A somewhat opinionated commentary on U.S. and
Canadian maritime matters.
Sold on Courthouse Steps
shipyard was duly auctioned off yesterday: read the report in the Tacoma News Tribune
There was only one bidder - a hitherto unknown entity called Washington Landmark
Holdings LLC - and the price paid was $6,001,192.64, which just happens to be
the amount owed by Martinac to Alaskan Leader Fisheries. Let's hope the
new owner has a plan that involves building ships, not condos. July 19,
Can Ingalls Handle the LHA Program?
to read about the apprenticeship graduation they held at Ingalls
Shipbuilding last week. Goodness knows, shipbuilding needs all the new
entrants it can get. Unfortunately, Ingalls' training program doesn't
even scrape the surface of their workforce problem, which is said to be
a shortage of around 1000 experienced workers. Since it's pretty
unlikely that 1000 experienced shipyard workers are going to show up at
Ingalls' gate any time soon, especially since the Mississippi/Alabama
area also includes Austal USA, BAE Alabama, Signal International, VT
Halter Marine, Gulf Coast Shipyard Group and a bunch of smaller yards,
they might have to bite the proverbial bullet and plan on reducing their
workload. So, let's look at that workload.
there's the DDG-51 program. This has recently been restarted after a
couple of years of inactivity. Ingalls delivered DDG 110 in February
2011 but didn't get another order until later that year, resulting in
the keel of their next DDG not being laid until November 2013. It's
safe to say that this program will continue, because nobody wants to
risk the huge cost that would inevitably be associated with a switch to
a new design. There's not a lot of difference between Ingalls' prices
and Bath's, or between their construction times, so both can be expected
to be kept under contract: the difference is that Ingalls will probably
be held to one ship a year, while Bath, because it has no other programs
in hand, will get one or two, depending on the program's funding.
Anyway, right now, the manpower curve for Ingalls' DDG program is on the
the Coast Guard's National Security Cutter (NSC) program. The NSC
construction schedule has been very uneven and not at all conducive to
efficient shipbuilding, but, after much uncertainty, it
now looks as though all eight ships will be built and the schedule has
been accelerated. After 30 months of only having one ship under
construction, Ingalls now has three, so this program's manpower curve is
also on the upward slope. Note,
however, that there are only two more NSCs to come, so this program will
be phasing down in 2017 and out in 2018.
Ingalls' third program is the LPD-17. They delivered the last Avondale-built ship in
October 2013: the next , LPD 26, should be launched soon and delivered
late next year, with the final ship, LPD 27, following in late 2016.
This program's manning curve is, therefore, on the downward slope:
personnel no longer required for the LPD program can be transferred to
other programs, but see below.
there's the LHA program. Ingalls has just delivered LHA 6, which
it started five years ago, right after it delivered the last LHD, and
they have just recently started construction of LHA 7: another
ludicrously inefficient construction schedule. (Does nobody on Capitol
Hill or in the Navy understand about bell curves and the need for
successive ships in a sequence to overlap in a way that optimizes the
shipbuilder's application of the resources required for their
construction? I guess not. They didn't when I worked the Hill, so why
should I expect them to be any different today?) Are they seriously
planning to fund these ships at 5-year intervals, resulting in a
manpower curve that's a recurring wave? Ingalls built the original five
LHAs at one-year intervals, which would be pushing it today, but they
built the first seven LHDs at two-year intervals, so why couldn't they
build the LHAs at that rate? Oh right, because the Congress won't fund
that rate, despite the fact that it would result in much lower costs.
In any case, the LHA program's manning curve is now on the upward slope
too. By the way, Ingalls' performance on this program is even worse
than it appears. Not only did it take them five years to build LHA 6,
but they had to get Newport News to build most of the forebody.
Really. And then there was the embarrassment of finding that they
couldn't dry-dock the finished ship.
three of Ingalls' four programs need workers and only one program is
letting workers go. As a result, they have a serious shortage of
skilled, experienced personnel, in a region where they must compete for
labor with many more mid-sized and small shipbuilders than any of the
other four big naval shipbuilders. The basis of this problem goes back
to the Reagan Administration, when a number of factors combined to
reduce the shipbuilding industry work force by about one third, as a
result of which almost no new blood came into the industry for over ten
years. It may be inevitable, therefore, that Ingalls reduce its
workload, which could be done by ceding either the DDG program to Bath
or the LHA program to NASSCO. Indeed, the Navy seems to have chosen the
second course already, because they are planning to ask NASSCO to
compete for LHA 8 and you know that NASSCO can underbid Ingalls. (To
build an LHA would be a major step up for NASSCO, but they would
probably bid as a NASSCO/BIW team.) Unfortunately, a reduction in
workload also means a reduction in revenues and proportionately an even
greater reduction in earnings. Not good for HII's stockholders, who
must already see Ingalls as a millstone round the neck of highly
profitable Newport News. They
got out from under the dreaded Northrop Grumman and effectively got rid
of Avondale, and they are still struggling.
So what can be done? Should HII sell Ingalls? (Fincantieri might buy
it!) Can Ingalls survive in the longer term? If the Navy's force
structure changes to the extent that they only need four big yards, why
would they prop up a fifth? (Don't say we need them for competition: we
haven't had competition since the 1980s.) Nope, I think they're
done for. Not tomorrow, of course, but in about five years' time.
this discussion is very simplistic and the future of a facility as
important as Ingalls deserves examination in detail, but the purpose of
this column is just to review the situation and to get you thinking, not
to answer all the questions. You have to pay me for that. July 18, 2014.
Panamax Dock to Be Scrapped
Irving Shipbuilding is spending multi-millions to
modernize and expand its Halifax shipyard and now its shopping list is one item
longer, and one very expensive item at that. The Halifax Shipping News
reports that their Panamax floating dry-dock, known as the Nova Dock, is going
to have to be scrapped. Read the story
here. This is astonishing news,
because it's only 30 years old and a well-maintained floater should have a
useful economic life of at least 50 years. (Think of all the WWII-vintage
docks that are still in service.) This dock was built by M.I.L. in 1983,
to a top-of the-line design, with better-than-average wing-wall cranes. I
guess that it just hasn't been maintained properly.
