NAVY CLASSIFIES INSURV REPORTS
The Navy Times reports that INSURV reports are now classified. Read the report here. Well, we wouldn't want the taxpayers to know what's going on, would we? The decision was made by RADM Raymond Klein, the INSURV board president, without explanation. Here's an indescribably stupid action that the incoming SECNAV can reverse on his first day, coupled with a direction to RADM Klein that it's time to take early retirement. February 28, 2009.
IT'S OFFICIAL
Yes, my sources confirm that Bath and Ingalls have indeed started construction of the DDG 1000. Why all the secrecy, do you suppose? Launch is now scheduled for April 2012 and delivery for April 2013, but sail-away is not till June 2014. Remember those dates as time passes. February 27, 2009.
ALLISION IN PHILLY
The general cargo ship "Forestland", outbound with a load of scrap, lost either power or steering and rammed the lightering tank barge "OSG 400", which was moored at a pier in Sunoco's Eagle Point facility on Wednesday, causing significant damage to both vessels. Strangely, there is nothing about this either in the local papers or on the Coast Guard's web site. February 27, 2009.
JOHN GALLAGHER JOINS ATLANTIC MARINE
Atlantic Marine Holdings has hired John Gallagher, currently VP Operations at Derecktor Shipyard, to run its recently acquired Northeast yards, in Boston and Philadelphis. February 27, 2009.
NO MORE COLD WAR-ERA WEAPONS SYSTEMS
So what might this mean for naval shipbuilding? Well, I suspect that it means that the CVN program will be cut back and stretched out; ditto the SSN program; and there won't be any Future Surface Combatant, let alone a nuclear cruiser, only more of the current design of DDG. Now don't start yelling at me, I didn't say I agreed with this, only that this is what I expect to happen. What should happen, but won't, is a cut-back in all these large and ridiculously expensive amphibs. We haven't stormed a beach in over 50 years: the marines now arrive by plane and their equipment arrives courtesy of MSC. What are all these LPDs and LHAs for, exactly? February 25, 2009.
FERRY
"ISLANDER" SOLD ON E-BAY
The ferry "Islander", which was built by Maryland Shipbuilding - remember them? - in 1950 and served the Wood's Hole, Martha's Vineyard and Nantucket Steamship Authority for 57 years before being sold to the Governor's Island Preservation and Education Association in 2007 for $500,000, has now been sold on E-Bay for only $23,600. February 25, 2009.
ASHTON CARTER TO BE DOD ACQUISITION CHIEF
Defense News reports that the President is going to nominate Ashton Carter for the really tough job of being Deputy SecDef for Acquisition, replacing John Young. He seems to have a pretty impressive resume, although it's not very acquisition-oriented. But maybe that's a good thing. Read the story here. February 24, 2009.
DISAPPOINTING RESULTS FROM PHILLY
Aker Philadelphia reported a loss in the 4th Quarter. Read its release here. And they need more work, too. February 24, 2009.
GULFMARK REPORTS A RECORD QUARTER
Gulfmark has reported significantly increased sales and profits for the fourth quarter, a lot of it coming from its U.S. operation, formerly Rigdon Marine. Read its press release here. February 23, 2009.
ACL GETS EXTENDED CREDIT
American Commercial Lines has negotiated a two-year extension to its current credit line. Read its press release here. February 23, 2009.
TANKER AGROUND OFF GALVESTON
The partially loaded Aframax tanker "Yasa Golden Dardanelles" ran aground in the Galveston fairway on Friday. Read the Coast Guard's report here. February 23, 2009.
