Daewoo Shipbuilding & Marine Engineering Ltd. is shutting its wind tower manufacturing plant in Trenton, N.S.
The province has pumped more than $56 million into DSME Trenton Ltd., also known as DSTN, which is majority owned by a South Korean subsidiary of shipping giant Daewoo Shipbuilding & Marine Engineering.
The company announced Friday it is going into receivership.
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The province learned late on Thursday that the plant was shutting down permanently, Business Minister Mark Furey said in a statement.
"DSTN's future prospects have not improved over the past year and the domestic wind tower market is well below expectations," he said.
'Minimize the potential cost to taxpayers'
Furey said the government will exercise its right to file for receivership proceedings to try to recover as much of its investment as possible. DSTN has several million dollars in cash, equipment and property.
"Taking action now will minimize the potential cost to taxpayers for any environmental cleanup or receivership fees," Furey said.
Trenton Mayor Glen MacKinnon said the closure of the plant — which dates back to the late 1800s — is a big blow to the community of about 2,600 people.
"Obviously, it is not good news for the town," he said. "It means less jobs in Pictou County. Any economic hit to our area is very concerning and we will try as hard as we can to bring new a new entity into that facility."
Didn't achieve job targets
The plant currently has no customer orders and was operating in a maintenance mode with 19 active employees. It costs about $400,000 per month just to keep the facility open, DTSN said.
And after more than five years in operation, the plant did not make money on any contracts or achieve job targets, which were 300 to 500 when the company arrived in 2010.
The parent company of DSME Trenton is undergoing organizational restructuring in an attempt to recover from recent, substantial operating losses which affected its Trenton plant, the company said in a statement.
"Regretfully this is unfavourable news which negatively impacts each of our valued stakeholders, however DSTN can only express deep appreciation to everyone who supported and contributed to our organization."
The Nova Scotia government is the only secured creditor of the plant. It has a 49 per cent stake in the company and one seat on the board of directors.
In January, the company had no contracts. On behalf of DSME Trenton, the accounting firm EY canvassed 100 possible companies for work and failed.
DSME Trenton had considered finding a third investor and even contemplated returning to railcar manufacturing.
"Government did everything reasonably possible to help the company become profitable, including supporting an investment attraction initiative that did not find any new customers or investors," Furey said in a statement.
"Converting the facility to another use, such as manufacturing pressurized railcars, would have required another multi-million dollar investment from taxpayers. This is simply not affordable, and would have a limited chance of success."
The Atlantic Canada Opportunities Agency also gave the company more than $7 million for equipment and training.
The province's contribution to DSTN included:
- $19.6 million for 49 per cent of the company's common shares.
- $36 million in repayable loans.
- $3.8 million in a forgivable loan.