Not good news.
July 13, 2014.
Canadian Yachtbuilder Tries the Tug Market
Marine Group, of Richmond BC, normally builds luxury custom and semi-custom
yachts. Visit them
here. Now they are going to try their
hand in the commercial market, building two McIlwain-designed harbor tugs for
Ledcor Marine Group. Read Ledcor's announcement
(That's one of their fleet on the right.) The Canadian maritime industry
continues to amaze.
July 13, 2014.
That Fizzy Rubbish for the RN
The first of the Royal Navy's two new carriers,
the 64,000-ton future HMS Queen Elizabeth, (R 08), was christened
yesterday at Rosyth Dockyard, on the Firth of Forth. Very 21st-century -
the Queen pushed a button which released a lever holding a bottle which duly
shattered on the ship's bow. Not actually
an event that I would normally comment on, except for the fact that the bottle
used did not contain champagne. It was a bottle of single malt whisky,
specifically Bowmore, from the oldest of the 14 distilleries on the isle of
Islay. Much more appropriate, I'm sure you all agree. This also
raises the intriguing question of what happens to naval ship construction in
Britain if Scotland secedes from the Union. In addition to Rosyth, two of
BAE's three shipbuilding yards are in Scotland - the surface combatant builder
formerly known as Yarrows and the auxiliary builder formerly known as Fairfield.
July 5, 2014.
Buys STX Canada Marine
STX Canada Marine, undoubtedly one of the best
firms of naval architects around, has been sold yet again. (What is it?
Eight times in the past 20 years?) This time it's Vard which has bought it
and the name will be changed to Vard Marine Inc.
Who, do I hear you cry? Vard is a Norwegian
company, although it's stock is traded on the Singapore exchange. It's a
big player in OSV construction, with ten mid-sized shipyards in Norway, Romania,
Brazil and Vietnam - that's Langsten Verft on the right. Visit them at
www.vard.com. Until recently, Vard was
called STX OSV and was owned by Korea's STX Corporation, as was STX Marine
Canada, but with separate lines of communication to top management in Seoul.
It is now 55% owned by Fincantieri, who also, as you know, own Marinette Marine
and Bay Shipbuilding. Read Vard's brace of announcements
here. The deal is priced at NOK
65 million and includes STX USA Marine, in Houston, and STX Canada Marine's
Ottawa office. So, is this good news or bad? It has to be good news,
if only because it leaves the existing management team in place and gives them
access to Vard's portfolio of designs. The negative has to be the
involvement of Fincantieri: I used to be favorably disposed to Fincantieri but
I've been turned off by what they're doing to Marinette. Let's hope that's
an aberration and the Vard experience will be positive.
July 4, 2014.
Goes to Poland
industry is so important to the Canadian economy that BC Ferries has ordered
three new ships from Remontowa Shipbuilding, in Gdansk. Read the story in
the Vancouver Sun
here. The Canadian taxpayer is
forking over billions of dollars for sole-source contracts with bargebuilder
Vancouver Shipyards and patrol craft builder Halifax Shipyards which will allow
them to upgrade their capabilities for the construction of a new generation of
oceangoing ships for the Canadian Navy and Coast Guard, ships which will cost
four or five times what they would cost in a European shipyard and take two or
three times as long to build. Meanwhile, the BC taxpayer - BC Ferries -
can't get a Canadian yard to bid on its requirements. Isn't there
something awry about this logic? Would it not have been a whole lot
cheaper to buy the Navy and Coast Guard ships in Europe or Korea and to
stimulate construction of all the commercial stuff in Canadian shipyards?
I mean, we're not talking nuclear subs here. Good grief! The U.S.
shipbuilding industry, Jones Act and all, is a model of rational behavior by
comparison. And you thought that Canadians were sensible people.
July 4, 2014.
Out at Horizon Lines
The CEO of Horizon
Lines, Sam Woodward, has resigned, after only two years on the job. Read
the company's 8-K
here. He has been replaced by
Steve Rubin, one of the company's directors and a management consultant by
related news, my spies report that men in suits have been seen visiting
Horizon's facilities. Is somebody doing due diligence? July 2, 2014.
P.S.: Additional info. I'm told that
Matson is looking at Horizon's three Alaskan-trade ships, the ones built by Bay,
while Crowley is looking at their Hawaiian-trade ships. That leaves the
Puerto Rican-trade for TOTE, if they're interested. Intriguing. July
Sometimes it seems
that Vigor can do nothing right. Today's bad news is that the GAO has
thrown out Vigor's protest of the Navy's award of Puget Sound-area CVN work to
GD. This is work that Todd had handled for years and should have been an
automatic for Vigor. But no. Read the ruling
Could Save Martinac?
The news that
Martinac Shipbuilding is in danger not only of closing but, worse, of being
essentially liquidated in a bankruptcy auction, is profoundly discouraging.
Read the report in the Tacoma News Tribune
This is a shipyard with a distinguished construction record, going back 90
and see their construction record
And its recent history makes most of those small yards on the Gulf Coast look
like amateurs. This is a shipyard that's worth keeping. Will someone
please step up and write a check? One of the ironies of this particular
situation is that it doesn't take much to forestall the threatened foreclosure,
although it would still be necessary to structure a new ownership
arrangement that would hold up in the longer term. So, who could be
Martinac's white knight? Not easy. The problem is that it doesn't
fit well into any of the existing shipyard groups - GD, VTHM, BAE, Fincantieri,
Bollinger, Trinity. It may have to be an operator. Foss is the
obvious choice, because they are known to be planning a new yard, to replace
their Seattle yard, but Martinac is not big enough for their needs.