GD HAS A GOOD YEAR, BEATS NG YET AGAIN
General Dynamics filed its 10-K for 2008 yesterday, revealing another good year. Read the 10-K here. Total sales were $29.3 billion, 7.5% up on 2007, and they had a net profit of $2.5 billion, 18.7% up on 2007. The Shipbuilding segment had t
otal sales of $5.6 billion, 12.2% up on 2007, and an operating profit of $0.5 billion, 23.8% up on 2007. See our analysis of the financial statements of GD and its predecessor companies, going back to 1985, here. See below for a comparison of Northrop Grumman's and GD's results for 2008: remember that NG's column A is with the write-off of goodwill, column B without it. There's not much doubt which is the better company, is there? February 20, 2009.|
Item |
NG |
GD |
|
|
2008 A |
2008 B |
2008 |
|
|
000 USD |
000 USD |
000 USD |
|
|
Total Company |
|||
|
Net Sales |
33,887 |
33,887 |
29,300 |
|
Operating Margin |
(111) |
2,949 |
3,653 |
|
Operating Margin (%) |
(0.30%) |
8.70% |
12.50% |
|
Net Income |
(1,262) |
1,798 |
2,459 |
|
Net Income (%) |
(3.70%) |
5.30% |
8.40% |
|
Total Assets |
30,197 |
33,257 |
28,373 |
|
Stockholders' Equity |
11,920 |
14,980 |
10,053 |
|
Property, Plant and Equipment |
4,810 |
4,810 |
2,872 |
|
Depreciation |
761 |
761 |
301 |
|
Capital Expenditure |
681 |
681 |
490 |
|
Employees |
123,600 |
123,600 |
92,300 |
|
Net Sales/Employee |
274,200 |
274,200 |
317,400 |
|
Shipbuilding Unit |
|||
|
Net Sales |
6,145 |
6,145 |
5,556 |
|
Operating Margin |
(2,307) |
183 |
521 |
|
Operating Margin (%) |
(37.50%) |
3.00% |
9.40% |
|
Total Assets |
4,427 |
6,917 |
1,989 |
|
Depreciation |
193 |
193 |
60 |
|
Capital Expenditure |
218 |
218 |
126 |
|
Shipbuilding as a Proportion of the Total Company |
|||
|
Net Sales |
18.10% |
18.10% |
19.00% |
|
Operating Margin |
n/a |
6.20% |
14.30% |
|
Total Assets |
14.70% |
20.80% |
7.00% |
|
Depreciation |
25.40% |
25.40% |
20.00% |
|
Capital Expenditure |
32.00% |
32.00% |
25.70% |
JEFFERIES CUTS RATING ON OFFSHORE STOCKS
Tradewinds reports that the offshore services industry analyst at Jefferies, Judson Bailey, has cut his ratings of Gulfmark, Hornbeck and Trico, saying that he expects that "the OSV market will start to feel pressure in the coming months and likely deteriorate further over the second half of 2009 and into 2010." I don't think so, but who am I to disagree with a Wall Street analyst? They know everything, right? February 20, 2009.
AKER KEEPS THEM COMING
Aker Philly delivered its sixth product carrier, "Overseas Boston", yesterday. Read the announcement here. Note that total construction time, from the start of fabrication to delivery, was 46 weeks, a reduction of four weeks from its predecessor. Construction times for the first five ships were 67, 58, 53, 51 and 50 weeks. The interval between deliveries is consistently 21 weeks. Keep it up, guys. February 20, 2009.
DENNIS BRYANT MOVES ON
Many of you may, like me, have made it a daily habit to visit Holland & Knight's web site with the column of news of maritime government affairs that was written for them, with a good deal of wit, by one of the senior partners in their maritime law group, Dennis Bryant. Well, Dennis has moved on and has started his own maritime blog, which you can find at http://bryantsmaritimeblog.blogspot.com/ Bookmark it. I have no doubt but that it will be a great addition to the maritime news world. February 19, 2009.
WHAT'S ALL THE FUSS ABOUT THE PMA GROUP ?
It's interesting to see all the fuss in the media about how Paul Magliochetti's clients are allegedly getting special attention from the House Defense Appropriations Subcommittee. What on earth do people think that lobbyists do? Back in the murky mists of the Reagan era, when Paul worked for the Subcommittee, I was a shipyard lobbyist. There was a bunch of us in those days. We all knew that we had to be nice both to the staff and to the members of the subcommittee if we wanted to get our message across, and part of that process was rounding up campaign contributions. There are rules about how you do that and, obviously, you've got a problem if you break them. But there is no point soliciting funds to re-elect a member from, say, Kansas, who's got no interest in shipbuilding. Such naivety! February 19, 2009.
