Quebec-based Groupe Océan, a key player at the troubled New Brunswick Naval Centre, is laying off all 28 of its employees at the site until the facility's financial problems are resolved.
The company plans to build a floating drydock at the centre over the next five years, eventually employing 77 people. The shipyard project in Bas-Caraquet has been touted as a big boost to the economy in northeast New Brunswick.
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But this fall Groupe Océan became one of four contractors to file a lien against the Naval Centre, saying it has not been paid for almost $717,000 worth of workers' time and materials.
Now it says it's taking a "pause" until the shipyard's financial problems are resolved.
"We are not withdrawing from the Naval Centre," says company spokesperson Philippe Filion. "We're pausing to fix the current problem, and then we'll come back even stronger. Our goal is to stay in New Brunswick and continue the project."
Three other local suppliers have also filed liens worth around $1.5 million.
Victor Boudreau, the minister for the Regional Development Corporation, says "discussions are ongoing" to resolve the Naval Centre's cash crunch.
"Our offer is still on the table but it comes with conditions that have to be met," he says. "Other funding partners needed to secure their share of the project."
Those conditions include the Naval Centre matching RDC's promised $4 million in infrastructure funding. RDC stopped payments after $1.5 million once it became clear the centre couldn't raise the matching money.
The centre has said banks and other lenders wouldn't advance the moneys without financial guarantees from the two municipalities who helped create the centre, the town of Caraquet and the village of Bas-Caraquet. The municipalities can't guarantee that amount.
Boudreau wouldn't comment on the details of the province's discussions with the Naval Centre, saying he would not "start negotiating financial conditions in the media."
The 28 workers will be offered jobs at other Groupe Océan facilities outside the province and will be able to return to Bas-Caraquet once the project moves ahead.
"We've invested a lot of money to support the project," Filion says, "but we're the only ones to have kept our promises, so at the moment, we're losing money."
Filion said Groupe Océan can't keep spending money on the drydock if the Naval Centre doesn't have the money to pay it for the work it's doing.
In May, a government press release said Groupe Océan "will invest $29 million over a five-year period as it undertakes the first construction project" at the site.
But Filion now says that's incorrect, and it's supposed to be the cash-strapped Naval Centre itself putting up the $29 million.
"It's not Groupe Océan investing the $29 million. It's the Naval Centre that is having Groupe Océan build a project for $29 million. It's the drydock, and it's the Naval Centre that has to furnish the funds to pay for the drydock."
Besides RDC's $4 million, the federal government has handed over $2 million through the Atlantic Canada Opportunities Agency.
Opportunities New Brunswick, the provincial job-creation agency, is also set to provide Groupe Océan $3.8 million in payroll rebates for the anticipated 77 jobs. None of that money has been handed over.
RDC said in late October that it would take about two weeks to resolve the situation.
No guarantee for project from province
Friday, Boudreau wouldn't say whether he's confident the project will re-start. But he downplayed any idea that the economy of the region hinges on it.
"Whether this project goes forward or doesn't go forward, there are still going to be other initiatives, other attempts to bring jobs to northern New Brunswick," he said.
The opposition Progressive Conservatives, who began the approval process for the funding when they were the government, say the Liberal government's mistake was presuming that the two municipalities involved in the Naval Centre would be able to borrow $4 million in matching funds.
"It was a poison pill the way it was set up, and the premier should have known," said Conservative Leader Bruce Fitch.
But Fitch said he's not necessarily against the province putting more money into the centre if there's evidence it would boost the local economy.
"If there's a business case looking at some of those spin-offs, you may be able to justify going forward with the funds," he said.