Maritime Memos                                                                                June 2011


AUSTAL GETS TWO MORE JHSVS

The Navy has exercised options on its contract with Austal USA for the construction of JHSVs 6 and 7.  The two together are valued at $312.9 million, with delivery by June 2014.  Read the DefenseLink announcement here June 30, 2011.

NASSCO GETS LLTM MONEY FOR MLP 3

The Navy has exercised an option on its contract with NASSCO for $60 million in LLTM for MLP 3.  Read the DefenseLink announcement here June 30, 2011.

MICHIGAN GETS RESEARCH MONEY

The  Office of Naval Research has awarded a contract worth almost $15 million to the University of Michigan for "the environment and ship motion forecasting program which seeks to provide sea-based ship and cargo system operators with seaway environmental forecasting in order to predict ship motions and determine windows of opportunity for inter-intra-ship material and personnel environment."  I assume that there's someone up there in Ann Arbor who knows what this means: to me it's gibberish, but that's often what you get from PhDs.  Read the DefenseLink announcement here June 30, 2011.

BOEING BAILS FROM MARINETTE SSC TEAM

A curious development at Marinette Marine.  Their team for the Navy's Ship-to-Shore Connector (SSC) program no longer includes Boeing, who appear to have been replaced by the British company Griffon Hoverwork, successor to the legendary British Hovercraft.  Read the original teaming announcement here and visit the current team's web site here.  So, who ticked off whom?  Well, the rumor mill says that Lockheed Martin, Marinette's 20% stockholder, ticked off Boeing.  June 29, 2011.

FMT SELLS BLACK-OIL FLEET

Fast-expanding Florida Marine Transporters has sold its black-oil fleet to Genesis Energy, for $141 million.  Read the announcement here.  This apparently involves 30 barges and 14 towboats, a relatively small proportion of the total FMT fleet of 250+ barges and 80+ towboats.  June 28, 2011.

WAIVER DROPPED

No sooner had I posted a complaint about the Jones Act waiver for SPR oil movements than the Administration dropped it.  Not my doing, however: the thanks go to Secretary LaHood and Administrator Matsuda.  Now they need to find out whose stupid idea that was and take him out behind the woodshed for a good talking-to.  June 26, 2011.

CBO: NAVY'S SHIPBUILDING PLANS DON'T ADD UP

The Congressional Budget Office has released its latest review of the Navy's long-term shipbuilding plans and, no surprise, has concluded that they don't make sense.  Key findings:

  • CBO's estimate of the costs for new-ship construction in the 2012 shipbuilding plan is about 16 percent higher than the Navy's estimate overall.  CBO's estimates are 7 percent higher than the Navy's for the first 10 years of the plan, 10 percent higher for the following decade, and 31 percent higher for the final 10 years of the plan.
  • If the Navy receives the same amount of funding for ship construction in the next 30 years as it has over the past three decades, it will not be able to afford all of the purchases in the 2012 plan.  CBO's estimate of the full cost of the Navy's 2012 shipbuilding plan is about 27 percent above the average funding of almost $16 billion per year (in 2011 dollars) that the Navy has received over the past three decades.

Read the report hereJune 25, 2011.

STOP THE  JONES ACT WAIVER!

The plan to release 30 million barrels from the SPR includes a proposed waiver of the Jones Act.  This is ridiculous.  Wake up, Shipbuilding Caucus, and put a stop to it.  June 25, 2011.

THEY GOT BACK TOGETHER!

Who would have thought it?  After 16 years in the wilderness, four of the "big six" shipyards have rejoined the Shipbuilders Council of America, (SCA), the exceptions being Avondale, for obvious reasons, and Electric Boat, for not so obvious reasons.  Read the announcement here.  Excellent news.  This can only be good for the industry, greatly strengthening its voice in Washington.  June 24, 2011.

The MV Hazel McIsaac, which now runs from Shoal Arm to Little Bay Islands, is one of two ferries completed by Kiewit in 2011. HIDDEN AGENDA BEHIND MARYSTOWN LAY-OFFS?

There is understandable uproar in Newfoundland as Kiewit lays off almost the entire workforce at its Marystown shipyard.  The yard has just delivered the second of two new ferries - pictured on the right - and has nothing in the pipeline.  This follows the company's withdrawal in April from the competition for the federal government's $35-billion National Shipbuilding Procurement Program, on the totally ludicrous grounds that they didn't have the resources needed to put together a proposal.  Meanwhile, the provincial government recently contracted for the design of six more new ferries, to be built in Newfoundland, with Marystown the obvious favorite for the contract.  It seems clear that Kiewit is not interested in shipbuilding or in the Marystown shipyard and, being a very large and privately held company, doesn't care about its public image either.  Let's face it, it acquired this business back in 2000 to get its Cow Head offshore fabrication facility, not its shipbuilding and repair facility.  The company's current unbusinesslike non-performance seems to be deliberate.  Is it designed to bully the government into stepping in in some way?  Well, this yard certainly needs a new owner.  And soon.  But who?  June 23, 2011.