HORNBECK HAD GOOD YEAR IN 2008
Hornbeck reported sales of $432 million in 2008, 27% up from 2007. Net income was $117 million, a remarkable 27% of sales and 23% up from 2007. Read the report here. Note that the two MPSV conversions are STILL not done. Although the first is apparently almost done, delivery of the second has slipped yet again, this time to the fourth quarter of this year. Note also that Hornbeck is not expecting any decline in earnings or fleet utilization this year. February 19, 2009.
SEACOR REPORTS INCREASED REVENUES IN 2008
Seacor reported sales of $1,655 million in 2008, 22% up from 2007. Net income was $224 million, a healthy 13.5% of sales but slightly down from 2007. Read the report here. February 18, 2009.
US SHIPPING MISSES ANOTHER PAYMENT
US Shipping filed an 8-K today reporting that it has failed to make an interest payment of $6.5 million on its debt. Read it here. February 17, 2009.
MORE ON THE "PORT ROYAL" GROUNDING
Sources say that the "Port Royal" has lost her sonar dome and all the blades on one, if not both, propellers. The port shaft is bowed, the sonar and forward Aegis skid are flooded out. Apparently she was a long way east of where she was supposed to be, in an area where there are a lot of shoals. Tough on the crew, being hard aground in eight feet of water for over three days, with no food, no water and no A/C. February 17, 2009.
NASSCO WINS MLP CONTRACT
Rumor has it that the Navy has awarded the contract for "Systems Design Part 1 (SD1)" of the Mobile Landing Platform (MLP) Program to NASSCO. No surprise there, although it will be a surprise if the MLP ever gets built. It's a pretty good rumor, because it includes the contract number. I guess we'll see an announcement soon. February 17, 2009.
GD confirmed the contract, although there's still nothing from the Navy. Read GD's announcement here. February 19, 2009.
Read NG's press release here. February 16, 2009.
NG EXPLAINS WRITE-DOWNS
Defense News reports an explanation from NG on its recent write-down of $3 billion in goodwill. Read the story here. February 16, 2009.
TODD REPORTS ON 4TH QUARTER
Todd Shipyards earned net income of $2.6 million in the fourth quarter of CY-08, on sales of $33.5 million, (7.8%), compared to
net income of $2.9 million in the fourth quarter of CY-07, on sales of $39.1 million, (7.4%). February 15, 2009.DROP BACK 125 YEARS
It's hard to keep up with Google's wonderful program of digitizing the world's books: I am going to have to start doing a periodic broad-brush search, to see what's new. I have just discove
red, courtesy of an eagle-eyed reader, the Census Bureau's "Report on the Ship-building Industry of the United States", published in 1884. You can find it and download it here. It's wonderful. February 15, 2009.MARINETTE TO GO TO COURT OF CLAIMS
Marinette Marine has given the Justice Department notice of its intent to file a post-award protest of the FRC contract in the Court of Claims. Read the Coast Guard's statement here. February 14, 2009.
STIMULUS INCLUDES $100MM FOR SMALL SHIPYARDS
Thanks to Senator Patty Murray, the stimulus bill includes $100 million for improvements to small shipyards. February 14, 2009.
CVN 77 ON SEA TRIALS
The recently commissioned carrier USS George H. W. Bush, (CVN 77), left the shipyard yesterday for her sea trials. Read the story in the Virginian-Pilot here. February 14, 2009.
HAS FAB STARTED ON THE ZUMWALTS?
An AP report says that the two shipyards "held private ceremonies this week signaling the start of construction". But no fanfare from the yards. Read the AP report here. February 13, 2009.
US SHIPPING GETS UNTIL THE 20TH
US Shipping announced today that the forbearance agreement with its lenders, which had already been extended once, has been extended again, this time through next Friday, February 20th. See their 8-K here. February 12, 2009.