Anyway, I'm sure that Mr. Martinac is already busy calling around the likely
candidates. Wish him luck. Mid-Summer's Day, 2014.
Auctioning Shipyard Equipment
G. Murphy & Co. are scheduling a sale of shipbuilding equipment at Vigor's
Portland shipyard. Read about it
I guess they have more than they need. Can't think why that might be. June
Replaced at Marinette
Word is that the
President of Marinette Marine, Chuck Goddard, is moving to Washington to work
for the parent company, Fincantieri Marine Group, and will be replaced by Jan
Allman, who is currently VP, Manufacturing, at Navistar - formerly International
Harvester - and who was previously the first female plant manager at Ford Motor
Company. Good luck, Ms Allman. I'm sure she knows that Henry Ford
started his career in a shipyard - serving an apprenticeship with Detroit
Shipbuilding. June 18, 2014.
The Navy continues
to dump old ships. Today it was announced that the carrier
Constellation will shortly join her sisters, the Forrestal and the Saratoga,
for recycling in Brownsville TX. Read the story in the Navy Times
here. And I just discovered that
there's a draft RFP on the DLA web site for the recycling of two CGs, a DD and
three FFGs. Find it
here. June 18, 2014.
Cutter for Sale
With nine of the
Sentinel-class FRCs delivered, the Coast Guard has apparently found it
possible to start retiring the Island-class cutters that they replace.
I thought that we needed all the boats we could lay our hands on, but seemingly
not. Read the sale announcement for the Bainbridge Island, (WPB
This is one of the younger boats of the class, too: so, why aren't we giving her
to one of our allies? There must be something wrong with her. June
Buy Westport Yachts
builder of OSVs has bought our leading builder of megayachts: the Chouests, of
Edison Chouest Offshore, have bought the assets of Westport Yachts, which
operates four shipyards in Washington State - that's their Westport yard on the
out in 1964, building fishing vessels, but now only builds composite-hull,
I don't see any
formal announcements anywhere but it's widely covered in the local press and the
yacht industry press. Read the report in Megayacht News
here. This is, obviously, a good
time to buy a yacht builder, the industry not having recovered yet from the
recession. It will be interesting to watch the Chouest clan light a fire
under their new division. June 9, 2014.
Upholds USCG's OPC Awards
You will recall
that the two
shipbuilders that, back in February, were
not selected for the U.S. Coast
Guard's OPC Phase I contracts, Ingalls Shipbuilding and VT Halter Marine,
filed protests with the GAO. As predicted here, the GAO has today ruled
for the Coast Guard and affirmed its selection of Bath Iron Works, Bollinger
Shipyards and Eastern Shipbuilding. As a result, the program can now,
finally, get going. Read the Coast Guard's announcement
This is excellent. June 4, 2014.
P.S.: Read the GAO's report
here. In brief, all five bidders were ok on every measure
except past performance, where Ingalls and VTHM were severely criticized.
Two FMCs Head Out
The Pensacola News-Journal reports that
the first two of the four Fast Missile Craft, (FMC), being built by VT Halter
Marine for the Egyptian Navy were shipped out today. (A little research
reveals that the heavy-lift ship involved is the Combi Dock III, not a
US-flag ship, but then I guess we don't have any qualified ships in the good old
USMM.) Read the story
here. The two ships are the ENS S. Ezzat, (682), and the
ENS F. Zekry, (684), built to Vosper International's Ambassador Class III
design, classed by ABS and financed through FMS. Good work by VTHM, even
though it is over 13 years since the contract for this program was originally
awarded to their predecessor company. Once again, I observe that we could
do worse than build some of these very fast, high-performance ships for our own
Navy. May 28, 2014.
Let's be realistic and face the fact, unpleasant
as it may be, that there is no feasible way the United States can be
preserved and the best thing to do now is to recycle her. Yes, she's a
terrific example of U.S. naval architectural and shipbuilding skills, but she
was never successful as an ocean liner. For starters, she was designed for a
trade that everyone could see was dying and was uneconomical in competition with
the other ships in that trade. She only operated for 17 years and has now been tied up for 45
years. Plenty of folks have tried to revive her, spending countless
millions, but nobody has got even close. She's a wreck. Maybe she
could have been converted into a hospital ship, back in the 80s, but too late
anyone anywhere really seriously believe that she can find a new life now?
If we were going to save an old-style US-built liner, we should have saved the America.
She was designed by the same great naval architect and built by the same great
shipbuilder; she served the nation well as a troopship in WWII and kept working for
49 years after the war ended. And we let her get "accidentally" wrecked
in the Canary Islands on the way to a scrapyard in India. (You can still
see her hulk at low tide.) If we can send Forrestal and Saratoga
to the recyclers in Brownsville, we should have no qualms about sending the
United States down there too. National Maritime Day, 2014 (plus a
minor edit May 25).
Sucks Up Another
The Oregonian reports that
Vigor Industrial and
Oregon Iron Works have agreed to
merge, although it sounds more like an acquisition than a merger. Read the
here and Vigor's announcement
here. Both companies have had their problems recently: let's hope
this is not another example of two drowning men trying to keep afloat by holding
on to each other. National Maritime Day, 2014.
States and Philadelphia
There are probably some folks out
there who wonder why the United States is in Philadelphia at all,
especially since she had never been laid up there. Funny story, as they
say. Between 1993 and 1996, the big ship was in Turkey and Ukraine,
getting all the asbestos etc. removed. In 1996, the City of Philadelphia did its original
deal with Kvaerner - Aker's predecessor and a leading builder of cruise ships - to privatize the
west end of the Navy Yard. The
owners of the United States at that time, Fred Mayer and Edward Cantor,
promptly hitched up the tugs and towed her to Philly, calling from mid-Atlantic
to let the City know that they were graciously going to let the City's new shipyard
operator undertake their long awaited restoration project. The City and the
Navy rejected this offer, however, and refused to let them even dock at the Navy
Yard. So, without even having permission to enter the port, they took her
to Packer Avenue, whence she later moved to Pier 82. Eighteen years later,
there she still is. May 10, 2014.
