July was a big month for small shipyards. The U.S. Department of Transportation (DOT) announced two separate programs for shipyards and ferry construction. The third program, to have been paid for with $99 million from the economic stimulus bill, was announced and then withdrawn. Let's look at them chronologically as they were announced.
On July 9, the Maritime Administration (MarAd) announced the awarding of $17.1 million in shipyard grants to 14 shipyards in 10 states. The shipyards had to fall in one of two classes: yards with fewer than 600 employees and yards with between 600 and 1,200 employees. All but two of the yards receiving awards were in the first category.
The big winner was North Florida Shipyards Inc., which received $3.3 million. VT Halter Marineâ€™s three shipyards got $2.9 million and Bay Shipbuilding was also awarded $2.9 million. Others in the million-dollar club included Aker Philadelphia, $1.9 million; Marinette Marine Co., $1.4 million; Basic Marine, $1.3 million; and Bollinger Shipyards, $1.1 million.
Other grants went to Pacific Ship Repair and Fabrication Inc., of San Diego; Total Marine Services of Jefferson Inc., of Harvey, La.; Gladding-Hearn Shipbuilding, of Somerset, Mass.; Zidell Corp., of Portland, Ore.; and William E. Munson Co. Inc., of Burlington, Wash.
All of the awards were for basic shipyard infrastructure, such as press brakes, plasma-cutting machines, welding equipment, transporters, shears and cranes.
Next, on July 14, U.S. Transportation Secretary Ray LaHood announced $60 million in grants to update ferry service in 19 states. Of the $60 million, a little more half ($32 million) went to ferry construction projects, with the other half going to upgrade ferry terminals and other land-based infrastructure.
Top awards were $7.6 million to Washington State, $7.2 million for a new ferry for Port Aransas in Texas and $5.5 million for a new Casco Bay ferry in Maine. A series of smaller awards were also made for aluminum passenger-only ferries or even vehicle barges that are pushed across a waterway by a small tug. In this group, awards of $3 million were approved for new ferries for the Virgin Islands, Tennessee and Oregon; and awards of about $1 million were granted for ferries for Maryland, Georgia, Missouri and Wisconsin.
Kentucky was awarded $300,000 each for two ferries. At first this seems very low for a new ferryboat. But according to the state of Kentucky, one of the awards is for a small tugboat to push an existing vehicle barge across the Cumberland River and the second $300,000 will buy a new vehicle barge for another crossing.
Still, $300,000 doesnâ€™t buy much of a tugboat or barge. By way of comparison, the Iberville Parish ferry in Louisiana received $650,000 for a new engine for one of its vessels.
When these grants turn into contracts, expect shipyards such as Conrad, Halter, Gulf Craft, Gladding-Hearn, Steiner, Geo, SeaArk, Munson and others that are actively building ferries today to wind up with this business.
The big award that everyone was waiting for, the $99 million small shipyard grant program from the stimulus bill, came and went in a matter of hours. The program award winners were announced early on the morning of July 16, but by noon the announcement had been removed from the MarAd Web site. By July 22, LaHood issued a press release stating that the process to evaluate the applicants was â€œincomplete.â€
That is Washington speak for the political firestorm that developed within hours of the announcement. There were over 500 shipyard applications and only 67 grants, so a lot of members of Congress were very unhappy that one or more of the yards from their districts were snubbed.
At this point it is anyoneâ€™s guess what will happen. LaHood did say in the same press release, â€œWe will meet our August 17 deadline for distributing these Recovery Act dollars to shipyards around the country.â€ So there is bound to be a lot of massaging of the original list of 67 winners. Expect more shipyards to be added to the list with the current average of $1.5 million per yard to drop.
Jeffboat cuts work force
Jeffboat LLC, the nationâ€™s largest barge builder, will reduce its work force by about 10 percent. Severance packages will be offered to some salaried workers, while other salaried workers and some hourly workers will be terminated, leaving about 1,000 people employed at Jeffboatâ€™s various shipyards.
Industrywide, barge-building activity is still at a high level despite recessionary pressures and the absorption into the fleets of a huge number of new barges and pushboats built in the past three years.
Through June, Tim Coltonâ€™s Maritime Memos reports 84 pushboats and tugs have been delivered and over 400 barges less than 5,000 gross tons have been added to the various fleets. This is on a par with 2008, but 30 percent ahead of 2007. This building rate is not sustainable under current economic conditions and layoffs are the result.
Crew boats a mixed bag
The crew/supply boat builders on Bayou Teche, near New Iberia, La. are having a very peculiar year. Two years ago all five had two-year backlogs, but things have changed. The ripple effect that started with lower oil prices led to fewer active rigs and has worked itself down to a lower demand for offshore oil vessels. As a result, the boat companies are ordering fewer crew/supply boats.
But itâ€™s a very mixed bag, from companies shutting down operations completely, to one shipyard that has all its fabrication sheds full.
The good news comes from Breaux Brothers Enterprises of Loreauville, La. Not only are its fabrication sheds are full; the company boasts a two-year backlog.
â€œWe have been very lucky, even blessed,â€ said Vic Breaux, owner of the yard. â€œWe have a 187-foot vessel that will go in the water in late August.â€
The vessel, Fast Viking, is for Edison Chouest Offshore. Behind that, Breaux Brothers has a pair of 177 footers for Gulf Logistics, a 160-foot vessel for Crewboats Inc., and two 194-foot boats for Edison Chouest Offshore.
Breauxâ€™s hope â€” indeed that of all vessel builders with backlogs â€” is that by the time the backlog is worked down, new orders will be well in hand.
More good news from the bayou
Houma, La., is a boomtown. Most of the vehicles that crowd this bayou town are trucks â€” from huge flat beds delivering boat-building materials to shipyards and distributors to pickup trucks delivering people to oil field related jobs.
One shipyard in step with all of this is Candies Shipbuilders LLC, the shipbuilding arm of Otto Candies LLC, one of the founders of the offshore-oil-vessel industry.
The shipyard specializes in building really big offshore vessels. Since buying the shipyard in 2005, Candies has built a pair of 285-foot supply boats, a 205-foot supply boat and a 300-foot construction vessel. Needing more vessels quickly and lacking room to build them, Candies contracted with Dakota Creek Industries to build three 300-foot-plus construction vessels, with the topsides being finished at Candies Shipbuilders. Also VT Halter Marine is building the hull and deckhouse of a 285-foot supply boat to be finished at Candies while Candies has its yard full with a 285-foot supply boat and a 300-foot construction vessel.
All of Candies newbuilds are on long-term contracts. â€œWe used to offer our vessels in the spot market, moving them from job to job frequently,â€ said Brett Candies, sales manager of Otto Candies LLC. â€œBut with the investment we have in these large vessels, it makes more sense to contract them for two- to four-year periods to keep them utilized to the fullest,â€ Candies added.