ROWAN CANCELS CONTRACTS
Rowan Companies announced this week that it was suspending construction of two jack-ups - one at its own Le Tourneau yard in Vicksburg MS and one at Keppel AMFELS in Brownsville TX - and is cancelling a third, which was to have been built in Vicksburg. Read the 8-K here. It's not clear whether this action is truly a response to market conditions or a reaction to the anti-manufacturing opinions of a major stockholder, Steel Company. January 31, 2009.
RAY MABUS FOR SECNAV?
Inside Defense is reporting that a leading contender for the position of Secretary of the Navy is Ray Mabus, a former Democratic Governor of Mississippi, Ambassador to Saudi Arabia and member of the Board of Directors of the late but unlamented shipbuilding company Friede Goldman Halter. January 31, 2009.
KIRBY RESULTS UP AGAIN, BUT WHAT NEXT?
Kirby announced its fourth-quarter results yesterday and, as usual, thy showed continued growth. Management expressed some doubt about this year, however. Read the announcement here. January 29, 2009.
PSA FOR LCS 2
The Navy has awarded a contract to GD/BIW for the PSA of LCS 2, which hasn't actually been delivered yet, but details, details. The value is $37 million, same as the value of the recent award of an overhaul of LCS 1. Read the DefenseLink announcement here. January 29, 2009.
BOMB THREAT ON FERRY
There was a bomb threat on the Washington State ferry "Hyak" yesterday, resolved after a search by the state police. Read the story in the Kitsap Sun here. January 29, 2009.
U.S. MARITIME POLICY "NARROWLY FOCUSED"
MARAD has published a report by the consulting firm Global Insight on U.S. maritime policy. It seems to be a pretty good piece of work, although I have only skimmed it and need to read it carefully. Find it here. January 29, 2009.
"DEFENSE SPIGOT CLOSING"
Secretary Gates forecasts reductions in defense spending. Read the story on DoD Buzz here. Read his testimony here. His bullet points on defense acquisition are excellent:
• First, I believe that the FY 2010 budget must make hard choices. Any necessary changes should avoid across-the-board adjustments, which inefficiently extend all programs.
• We have begun to purchase systems at more efficient rates for the production lines. I believe we can combine budget stability and order rates that take advantage of economies of scale to lower costs.
• I will pursue greater quantities of systems that represent the “75 percent” solution instead of smaller quantities of “99 percent,” exquisite systems.
• While the military’s operations have become very joint – and impressively so – budget and procurement decisions remain overwhelmingly service-centric. To address a given risk, we may have to invest more in the future-oriented program of one service and less in that of another service – particularly when both programs were conceived with the same threat in mind.
• We must freeze requirements on programs at contract award and write contracts that incentivize proper behavior.
• I feel that many programs that cost more than anticipated are built on an inadequate initial foundation. I believe the Department should seek increased competition, use of prototypes, and ensure technology maturity so that our programs are ready for the next phases of development.
• Finally, we must restore the Department’s acquisition team. I look forward to working with the Congress to establish a necessary consensus on the need to have adequate personnel capacity in all elements of the acquisition process. On that note, I thank you for continuing to give us the funding, authorities, and support to sustain our growth plan for the defense acquisition workforce.
January 29, 2009.
OSG TANKER ADRIFT OFF SF BAY
The Panamax tanker "Overseas Cleliamar" lost power last evening, near Point Diablo, just west of the Golden Gate Bridge, and had to be towed back to port. She was in ballast, outbound for Ecuador. Read the report in the San Francisco Examiner here. January 28, 2009.
SEND A GUNBOAT!
The Venezuelan state oil company, PDVSA, has seized the U.S. jack-up "Ensco 69" - built in Vicksburg in 1976 - in a contractual dispute. Read the story here. Ensco stopped drilling because PDVSA stopped paying - Ensco says they are owed $35 million - and the Venezuelans were miffed. We can't have these two-bit socialists stealing our rigs: send a gunboat! Oh, right, we don't have any gunboats any more, only multi-billion dollar cold-war-era monsters. Another reason to bail out of Venezuela and let its crumbling oil industry collapse from its own incompetence. January 28/29, 2009.
DELTA QUEEN TO BE HOTEL
The historic "Delta Queen", run off the river by the unions, is to be a floating hotel in Chattanooga. Read the press release here. January 28, 2009.
ERIE SB IS FIRST CASUALTY
A lot of shipbuilders are going to fold this year. Leading the sad parade is Erie Shipbuilding, which just closed for lack of financing. Read the report in the Erie Times-News here. January 27, 2009.