And here's a picture of her which you haven't
seen before. Here she is entering the Delaware Capes, back in 1996, in a
photograph taken by Allen Baker, who was skipper of one of the McAllister tugs
that brought her in. May 10, 2014.
States and Olympia to Sun Ship?
intriguing rumor. I'm told that there's a move afoot to moor both the
United States and the Olympia in Sun Shipbuilding's big basin in
Chester. Permanently, as they did with the Queen Mary in Long
Beach. Excellent idea. First, they won't have to repair all the hull
damage. Second, they've got a built-in market in all the folks visiting
the racetrack and the casino that now occupy the former Central Yard. And
third, they've got a three-legged museum based on the astonishing history of
these two great ships and one of our greatest shipyards. Go for it.
May 6, 2014.
Comes word from
Puget Sound that Vigor Seattle may have lost its Navy contracts for CVN and CMT
(Combatant Maintenance Team) work, contracts that must have provided more than
half of Todd Seattle's revenues. Can this be true? And if they have
problems with these contracts, how are they doing with their USCG icebreaker
work? This is not good. With all Vigor's recent commitments to major
capital expenditures, their balance sheet must look terrible.
But, hey, maybe
there's a bright side. Let's get Foss in there. The Harbor Island
yard is certainly big enough for their needs, and Foss's management could run
rings round Vigor's.
May 5, 2014.
P.S.: Reliable sources confirm that Vigor will
be out of the Navy ship repair business by September. In addition, I see
that the Coast Guard announced on Thursday that it has awarded the next
dry-docking of the icebreaker Polar Star to
Mare Island Dry Dock, LLC.
There's a lot more news in the same vein but these are the important items.
May 5, 2014.
Drops Plans for Shipyard in Everett
Back in October,
we reported that Foss Maritime was planning to acquire the Kimberly-Clark property in Everett
harbor and developing it as a shipyard, to replace their yard in Seattle, which is now too small for their needs.
They announced yesterday, however, that negotiations have broken down.
Read their release
So, where do they go now?
May 2, 2014.
The flood of
tanker tonnage continues. Moran announced today that it has ordered three
large tank barges from Bay Shipbuilding, while Kirby
almost simultaneously that it has ordered another from Gunderson and is
negotiating for two more. The Moran order is for two 150,000-bbl barges,
one 110,00-bbl barge, one 6,000-hp tug and one 5,300-hp tug: no prices are
provided but all are to be delivered within 24 months. Presumably Moran
already has a tug to marry to the first barge. Note that Bay will build
the tugs as well as the barges: in the recent past, Marinette has built the tugs
for barges built by Bay. No announcement from Moran but read Bay's release
Kirby order is based on their exercise of options for one 185,000-bbl barge from
Gunderson and one 10,000-hp tug from Nichols Bros: total price $75 million, with
delivery in the first half of 2016. Read Kirby's announcement
that they are planning to buy two more but don't say where: the rational thing
would be to continue the series at Gunderson and Nichols, and Kirby are very
rational people, but you never know.
All this new capacity. Two years ago, the
OPA90-driven renewal of the Jones Act fleet of tank vessels was essentially
complete: the only unfinished vessels were SeaRiver's two Aframaxes and the last
of Crowley's 750-series ATBs. Since there had been almost no growth in
Jones Act tank vessel trading for decades, it was reasonable to expect that it
would be a while before there was another surge in new construction. But
now we have upheaval. At present, there are 11 product carriers on order,
with a total capacity of about 3.6 million barrels:
this will increase the capacity of the existing product carrier fleet by about
33%. In addition, there are now 12 ATBs on order, with a total capacity of
about 2.0 million barrels: this will increase the capacity of the existing ATB fleet
by about 10%. Let us hope that we're not overdoing it.
revealed this morning, in its 1st-quarter results, that the first of the two
Aframax tankers it is building for SeaRiver Maritime - and presumably the second
one also - has been delayed by what it describes as "a
defect in the propulsion system ..... arising from a third-party supplied
Read their announcement
The impact is a reduction in profit on the program to 2% or 3%: that signals a
fairly major problem. May 2, 2014.
The LCS program
having proved unaffordable, largely thanks to the Navy's idiotic passion for
bells and whistles, they are now looking for suggestions for what they call a
small surface combatant, or SSC. Read the announcement on FedBizOpps
The key words in the RFI are right up front:
Small surface combatants
enable the Navy to implement the Defense Strategic Guidance (DSG) imperative to
develop innovative, low-cost, and small-footprint approaches to achieve our
It sounds as
though we now have a potential overlap between the Navy's SSC and the Coast
Guard's OPC, but that's not necessarily a bad thing. In fact, it would be
nice if, for a change, the Navy could manage to build some affordable ships.
I know, shades of Gary Hart, but I think this is what we need, not more SSNs at
$1.8 billion a pop. May Day, 2014.
SSNs in One Go
I don't know what
we want all these SSNs for, but let's assume that they are critical to our
defense and look at the more interesting aspect of the Navy's announcement on
Monday - read it
which is the procurement of five years' worth of SSNs in one go.
It's a credit to
EB and NNS and their horde of subcontractors that the SSN program is going so
smoothly that this contract is possible. But, if
we can commit $18 billion to buy five years' worth of one ship type, why can't
we do it with all ship types? I'm even willing to assume that the Navy
would go that way if it were allowed to. But it's the Congress, isn't it?
Even this massive contract is not really firm, because the Congress could renege
at any time. Anyway, why don't we switch from a five-year plan that's
revised every year to an eight-year plan that's revised every four years.
Make it the first item of business in January of the first year of each new
Administration. Four years of SSNs for EB/NNS, four years of CVN work for
NNS, four years of destroyers for BIW, four years of LCSs for Austal and
Marinette, four years of amphibs for Ingalls and four years of auxiliaries for
NASSCO. There are a few other changes needed, of course, such as a policy
of freezing designs before contract award, making no changes during construction
and rewarding schedule performance as well as price performance.
