San Francisco, BAE Systems agree to new 20-year ship repair lease


The following is the text of a news release from the Port of San Francisco:

(SAN FRANCISCO) (April 17) — The San Francisco Port Commission has executed a new 20-year lease agreement with BAE Systems for maritime ship repair that will sustain San Francisco’s 150-year tradition of shipbuilding and repair. The agreement includes a provision that could extend shipyard operations through 2045.

BAE Systems San Francisco Ship Repair currently leases the port’s Pier 70 shipyard and two floating dry docks under a 30-year lease, set to expire in December 2017. The shipyard has made a successful transition over the past 20 years, since the Bay Area military base closures in the early 1990s, to being highly competitive in the commercial ship repair markets. As a result, BAE Systems and the port crafted a new lease agreement that will sustain industrial ship repair into the future.

“Today we proudly continue one of San Francisco’s oldest maritime traditions, a tradition that has been creating and maintaining quality maritime jobs for more than a century,” announced Monique Moyer, the port’s executive director. “BAE Systems and the port have collaborated to expand West Coast dry-docking capabilities, servicing post-Panamax ships, providing emission-free electrical power to the ships, and deepening the shipyard’s channel entrance to accommodate large ships. This agreement fortifies our alliance to sustain this industry for decades to come.”

BAE Systems employs an average of 250 skilled craft workers year-round, representing 10 local trade unions, plus additional jobs during peak periods, where employment levels can rise to over 1,000 people. San Francisco’s most marketable features in the ship repair business are its two floating dry docks and its central coast location, which makes it ideal for both northbound and southbound migratory cruise and tanker fleets.

The San Francisco Port Commission, at its meeting on March 24, 2015, unanimously approved a new long-term lease with BAE that will:

• Establish a 20-year lease term beginning April 1, 2015, with two five-year extension options.
• Institute a system of rent credits that will incentivize investments in the port-owned equipment and buildings, revitalize these assets, and eliminate or reduce port liability.
• Set up a shared dredging fund between the port, BAE Systems, and the Army Corps of Engineers, that will deepen the publicly accessible channel at the entrance to the shipyard and lead the way for federal maintenance dredging in the future.
• Forge an agreement between the port and BAE Systems for pursuing possible funding opportunities for the replacement of the port’s post-Panamax dry dock No. 2.

The shipyard is located at Pier 70, near the intersection of 20th and Illinois streets, at the foot of Potrero Hill. Ships have been built and repaired in and around this area for over 150 years. Today, ship repair remains of vital economic interest to the port and the city, as this industry generates hundreds of family-wage jobs and helps attract maritime commerce to San Francisco through increased cruise, cargo, and military vessel activities. It is a maritime industry in which San Francisco is the leader in Northern California.

The Port of San Francisco is a revenue-generating agency of the city and county of San Francisco. The port manages a broad range of maritime, commercial, and publicly accessible facilities along 7.5 miles of the city’s waterfront that are held in public trust for the people of California.

By Professional Mariner Staff