USS SAVANNAH SOLD FOR SCRAP
MARAD has sold three more ships for scrap. The three are the USS Savannah (AOR 4), built by Quincy in 1970, the "Hattiesburg Victory", built by California Shipbuilding in 1945, and the "Pioneer Contractor", built by Quincy in 1963. Read the press release here. January 26, 2009.
COAST GUARD PROCUREMENT STUDIED
The Coast Guard has welcomed the findings of the Brown Report on "The Challenge of Contracting for Large Complex Projects". Read the report here. Note the three principal "lessons for future acquisitions of complex products":
• The effective acquisition of complex products requires an expanded and more highly skilled acquisition workforce.
• The effective acquisition of complex products requires a better understanding of risk.
• The effective acquisition of complex products requires an investment in learning.
Maybe some folks in the Navy should read this too. January 25, 2009.
"GREEN BAY" COMMISSIONED
The fourth ship of the "San Antonio" class of amphibs, the USS "Green Bay", (LPD 20), was commissioned in San Diego on Saturday. Note that she was delivered on August 29, almost five months ago. This is the way it's supposed to be done: build the ship, undergo extensive testing and trials, make a formal delivery of a fully operational ship, move her to her designated home port, then commission her. January 25/26, 2009.
NEW ADMINISTRATION SUPPORTS THE LCS
Defense News reports that there are clear signals coming from the new Administration that it supports more prepositioning ships and small rather than large naval vessels. Read the story here. January 24, 2009.
GREAT LAKES IRON ORE TRADE DOWN 80% !
Just in case you hadn't noticed that we have a recession going here, the Lakes Carriers Association reports that iron ore movements in January, before trading ended for the winter, were 80% down on January last year. Read the report here. Yikes! January 24, 2009.
NG TO TAKE A $3.0 TO $3.4 BILLION CHARGE
Northrop Grumman announced today that "it will record a fourth quarter non-cash, after-tax charge of $3.0 to $3.4 billion for impairment of goodwill .... book values for Shipbuilding and Space Technology exceeded the fair values of these businesses." Read the announcement here. Interesting. It's not clear how much of this charge is attributable to Shipbuilding, but they must be projecting a very significant reduction in net cash flow over the next few years. Remember that the DCF analysis underlying this decision is much more sensitive to results in the near term than to those in the longer term. A cut of this size could indicate a reduction in projected net cash flow of as much as 35%. I guess we will learn more when they release their results on February 2. January 22, 2009.
BOLLINGER WINS CASE AGAINST NG
Judge Vance of the U.S. District Court for the Eastern District of Louisiana has ruled for Bollinger Shipyards on its motion to compel arbitration of its dispute with NG Ship Systems over the conversion of eight "Island"-class patrol boats from 110-footers to 123-footers. In addition, the judge denied NG's motions to dismiss. Read the ruling here. January 22, 2009.
WHITWORTH OUT AT OSG AMERICA
OSG has made a bunch of management changes, including replacing Jonathan Whitworth as President of OSG America. Read the announcement here. I'm not sure what all this signifies but I'm sure that y'all will write and tell me. January 21, 2009.
TIDEWATER LOOKS BULLISH
Tidewater's Joe Bennett made a presentation to Pritchard Capital Partners' Energize 2009 Conference last week. See it here. All good, positive stuff. January 21, 2009.
TANKER OPERATORS DO THE CONTANGO
It's not often that one gets to use the delightful word "contango", but here it is. Tanker operators worldwide are benefiting from the current situation in the crude oil market, in which the futures market is offering 40% more for a barrel of oil than the current price. As a result, there are now about 500 million barrels of crude being stored in idle tankers, with this number growing every day. Read one news story about it here. And, before you ask me, it's not Latin or anything: it seems to have originated in the mid-19th century, on the London stock exchange, probably as a corruption of "contingent". January 20, 2009.
Several readers have suggested that I also mention the antonym of "contango", which is "backwardation", so I just did. Backwardation is an even better word than contango in some ways and it seems particularly appropriate for use by some elements of the U.S. marine industry. January 21, 2009.STIMULUS BILL STIFFS THE MARINE INDUSTRY
The "American Recovery and Reinvestment Act of 2009" released by the House Appropriations Committee on Friday contains absolutely no funds for marine projects.
