Tim Colton's

Maritime Memos

A somewhat opinionated commentary on U.S. and Canadian maritime matters.

 

VTHM Launches ConRo for Pasha

The Mississippi Press reports that the 25,000-dwt container-roro Marjorie C was launched at VT Halter Marine's Pascagoula shipyard on Saturday.  Read the story and see a video here.  Delivery of the $144-million ship is scheduled for October and she will be followed in the construction sequence by two slightly larger LNG-powered conros for Crowley.  Note that the Marjorie C was preceded in this sequence by three 45,000-dwt ATBs.  Can anyone doubt that the oceangoing Jones Act market is not just for Aker and NASSCO?  August 11, 2014.

Ingalls Closes Gulfport Yard

WLOX Biloxi reports that Ingalls has closed its grandly named Gulfport Center of Excellence, next door to Gulf Coast Shipyard Group (formerly Trinity Yachts and, before that, Halter Gulfport).  Read the story here.  No surprise, as they had said this was coming after they lost the contract for the third Zumwalt-class superstructure, but another indicator of the downhill slope that Ingalls appears to be on.  No obvious buyers but you never know.  If it's not too expensive, it could be converted to boatbuilding: water depth and air draft limitations prevent the construction of anything big.  August 1, 2014.

First Horizon Shoe Drops

The Puerto Rican web site Caribbean Business reports that Crowley is negotiating to buy Horizon Lines' Caribbean services.  Read the article here.  No surprise, of course.  And now that this potential deal is out in the open, can it be long before the parallel discussions for their Alaskan and Hawaiian services are made public?  July 22, 2014.

Martinac Sold on Courthouse Steps

The historic shipyard was duly auctioned off yesterday: read the report in the Tacoma News Tribune here.  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, 2014.

Can Ingalls Handle the LHA Program?

It's good 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. 

First, 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 upward slope.

Next comes 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. 

Finally, 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. 

In summary, 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.

I know 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.

30-yo 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

Bracewell 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 here (That's one of their fleet on the right.)  The Canadian maritime industry continues to amaze.  July 13, 2014.

None of 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.

Vard 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 and 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.

BC Ferries Goes to Poland

The shipbuilding 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.

Woodward 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 background.

In possibly 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 2, 2014.

Another Fine Vigor Mess

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 hereJune 25, 2014.

Who 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 here.  This is a shipyard with a distinguished construction record, going back 90 years: visit them here and see their construction record here.  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.

Vigor Auctioning Shipyard Equipment

Auctioneers James G. Murphy & Co. are scheduling a sale of shipbuilding equipment at Vigor's Portland shipyard.  Read about it here.  I guess they have more than they need.  Can't think why that might be.  June 20, 2014.

Goddard 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.

More Recycling

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 hereJune 18, 2014.

Island-Class 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 1343), here.  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 18, 2014.

Chouests Buy Westport Yachts

Our leading 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 right.  Westport started out in 1964, building fishing vessels, but now only builds composite-hull, standard-design megayachts.  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.

GAO 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 here.  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.  Interesting reading.

First 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.

Scrap Her

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 now.  Does 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).

Vigor 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 story 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.

The United 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. 

United States and Olympia to Sun Ship?

Here's an 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.

Hopeless in Seattle

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.

Foss 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 here.  So, where do they go now?  May 2, 2014.

Still More ATBs

The flood of tanker tonnage continues.  Moran announced today that it has ordered three large tank barges from Bay Shipbuilding, while Kirby announced 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 here.  The 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 here.  Note 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.  May 2, 2014.

Exxon's Ships Delayed

Aker Philly 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 component".  Read their announcement here.  The impact is a reduction in profit on the program to 2% or 3%: that signals a fairly major problem.  May 2, 2014.

SSCs, not LCSs

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 here.  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
security objectives.

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.

Ten 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 here - 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.

Vigor Delivers

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 24, 2014.

HII 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 here 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 Goes Tropical

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 here.  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 Tropical Shipping here.  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 8, 2014.

In Case You Were Wondering

You will recall that, almost exactly two years go, the floating dry-dock at Vigor Industrial's Everett shipyard capsized, dumping Crowley's Invader, the first of the 35-boat 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.

GLDD Switches to Eastern

Now that their dispute with Signal International has been resolved - read Signal's release here - Great Lakes Dredge & Dock has contracted for a modified version with Eastern Shipbuilding.  Read Eastern's announcement here.  Let's hope that Eastern gets on better with this customer than Signal did.  April 1, 2014.

The 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.

Ingalls 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, 2014.

Whose Tank Barges? (Revised)

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 timcolton@aol.com 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.

Tank 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.

Vancouver SY to Build a Cable Ferry

British Columbia 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 Ferries here 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 27, 2014.

Who Needs Pipelines?

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 27, 2014.

Ingalls and VTHM Protest

The two 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 27, 2014.

It's Going to Be a Smaller Navy

It's 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 here.  Now, 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.  Depressing.  February 25, 2014.

Don't 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.  February 20, 2014.

Seabulk Goes to the Lakes

Seacor's ocean 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 announcement though.  February 12, 2014 (expanded and amended several times).

Bath, 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 announcement here.  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.

Irwin the Droll

Ingalls 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 here.  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.

Forrestal Heads South

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 here.  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.

Bollinger 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.

Vigor to 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 here and visit the Seward yard's web site here.  See the shipyard from the air on Google hereJanuary 31, 2014.

HII 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 this story here.  Apparently Avondale is now down to 644 employees.  January 31, 2014.

P.P.S.:  Read today's article in the Times-Picayune here.  LPD 25 will leave the Avondale yard on Monday.  February 1, 2014.

MetalShark Boats Moving Up

MetalShark Boats, 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 here.  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 Canal area hereJanuary 29, 2014.

Note 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.

Sotiris Emmanouil Arrested

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, here January 19, 2014.

Austal Steps Up the Pace

The future USNS Fall River, (JHSV 4), was floated yesterday, using Austal's uniquely complicated system.  Read Austal's announcement 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.

OSG 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.

MLP 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 announcement here.  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.

US 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.

Aker Starts Work on Crowley's Ships

Earlier this month, Aker Philadelphia started work on the first of the four product carriers they are contracted to build for Crowley.  Read Aker's announcement here.  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.

Kirby 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 here.  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.

DoD 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.  Grrrr.  January 18, 2014.

 

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