Maritime News and Comment

March 2008

    TODD ONLY BIDDER FOR WSF FERRY.  There was only one bid for a simple little double-ended car ferry, to be built to an existing design,  for Washington State Ferries, and that was more than 50% over the state agency's estimate.  Read the report in the Seattle Times here.  That sole bid, for $26 million, came from Todd Pacific Shipyards, whose primary activity these days is naval ship repair.  Well, dozy Washington-state politicians, that's what you get when you restrict bidding to in-state companies, in a sort of mini-Jones Act scenario without the national defense argument.  Now, bite the bullet, sign the contract and move on to the next project.  Goodness knows you need some new ferries, a whole lot of new ferries.  And next time, solicit bids nationwide.  Look at all the experienced builders who have built conventional ferries recently: Blount, Derecktor, Atlantic, Bender, VT Halter, Steiner, Orange, Patti, others.  March 28, 2008.

    PECK & HALE GUILTY OF BID RIGGING.  The Justice Department has announced that Peck & Hale, the Long Island manufacturer of hardware for securing containers, has pled guilty and agreed to pay a $275,000 criminal fine for its role in a conspiracy to rig bids on DoD contracts.  Read the DoJ announcement here.  March 26, 2008.

    JAPAN SETS EXAMPLE FOR THE U.S. BY FIRING NAVY CHIEF.  Multiple international newspapers but, as far as I can tell, no U.S. news sources have reported this week that Japan's Defense Minister fired the head of the Japanese Navy, Admiral Eiji Yoshikawa, on Friday.  In addition, he fined or suspended two Vice Ministers and 36 Navy executives, and another 50 Navy officials also received some kind of punishment.  Read the report in the International Herald-Tribune here.  Why this strong action?  It appears to be the culmination of a whole string of scandals and screw-ups, including the sinking of a fishing boat by a destroyer.  Well all I can say is, "Good on yer, Minister."  Given the disarray and totally screwed-up condition of our own Navy, and scaling up on a ship-for-ship basis, would it not be refreshing if our own Defense Secretary were to fire or otherwise discipline a couple of hundred assorted incompetent admirals and SES executives?  Nobody is ever held responsible for anything any more.  I'll bet that no one is ever brought to account even for the death of that poor Egyptian chap on Monday.  March 26, 2008.  Lots of strongly worded e-mail about that last sentence, generally on the theme of "Remember the Cole".  Well, maybe there's a parallel, but, good heavens, bum boats have been around for centuries, surely we have learnt how to navigate the ports and canals of the world without having to shoot everybody who doesn't get out of the way quickly enough.  March 27, 2008.

    CASUALTY RATES SOAR.  The International Union of Marine Insurance, (IUMI), reports that the number of serious marine losses has soared in recent years.  Read its press release here.  You don't hear much about this from class, do you?  Wouldn't it be great to hear class societies boasting about their fleet's safety record rather than about their market share?  March 25, 2008.

    LARGE FISHING VESSEL LOST.  The 189-foot fishing vessel "Alaskan Ranger" has sunk in the Bering Sea, with the loss of several lives.  Read the Coast Guard's reports here.  The "Alaska Ranger" is one of the largest fishing vessels in service: she was built in 1973 as an OSV at McDermott's Amelia shipyard (now Bollinger Marine Fabricators) (McDermott Hull #182).  March 24, 2008.

    MORE "INDEPENDENCE" QUESTIONS.  So what's really going on?  Has NCL America in fact sold her to Global Marketing Systems (GMS)?  She's still listed on the Coast Guard's records as owned by California Manufacturing, an NCL affiliate.  If they have sold her, did they get permission from MARAD?  If not, why not?  GMS' lawyer says that this wasn't required, because GMS is a U.S. buyer.  But GMS is itself selling her on to someone else, presumably a ship recycler.  After all, GMS describes itself as "a cash buyer of ships for recycling": visit its web site here.  If the ship is not destined for recycling, who are the real buyers and what are their plans?  If she is not going to the scrap yard, as almost everyone assumes, what is the alternative plan?  Is she to be converted into a floating hotel, like the QE2?  Where, in fact, is she today?  Can the EPA force GMS to bring her back to the U.S., rather than break the law on export of PCBs etc.?  And finally, what does NCL's bosom buddy, Senator Inouye, (D-Hawaii), have to say about all this?  March 19, 2008, modified March 23.

    BATH MACHINISTS HAVE PROBLEMS.  The Times record reports that the Machinists' local at Bath Iron Works - the largest union at the shipyard - is in disarray today and being investigated by the Department of Labor, after at least eight members were accused of misuse of union property, missing funds and several other things.  The international has placed the local in trusteeship and suspended its officers.  Read the story here.  March 19, 2008.

    PILOT OF COSCO BUSAN CHARGED.  The San Francisco Bar pilot on the bridge of the "Cosco Busan" when it hit the Bay Bridge has been charged with violations of the Clean Water Act and the Migratory Bird Treaty Act.  Read the story here.  March 18, 2008.