May Day, 2014.
The Coast Guard
has issued a certificate of documentation for the 4,050-cy split-hull dump barge
Freedom, pictured on the right. She was built by Vigor Fab for
American Construction Company. Note that this contract was executed in
October 2012, with delivery scheduled for June 30, 2013. The President of
American Construction said, at the time of contract award, that "Vigor Fab has a
solid reputation for on time, on budget deliveries." Ah, well. April
Teams Up with Kinder Morgan
There's hope for
Avondale yet. HII announced today that it is teaming up with Kinder Morgan
Energy Partners in its search for something to do with the now idle New Orleans
shipyard. Read their release
here. A good move. Kinder
Morgan is active in a whole bunch of markets that could generate the sort of
work that would suit Avondale well. Visit their web site
and see for yourselves. And maybe there's a hidden agenda here.
Maybe, if it turns out that there are business opportunities here, KMP might be
persuaded to take the yard off HII's hands. April 11, 2014.
Saltchuk Resources, the parent company of
industry leaders Foss Maritime and TOTE, among other things, is buying Tropical
Shipping for $220 million. Read the announcement
Tropical operates a fleet of 14 relatively small ships, mostly LO/ROs, mostly
St. Vincent-flagged. Their network of services links the U.S. and Canada
to the Bahamas and just about every one of the Caribbean islands. Visit
Sounds like a good move to me. And, even though Saltchuk says that
Tropical will continue to operate as an independent entity, i.e., serving the
non-Jones Act trades, while TOTE continues to handle the Jones Act routes, it
will be interesting to see what synergies (horrible word) result. April
Case You Were Wondering
You will recall that, almost exactly two years
floating dry-dock at Vigor Industrial's Everett shipyard capsized, dumping Crowley's Invader, the first of
Invader class of tugs, built by McDermott in 1974. In case you were
wondering, Crowley subsequently sold the Invader to AMIX Recycling, in
Vancouver BC. April 4, 2014.
Switches to Eastern
Now that their dispute with Signal International has been
resolved - read Signal's release
- Great Lakes Dredge & Dock has contracted for a modified version with Eastern
Shipbuilding. Read Eastern's announcement
Let's hope that Eastern gets on better with this customer than Signal did.
April 1, 2014.
Jones Act Conundrum (Revised)
One of these days, we'll all get together and
straighten out the Jones Act, but I'm not holding my breath. It was passed
in 1920, when the maritime industry was struggling to survive in the years after
World War I, and here we are, 94 years later, pretending that it's still
relevant, when it obviously isn't. Or is it? Does it still
make sense or doesn't it? The Cold War is long over and, in this era
of world trade, it isn't coming back. What wartime scenario requires the
availability of a huge fleet of inland hopper barges? If you lived in
Hawaii, wouldn't you resent the requirement to support our inefficient and
costly non-contiguous operators? What have OSV and crewboat operators got
to do with national defense? Now don't yell at me. I'm not proposing
any change, I'm just pointing out the obvious, that the anti-Jones Acters have a
legitimate point, and postulating some topics for discussion. Me, I'm with
Adam Smith, one of the greatest economists of all time - well, he was a
Professor at my alma mater - who made it clear in his manual of free trade,
The Wealth of Nations, that the maritime industry was the sole industry that
should be protected. But would he say the same today? Oh and then
there's the second question. Even if, hypothetically of course, we were to
agree that we don't need the Jones Act any more, how exactly would we go about
phasing it out? If half the operators in a particular market have just
renewed their fleets with modern, expensive, US-built ships, is it fair that,
post repeal, the other half gets to replace their old crocks with new,
inexpensive, foreign-built ships? It would be great if we could recognize
that there's a problem here that we should do something about, but no, it's much
easier to pretend that there's no problem and to continue on down the same old
hypocritical trail. March 18, 2014.
P.S.: I'm told that the second MARAD
conference on maritime policy is going to focus on the Jones Act.
Excellent. The conference needs to address the Jones Act with an open
mind, identifying ways in which its coverage might be either expanded or
reduced, and any changes needed in the ways in which it is enforced. And
the organizers need to solicit suggestions in advance, so that everyone can dive
right in at the outset. March 19, 2014.
P.P.S.: The second MARAD conference will
be on May 6th. Read the notice in the Federal Register
here. March 27, 2014.
Can't Dock an LHA! (Revised)
The future USS
America, (LHA 6), is due to be delivered next month, so she's in the big
dry-dock at BAE Systems Mobile this week. Huh? What's wrong with
Ingalls' dry-dock, do I hear you cry? Well, no surprise, but an America-class
LHA is a lot heavier when complete than when launched. But it raises again
the issue of the BAE dock not being Jones Act-qualified. Docking and
undocking a ship on this dry-dock requires a coastal movement, even if it's only
from the pier to deep water and back again. This is cabotage and
requires a Jones Act-qualified vessel. The BAE dock is not a Jones
Act-qualified vessel: not only is it not US-built but its operator is not a U.S.
citizen. Once again, it seems that the Coast Guard is bending the rules.
Mind you, it's the only rational way of doing the job, but should there not be
some kind of quid pro quo? We'll let them use a non-Jones Act
vessel if, in return, they agree to do ..... what? March 18, 2014.
P.S.: By the way, the BIW dry-dock also
has to make a coastal movement to launch a ship and it's not a Jones Act dock
either. Sometimes it seems that our great leaders believe that the Jones
Act is fine in principle, but if it gets in the way of current requirements then
it can be ignored. March 18, 2014.
