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PAL to cut more than one-third of employees
State shipping company PT PAL Indonesia confirmed Wednesday its plan to cut more than one-third of its 2,400 employees next year as part of a restructuring program after receiving fresh government capital
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tate shipping company PT PAL Indonesia confirmed Wednesday its plan to cut more than one-third of its 2,400 employees next year as part of a restructuring program after receiving fresh government capital.
“After the restructuring, we should ideally employ about 1,500 only,” PAL president director Harsusanto told reporters after signing a credit agreement between PAL and state asset management PT PPA in the office of the SOE Ministry on Wednesday.
The state’s largest shipping company decided last May to introduce one day off work every week for up to 800 of its 2,400 employees, as part of efforts to cut costs.
PAL has been in financial trouble since making a contract for the construction of 20 vessels in 2006 on a flat price without taking US dollar fluctuations into consideration. This deal later prompted currency losses for the company, helping causing the current financial problem.
As a consequence, the company posted Rp 443 billion (US$46.9 million) in losses in 2007 and Rp 46 billion in 2008. PAL now owes $120 million in short-term debts to local private and state banks as of 2009.
On Wednesday, the government, through PPA, injected about $45 million in the firm. “About $25.6 million will be allocated for construction of ten ships, with Rp 193.37 billion for restructuring the ailing company,” PPA president director Boyke Mukijat said.
Harsusanto revealed Wednesday that PAL planned to create a new policy on financing before building ships for their clients in order to avoid similar mistakes in the future.
“We will adjust the contracts following international practice, including imposing down-payments,” Harsusanto said.
Currently the company still has 18 unfinished orders. Two vessels ordered by the Navy, four escort tugs each ordered by energy company BP Plc and three 38-meter boats ordered by the customs and excise office. There is another order for a 50,000 dead weight ton (DWT) vessels ordered by a Turkish private company.
The company is targeting to finish 14 vessels by the end of 2011.
Harsusanto revealed that PAL was aiming at several contracts in 2010, including a missile-equipped warship worth $240 million for the Navy, tankers for state gas and oil producer PT Pertamina and a-60 meter ship for the Maritime Affairs and Fishery Ministry (DKP).
This year PAL is targeting to gain 1.6 trillion in revenue up from Rp 1.2 trillion booked in 2008.
