Local contractors blast Chinese port deal

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Leading Cayman Islands contractors blasted the government’s handling of cruise port negotiations with China Harbour Engineering Company, airing concerns about the company’s health standards and ability to dominate the local construction industry. They questioned why the Chinese government-controlled company is being talked to in the first place, and what safeguards the Cayman government has in mind to protect the 
Islands’ economy. 

“We’ve all decided that this is a tiny project for a company the size of China Harbour. Our project is something that we can manage locally. Most of us are out of work. We need this work to survive,” said Kris Bergstrom, vice president of the Cayman Contractors Association. “The biggest question is why are we going outside of ourselves to court a company like China Harbour, who have now not only stated that they’re looking at the port but quote-unquote billions of dollars in other construction projects in 
Grand Cayman?” 

He said, “Our real concerns are, A. How did they get invited to the table? B. Why are they here – why are they coming here? And C. How are we going to deal with this downstream? Are they going to be here and we’re all going to be Chinese in a couple of years? It’s a real concern for us and our livelihood going forward.” 

George Town MLA Ellio Solomon, who said he has recently been named the lead legislator concerning the China Harbour deal, pointed to his track record in using local contractors for relatively small-scale public housing projects, saying he would similarly strive to spend money locally as much as possible in the context of the large-scale cruise ship berthing facility. 

“I say, ‘fit for the little, fit for the much,’ and hopefully that will assure you that if we’ve done the same thing for affordable homes, which is a small contract, that the government has the same intentions when it comes to something as large as the port project,” Mr. Solomon said. “As the new councillor I will do exactly what I did with affordable housing.” 

The interaction between Mr. Solomon and contractors occurred after a Chamber of Commerce ‘Be Informed’ presentation on representatives’ fact-finding trip to view China Harbour’s projects in Jamaica. 

Contractors Association President Rayal Bodden said the information session was a helpful forum for dialogue.  

“I think it went very well. I think everything was addressed in the meeting succinctly by everyone in various areas,” he said. 

 

Health and safety concerns 

After viewing photographs of China Harbour construction sites taken by the delegation, Island Builders Managing Director Dean Scott said, “The plant equipment looks to be kind of obsolete, and just looking from the pictures, while the quality of the finished product looks very good, the health and safety appears to be very weak.” 

New Chamber President David Kirkaldy said some of the differences in methods China Harbour used in Jamaica, and those used in Cayman, may be due to general differences in how construction is done in Jamaica. He said on the Jamaica job sites there was “an awful lot of emphasis put on health and safety from a high-level point”, but “There seemed to be a disconnect between the stated objectives of health and safety and what was happening in some aspects”. 

“I made the comment that at Camana Bay during construction, that just to go and have a walk over to one area or another you had to stop at health and safety to put on a hard hat and hard-toe shoes if you didn’t have them on. None of that happened [in Jamaica]. Most of the employees that I saw, particularly the Chinese employees, were in, I mean to be honest with you, flip-flops,” Mr. Kirkaldy said. “They’re working on the ground with nothing above them, but they all had hard hats on, I will say that.” 

Mr. Kirkaldy said, for some of the projects in more remote areas of Jamaica, workers were living in so-called ‘work camps’ – which had to meet standards approved by the Jamaican government – but in other areas workers were living in available rented accommodations. He said about one-third of the construction workers were Chinese nationals, typically in higher-skilled positions, with the remaining two-thirds apparently Jamaican. 

 

Potential for domination 

Contractors attending Thursday’s presentation said they would not be able to maintain their current wages and standards for workers and still hope to compete with a Chinese company able to employ low-paid workers living in work camp conditions and with access to cheap construction materials shipped from China. 

Architect Burns Conolly said China Harbour’s allure, both to Cayman and other countries strapped for cash, is China Harbour’s access to extremely-low-interest financing via the Export-Import Bank of China.  

“It’s really coming down to money here. The question is that the Cayman government doesn’t have money to build this. We have to get money from somewhere,” he said. “We’ve been involved in the last six months in two major national projects overseas, one in Guyana and one in Trinidad. In both cases we lost the project because the Chinese came in with money, cheap money.” 

He said, “The Cayman government doesn’t have any money, doesn’t have any ability to borrow money, so we’re not actually in the driving seat on any of these projects where we’re requiring funds to come in. The Chinese at the moment have the most funds at the cheapest rate.” 

Martyn Bould is Rider Levett Bucknall’s project director for the Baha Mar project in Nassau, which is being financed by the Export-Import Bank of China and constructed by China State Construction Engineering Corp. 

Mr. Bould said Thursday, “The problem you have, certainly on the Baha Mar project, is the contractor is also a shareholder in the Baha Mar project, so he also receives the same information the owner has, and he also knows all the information the banker has. So it is relative to having an open dialogue, in that regard it poses a problem.” 

 

Local, outside money  

Businessman and former political candidate Bo Miller suggested attempting to raise funds for the cruise pier locally before moving forward with China Harbour or anyone else. 