P.P.S.: OK, I'm wrong (I'm often wrong
but I don't usually admit it.) First off, BAE's big dock does not have to
leave the pier to lift LHA 6, so the question of a Jones Act movement doesn't
arise. Second, even if it did, I am reliably informed that BAE has a
blanket Jones Act waiver for movements inside Mobile Harbor. March 19,
So, Kirby just
announced that it has ordered 29 tank barges from Trinity. Well, good, but
not the hottest news of the month. The intriguing thing is, however, that
they say that only 11 of the 29 are new orders for Trinity: the other 18 are
previous orders canceled by the company that ordered them. Huh?
Somebody ordered some tank barges but is now walking away? In this market?
Does anyone know who this company is? E-mail me at
firstname.lastname@example.org if you know, using one of your kids' e-mail addresses if
necessary. March 18, 2014.
P.S.: The general opinion seems to be that
there is no one company which gave up 18 slots - the figure 18 is just the
aggregation of ones and twos from multiple contracts. I guess we can
conclude that tank barge options should not be left unattended, in case someone
from Kirby comes by. March 19, 2014.
Barges by the Yard (Revised)
In the item below
about pipelines, I never meant to suggest that nothing was happening in the
tank barge sector. Quite the contrary, as you can see from the table below.
The total number of tank barges built in the U.S. in 2013 was 341, 36% more than
in 2012 and 88% more than in 2011. With Trinity switching Caruthersville
to tank barges and all those smaller players getting in on the game, who knows
how many we might produce
this year? March 5, revised March 7, 2014.
SY to Build a Cable Ferry
Ferries has awarded a contract to Vancouver Shipyards for construction of a
cable ferry. The contract price is CDN 15 million and the delivery is
scheduled for the first quarter of 2015. Read the announcement from BC
and that from Vancouver Shipyards
here. Note that this monster
contract apparently fills VSY up and they won't be bidding on anything else for
a while. Huh? Anyway, it'll be good practice for all those
billion-dollar RCN and CCG contracts that are coming down the pike. February
Those folks who
are opposed to the Keystone pipeline need their heads examining, but, however
that argument turns out, we still have the challenge of getting all that crude
out of the Dakotas safely and efficiently. Let's consider the
alternatives. The cheapest and safest solution is pipelines, but nobody
seems to like pipelines. The next cheapest and safest is barge
transportation, but nobody's talking barges, they've skipped ahead to rail,
which is significantly more expensive and apparently not all that safe.
So, why not barges? The Missouri River rises in western Montana and comes
pouring down through the Dakotas until, two thousand miles later, it runs into
the Mississippi. At one time it was navigable pretty much the whole way
but now it's described as navigable only from Sioux City on down: what would it
take to extend the waterway up to Pierre, or even to Bismarck? Has anyone
looked at that? Anyway, why wait? Let's start moving crude on
barges. We don't need to move it all: start modestly and demonstrate that
barges beat railcars any day of the week. So, ok then. February
and VTHM Protest
shipbuilders that were not selected for the U.S. Coast
Guard's OPC Phase I contracts, Ingalls Shipbuilding and VT Halter Marine, have
filed protests with the GAO. Read the Defense News story
here. If you are interested, the
docket number for both is B.409541.1. Do they have a chance?
Probably not. Protests are rarely successful, especially these days, when
Contracting Officers have much less independent authority than they used to
have: sometimes it seems that they can't go to the bathroom without permission
from the lawyers. In this case, however, the PCO is Carl McGill, who has
been there for ever and knows what he's doing: small chance of any mistakes.
The other thing is that the cost of a protest is rarely justified by the size of
the contract. In this case, however, the contract is clearly big enough to
justify the cost, so why not? But that does not mean that this protest is
necessarily valid. My bet is that both protests will be rejected. February
It's Going to Be a Smaller Navy
been obvious for ages that our armed services were going to have to get smaller,
what with the Cold War being over and most of the services' missions being
focused more on smaller-scale challenges. But none of the services seem to
be capable of making rational plans involving affordable weapons. The Navy
may or may not be the worst offender, but its ability to burn up huge quantities
of the taxpayers' money designing and building ridiculously gold-plated boats
(like the one on the right) has certainly been impressive. Is it not
astonishing that we've got to the point that the Secretary of Defense has to
tell them what they need to do?
All three service
secretaries should have resigned or been fired. Read SECDEF's statement
here and the
Defense News report
as far as the shipbuilding sector is concerned, where do we go from here?
First, the Congress needs to back DoD on the planned reductions - 11 cruisers, 3
amphibs and probably one carrier - and on the planned shift from the LCS to a
new class of some kind of corvette or OPV - which needs, of course, to be a
standard, off-the-shelf design. Second, everyone needs to get on board
with fully-funded multi-year procurements for every program. Third, the
Navy needs to give serious consideration to single-sourcing: carriers at NNS,
subs at EB, DDGs at BIW, amphibs at Ingalls and auxiliaries at NASSCO. The
absence of competition will be seen as a problem, of course, but this can be
handled (a) by restructuring the form of contract to provide real incentives for
cutting costs and delivering early, and (b) by managing the programs with zero
changes - if changes must be made, they can do them post-delivery. None of
this will happen, of course. The Congress and the Navy will continue to
stumble along from one unstructured decision to the next, in that ongoing
demonstration of incompetence which we have been living with now for 25 years.
Miss Sting's "The Last Ship"
A musical about
the decline of shipbuilding? Yes, indeed, and why not? Almost all of
us in this industry have experienced the
misery and the
pain associated with the shift of big-ship shipbuilding to the Far East and the
dramatic ups and downs of the small-ship markets, all made so much worse by the
fact that in so many communities the shipyard is the major employer and when it
goes, nothing replaces it. Sting grew up in Wallsend, on the Tyne, in the
shadow of the cranes and shops at that great yard, Swan Hunter, where his father
worked. He's created an amazing musical about Swan's decline, a work of
art, something everyone should see. Click on the logo on the right to go
to the web site and learn more. And Sting himself is doing a concert
performance on PBS at 9 pm tomorrow evening.
Goes to the Lakes
shipping subsidiary, Seabulk Tankers, currently owns and/or operates seven
product carriers - five of the six Double Eagles and the two Avondale-built
ships that were so notoriously double-hulled in China a few years ago.