    BULKER HITS DREDGE IN NY HARBOR.  The 6-year-old, 50,000-dwt bulker "Osprey 1", owned by Eagle Bulk Shipping, collided with the 2-year-old clamshell dredge "Delaware Bay", owned by Donjon Marine, in New York Harbor on Thursday morning.  The bulker sustained a 30'-by-3' gash in her hull: the dredge was undamaged.  Read the Coast Guard's statement here.  March 17, 2008.

    THE HASC ON SHIPBUILDING.  The Seapower Subcommittee of the House Armed Services Committee held a hearing on Thursday on naval shipbuilding.  Its Chairman, Congressman Gene Taylor, talked sense (mostly) for once: read his statement here.  Read also the testimony of the four witnesses: it's interesting: Allison Stiller (DASN Ship Programs) and VADM Barry McCullough (DCNO Resources and Requirements) here; Eric Labs (Senior Naval Analyst, CBO) here; and Ron O’Rourke (Specialist in National Defense, CRS) here.  March 17, 2008.

    WHAT'S A SHIPYARD WORTH?  Singaporean entrepreneur and all-round wizard, Brian Chang, just sold 30% of Yantai Raffles Shipyard for $566 million.  Not bad.  The reason that I report this is that Halter Marine Group helped Mr. Chang get this shipyard started, only ten years ago, and had an option to participate in its ownership.  But Halter's brilliant managers passed on what some of us thought was a golden opportunity.  Talk about "What if?" scenarios!  March 14, 2008.

    ANOTHER BIG DOCK FOR FREEPORT.  In more bad news for the U.S. repair industry, Grand Bahama Shipyard has bought one of the biggest floating docks in the world, from Soreni SA, the inactive repair yard in Le Havre.  The yard's new Drydock #3 is 310 meters long by 53 meters wide and has a lifting capacity of 50,000 tonnes.  Once it's installed, the yard's Drydock #2 - the former Portland Dock #4 - will be lengthened and otherwise modified, so that it can accommodate ever larger ships.  The yard will still be focused on cruise ships but wants to increase its share of other large-ship repair work, including LNG carriers and drilling rigs.  The only question in my mind is, where will they find enough skilled workers?   March 14, 2008, expanded March 17.

    GAO REVIEW OF NSC PROGRAM.  The GAO has taken yet another look at the screwed-up Deepwater program.  Read its report here.  I reproduce, for your amazement, the table that shows the cost growth on the National Security Cutter: the numbers are in millions, of course.  The projected total for the three ships is a staggering $1,641 million, 90% more than the original projection of $865 million.  But, strangely, I can't hear Congressman Taylor (D-Northrop Grumman) demanding that the contractor refund money to the taxpayers.  March 14, 2008.

    MORE MANITOWOC MARINE QUESTIONS.  A naval shipbuilding blogger has raised new questions about the future of Manitowoc Marine Group.  Read what he wrote here.  Certainly, the company's CEO sounds pretty ambivalent, but why would he want to sell a cash cow that requires minimal corporate oversight?  Remember that the LCS problems are not in the shipyard: they all lie with the Navy, Lockheed Martin and others.  March 7, 2008.

    LOUISIANA TO INVEST IN CHOUEST.  The Governor of Louisiana's budget request includes an investment of $10 million in Edison Chouest's proposed new shipyard in Houma, to be called Louisiana Ship, which the Chouests say will generate 1000 new jobs.  Well, the Chouests have never been accused of not knowing what they are doing, but where are they going to find 1000 new shipyard workers in a region that is so desperately short of skilled labor?  Romania?  The number of temporary foreign workers at the Chouests' shipyards is already greater than the number of locals.  And why do the Chouests need this help?  They've never had any problem financing their many ventures before.  Only last year they found $62 million to buy a 25% interest in the New Orleans Hornets.  And, again, why only $10 million?  That's small change in the construction of a new shipyard.  What else is the State giving them?  In fact, this all smells like old-style Louisiana politics at work: I thought that Bobby Jindal was going to change all that.  If the State wants to support its admittedly important shipyard industry, why does it not introduce measures that would be available to everyone?  Such as a program to encourage investments in productivity improvement?  March 7, expanded March 8, 2008.

    POLITICIANS ARE WONDERFUL.  So the Air Force awarded the big tanker contract to the NG/EADS team and not to Boeing, and our congressional representatives are shocked.  Shocked!  Well what did they expect?  Not long ago, this program was all set up to go to Boeing sole-source, since no other U.S. aircraft builder had a feasible design.  It was the Congress, not the Air Force, that insisted on competition and opened the door to EADS.  Murtha and Dicks and the others on the Defense Appropriations Subcommittee had their chance to keep it at home back then.  Not that I have anything against competition, mind you, but DoD contracts are different.  Four more points:

First, by all reports, the NG/EADS proposal was the clear winner over the Boeing proposal in every single Section M category.  And you can bet that the DoD's army of contract lawyers vetted every decision.

