Nichols delivered the ferry Steilacoom II in December 2006 to Pierce County in Washington state. Nichols has built over 100 vessels during the 40 years it has been in business. (Courtesy Nichols Brothers Boat Builders)
Nichols Brothers Boat Builders Inc., which operates a shipyard on Whidbey Island, Wash., filed for protection from creditors in November and laid off most of its 180 workers. President Bryan Nichols said the company had debts of $43.9 million and assets of $3.41 million.
Revenues for the boat builder have been plummeting. In 2007 revenues were $6.86 million compared with $23.6 million in 2006 and $35.7 million in 2005, according to Nichols.
The company’s largest creditor is Hornbeck Offshore Services LLC, with a $20 million claim. NicholsÂ was building four 240-foot offshore supply vessels for Hornbeck, but the contract has been cancelled. Hornbeck sued Nichols in June when the yard failed to provide a $12.5 million line of credit for security until the four vessels were delivered.
This suit came on the heels of another suit over the late delivery and quality problems alleged by Expoships, of Bonita Springs, Fla. Nichols built a 228-foot vessel designed to house a fine art exposition that would move from port to port along the East Coast. Expoships alleges delivery of Grand Luxe was six months late and the vessel had water damage.
Nichols said it has reached a settlement of the suit with Expoships. “This was a neat project, but we both cut our losses and walked away from the suit,” said Nichols.
The problem with Hornbeck will not be as easily resolved. “We are in talks with Hornbeck to resolve the dispute,” Nichols said, “but we are not actively negotiating a deal with Hornbeck for any ownership in NBBBI.”
At the time of the filing for reorganization under Chapter 11 of federal bankruptcy law, Nichols was building a 116-foot catamaran ferry for San Francisco Bay Area Water Authority and two 100-foot tugs for Baydelta Maritime. In early December Nichols brought back 50 workers to complete the tugs.
The news caught the boat building industry by surprise. The company has been a major boat builder for over four decades. From 1967 to its November 2007 bankruptcy, Nichols delivered 102 vessels. Among its signature boats was a series of 25 fast catamaran passenger ferries built under an Incat license. The company also built the Queen of the West and the Empress of the North, luxury overnight passenger paddle-wheelers that ply routes to Alaska and the Northwest rivers system, along with Star of Honolulu, a successful luncheon and dinner cruise vessel.
Nichols built dozens of tugs, barges, fishing boats and U.S. Navy vessels.
The Hornbeck deal was a surprise from contract signing onward. Almost all of the offshore oilfield supply boats built in the United States are constructed by a handful of Gulf Coast shipyards. But Hornbeck needed many vessels fast because of the recent oil and gas boom, so when their normal Gulf Coast builders could not build them, Hornbeck turned to a yard that had never built an offshore supply boat.
Many industry watchers don’t expect the Nichols yard to be closed permanently.
“This is a good yard. Don’t expect it to be closed long,” said Tim Colton of Maritime Business Strategies LLC, a leading shipbuilding consultant.