Read it here. January 20, 2009.BULKER AGROUND IN CHESAPEAKE BAY
The 800-foot bulker "CSL Argosy", with a full load of iron ore, grounded near Gibson Island, in Chesapeake Bay, on Saturday. Read the Coast Guard's release here. January 19, 2009.
LAKER HITS PIER IN DULUTH
The 1000-foot laker "Edwin M. Gott" allided with a pier in Duluth on Friday. Read the Coast Guard's release here. January 19, 2009.
SUPPLY BOAT SINKS IN ALASKA
The supply boat "Monarch", sank yesterday after being pinned against the Granite Point platform in Cook Inlet by sea ice. The crew escaped to the platform and were helicoptered to shore. Read the Coast Guard's report here and the State of Alaska's report, with photographs, here. January 16, 2009.
NNS TO START ON CVN 79
The Navy has awarded a CPFF contract to Newport News for construction preparation efforts for the second "Ford"-class carrier, CVN 79. The value is only $373 million, a mere bagatelle. Note that this ship does not appear in the FYDP until FY-12. Read the DefenseLink announcement here. January 15, 2009.
THE NAVY BUYS THREE PREPO SHIPS
The Navy has exercised its option on its contracts with WTAK-1, Inc., WTAK-3, Inc., and Braintree V Maritime Corp.
to buy the prepositioning ships "SGT Matej Kocak", "MAJ Stephen W. Pless" and "SGT William R. Button". The prices are $49.6, 45.6 and 48.6 million, respectively. Read the DefenseLink announcement here. January 15, 2009.MARINETTE GETS MORE LIGHTERAGE
The Navy has exercised an option on its contract with Marinette Marine for a single warping tug for the Improved Navy Lighterage System, or INLS. The value is about $6 million. Read the DefenseLink announcement here. January 15, 2009.
NAVY TO BASE A CVN IN MAYPORT
As expected, the Navy has agreed to base a nuclear-powered carrier in Mayport FL, replacing the USS Kennedy. Read the announcement here. January 15, 2009.
US SHIPPING SELLS TWO ITBS TO NIGERIAN OWNERS
The leading U.S. shipbroker, Marcon, has announced the sale of the two oldest of US Shipping's six obsolete ITBs, the "Jacksonville" and the "Groton", to foreign owners. The barges were built at Sparrows Point and the tugs at Halter's Chickasaw yard, in 1982. Neither the identity of the buyer nor the price was revealed but the ABS Record gives the new owner as Platinum Fleet Limited, of Lagos, Nigeria. January 15, 2009.
USS MILWAUKEE SOLD FOR SCRAP
MARAD has sold the USS Milwaukee (AOR 2), built by Quincy in 1969, for scrap. Read the press release here. January 15, 2009.
LIBERTY DROPS ITS BID FOR ISH
Phil Shapiro's Liberty Shipping has dropped its bid for the Johnsen family's International Shipholding, citing "dilatory and obstructionist tactics". Read Liberty's letter here. This is a pity. In our opinion, the proposed deal made sense for both parties and would have secured the future for two of our few remaining deep-sea operators. January 15, 2009.
CONGRESSMAN GENE TAYLOR LOSES HIS MIND
The Chairman of the House Sea Power Subcommittee, Rep. Gene Taylor, ever a mindless shill for No Good Shipbuilding, has finally lost it. Rooting for your local shipyard is one thing, even if you are supposed to be the impartial Chair of one of the four subcommittees with the most influence over its success, but this is truly insane. He wants the Pascagoula yard to be made nuclear-capable. Read the story in the Mobile Press-Register here. Here is a shipyard with a desperate shortage of skilled workers, an almost complete lack of competent management, rapidly declining productivity and apparently no quality assurance system whatever, and he thinks they should take on the more complex, more quality-sensitive work involved in building nuclear-powered ships. Should they not first concentrate on hauling themselves back to the standards that they had achieved eight years ago, before NG took over and it all fell apart? And wouldn't Rep. Taylor be better employed doing something about rebuilding his devastated district, which still looks as though it was hit by a neutron bomb, 3˝ years after Katrina? January 15, 2009.
NEW ROLE FOR LPD 17
The USS "San Antonio", (LPD 17), is to be assigned as command ship for the multinational anti-piracy task force. Well that's better than being laid up, I suppose, but is this what we paid $2 billion for? January 14, 2009.
