June 12, 1996
(Industry, Trade and Technology)

The following statement was issued today by Premier Brian Tobin at a news conference held at Confederation Building:

Premier announces business plan for Marystown Shipyard

As you are aware, government has been holding ongoing discussions over the past number of months with the Board of Directors of Marystown Shipyard Limited concerning the future of this major industrial facility. The board has been working closely with senior management at the shipyard toward the development of a business plan which will capitalize on major opportunities in the shipbuilding, general industrial and offshore fabrication sectors.

I am pleased to announce today that with the full co-operation of the unionized employees, staff and management at Marystown Shipyard Limited, a refined business plan has been developed which will see major productivity improvements and overhead reductions at the yard. Unionized employees at Marystown Shipyard, in the interest of making their facility a more competitive one, have agreed to enter into negotiations in the context of a pre-agreed agenda with the intent of bringing about changes in work practices and procedures. These changes will improve overall productivity and reduce the yard's direct costs.

Supervisory and staff personnel have already agreed to changes in their working arrangements that will contribute to cost improvements. The resultant increase in productivity will substantially benefit the company in its efforts to secure contracts in increasingly competitive marketplaces. It also significantly contributes to our effort to transform the yard into a commercially viable, profitable operation which provides the taxpayers of the province with a real financial return on their substantial investment in this facility.

This most recent progress in improving the competitiveness of Marystown Shipyard follows substantial measures taken by all levels of employees in mid-1995 to reduce costs and directly participate in the board of directors' effort to contain losses at the yard.

It gives me great pleasure to announce that the co-operation on the part of Marystown Shipyard's workforce has already paid great dividends. Marystown Shipyard has been advised over the past few days that it is has been the successful bidder for the mid-life refit of the federal vessel CFAV "QUEST".

The "QUEST" is a key component of Marystown Shipyard's current five year business plan. The yard is proceeding to aggressively pursue contracts in the other market segments laid out in its plan and I am confident that it will achieve success in this regard.

In order for Marystown Shipyard to proceed with the contract for the refit of the "QUEST" and continue with the other elements of its business plan, it is necessary for government to provide further financial commitments on behalf of the yard. First of all, the Government of Newfoundland and Labrador is providing a performance guarantee to the federal government in support of the contract for the CFAV "QUEST". Without this performance guarantee from the province, the yard would not be able to proceed with this contract as it does not have the financial strength to secure the necessary bonding for contracts of this type.

Government has also agreed to increase the loan guarantee support for Marystown Shipyard's operating line of credit to provide the yard with the necessary working capital to proceed with this contract as well as pursue the other opportunities outlined in its business plan. In making this financial support available to Marystown Shipyard, government is reaffirming its confidence that change will be achieved that will greatly assist in achieving the desired goal of self- sustainability. I want to be clear. Government has only agreed to provide this additional support on the basis of the undertaking from the employees representatives to work with us to bring about significant productivity improvements in the context of changes to work practices and procedures.

The Board of Directors of Marystown Shipyard Limited have contributed tremendously in the first year of their mandate towards our effort to transform the shipyard into a commercially viable operation. I want to reaffirm government's commitment to the board to give them full authority to run the affairs of the shipyard in a business-like manner, free from direct intervention by government. Marystown Shipyard operates in competitive industrial sectors and can thrive only if the expertise of the private business community continues to be brought to bear on its day-to-day management.

I am confident that all of the stakeholders in this facility, the board of directors, senior management and most importantly, the general workforce, will do their utmost to demonstrate that this vote of confidence in the future of the yard is well-founded.

1996 06 12  " 10:25 a.m.