Second, the planes will be assembled here, although many components will be built elsewhere.  Boeing says that they would build the whole plane here.  Yeah, right, or, at best, maybe.  Boeing's civil aircraft are assembled in Seattle from components made all over the world, including China.  If they were to build these Air Force tankers in Seattle, they would necessarily have to build more of their civil aircraft overseas.  Why?  Because the additional skilled workers required just aren't there.

Third, the Buy American Act is no help here.  It's been watered down to the point that you can buy just about anything you want from a manufacturer based in an allied nation.  (This is why we don't have a marine manufacturing industry any more.)  Meanwhile, the Navy cannot buy so much as a 25-foot aluminum boat from a foreign source.  Why?  No thanks to the Buy American Act.  The reason is that the Congress inserts language in the Appropriations Act every year that specifically forbids it.  If they can do that for ships, they could do it for planes, could they not?

And fourth, what would a reversal of this award do to Boeing's overseas sales?

So don't blame the Air Force, blame the Congress, particularly Congressman Norm Dicks (D-Boeing), who has been on the Defense Appropriations Subcommittee for 32 years and was a congressional staffer for 8 years before that: he should have worked out by now how the system works.

How will this non-problem be resolved?  The contract award will be upheld and Boeing's protest dismissed, but execution of the contract could be delayed at least a year by a subsequent appeal to the GAO or to the Court of Federal Claims, if not both.  In the meantime, NG/EADS will defuse the politicians' fury by finding ways of building more bits of the plane in the U.S., albeit at extra cost.  And the general public will have forgotten all about it by April.  March 6, 2008.

    THIS IS WHERE THE MONEY IS.  The pundits have been telling us that, following Senator McCain's victories on Tuesday, the first item on his agenda is now fund-raising.  So yesterday he had to stop by the White House, but where is he today?  Why, right here in Palm Beach County.  Three fundraisers in a single day.  This must be where the money is.  I knew that there was a reason I moved here.  March 6, 2008.

    TWO MORE T-AKE NAMES.  The Navy has announced that T-AKE 7 will be named for Carl Brashear, the deep-sea diver, and T-AKE 8 will be named for Wally Schirra, the astronaut.  Read the announcement here.  March 5, 2008.

    MORE NEWPORT NEWS MANAGERS HEAD SOUTH.  Northrop Grumman Shipbuilding, now headed by Mike Petters from Newport News, has appointed Irwin Edenzon of Newport News to run the Gulf Coast operations formerly known as Ingalls and Avondale.  Read the announcement here.  What a kick in the gut for the Gulf Coast guys!  But the reality is that all the competent shipbuilders down south either quit or took early retirement when the megalomaniacal idiot Dur was in charge, whereas there are still some competent folks at Newport News and Edenzon is one of them.  Maybe this is the turnaround decision for Ingalls/Avondale.  But don't hold your breath.  March 5, 2008.

    WATCH YOUR GRAMMAR.  Today is National Grammar Day and all the pedants, including me, are out in force.  So watch it!  I have already chastised a lady who responded "Not for I, thank you" to a waitress offering her orange juice.  And the day is just warming up.  March 4, 2008.

    NEW FIVE-YEAR PLAN.  The latest edition of the Navy's ever-changing five-year plan is out.  Is it any wonder that the nitwits in Congress are so fond of telling the Navy what it needs to build when the Navy seems to be incapable of any degree of consistency in deciding what it wants?  Note that, as usual, the numbers in the three later years are much higher than those in the first two.  Those guys have such a strong grasp on reality, don't they?  March 2, 2008.

    NAVY TO SINK USS "FORRESTAL".  The Navy Times reports that the carrier "Forrestal" is on a list of 15 ships to be sunk over the next five years.  Read the article here.  Other ships to be sunk include the AD Acadia, the DDs Conolly and Radford, the AGOR Hayes, the AFSs Concord, San Jose, Saturn, Spica and Niagara Falls, and the AEs Kilauea, Flint, Shasta, Mount Baker and Kiska.  In addition, the AD Puget Sound, the AGC Coronado, the ASs Simon Lake, L. Y. Spear and McKee, the CGs Yorktown, Vincennes and Thomas S. Gates, the CVs Independence and Constellation, the LPD Austin; the LPH New Orleans, the LSDs Anchorage and Fort Fisher, the SS Trout, and the SSNs Drum, Omaha, Cincinnati, New York City, Groton, Birmingham, Phoenix, Los Angeles and Baltimore will all be scrapped.  I guess the days of tying old ships up, just in case we might need them one day, are over.  March 2, 2008.

    IRONHEAD MARINE TAKES OVER TOLEDO SHIPYARD.  The Toledo Blade reports that Ironhead Marine, Inc., is the latest operator of the Toledo-Lucas County Port Authority's shipyard, founded in 1890 by a Scotsman (of course), as Craig Shipbuilding, and later Toledo Shipbuilding and AmShip Toledo.  Read the article here.  March 2, 2008.

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