Great Lakes Towing seeks opportunity in adversity

When Great Lakes Towing (GLT) was founded in 1899 by some of the most storied names in American business, the company was poised to, and did, become the largest tug assist company on the Great Lakes. The opening of the St. Lawrence Seaway in 1959 extended that dominance.

From left to right, California, one of the original tugs in the Great Lakes fleet; Handy-One, the first of the HandySize tugs; Karen Andrie, in the shipyard for repowering. (Brian Gauvin photos)

Today GLT, as a subsidiary of The Great Lakes Group (GLG), maintains that position, floating a fleet of 40 tugs working in 30 ports. But over the years, in response to a decline in shipping within the lakes system, GLG has diversified by adding other subsidiaries, Great Lakes Shipyard, Tugz International and Puerto Rico Towing and Barge Co., and two recent additions, Wind Logistics Inc. and Carbon Fiber Marine Products Inc.

The company’s vice president of engineering, Joe Starck Jr., pointed out on a tour of the Cleveland headquarters that the company’s shipyard is working within a closed system. “There are only so many ships and boats on the Great Lakes. For the shipyard, we can count the boats and assess the future.”

With the auto industry in decline and the domestic steel industry becoming a distant memory, the movement of ore for steel, steel for vehicles and vehicles to market could portend a limited future for ship-assist work on the lakes unless other cargos develop.

Other ventures — most notably the construction and maintenance of wind farms and development of carbon fiber products, hence the two new additions to GLG’s roster of companies — have a bright future in the eyes of GLG President Ronald Rasmus. “I have a vision,” he said. “I want to expand into the offshore wind business. I’ve done a lot of research and the state of Ohio is going to invest in windmills on Lake Erie.”

Rasmus joined the company in 1983 and has presided over many diversification projects and changes in the company since then, including moving the company headquarters from the venerable Terminal Tower in downtown Cleveland to new offices and facilities on the Old River Channel, where the Cuyahoga River enters Lake Erie.

Phase one of the new development consisted of building the new offices and a fabrication building for constructing the HandySize class of tugs that the shipyard is producing on spec. “We have grandiose plans,” said Rasmus. “We’ve put $14 million into those plans.” Phase two includes developing a new slip, building an additional 45,000 square feet of fabrication space and installing a 700-ton marine travel lift, all at an estimated cost of an additional $17 million.

“I go through the day pretending that I am riding a mechanical bull and that somehow I’m going to hold on. I’m not as overly confident of the future as I once was. I spent 10 years working in the World Trade Center. I never thought of the possibility that they would fall down. We’ve now been in business for 110 years and in the short term I know we will be here at least through the 111th.”

Rasmus contends that if the company is going to survive, it must embark on new ventures, diversify and find new niches. When he expounds on windmills, he’s not jousting. He sees a twofer opportunity for GLG in the wind market, one being a new specialized deployment vessel, built at their shipyard, to be used for erecting turbines, and another for maintaining the offshore farm using the company’s HandySize tugs.

“We can do that job with the existing HandySize tug in any weather. It can be done as an adjunct to our tugboat business. The incremental cost would be the tug’s availability for assist work. I see this as a very proximate project and I’ve targeted this for a part of our expansion.”

Great Lakes President Ronald Rasmus.

The tugs have an ice-strengthened hull and are designed to utilize either z-drive or conventional screws in nozzles with twin rudders for propulsion. They measure in at less than 99,000 grt and are less than 79 feet long, qualifying the vessels to run with only one licensed operator, and although they have accommodations for six, a crew of only two is needed for harbor work. The boat meets load-line specifications, but is not required to, and is ABS certified. “It is designed to have the lowest possible operation cost,” said Rasmus. “Every single decision was made on that basis.”

The company has built two of the HandySize tugs so far, one of which, Handy-One, is kept in the home fleet. The other was sold to the Empresa Nacional Portuaria, an agency affiliated with Honduran ports. A third HandySize hull is nearing completion in the new fabrication shed. Despite the economy and a stagnant new-build market, she is slated for completion this summer and for delivery to a prospective buyer in Latin America. One benefit of that decision is to keep the company’s trained shipyard workers working in the shadow of a deep recession.

“I’m looking for a new and better way to use a tug-type vessel and then spreading the cost of maintaining it over its different uses,” said Rasmus. “For the wind-farm maintenance, on the lakes, you need an icebreaker, and that same tug can be used for harbor assists.”

Rasmus is also developing designs for a tugboat that can be used as a fireboat. “A city would not have to pay the entire operating cost because of the vessel’s multipurpose use as a fireboat and as an assist tug. It would allow the city to share those costs with us. It’s a cost-effective way of performing services that are not available anymore because of the high cost of maintaining the vessels. I’m pitching these tugboats as fireboats, too. So often we are locked into traditional thought, especially in the marine business.”

The HandySize tugboat is designed by Jensen Maritime Consultants. Jensen also designed the TugZ class of tractor tug that GLS Tugz had built in the late 1990s. But that was through the good times and Rasmus is not so confident of the current newbuild market. Hence the outpouring of multiuse ideas for the design, which has distinct advantages for ice-bound and/or tight harbors, agencies on a budget and the like. The HandySize tugs cost considerably less to build than the big workhorses, so for a niche operator who doesn’t need more than 3,200 hp to feed and care for in order to assist a ship or tow a barge, they are attractive.

