Horizon files for bankruptcy protection after overruns on NYC ferries


Horizon Shipbuilding has filed for Chapter 11 bankruptcy protection, citing cost overruns on ferries constructed for New York City and problems fulfilling a tugboat contract for McAllister Towing and Transportation.

Horizon, of Bayou La Batre, Ala., filed its petition on Oct. 24 in U.S. Bankruptcy Court in Mobile, Ala. The company is one of two chosen to construct a fleet of 85-foot catamarans for the new NYC Ferry service. The other builder is Metal Shark Boats of Jeanerette, La.

In mid-2016, the companies were contracted by HNY Ferry Fleet, a subsidiary of Hornblower Cruises & Events in San Francisco, to build Incat Crowther-designed, 150-passenger aluminum vessels for NYC Ferry. Horizon delivered 10 ferries to New York in 2017, but the company misjudged its costs on that project and another one.

“Our overruns on the NYC ferries were largely due to the man-hours and overtime required to meet the ambitious production schedule,” Horizon CEO Travis Short said in November. “In addition, our project to build tugs for McAllister Towing required more material, labor and time than was budgeted.”

Horizon delivered the 6,770-hp Capt. Brian A. McAllister last summer, the first in a series of Tier 4 tugs for the New York-based operator. But work stopped on two other tugs because of the shipyard’s “financial inability to continue without a major restructuring of the (contract) terms,” according to court filings by McAllister’s attorneys. The second tug in the class, Rosemary McAllister, is about 85 percent done, according to court documents. A third tug, Ava M. McAllister, is about 20 percent complete.

Horizon had agreed to build each NYC ferry for about $2.6 million, Short said. But during construction, the company had cash-flow problems, fell behind schedule and had to employ outside workers. Its options to deliver another three ferries to New York in 2018 weren’t exercised. Hornblower reassigned those builds to Metal Shark.

“The forecasted shortfalls were brought to the forefront early in the project, and discussions have been ongoing since then without resolution,” Horizon Vice President Lance Lemcool said in a statement issued in late September. “Horizon will now take the time to reorganize its current projects and make every effort to regain its reputation with the vendors and subcontractors that help make up the Horizon team.”

New York City hasn’t offered to assist Horizon. “We brought the cost overruns to the attention of our customer, NYC Economic Development Corp. and Mayor (Bill) de Blasio’s office, but that resulted in no help,” Short said.

Stephanie Baez, spokeswoman for the city’s Economic Development Corp., said in November that while NYCEDC understands the hardships many shipyards are facing, “we’re not in a position to comment on contractual relationships between subcontractors and our operator, Hornblower. We have a clear responsibility to get the best value for our taxpayers and to hold contractors accountable for the promises and costs they agree to. That was successfully accomplished.”

The new ferry routes began in New York last spring, giving public-transit riders more alternatives to crowded subways and buses. The added ferries are more popular than city administrators expected.

Hornblower issued a request for proposal in late spring 2016, seeking the most competitive and qualified rates, Hornblower spokesman Josh Knoller said in November.

“The two experienced shipyards selected reflected those criteria,” he said. “Hornblower has fulfilled all of its contractual obligations with Horizon, and we wish them well as they work through their current situation.”

Metal Shark charged about $3 million for each of its first six ferries, said Josh Stickles, the company’s vice president of marketing. Last spring, the shipbuilder delivered those six vessels on time.

In early August, Hornblower ordered four 97-foot, 350-passenger ferries from Metal Shark. The operator also ordered another 85-foot ferry from the builder. The five vessels are in production at Metal Shark’s yard in Franklin, La., and are scheduled to be delivered in 2018.

When asked whether Horizon plans to build more ferries for other customers, Short said, “That is our intention.”

By Professional Mariner Staff