Recently they ordered three new ships from NASSCO. And now, for a change
of pace, they have ordered a 185,000-barrel ATB. Read their announcement
here. The barge will be built by
Donjon Shipbuilding, in Erie: Donjon has never built a tank barge and apparently
needs over two years to build this one. Donjon built a dry-bulk ATB a coupla years ago, in which Seabulk was involved, and I'm told that a follow-up
project had been expected. But why
would Seacor pay for Donjon to learn how to build tank barges? And,
although Donjon built the tug for the dry bulk ATB, the tug for this combo will be
built by BAE Systems Jacksonville. All very strange. Finally, I'm
told that BAE's contract includes an option for a second tug, so maybe there's
an option on Donjon's contract too: nothing about options in Seabulk's
February 12, 2014
(expanded and amended several times).
Bollinger and Eastern
The U.S. Coast
Guard has awarded firm-fixed-price contracts for the Offshore Patrol Cutter (OPC)
program to Bath Iron Works, Bollinger Shipyards and Eastern Shipbuilding.
Not selected were Ingalls and VT Halter Marine. (Earlier casualties were
Marinette, NASSCO and Vigor.) Read the FedBizOps announcement
here. Read the Coast Guard's
These are Phase I contracts, each for just less than $22 million, covering
Preliminary and Contract Design: one of these three shipbuilders will be
selected to continue to Detail Design and Construction of up to 11 cutters, with
another 14 or so up for grabs after that. The choice of contractors is
interesting. Bath - one of the "Big Five" and one of the best builders of
surface combatants in the world. Bollinger - one of the "Second Tier" and
the yard that knows better than anyone what the Coast Guard wants. And
Eastern - an outsider in many ways but a yard which has increased its
productivity, its output and its average ship size in recent years, which has
moved into more complex and more valuable market sectors, and which has had the
nous to team for this program with STX Marine USA, possibly the best
naval architects in North America. Who will win? Well, it should be
Bollinger: logic says that Bath is too expensive and Eastern too inexperienced,
but there are a lot of conflicting factors at work here and early
chicken-counting would be most unwise. February 11, 2014.
Shipbuilding has announced its acquisition of a 12-acre property in Moss Point,
to be used for warehousing, as part of a "strategy to consolidate
facilities." Read their release
Buying a facility that is several miles away from their ludicrously over-sized
monster of a shipyard could hardly be described as consolidation, but they talk
a different language in HII. This story is, of course, a non-event of a
news item, one that I wouldn't normally bother to comment on, but it also
contains this burst of humor from Mr. Edenzon: "Improving efficiency
and reducing leasing costs will help us make our ships more affordable so we can
sell more ships." This from the world's most expensive shipbuilder!
Really, who knew old Irwin could be so witty? February 6, 2014.
The first of the
big-deck carriers, the former USS Forrestal, (CV 59), left Philadelphia
this morning on the first leg of the long 17-day tow to Brownsville TX and the
recyclers' torches. Built by Newport News, she was delivered in 1955 and
retired in 1993. Read the Philadelphia Inquirer's story
She's being towed by the 8,000-hp ocean tug Lauren Foss, and is currently
zipping along at an average speed of about six knots. February 4, 2014.
Sells Bee Mar 2
Back in 2007,
Bollinger Shipyards started building a series of ten PSVs on spec. for a related
entity called Bee Mar and then, in 2009, sold them en bloc to Harvey Gulf
International. If it works once, it'll work again, right? So, in
2012, they created another Bee Mar and are currently building seven PSVs on
spec. And yesterday they sold them en bloc to Edison Chouest. Good
move. February 4, 2014.
Buy Seward Shipyard
A further addition
to the Vigor Industrial group was announced yesterday. An agreement has
apparently been reached for the acquisition of Seward Ship's Drydock, of Seward
AK. Read Vigor's announcement
visit the Seward yard's web site
See the shipyard from the air on Google
here. January 31, 2014.
Reopens Avondale's Waggaman Plant
An internal memo
advises HII employees that the new Commercial Energy Division is reopening the
old Avondale modular construction facility in Waggaman. This is a very
small plant - 200 employees, tops - that's only a short distance to the west of
the shipyard itself and not on the river, so it's limited in the size of module
it can produce. What's going on? What can they do at the Waggaman
plant that they can't do in the shipyard? Could they be going to move the
few workers remaining at the shipyard to Waggaman and close the shipyard?
Surely not. All very sad. January 30, 2014.
P.S.: Read the Time-Picayune's coverage of
here. Apparently Avondale is now down to 644 employees.
January 31, 2014.
P.P.S.: Read today's article in the
here. LPD 25 will leave the Avondale yard on Monday.
February 1, 2014.
Boats Moving Up
who are currently building up to 500 Response Boats (Small) for the Coast Guard
and up to 350 High-Speed Maneuverable Surface Target (HSMST) boats for the Navy,
is developing a new shipyard on a 25-acre site on the Charenton Commercial
Canal, in Franklin LA, where they can build vessels up to 250 feet. Read the story
Interesting location: Gulf Craft, one of the companies MetalShark will be
competing with in these new markets, just moved its Patterson operation to a
25-acre site on the Charenton Commercial Canal. See MetalShark's existing
Jeanerette plant from the air on Google
here and the Charenton Commercial
here. January 29, 2014.
to HII and Louisiana
Finland's YLE News reports that STX
Finland has sold the Rauma shipyard to the City of Rauma. Read the story
here. When STX bought Aker Yards
Finland and created STX Finland, they had three shipyards, all building
high-value ships but each focused on a different market sector. The Turku
yard built big cruise ships, including the 220,000-GT Oasis-class
monsters; the Helsinki yard built icebreakers, mid-sized cruise ships and other
high-value ships; and the Rauma yard built large ferries,
offshore patrol vessels and the like. None of the three were competitive, even by
Western European standards,
so STX's first move was to put the Helsinki yard into a joint venture with
Russia's United Shipbuilding, to build icebreakers, which are, of course,
government-financed. Now they have dumped the Rauma yard, for the trivial
sum of €18 million. The City plans to turn it into an industrial park,
with Rolls-Royce Marine already signed up as a tenant. Does this theme
sound familiar? January 22, 2014.
