Paramount’s naval business pivots to international markets as local market conditions worsen

3363

Paramount Maritime Holdings will pivot to international markets after closing its Cape Town shipyards Nautic Africa and Veecraft, and move closer to its global customers.

Paramount Maritime Holdings, the naval and shipbuilding subsidiary of global aerospace and defence technology company Paramount, has announced a ‘strategic realignment of its capabilities and portfolio to address the challenges facing the local shipbuilding industry, in the face of existential pressures such as unfavourable economic conditions and costly supply chains, coupled with the increasing demand of governments to manufacture naval solutions locally’.

Paramount said its Maritime Holdings division took the decision to move its shipbuilding business to jurisdictions that provide more favourable conditions for aluminium shipbuilding and are closer to its global customers, following severe challenges and tough market conditions over the last few years.

The tough decision to close the shipyards in Cape Town following the completion of existing projects was taken after several years of losses and structural issues arising from building vessels in South Africa, Paramount told defenceWeb. The impact of COVID-19, long distances to customer markets, and higher import and material costs significantly increased the overall costs of production, the UAE-headquartered company explained.

The companies Nautic, Veecraft and Nautic South Africa were placed into voluntary liquidation in November last year. Veecraft is being liquidated by Summit Trust, which held creditors meetings in February and May. The liquidators are busy winding up the company, with assets auctioned off over the last several months, including boat- and shipbuilding yards.

According to WH Auctioneers, hundreds of items of equipment belonging to Nautic, Nautic Africa and Veecraft are to be auctioned at the end of October. The company in September auctioned Nautic’s 8 400 square metre facility in Paarden Eiland, amongst other assets.

In explaining the problems that led to the demise of Nautic and Veecraft, Paramount said the yards experienced delays in the activation of contracts, as well as delivery delays on contracts driven by technical issues beyond the control of the shipyards. “Despite every endeavour by management to address these issues and turn around the businesses, these structural issues became insurmountable,” Paramount said.

Paramount Maritime Holdings will now pivot to international markets in line with its global strategy, and build its range of aluminium vessels through local partnerships in customer countries. This is in line with the Group’s portable production model, ensuring security of supply to customers.

“The closure of the shipyards in Cape Town will have no impact on any of the other Group businesses,” Paramount told defenceWeb.