By IAN ROSS
A new owner is at the helm of Thunder Bay’s Pascol Engineering.
The Upper Lakes Group Inc., has assumed ownership of Pascol after its insolvent parent company, Canadian Shipbuilding & Engineering Ltd. (CS & E), entered creditor protection last summer.
The sale was approved by an Ontario Superior Court Justice in Toronto, March 1.
The Thunder Bay shipyard and fabrication shop will operate under the new banner of Lakehead Marine and Industrial, one of five independent companies under a newly created sector group of Upper Lakes known as Great Lakes Marine and Industrial. It also includes marine contractor shops in St. Catharines and Port Colborne.
“The ink is dry on the agreement,” said Upper Lakes spokesman John Dewar, March 5.
Dewar says Upper Lakes management is promising continuity, stability and a “more harmonious way” of doing business.
Toronto-based Upper Lakes is a diversified conglomerate including a fleet of Great Lakes freighters, grain and fuel-handling terminals and now expanded marine services.
The purchase price was not made public. “This was not a fire sale bargain basement price.”
Prior to the liquidation process, Canadian Shipbuilding & Engineering Ltd. consisted of four companies including Pascol and Port Weller Dry Docks in St. Catharines.
Port Weller suspended operations last summer when CS & E entered the Companies’ Creditor Arrangement Act (CCAA) process but Pascol continued to operate, including through this winter to perform repairs on Great Lakes freighters.
According to financial statements, CS & E owed about $8 million to creditors, including $1.24 million to the Bank of Nova Scotia and $1.15 million to Upper Lakes.
During the liquidation process, Dewar says Upper Lakes offered the highest competitive bid and staved off other bids from international rivals interested in acquiring Port Weller’s shipyard equipment and taking it offshore.
“Pascol didn’t draw as much attention as Port Weller did,” says Dewar. “Whether that’s because of its geography or that it’s happily gone along turning a modest profit for many years. It didn’t have the same visibility as Port Weller did.”
Upper Lakes was part of a complex ownership group of CS & E along with some European interests, which had a six-vessel shipbuilding contract underway at the Port Weller.
One ship was completed and another under construction when the deal fell apart and the decision was made to liquidate CS & E’s assets.
The failed international shipbuilding project and ongoing difficulties at Port Weller dragged the other companies into creditor protection.
Winter is the busiest time of year for Pascol with freighters berthed for winter layup and repairs.
Dewar says Pascol will continue with ship repairs, while seeking ways to grow the business. But there’s also significant opportunity to do industrial fabrication work in the Alberta oil sands.
“It’s is our intention for Great Lakes Marine and Industrial to capitalize on that. One strategic component of that will be the facility at Thunder Bay.”
Any new investment in Thunder Bay is proportional as projects become available.
“We’re not going to overextend, “ says Dewar. “As we get the opportunities, we will put the investment to do the work properly, we’re not going to be speculative.”
“We want to create a stable workforce environment both in ship repair and industrial fabrication to avoid large spikes in creating layoffs and hiring binges with each project.
“We’re trying to get a stable flow of business in there. It’s healthier for the company and creates more reasonable expectations for the workers.”
There will also be a more cohesive approach to spread out projects among the five reorganized companies to take advantage of complimentary skills, services and equipment.
Herb Daniher, staff representative for Local 5055 United Steelworkers of America, representing 120 full-time and seasonal tradespeople at Pascol, says new ownership beats the alternative of being out of business.
“Time will tell what exactly happens, but we’ve always thought we had a legitimate business interest with a profitable centre and we were in a niche market.”
Daniher says although the union has not officially been notified of the companies’ reconfiguration. “We’re hoping it’s going to be business as usual with some growth.”
The Steelworkers collective agreement expires at the end of June and Daniher was reluctant to speculate on how new ownership will affect negotiations. “At this stage, we haven’t sat down with this particular ownership group to have any new discussions.”
