Subic Bay Freeport, but the pay was only P400 a day and he spent much money on transportation and food.
“Nakaabang na ang mga tumatanggap ng sangla na ATM [The loan sharks were already waiting to pounce on our ATM cards],” Gardoce recalled now. So, after two months he went back to his reliable tricycle.
Gardoce said a lot of his former colleagues at Hanjin had left for work in Cavite and Bulacan, while others went home to their native provinces because they can no longer pay for amortization for their Pag-Ibig-funded houses.
“Si Diogreth Mendigorin, nag-collapse na [has given up],” Gardoce said of another worker that the BusinessMirror interviewed at the workers’ village last year.
He, however, couldn’t bear to leave their home for which he had already spent some P100,000 on improvements.
“Ngayon, ay ginigipit na kami at pinapaalis pero nagmamatigas na lang ako dahil gusto kong makapagtapos muna ang mga anak ko [The developer is now pressuring us to leave, but I stand firm because I want my children to finish school first],” Gardoce said.
Shuttered shops
Other income earners who relied on the disposable income of shipyard workers likewise went under in the wake of the Hanjin bankruptcy.
Along the road leading to the HHIC-Phil shipyard are closed eateries, buses parked in vacant lots, and houses and former workers’ dormitories with “For Sale” signs.
Claire dela Cruz, a native of the former fishermen’s community where Hanjin shipyard is now located, used to operate one of the 20 or so canteens that catered to shipyard workers who worked three shifts.
She says they used to cook six different kinds of dishes when the facility was fully operational, and posted average daily sales of P12,000.
Today, with only 300 workers maintaining the shipyard, Dela Cruz only sells bread, candy, chips, and cigarette which earn her about P1,000 a day.
Buses that ferried the thousands of workers to and from work were also among the first casualties of the Hanjin downfall.
Arturo Dumaguing, who operated two units that plied the Castillejos-Hanjin route, said that a total of 65 bus units were fielded in the heyday of Hanjin, and these units each earned from P2,400 to P3,600 for the two or three trips they had each day.
Now, only two units are doing business for the 300 remaining shipyard workers, he added.
Lack of alternatives
The sudden crash of HHIC-Phil sent government agencies in a mad scramble to find alternative jobs for the displaced workers. But there simply was not enough new jobs to fill the void.
According to the SBMA Labor Department, various agencies joined hands to organize a jobs fair in February last year to drum up assistance and support for displaced Hanjin workers. These included the Department of Public Works and Highways (DPWH), Department of Trade and Industry (DTI), Bases Conversion and Development Authority (BCDA), Department of Labor and Employment (DOLE), and the Department of Transportation (DOTr).
The event held at the Subic Gymnasium announced 25,200 job openings from various locators in Subic and Clark, as well as businesses in Manila and neighboring provinces.
SBMA labor officials also reported that 8,000 applications were received from walk-in applicants, and a total of 5,000 jobseekers were interviewed. Of these, more than 400 were eventually hired, with close to a hundred hired on the spot during the job fair.
On top of these, the SBMA Labor Department said that a total of 115 former Hanjin workers and their relatives were hired last year by investor-firms in the Subic Bay Freeport. Most of them found employment as production operators, sewers, assembly operators, and welders in factories, manufacturing firms, and automotive remanufacturing companies.
Needed changes
The lack of jobs to solve the unemployment problem created by the Hanjin debacle has left affected workers without any hope other than the arrival of another investor to take over the operation of the Subic shipyard.
Efren Vinluan, president of the Samahan ng mga Manggagawa sa Hanjin, said only a new operator can bring about favorable changes that would benefit the former shipyard workers.
Vinluan, a deputy foreman at the shipyard, is among the 53 holdouts who had not resigned from work after Hanjin announced a retrenchment prior to filing for rehabilitation last year. The holdouts, who were supposed to be among the 300 workers who will remain to maintain the facility, had been barred from the shipyard since March last year.
With a new operator, one of the changes that need to be made, Vinluan said, is doing away with subcontractors, which insulate the mother company from responsibilities of an employer. These, too, had shielded Hanjin from liabilities for most of the accidents and work-related injuries and deaths that had happened at the shipyard, he added.
“Sa ngayon ay ayaw na kaming kausapin ng subcontrators at mga abogado na lang ng Hanjin ang humaharap sa amin, kaya wala kaming magawa [As of now, the subcontractors have left the talking to the lawyers, and we can’t win over them],” Vinluan said.
Jenzen Mauricio, another Samahan officer, pointed out that Hanjin is mandated by law to absorb employees of subcontractors that have shut down.
“Sabi ng DOLE, tama kami, pero dahil sa sitwasyon ng Hanjin ay wala rin silang magawa [Even the DOLE agreed with us, but they can’t do anything now that Hanjin is up for rehabilitation],” Mauricio said.
Long wait for white knight
Like damsels in distress, the displaced workers now hope for the arrival of a new shipyard management. But the waiting is proving to take longer than expected.
As early as August last year, the court-appointed receiver to handle the process of Hanjin rehabilitation, lawyer Rosario Bernaldo, has announced that Hanjin’s creditor banks were already in “exclusive talks” with a prospective company to take over the Hanjin shipyard.
Bernaldo identified the probable white knight as the Australian shipbuilder Austal Ltd., which has reportedly formed a consortium with American private equity firm Cerberus Capital Management.
To this day, nothing concrete had ever been announced to have come out of this supposed alliance.
Prior to this, SBMA Chairman Eisma had also mentioned some North American firms and European companies to be interested in the Subic shipyard, but these, too, have not made any public offering yet.
Meanwhile, the displaced workers and their families can only wait. And hope.
When word came out last December that HHIC-Phil would take in some 500 workers to finish the two ships being built at Drydock 6, a lot immediately filed their application. But there has not been any actual hiring so far.
At the Hanjin Village, despite the odds, Jose Gardoce Jr. keeps a positive outlook, as he firms up the family decision to stay and wait out the crisis.
“Para na lang sa mga anak namin ito. Sana ay mapasukan kami ng magandang ihip ng hangin [What we’re doing is for the sake of our children. I can only pray that good fortune would come our way sometime soon],” Gardoce added.
Image credits: Henry Empeño