GEIGER TO RUN BIW
General Dynamics has appointed Jeff Geiger as President of BIW, replacing Dugan Shipway, who is retiring. Read the story on Mainebiz here. Geiger, although a mere boy of 47, is a Michigan naval architect and a highly competent and experienced shipbuilder. He's an excellent choice for the job. Let's hope they don't run out of work while he's in charge.
Click here to see a table of BIW's DDG construction, which shows how they are slowing down and running out of work. (The figures in red are my estimates.) Note also that BIW's workforce hit a peak of close to 10,500 in 1990 but has been declining steadily ever since. Not only do they need more DDGs, soon, but they need a second product line. February 12/13, 2009.CONNAUGHTON TO ABS
ABS has hired ex-Maritime Administrator Sean Connaughton as Corporate VP, Government Affairs. Read the announcement here. Good move. February 12, 2009.
HUMOROUS PRESS RELEASE FROM HORIZON
Horizon Lines recently dry-docked one of its floating museum pieces, the 35-year-old "Horizon Producer", in that museum of a shipyard once known as the Brooklyn Navy Yard. This was apparently cause for a press release. Read it here. This is hilarious stuff. I particularly like "Containerships represent the newest technology afloat" and "Servicing an American ship in an American shipyard has always been our goal". Don't these people have any obligation to tell the truth in their press releases? February 10, 2009.
NG TAKES HUGE HIT FROM NGSB
Northrop Grumman filed its 10-K for 2008 yesterday, revealing the disaster that is its shipbuilding division. Read the 10-K here. Total sales were close to $34 billion, slightly up on 2007, but they had a net loss of $1.2 billion, compared to a net profit of $1.8 billion in 2007. Guess where the loss came from. The Shipbuilding segment had t
otal sales of over $6 billion, slightly up on 2007, but they had an operating loss of $2.3 billion, compared to a profit of about $0.5 billion in 2007. Of course, $2.5 billion of this loss came from writing off impaired goodwill, which basically means that NG is now recognizing that they paid $2.5 billion too much for the assets in their shipbuilding division. Without this write-off, NGSB's operating profit would have been about $180 million, or about 3% of sales. For your further amazement, see our analysis of the financial statements of NGSB and its predecessor companies going back to 1985: find it here. February 10, 2009.COAST GUARD RESCUES 134 STUPID PEOPLE
Sometimes we take the Coast Guard for granted: they are forever being asked to rescue people from their own stupidity. This past weekend, together with a bunch of other taxpayer-funded organizations, they had to rescue 134 people from an ice floe in Lake Erie. Really. Probably all Republicans. See the video here. February 9, 2009.
AUSTAL UNVEILS THE JHSV
See some details of the new boat on Austal's web site, here. February 9, 2009.
CRUISER AGROUND IN HAWAII
The cruiser USS Port Royal, (CG 73), ran aground near Honolulu Airport on Thursday and appears to be well and truly stuck. Read the story in the Honolulu Advertiser here. February 9, 2009.
SUCCESSFUL TRIALS FOR LHD 8
Sources say that the much delayed and over-budget LHD 8 had a very successful Builders Trial this past week and is looking good. Among other things, she comfortably exceeded her specified speed. It seems that NGSB has had all its best people on this ship for the past year, maybe because the yard, not the taxpayer, is paying for the over-run, a rare experience these days. Acceptance Trials next month, delivery in June. February 8, 2009.
IGNORANT WALL STREETERS
A financial analyst called Lee Eugene Munson thinks Horizon Lines is a good buy. Read his column here. He thinks that Horizon's stock price was dragged down by "association with other bulk shippers": Horizon isn't a bulk shipping company. He thinks we don't build cargo ships in the U.S.: all Horizon's competitors have recently built new ships. He overlooks the age and decrepitude of Horizon's fleet. He thinks that Horizon "plays a role in the market that others are not available to fill": is he kidding? He calls shipping companies "shippers". If Wall Streeters can be so terminally ignorant about our industry, how can we believe what they say about any industry? February 6, 2009.
