American vessel construction company, Philly Shipyard laid has laid off about 10 percent of its employees in the first quarter of 2018 and started idling parts of its facilities as a means of adjusting its business operations to the lack of new orders even as it is currently building two containerships for Matson, which were 74 pct complete as of March 31. The planned delivery dates for the two ships are Q3 2018 and Q1 2019, respectively.

Notwithstanding, there is a risk that the lack of a continued firm order backlog following the Matson project may cause operational inefficiencies for completion of the two ships, the yard said.

In addition, at the end of January, the Letter of Intent (LoI) for the construction of four containerships between the yard and TOTE expired. As a result, the project was put on hold. TOTE’s ships, which were planned for deliveries for 2020 and 2021, would have secured additional workload for the yard.

Philly Shipyard said that it still intends to resume the project, but as there are no assurances that would be the case, in case of its cancellation, the yard would have to write-off up to USD 20 million for the project.

The company said it was continuing to seek new orders, however, should it fail to obtain more work, more layoffs would follow.

” Philly Shipyard is in active discussions related to several potential new construction projects for other types of Jones Act vessels. However, there can be no assurance that Philly Shipyard will obtain contracts or financing for these projects,” the shipbuilder added.

The builder is looking into opportunities in the fishing and offshore wind sectors as well as the construction of specialized vessels such as cable layers.

Even if the yard obtains a new order in Q2 2018, it does not expect a production start date of sooner than Q1 2019.

“Philly Shipyard expects it will continue to suffer losses in 2018 and into 2019 due to the lack of work following the Matson project, even if the shipyard takes an order for a new vessel construction project. The interruption in Philly Shipyard’s building program has resulted in and will continue to result in significant under-recovered overhead costs,” the company said.

Philly Shipyard posted a net loss of USD 3.5 million in the first quarter of this year, swinging to a loss when compared to the net income of USD 17.2 million booked for Q1 2017. The company’s order backlog was USD 106.4 million at the end of the first three months of this year.