Entrepreneurial spirit thrives on Lake Superior

You can’t really be in the commercial towing business on the Great Lakes without being heavily into ice breaking. While both the Canadian and U.S. coast guards clear ice in the main shipping lanes, roughly from Christmas until April, it largely falls to the tugs of Great Lakes Towing and other local companies to break up ice and clear out passages in the vicinity of private commercial docks and other non-federal waterways.

Tug companies on the lakes break ice as a service to their clients. They are paid for ice breaking by the hour or by the job, just as they are paid for regular ship-assist services. In addition, tug companies in many U.S. ports where ice can be a problem to navigation, often lend a hand with a little ice breaking as a public service or for their own vessel movements. In theory, all it takes is a stout steel hull and a captain who won’t go bashing in the bow sections or damaging rudders or propellers.

Great Lakes Towing (GLT), based in Cleveland but with operations all over the lakes, reports that it typically performs hundreds of ice breaking assists in many of the 44 ports that it serves. Most of the assists take place at the beginning or end of each season, as shippers deal with ice to complete their final voyages, and then to get going again in spring.

This is especially true in Duluth, Minn., located on the far western shore of Lake Superior, northernmost of the Great Lakes. Beginning as recently as mid-March, the four GLT tugs that had spent the past couple of months snugged down at their dock in Duluth were being brought back to life from winter’s deep freeze. They were sent out into the harbor in an effort to break up and disperse the 2 feet of ice that covered just about all the protected water that one could see. This same routine has signaled the start of the shipping season for as long as anyone can remember.

But this year there was something new in Duluth. With the first ship movements in March, not only were the familiar “G†tugs of Great Lakes Towing out breaking ice, but there were also two oddly colored, traditional-looking tugs belonging to a new company, Heritage Marine, breaking ice and moving ships around.

In a competitive challenge to GLT, a private company with better than 90 percent market share in the region, Michael Ojard, a local entrepreneur and resident of nearby Knife River, has been putting together this new company for a couple of years. This season Ojard, backed by family investment and participation, has come out with his second tug, reaching the critical mass for marketable ship assist work.

The presence of Heritage Marine on the Duluth waterfront became especially noticeable in January, when Ojard’s tug, Edward H., broke ice and handled the undocking of the 858-foot self-unloading bulker Roger Blough when it was the last ship departing at the end of the 2009 season, loaded with iron ore. As that scene unfolded, the four GLT tugs remained tied up.

Roger Blough, built in 1972 and operated by Key Lakes Inc., finished loading in Duluth on Jan. 10 and was headed to unload at a steel mill in Gary, Ind., at the southern tip of Lake Michigan. This particular ship, among other vessels, had turned in a low-level performance during the 2009 season. The ship was kept tied to its dock until the end of October because of the low demand for transport on the lakes. Another laker, American Republic, did not leave its dock until the end of November, according to its operator. In all, seven ships operated by members of the Lake Carriers’ Association did not leave their docks in 2009, according to the association. It was not a good year for the shipping business on the Great Lakes, and that, of course also made it a down year for the tug business.

At the end of the season, GLT provided a glimpse of the state of its industry. While the company officially maintains a fleet of 50 tugs to service roughly 44 ports on the lakes, this past year the company had only 32 tugs in service. That number is the absolute minimum required to service those ports, said Ron Rasmus, company president. In 2008, the company had an average of 37 tugs in service, according to Rasmus.

“We did not break out our entire fleet by a substantial amount this past year,†said Rasmus. “In our business, we don’t have the luxury of not breaking out our vessels because business is down. We have to break out that minimum number and then wait for a ship to come in.â€

The company reported decreases in numbers of tows and resulting revenue in every port where it operates on the lakes. However, diminished numbers related to harbor towing were offset by profitable performance by its project towing and shipyard divisions, including construction and sale of a healthy number of truckable barges and workboats, Rasmus said.

It is interesting that right there in the remote port of Duluth, one can observe the effects of world and national economic conditions, combined with the machinations of local entrepreneurs and established business owners all coming into play through the efforts of a half dozen small tugboats.

Ojard and Rasmus may be working against each other in the local business arena, but both are solidly optimistic about a recovering economy and about the future prospects of Great Lakes ports. One company, the smaller family-operated one, can survive the bleakest of times because it has no formal debt and minimal overhead. The other, with operations in 44 ports across the lakes, has relied on the strength of other business segments while its tugs spend a bit more time tied to docks than might be desirable.

“Our company has been here now for 111 years and we’ve seen a lot of business cycles,†said Rasmus. “Things may not be able to come back completely this year, but I am optimistic about the following season. Maybe this year will be a little bit better, but by 2011 things will be back to something similar to what we have known in the recent past.â€

That kind of enthusiasm is equaled, if not bettered by Ojard. The 62-year-old self-described man of many skills is an infectious entrepreneur and is passionate about business in general and, in particular, about the Port of Duluth and the tugboat business.