A LITTLE PERSPECTIVE NEEDED
So Vela has got its VLCC, the "Sirius Star", back and most of the pirates drowned. Good. Now, I feel compelled to point out to all the ignorant journalists who covered this story that the "Sirius Star" weighs, when fully loaded, close to 360,000 tons: this means that it is about four times the size of the USS "George H. W. Bush", over the size of which they were all swooning on Saturday. And also, by the way, the ship is worth more than its cargo: yes, 2 million barrels of oil are worth around $100 million, but this brand-new ship actually cost $130 million when Vela ordered it and five sisters in 2006 and, when they ordered four more recently, the price was $151 million. January 13, 2009.
J P MORGAN CHASE SELLS INTEREST IN SHIPYARDS
One Equity Partners, which manages investments in direct private equity transactions for J P Morgan Chase, has sold its 25% stake in ThyssenKrupp Marine Systems, (TKMS) to the majority investor, ThyssenKrupp Technologies. TKMS is the parent company for six major European shipbuilders - Howaldtswerke Deutsche Werft in Kiel, Blohm + Voss in Hamburg, Nordseewerke in Emden, Nobiskrug in Rendsburg, Kockums in Malmo and Hellenic Shipyards in Scaramanga. Read the press release from ThyssenKrupp Technologies here. So that gives you a few hundred million to invest in the U.S. maritime industry, right, guys? January 13, 2009.
FIND THEM HERE
The Marine Group has vanished from the Manitowoc web site, leaving no forwarding address. You can sort-of find them here, on Fincantieri's web site. Unfortunately, Fincantieri, great technologists though they are, have one of the world's worst web sites, confused, uninformative and almost terminally user-unfriendly: visit it and see for yourselves. Let's hope that the guys up north can persuade their new owners that they need their own site, and soon. January 13, 2009.
GAO REJECTS MARINETTE'S PROTEST OF FRC AWARD
The GAO has ruled in favor of the Coast Guard's decision to ward the Fast Response Cutter contract to Bollinger Shipyards, rejecting Marinette Marine's protest. Read the Coast Guard's press release here. January 12/13, 2009.
NASSCO DELIVERS FIRST USS SHIP
The product carrier "Golden State", NASSCO's Hull # 501, was delivered to US Shipping on Friday. Read NASSCO's press release here. January 12, 2009.
NEW USS ATB RUNS AGROUND
As if US Shipping did not have enough problems, its new ATB "Petrochem Trader", ran aground yesterday, just south of Albany NY. Read the report in the "The Independent" here. January 12, 2009.
LCS 1 GETS 4-MONTH OVERHAUL !
The USS "Freedom", (LCS 1), which was commissioned in October, is going into Colonna's Shipyard in Norfolk this week for a $37-million four-month overhaul, before undergoing Acceptance Trials. A commissioned ship that hasn't been through Acceptance Trials yet and already requires a four-month overhaul! What kind of nonsense is this? NAVSEA should be ashamed of itself. Oh and, by the way, the start of this overhaul has been delayed so that the ship can be at the Norfolk Naval Station pier during today's commissioning of CVN 77, a ship which is even less complete. At least LCS 1 can move under her own power. January 10, 2009.
SUB TO BE NAMED FOR SENATOR WARNER
The Navy has announced that the next "Virginia"-class submarine, SSN 785, will be named the USS "John Warner". Good idea. Read the announcement here. January 8, 2009.
WHO NEEDS LAUNCHWAYS?
Startling pictures from a Chinese shipyard. If you were the owner of this small pressurized gas carrier, would you be happy about this technique? January 7, 2009.
US SHIPPING MISSES PAYMENT.
Uh oh. The slippery slope gets steeper and slipperier. Read US Shipping's latest dose of bad news here. January 6, 2009.
CONRAD LAUNCHES GALVESTON FERRY
A great video of an unusual launch has been released by Alan C. McClure & Associates, the innovative Houston firm of naval architects. It shows Conrad Industries launching the new Galveston ferry upside down. That's right, upside down. See it here. January 6, 2009.
MANITOWOC-FINCANTIERI DEAL CLOSES
Manitowoc Corporation announced today that the sale of its Marine Group, which includes both Marinette Marine and Bay Shipbuilding, to Fincantieri closed on New Year's Eve, as planned. The price was $120 million, in cash. Read the announcement here. January 2, 2009.
US SHIPPING'S CFO QUITS
Embattled US Shipping announced yesterday that its CFO, Al Bergeron, has resigned "to pursue other opportunities". At the same time, the company announced that it is bending its own rules to allow Joe Gehegan and Jeff Miller to sell some of their stock. How nice. Read the 8-K here. January 1, 2009.
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