COMMENTARY : SEEMS INCREDIBLE WITH A FULL ORDER BOOK
AUGUST 29, 2012 - In a move that casts a shadow over the opening of next week's SMM event in Hamburg, P+S Werften CEO Rüdiger Fuchs walked into Stralsund district court today to make P+S the latest in the long line of German shipbuilders filing for insolvency. P+S was forced to make the filing despite having a relatively full order book.
We must be Finance-Challenged, but would someone explain how this can be ?
Well-known successful builder; plenty of income in the pipeline in the "relatively full order book". YET, this shipbuilder is bankrupt !
My previous experience along these lines was the result of a successful locomotive repair shop that was underwritten by a regional Industrial Development Board.
The President focused his attention on other subject matter --- his inventions, his new computer CAD toy, his social life, and he essentially walked away from the business.
The corporation occupied a huge nationally famous famous locomotive shop in upstate New York, fully equipped, full of knowledgeable workers and staff. The Industrial Development folks begged my company (the Delaware & Lehigh Corporation) to take it over, at NO COST ! We just would have had to pack up our families and relocate to a much less desirable location, so we turned it down.
BUT, I recall that the major asset of the works was the huge backlog of orders, in addition to a full and busy shop ... a very tempting offer, which we turned down ONLY because of the relocation necessity.
However, in the present case, here's P + F Werften, an operating shipyard in full operation with a reported relatively full order book, that is filing for bankruptcy. I understand that even Chinese shipyards are cutting back operations, so that there is clearly a downturn in the shipbuilding business, but one would hope that the order backlog would carry them through the worst of the downturn.
Am I missing something in my education or experience that prevents me from understanding this phenomenon ?