Remember him? He's the MIT graduate who
created Massachusetts Heavy Industries and persuaded the Massachusetts
congressional delegation to force a reluctant Maritime Administration to finance
the reconstruction of the Quincy shipyard, using $55 million of Title XI funds.
When MHI defaulted, he went back to Greece and disappeared. Well, now he's
been arrested by the Greek authorities, for allegedly taking $31 million in
bribes relating to a contract for the construction of German-designed submarines
by Hellenic Shipyards, of which he used to be Chairman. Read a splendidly
comprehensive account of this saga in Defense Industry Daily,
January 19, 2014.
Steps Up the Pace
The future USNS Fall River, (JHSV 4), was
floated yesterday, using Austal's uniquely complicated system. Read
here. It may be that the
interesting thing here is that Austal is really stepping up the pace, with four
ships now in the water and four launches scheduled this year. They just
launched LCS 6 last month, so they must be planning on launching LCS 8 this
year, which would definitely represent an increase in the construction rate for
that program. They started their LCS program ten months behind Marinette,
who just launched LCS 5 last month, and now appear to have at least caught up.
And launching JHSV 5 in the summer and JHSV 6 before the end of the year mean an
increased pace on that program too. Excellent!
January 18, 2014.
Turns to V.Ships for Help
Overseas Shipholding Group, still working its way
through bankruptcy, has turned over the management of its international fleet to
V.Ships, the Monaco-based company that is the world leader in managing other
people's ships. Read OSG's announcement
here. OK, this is good news, not
only because V.Ships are really good at what they do, but also because it should
free up OSG's guys to concentrate on managing the domestic fleet, where their
leadership position has been taken over by Crowley and Kirby.
January 18, 2014.
2 Completes Trials
The second Mobile Landing Platform, the future
USNS John Glenn, (T-MLP 2), has completed Builders Trials and will be
christened on February 1, with delivery in March. Read NAVSEA's
Pretty quick work on the part of NASSCO, all things considered, but these are
pretty basic ships. The problem is that the third ship is not far behind
the second. Although NASSCO has a healthy backlog of commercial work -
seven product carriers and two containerships - it's never healthy to have to
shut down the government product line and the T-AO program continues to move at
NAVSEA's now standard snail's pace. In fact, snails are positively
cougar-like compared to NAVSEA.
January 18, 2014.
Shipping in Trouble Again
Reliable sources report that US Shipping's
30-year-old T-5 tanker Houston, (ex-Gus W. Darnell), dumped
contaminated ballast water recently, while discharging at Sun's Nederland
terminal. The contamination was apparently caused by crude leaking from
the cargo tanks into the double bottom and, as a result, she is now in Gulf Copper's
Port Arthur shipyard. Significant cost and loss of revenue, of course, and it
may not be all that simple to get the clearances needed to get her back in
service. Who would charter this old boat, anyway? And all this
follows on the problems US Shipping has been having trying to keep that other
30-year-old relic, Charleston, in service. What an embarrassment US
Shipping is to the US flag.
January 18, 2014.
Starts Work on Crowley's Ships
month, Aker Philadelphia started work on the first of the four product carriers
they are contracted to build for Crowley. Read Aker's announcement
Now my question is, can they improve their productivity? On the first 14
product carriers, Aker reduced construction time initially but its later record
was surprisingly erratic, especially for a yard that was specifically designed
for series production. Now they will be building in direct parallel with
NASSCO and it will be interesting to make comparisons.
January 18, 2014.
Pushes Further into Ocean Trades
In the past three years, Kirby Corporation has
transformed itself from being primarily an inland tank barge operator to being
as big a player in the ocean trades as in the inland trades. Apparently
6.3 million barrels of capacity is not enough, however, and this week Kirby
ordered an ATB with a capacity of 185,000 barrels from Gunderson Marine, with a
10,000-hp ATB tug from Nichols Bros. Both contracts include an option.
Read Kirby's announcement
An interesting order: this will be the biggest barge ever built by Gunderson
and, I think, the biggest tug ever built by Nichols.
January 18, 2014.
Cuts the LCS Program
Back in 2002, the
original plan was for 56 littoral combat ships, (LCSs), in a 375-ship Navy.
That held for a couple of years but in 2005 the goal was increased to 84 LCSs in
a 325-ship Navy. Wow! Shades of the Gary Hart Navy! Of course, in
those halcyon days, almost ten years ago, we didn't know what an LCS was going
to cost. Then in 2006, the number dropped back to being closer to the
original plan: 55 LCSs in a 313-ship Navy. That held good until last
year's relatively minor adjustment to 52 LCSs in a 306-ship Navy. But now
here comes the big, bad DoD with an order that says 32 LCSs max. So where
does that number come from? If we only build 32, how do we cover the
missions that would have been covered by the other 20? Isn't it amazing
how fuzzy our fleet planning process is? I wouldn't mind if we couldn't
make up our minds about how many saucepans to buy for the Pentagon's kitchens,
but we are talking about tens of billions of dollars of the taxpayers' money.
Of course, I'm always on the wrong side on this and similar issues. I keep
reminding people that the Cold War has now been over for 25 years and there is
little prospect of another one any time soon, so why do we need all those
submarines and carrier battle groups? (Don't write and tell me: this is a
column, not a blog.) If we really feel the need to maintain a presence in
every corner of the earth, why don't we do it in multinational task forces,
instead of charging around like bullies in the playground? This means more
LCSs, not fewer. Cut one carrier group and build more LCSs. Cut some
submarines and build more LCSs. Cheaper ones, maybe, but still more.
January 18, 2014.
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