Harry Brautigam, a HandySize tug Great Lakes built for Empresa Nacional Portuaria, an agency affiliated with Honduran ports. At less than 99,000 grt and 79 feet in length, the tugs can run with only one licensed operator.

“We’re overpowering the fleet. It’s a sign of the times.” Rasmus contends that most towing doesn’t require the amount of bollard pull being engineered into the big tugs currently being built. “Most towing doesn’t require that amount of bollard pull. Our customers aren’t demanding 5- or 6,000 horsepower and technically they don’t need it. The fact is, we tow everything on the Great Lakes with 2,000 hp. We have a better accident and on-time record than most companies in the country.”

The company’s fleet of classic green and red conventional tugs with the big G on the bright red stack conjures up the image of the “Little Tug That Could.” They were all built between 1903 and the 1930s, and rebuilt and repowered in the 1950s and ’60s. They are all single screw, and all 2,000 hp with 30,000 to 60,000 pounds of bollard pull. “There is a place for lower powered equipment, lower cost, lower fuel consumption, and better treatment of the environment,” said Rasmus.

The company has fabricated another successful niche, a pin barge system that is truckable and can be arranged in many configurations. “The pin system allows for the barges to be trucked in sections and assembled on site at their destination,” said Starck. “The only limitation is what you can fit on a truck.”

To stand alone or to complement the truckable barges, GLS has developed a truckable pushboat that fits on a flatbed. In keeping with the company’s focus on producing cost-effective products, the boats are under 26 feet, not only to fit on a trailer, but designed so that they can be operated without a licensed captain.

“Many shipyards can turn out a box,” added Rasmus. “I don’t think any barge we build is standard. It’s for a niche business – the buyer’s business. And the buyer is willing to pay more if we can solve his problem. We have barges that have gone out to Diego Garcia and other naval bases for use as work platforms for torpedoes on submarines. We can truck the barges and we can truck the boats, and if necessary we have placed them on rail and on ships for delivery to their final destination.”

All of which brings Rasmus to carbon fiber, a substance he is researching to determine if it is applicable as the main building material in the pin barges. “It’s an experimental niche with the barges. By building the barges out of carbon fiber, you have less weight and no corrosion. The pin barges are a good steady business for us now. We’ve sold 37 barges in the last year and a half. For us that’s good business. So between windmills and carbon fiber, I see a great future for the company.”

As head of engineering, Joe Starck is working on ways to diversify and keep the skilled welders and shipyard workers the company has trained. It’s another twofer, create more business and avoid the cost and effort of training new people when normal business returns. He is looking at broadening the market by not confining the yard to building tugs and barges. “We have people here who have built OSVs and pushboats over the years,” he explained. “We’re also selling labor hours and broadening into industrial projects other than marine by using our existing resources and labor pool. Absolutely it is necessary if we are to keep our labor pool. They have skills that we don’t want to lose.”

Some of that skill is being used in repowering older vessels and conducting marine repairs for other companies. The shipyard has just finished repowering and adding a new wheelhouse to the tug Karen Andrie for Andrie Inc., and Cleveland’s fireboat, Anthony J. Celebrezze, is in the dry dock. The yard also has a construction barge and a Great Lakes research vessel, KIYI, slated for repairs. “These are all major refits and repairs as opposed to a shave and a haircut,” said Rasmus. “I see marine repair as a good niche right now.”

When Queen Elizabeth and President Dwight D. Eisenhower opened the St. Lawrence Seaway 50 years ago, they opened the floodgates for GLG to prosper. “We had inbound steel and outbound grain,” said Rasmus. “The ships came to the center of manufacturing in the country. Today the mills are closed, and there is not the need for imports. We’re not building cars and we’re not building houses, which are the primary industries that support many of the vessels engaged in domestic or foreign commerce on the Great Lakes.”

If the government’s stimulus package works, all the need for imports will bring that business back, according to Rasmus. “It will force the money suppliers to open up and start things moving again.”

Acknowledging that GLG’s business is down 20 percent this year, Rasmus projects that it could get worse for the company if the federal stimulus doesn’t work. But Rasmus predicts that if the strategy of freeing up money does work, then the resurgence of shipping construction materials and goods could bring back prosperity.

The biggest problem for GLG right now, contends Rasmus, is that its new tug and barge customers can’t get financing. “It isn’t that there is no work,” he said. “It is due to the fact that the banking system isn’t willing to finance our customers.”

“I never envisioned the collapse of banking and the auto industry,” said Rasmus. “So I’m just riding the mechanical bull and looking at options to keep us going. There are no guarantees, so how do you know? I believed the banks would always be there. But now I feel empowered when someone says that I’m going into a risky business. It turns out the banks were the risky business.”

From the conference room in the company’s new office building, you can look in the direction of the historic 52-story Terminal Tower, where John D. Rockefeller’s Standard Oil was founded.

Rasmus hopes that his company also has a great future. On to windmills and carbon fiber. •

By Professional Mariner Staff