HORIZON REPORTS
Struggling Horizon Lines filed its 10-K yesterday, reporting net income of $3 million in 2008, on revenues of $1,304 million. Oh, wow, that's, let's see, that's 0.25%. Terrific. Read the filing here. Note that the full 10-K is under the MD&A tab on this page, while the Full Filing tab just gives you the MD&A: such efficiency. There's so much to comment on here, but read it for yourselves. The bit I like best is:
We May Face Significant Costs As the Vessels Currently in Our Fleet Age. We believe that each of the vessels we currently operate has an estimated useful life of approximately 45 years from the year it was built. As of the date hereof, the average age of our active vessels is approximately 22 years and the average age of our Jones Act vessels is approximately 32 years. We expect to incur increasing costs to operate and maintain the vessels in good condition as they age. Eventually, these vessels will need to be replaced. We may not be able to replace all of our existing vessels with new vessels based on uncertainties related to financing, timing and shipyard availability.
They've got three ships that are over 40 and another six that are over 35, and they are so highly leveraged they couldn't finance a sailboat right now. February 6, 2009.
TAYLOR ON SHIPBUILDING
U.S. Rep. Gene Taylor, (D-MS), Chairman of the Seapower Subcommittee and the only member of the Congress who can design a patrol boat on the back of an envelope, issued a statement on naval shipbuilding yesterday. Read it here. I like "The shipbuilding plan needs less meddling, not more." He's not meddling, of course. To be fair, (for a change), he's got some good points, but the underlying message seems to be that everything the Navy needs should be built right here in Pascagoula, Mississippi. February 6, 2009.
CVN 77'S SEA TRIALS DELAYED
The newly commissioned carrier USS "George H. W. Bush", (CVN 77), is even further from being "alive" than we had thought. The Newport News "Daily Press" reports today that Builders Trials have been postponed a month. Read the report here. So that means that delivery is unlikely to be before May, at the earliest. February 6, 2009.
STEEL-ELECTRICS MAY NOT BE SCRAPPED
WSF's four 80-year-old "Steel-Electric" ferries, which the state agency thought it had sold for scrap back in September, have now been tentatively sold for $650,000 to a Tacoma real estate company called Managing Green, which may be planning to operate them in some way, i.e., not necessarily as ferries. Read the Seattle Post's story here. February 4, 2009.
WASHINGTON STATE FERRIES HAS A NEW PLAN
Washington's permanently confused Ferries Division has submitted a new long-range plan to the state legislature. Find it here. The more bullish of its two scenarios provides for the acquisition of three "Island Home"-class vessels and seven 144-car vessels, plus one small vessel, over the next 18 years. February 4, 2009.
NAVY STARTS OUT ON YET ANOTHER DESTROYER
In a memo last week entitled "DDG 1000: The Way Ahead", USD John Young talks about yet another wholly new design of destroyer, dubbed the FSC, for Future Surface Combatant. Oh god, please, no, no, no. Read Chris Cavas' excellent article about this in Defense News here. Read also Galrahn's informative and perceptive post on the subject here. February 3, 2009.
OWNERS OF S.S. "INDEPENDENCE" FINED
Global Shipping LLC and Global Marketing Systems Inc. have been fined a total of $518,500 for exporting the former liner "Independence" without a license. Read the EPA's report here. Originally reported to be headed for Alang, the fine old ship is now said to be in the Arabian Gulf, being converted to a barracks ship for construction workers, but nobody seems to know where. If any of my loyal readers in the region have seen her, please report in. February 3, 2009.
US SHIPPING GETS TEN MORE DAYS
The appropriately named forbearance agreement between US Shipping
and its bankers, which was to have expired on Saturday night, has been extended by ten days. Read the 8-K here. Will it be enough time for US Shipping to pull a rabbit out of its hat? February 2, 2009.HORIZON WOWS WALL STREET
Despite lousy results for the fourth quarter and prognostications of a dismal 2009 from Chuck Raymond, Horizon's stock rose last week. Read their press release here. No shortage of nitwits on Wall Street. February 2, 2009.
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