VTHM PLANS EXPANSION

VT Halter Marine has applied to the State of Mississippi for the permits needed to add a very large and very unusual floating dry-dock at its Pascagoula shipyard.  The dock is L-shaped and articulated.  Overall, it is 715 feet by 389 feet, but is designed to operate both as a 389-by-389 dock for drill rigs and as a 715-by-213 dock for ships up to the new definition of Panamax.  It has been designed by Heger Dry Dock, Inc., who are absolutely #1 at dry docks, so we can take it for granted that this concept will work.  The new dock will be located alongside the unused stretch at the south end of VTHM's yard, abutting the north end of Signal's yard.  The project cost is said to be $115 million, including civil works, so the dock itself is clearly going to be built in China, or maybe Vietnam, and will not, therefore, be a Jones Act dock.  This is a very intriguing project.  When VT bought Halter ten years ago, they were adamant that they were going to buy a floater and get into the repair business, but nothing happened.  Then they tried to buy Bender but lost out to Signal.  Now they propose to take on Signal with new capacity, in a yard with limited deep-water waterfront space, in a port with physical limitations for drill rigs and with very little commercial traffic.  I dunno about this.  I wish them well, because they are good people, but I dunno.  Is the market that strong?  Why not buy an ongoing operation, such as Gulf Copper, or Conrad?  (I am not suggesting that these companies are for sale, just using them as examples.)  This looks like the high-risk approach to me.  Midsummer Day, 2011.

HAWAII SUPERFERRIES TO BE SOLD AT AUCTION

MARAD has put a notice in the Federal Register to the effect that the two Hawaii SuperFerries are now up for sale to the highest bidder.  Apparently the Navy doesn't want them.  Read the announcement here  Bids are due in 30 days.  June 20, 2011.

COAST GUARD ORDERS FOUR TEST CUTTER BOATS

The Coast Guard has awarded four contracts for a test boat for the new Over-the-Horizon Cutter Boat (CB-OTH), of which more than 100 are planned.  The four contractors are MetalCraft Marine USA, William Munson Company, SAFE Boats International and Silver Ships.  Read the announcement here June 20, 2011.

INGALLS FINALLY GETS CONTRACT FOR DDG 113

It took long enough.  The Navy has finally exercised its option on its contract with Ingalls Shipbuilding for the construction of DDG 113, a ship funded in FY10.   Read the DefenseLink announcement here.  No price is given because they still haven't awarded the other two FY10 ships, DDGs 114 and 115.  June 16, 2011.

DDG 51S FOR SAUDI NAVY?

Defense News reports that the Saudis are considering buying two DDG 51s as Ballistic Missile Defense (BMD) ships.  This would be in addition to as many as ten LCSs, of a design to be determined.  Read the story here.  Excellent news.  Who will win?  Bath or Ingalls?  Austal or Marinette?  June 14, 2011.

DOWNHILL FOR MARINETTE

What did I tell you?  Fincantieri Marine Group has appointed a new President at Marinette Marine and, guess what, he's a retired admiral who comes from Lockheed Martin.  Not only that, but Chuck Goddard was previously PEO Ships, retiring as a one-star, his last job being Vice Commander of NAVSEA.  Read the announcement here and the accompanying resume here The latter is remarkably cryptic and uninformative: no mention, for example, of his rank.  Certainly no mention of the circumstances in which he was relieved of his duties and retired early without his second star.  Read the story in Defense News here.  But the key thing is, of course, that he has no industrial or business experience of any kind whatever - working in a naval shipyard doesn't count - and is, therefore, totally unqualified to run a ship construction company.  June 13/14, 2011.

IS THE JONES ACT IMPORTANT OR NOT?

In light of the maritime industry's recent pressure on Washington to support the Jones Act and to recognize all the positive impact that the Jones Act has on the U.S. economy, it comes as something of a surprise to hear that Austal USA is apparently trying to evade its responsibility to use a fully qualified Jones Act dry dock operated by a fully qualified Jones Act operator to launch its LCSs and JHSVs.  (A Jones Act dock is required because a launch that involves a transfer from dockside to deep water is long-established to be a Jones Act movement.)  This is nothing new or controversial: we've been round this track many times before.  And no waiver is required: there is a fully qualified dock right there in Mobile - it was used by Austal to launch the Hawaii Superferries and the first LCS.  So come on, guys, you want to be part of the U.S. industry, do what's right.  June 13, 2011.

SWIFTSHIPS DELIVERS TWO MORE

The fourth and fifth 35-meter patrol boats for Iraq are on their way, and Swiftships continues work on the other seven, despite their shipyard in Morgan City being under water.  June 9, 2011.

POSTAL SERVICE HONORS U.S. SHIPBUILDING, INDIRECTLY

On July 28, the Postal Service will issue a set of four stamps honoring the U.S. Merchant Marine.  Big shindig at Kings Point.  Read the story in Marine Log here.  This is great, but are they not simultaneously honoring the U.S. shipbuilding industry?  Or don't we matter?  At least these will be "forever" stamps.  June 8, 2011.

MORE ON THE MANAGEMENT CHANGE AT MARINETTE

The company has still said nothing - "the company does not typically comment on personnel matters" - what BS - but their HR guy has responded to the news being reported on local TV.   Read the story in the Green Bay Press-Gazette here.  Fincantieri has apparently "decided to go in a different direction regarding company leadership".  What does that mean?  Probably that they are going to exchange one of the best shipyard CEOs in the country for an inexperienced incompetent who will brown-nose the Navy.  Mainette's new direction?  Downhill, I'm afraid.  June 3, 2011.

AKER GETS CONSTRUCTION FINANCING

Caterpillar Financial Services has agreed to provide limited construction financing, to the tune of about $40 million per ship, for the two spec ships that the yard is building.  Read the announcement here.  So where's the other $80+ million per ship to come from?  June 1, 2011.

ANOTHER FALSE ECONOMY

Defense News reports that the Navy now intends to keep the two 40-year-old command ships, Blue Ridge, (LCC 19), and Mount Whitney, (LCC 20), in active service through 2039, almost 70 years.  Can you believe it?  Read the story here June 1, 2011.

NEXT CARRIER NAMED

The Navy has announced that the second of the Gerald R Ford class of carriers will be named the John F. Kennedy.  Read the announcement here June 1, 2011.