“The Cayman Islands in the last 40 years have had one of the most incredible economic experiences in human history, and quite frankly for us to find ourselves in this position today is a disgrace, that we have wasted so much of our resources and mismanaged our affairs to the point that we are about to become hostages to certain entities. We have over 200 banks in this country. We have according to the statistics billions of dollars passing through this place in hedge funds and all the other stuff. And we have expertise in this community from all walks of life,” he said. 

“Look for investors here before we move forward another step with this group or another group because the Cayman I see in 20 years, if you’re not involved with or working for the Darts, the Chinese or the Indians, you’re screwed. And that’s not a future I want for my children,” Mr. Miller said. “If we can’t raise $100 million or $200 million in this town with the amount of resources and wealth that we have created and have passed through Cayman, they need to turn the lights out on this place because we’re pissing it away.” 

Mr. Solomon said the government’s financial position is such that it must go to an outside source to get this project done. “That’s just a reality,” he said. 

He said when the government originally sent out a request for bids, it received about a dozen proposals.  

“In terms of the bids coming, I don’t honestly recall seeing one from a local company,” he said. “Well, yeah, DECCO and Dart, but I didn’t see that as a local company, and I think that’s unfortunate.” 

Audience members protested that their companies had submitted bids, including McAlpine and Royal Construction Ltd. At various points, Atlantic Star, DECCO, and Royal Construction-GLF had been in negotiations with the government over who will build the cruise berthing facility in George Town. 

Mr. Solomon said his first official meeting on the China Harbour negotiations would take place Monday, and he promised after that to meet with the Contractors Association and make himself available for media briefings. 

In addition to the cruise facility, government and China Harbour also are negotiating on improvements to the Spotts facility and building a cruise pier near the Turtle Farm. 

china worker camp

Living quarters for China Harbour Engineering Company workers on Rio Grande Bridge Project in Jamaica. – Photo: Submitted

1 COMMENT

  1. Lets look right here in cayman today!
    We have so-called contractors breaking the law right now and no one is policing them……
    We have contractors working with no business license, insurance, pension, medical and no overtime for the employees and yet we have companies in cayman that run as the law requires and having to pay for the action of government!!!
    Government was to raise money, well go out and hit these so call contractors and hit them with fines and play by the rule………………

  2. The context of this meeting was the delivery of the report on the visit by a delegation including CI Chamber of Commerce representatives to view three works in progress being undertaken by CHEC in Jamaica.

    As I noted in the meeting but not reported above, issues related to management of safety, housing, etc., for any company operating in the Cayman Islands is subject to Cayman Islands laws and regulations and oversight by relevant departments. What may be seen in one operating environment is not necessarily indicative of what may be seen in another due to any number of factors.

    As the first comment to this story notes, while many firms in Cayman are highly compliant in all aspects of their business, including safety management, there are just as many examples of those that miss the mark by a wide margin and are not called to task on their failings by those that should.

    The Chamber of Commerce works to support, promote and protect Cayman business and the wider community. I encourage all to read the full report of the Chamber visit can be found on our website http://www.caymanchamber.ky or directly on the following shortened link. http://bit.ly/sXTggo

  3. One of the problems local contractors will come up against is the way Chinese companies finance their operations using offshore locations like the Cayman Islands.

    When I researched this in 2007 it turned up a a fairly simple system of tax-avoidance where the finances of huge industrial complexes in China were being run through offshore letter box entities.

    Revenue from contracts went into the offshore accounts and relatively small amounts were then paid back into the real organisation in China attracting generous tax breaks as outside investment, even if the money only went to buy things like new Ferraris or BMWs for the owners and their families. In simple terms virtually all of the money from some areas of Chinese overseas trade ended up in offshore accounts and very little went back home.

    If that’s the way China Harbour works they are effectively, and apparently legally, being subsidised by the Chinese government and no local company can compete with that.

    But the danger, if this is the way CHEC finances are being handled, is that the leaders in Beijing could pull the plug on it any day and with a clear economic decline in China it might be expedient for them to start making examples of those seen as exploiting the Communist system.

  4. Funny, I’m not even Caymanian and I can see that it would be in everyone’s best interest from the CIG to do everything they can to control this project locally. Once this is completed there will be a lot of Money to be made, why should it go to another entity

  5. The Chamber of Commerce is screening comments again I expect.. Evidently my comments did not make the cut and is laying on the editor’s floor. This time the dog is wagging the tail… Yap, Yap..

  6. Mr. Brgstrom,
    Have you considered hiring an attorney and challenge this matter in a court. There may be legal grounds. Someone has to stand up to this government that believes in dictating instead of adhering to the wishes of the people and creating jobs for Caymanians. There’s only one important question left to be answered, what will you and your group do better than the UDP? will you too hire cheap foreign labor or will you provide jobs for Caymanian construction workers and sub contractors out of work or will it be deja vu all over again? Don’t expect us to support you if you have the same bad hiring habits.

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