Layoffs loom at CTF Group unit

Cheng Wong

Hip Seng Construction is facing significant challenges as it prepares to lay off employees and may cease operations within the week, according to sources.

Some workers are expected to transition to Hip Hing Construction, a subsidiary of CTF Services Group .

Financial difficulties at Hip Seng have arisen from a lack of construction projects.

Currently, the company is managing a few ongoing initiatives, including the University of Hong Kong's student dormitory in Wong Chuk Hang, the private residential project Pavilia Farm in Tai Wai and a development at SkyCity.

These projects will likely be taken over by Hip Hing.

Chau Sze-kit, chairman of the Hong Kong Construction Industry Employees General Union, said that private construction projects have plummeted by two-thirds, severely impacting the operations and cash flow of many firms.

"The situation is dire," Chau said yesterday. "Without improvements - given low project volume and poor client commissions - more layoffs are likely."

He further said that an oversupply of inventory is discouraging new construction initiatives.

While the number of government projects is increasing, private developers not on the approved contractors for public works whitelist will not benefit.

"It would be ideal to see more public projects. However, as the construction industry is divided into private and public sectors, contractors must be registered to bid for government contracts. Therefore, an increase in government projects alone won't save the entire industry," he added.

Chau suggested the SAR administration could break larger projects into smaller segments to attract more contractors to public work.

Meanwhile, Lam Chun-sing, chairman of the Federation of Hong Kong and Kowloon Labour Unions and a Legislative Council member, expressed concern for subcontractors.

"While I haven't received requests for direct assistance from workers, it's possible that Hip Seng has asked outsourcers and subcontractors to work without the means to pay them, which could create a chain reaction affecting subcontractor payments to their workers," he said.

Although the Construction Industry Security of Payment Bill was passed on December 18 to prohibit "pay when paid" clauses in supply chains, it won't take effect for another eight months.

The legislation aims to ensure timely payments and reduce wage default risks.

Lam warned that the immediate impact may primarily affect Hip Seng's subcontractors rather than its employees.

He also raised concerns that the administration's deficit might necessitate a reevaluation of public works projects based on priority, potentially delaying some initiatives and further complicating challenges within the industry.