While total waterborne commerce for the Port of Duluth was down by one-third or more in 2009, Ojard foresees economic recovery just around the corner. While the number of ship calls in Duluth declined by about 35 percent to 717 in 2009, and shipments of iron ore were actually down 57 percent, Ojard was working six days a week all winter getting his second tug ready for the ice breaking season.

“People are saying this is a dying port, but I don’t believe that at all,†said Ojard. “Here we’ve got this great natural harbor at the head of the lakes, with excellent rail service, a good work force, a great work ethic and a beautiful scenic harbor that is really underused. In the future, people are going to be looking around the region and they are going to be asking themselves, ‘Why don’t we ship more out of Duluth?’â€

Principal cargoes shipped out of Duluth currently are taconite pellets, coal and grain.

Ojard sees an opportunity for his company to grow with good customer service and with attractive rates for towing and ice breaking. “Right now it costs as much to make dock in Duluth for a foreign vessel as it costs for the entire trip across the Great Lakes because the towing and associated costs are so high,†he said. “I mean there are very few foreign vessels that get out of here for less than $25,000. To me, that seems excessive.â€

On a broader scale, Ojard said he sees a growing market for barge work in his region, including transport of different types of iron ore and scrap metal to the steel mill in Sault Ste. Marie, Mich., across the full length of Lake Superior. He said he has his eye out for a suitable barge and would like to assemble an articulated tug-barge combination for that possible future sector of his business.

But this past winter he was focused on improvement projects for his tugs and preparations for the 2010 harbor towing season, which includes the all-important work of ice breaking.

His first tug, the one that was out working in assistance of Roger Blough in mid-January, is a retired U.S. Army Corps of Engineers tug with an eight-cylinder turbocharged Enterprise diesel with direct-drive propulsion. It has been renamed Edward H. (ex-Forney), after Ojard’s father who spent much of his career as a marine engineer.

The 66-year-old tug is rated at 1,100 hp at 500 rpm on the engine, but it can be run faster with greater output. Ojard, working with his oldest son, Pat, 43, and local fabricators, has made the vessel more workable by (among other improvements) installing a double Airflex clutch assembly, new flywheel and shaft brake in the propeller shaft which allows him to take the engine “out of gear†and stop the shaft quickly before having to restart the engine in reverse mode. Because the engine can now be run without turning the shaft, the drive train technically is no longer direct-drive, according to its owners.

“Now, especially with our computer controls, we can go from making 200 turns ahead to 200 turns astern in less than three seconds,†Ojard said. “You can hardly do that with a regular reduction/reversing gear.â€

(Direct reversing engines operate without reduction gear or reversing gearbox, requiring the operator to stop the engine and manually adjust the engine to reverse or forward, before restarting it in the desired mode. This rather cumbersome propulsion system went out of fashion with the introduction of reversing gears and reduction gearboxes.)

Ojard, who has a daughter, three sons and 15 grandchildren, owned a transmission shop and various other automotive enterprises before selling his businesses about six years ago. “After selling it all, I had a feeling that I wanted to try my hand in the tugboat business,†Ojard said. He looks forward to the days when one or more of his children or grandchildren will join him in the business — or take it over, depending on the timing.

While Ojard is the actual owner of the business, he stresses that most aspects of its startup and development, including financing, have been a family endeavor.

Because his Coast Guard license is only for 100 tons, he uses several local skippers as captains, while he works as engineer and takes care of the business end. Ojard’s son, Pat, is a former Coast Guard engineer now working full-time as an engineer for Canadian National Railway and also working regularly with his father in the tugboat enterprise.

“Dad and I have extensive working knowledge of diesel engines and accessory systems, so if we can make it better, we just do it,†said Pat Ojard. “For example, we converted one of our ballast tanks to use for cooling water for the engine(s) while operating in ice. We don’t have to clean strainers in the ice and we can run several hours before any metering or exchanging of the cooling water is required.â€

Heritage Marine acquired a second tug in 2009, this one named Nels J. (ex-Ares) with a single 16-cylinder EMD-645 diesel and a Falk reduction/reversing gear. The 103-foot tug, built in 1958, was delivered to the Great Lakes from the Gulf Coast in October 2009. The Ojards were hard at work getting the boat ready all winter long.

“We were working on the Nels J. six days a week in order to get her ready,†said Michael Ojard. On Nels J., he said, the father and son team, along with others involved with the company, converted a 650-gallon lube oil tank to a diesel day tank, installed a new bilge pump and fire pump, deck plating in the engine room and a new engine oil primer system. They re-plumbed the water system for two generators, installed a new toilet and grey water tank and completed a long list of other improvements.

When the 768-foot ore boat John G. Munson was ready to sail from its berth in Duluth in late-March, both Edward H. and Nels J. were out there working to send the ship on its way. Because Duluth’s famous lift bridge at its main entrance was closed for maintenance until April, the ship, along with attending tugs, had to break ice and travel more than four miles south along an inshore passage to gain access to Lake Superior through what is called the Superior entry. That was, presumably, a good way to begin the season for the Ojards and others at Heritage Marine.

By Professional Mariner Staff