NASSCO Building Container Ships for Matson

By Mark Edward Nero
San Diego-based General Dynamics NASSCO said Aug. 25 that it has signed a contract with Matson Navigation Co. to design and build two Kanaloa Class liquefied natural gas-capable containerships with roll-on/roll-off capability.

The 870-foot-long, 3,500-TEU containerships are designed with the ability to transport containers, automobiles and rolling stock, including trailers. The design also incorporates LNG-capable main and auxiliary engines, which are compliant with Tier III emission requirements.

“Our partnership with Matson builds upon NASSCO’s successful track record of constructing high-quality, highly efficient and on-time delivery for the Jones Act trade,” General Dynamics NASSCO and Bath Iron Works President Fred Harris said in a statement.

The Jones Act-qualified ships are to be built at the NASSCO shipyard in San Diego. Construction of the first containership is slated to begin in early 2018, with deliveries set for 2019 and mid-2020, respectively.

“We are pleased to be working with NASSCO again on new vessels for Matson. NASSCO’s deep history and reputation for quality give us confidence that these new ships will be the most advanced efficient and productive vessels in our fleet,” Matson President and CEO Matt Cox said. “Our last NASSCO vessel, RJ Pfeiffer, has been a mainstay of our Hawaii service and we look forward to adding the superior performance of these new Kanaloa Class vessels to the fleet.”

Once delivered, both ships are expected to serve a trade route between the continental West Coast and Hawaii.

Over the past decade, NASSCO has delivered 28 ocean-going ships to government and commercial customers, including the world’s first LNG-powered containerships. The company partners with Daewoo Ship Engineering Co. to provide ship design and shipbuilding technologies for customers.

Canadian Provinces Ink Maritime Training Deal

By Mark Edward Nero

On Jan. 13, the Canadian provinces of British Columbia and Nova Scotia signed a memorandum of understanding aimed at strengthening workforce cooperation, including innovation and training in the shipbuilding and industrial marine industries.

The two provinces said in an announcement that the agreement positions them to work together “to innovate trades training in the shipbuilding and industrial marine industries, improving outcomes for apprentices and the sector overall.”

Under the deal, British Columbia and Nova Scotia are expected to share labor market information such as workforce demand projections, initiatives to support sector-based workforce planning and best practices in labor market data analysis.

“Shipbuilding and marine industries are important to the economies of both our coastal provinces,” British Columbia Minister of Jobs, Tourism and Skills Training Shirley Bond said in a statement announcing the agreement. “We will continue to work with government and industry partners to align and improve apprenticeship training across Canada.”

“We share a strong shipbuilding industry,” added Karen Casey, Nova Scotia’s acting Minister of Labor and Advanced Education. “We need to take advantage of this and work together to help grow our two provinces’ economies. This partnership helps our businesses to build their export capacity and take full advantage of spin-off opportunities coming out of the industry.”

Key commitments identified in the MOU include: sharing and leveraging best practices in trades training, including the evaluation of training models in the shipbuilding and industrial marine industries; and assessing and evaluating the training delivery models for marine sector trades training and jointly develop and implement identified new models as appropriate in the shipbuilding and industrial marine industries.

The agreement also calls for promoting youth participation in trades training in the shipbuilding and industrial marine industries.

MARAD: US Shipbuilding Generates $37 Billion

By Mark Edward Nero

The private shipbuilding and repair industry in the US provided more than 110,000 jobs across all 50 states in 2013 and contributed more than $37 billion to the gross domestic product, according to a newly released study by the Maritime Administration.

In 2013, the US private shipbuilding and repairing industry directly provided 110,390 jobs, $9.2 billion in labor income, and $10.7 billion in gross domestic product to the national economy, according to the study, which was released the first week of November.

Including direct, indirect, and induced impacts, on a nationwide basis, total economic activity associated with the industry reached 399,420 jobs, $25.1 billion of labor income, and $37.3 billion in GDP in 2013, the document states.

The states with the highest reported levels of overall direct, indirect, and induced employment associated with the industry were Virginia, California, Mississippi, Louisiana and Texas.

There are currently 124 shipyards in the United States, spread across 26 states, that are classified as active shipbuilders. There are also more than 200 shipyards engaged in ship repairs or capable of building ships but not actively engaged in shipbuilding.

Employment in shipbuilding and repairing is concentrated in a relatively small number of coastal states, with the top five states accounting for 63 percent of all private employment in the shipbuilding and repairing industry.

“Everything that shipbuilding meant in 1789, it still means today,” US Transportation Secretary Anthony Foxx said. “In 2015, American shipbuilders ensure that our nation can build and maintain the vessels that our military needs to keep our nation secure. In 2015, American shipbuilders still provide essential commercial vessels (that) enable domestic commerce on our inland waterways and link to our domestic energy supplies.”

The full MARAD report is available at http://www.marad.dot.gov/wp-content/uploads/pdf/MARAD_Econ_Study_Final_Report_2015.pdf

Maersk Cutting Back on Jobs, Shipbuilding

By Mark Edward Nero

As a response to both the short term and long term market outlook, Maersk Line is implementing a number of cost and efficiency initiatives, including cutting back on shipbuilding and eliminating jobs, the company said Nov. 4

Maersk Line, the world’s largest shipping company, plans to reduce its network capacity and postpone investments in new capacity, while the same time reducing operating costs by escalating already announced plans to, over the next two years, cut at least 4,000 jobs.

The company also stated that it is cutting back on shipbuilding plans that it announced earlier this year: it will now not exercise previously announced options for six 19,630-TEU vessels and two 3,600-TEU feeders and is postponing its decision on eight optional 14,000-TEU vessels.

“We are on a journey to transform Maersk Line,” CEO Søren Skou explained in a prepared statement. “We will make the organization leaner and simpler. We want to improve our customer experience digitally and at the same time work as efficiently as possible.”

The company currently has 23,000 employees globally and says it will eliminate the 4,000 positions through natural attrition and other means.

“We are fewer people today than a year ago. We will be fewer next year and the following year. These decisions are not taken lightly, but they are necessary steps to transform our industry,” Skou said.

Engineer Arrested for Stealing Shipbuilding Secrets

Canadian authorities on Dec. 1 arrested a naturalized citizen for allegedly trying to sell national shipbuilding secrets to China.

The arrested man, Qing Quentin Huang, is a Toronto resident employed by Lloyd’s Register Canada. The company is a subcontractor to Irving Shipbuilding, whose projects include the Arctic Offshore Patrol Ship project, a vessel procurement plan for the Royal Canadian Navy.

In a statement, the Royal Canadian Mounted Police said it was notified Nov. 28 that Huang was “taking steps to pass sensitive information” to authorities from the People’s Republic of China.

The information allegedly relates to elements of the Government of Canada National Shipbuilding Procurement Strategy, which includes patrol ships, frigates, naval auxiliary vessels, science research vessels and icebreakers.

“In these types of cases, sharing of information may give a foreign entity a tactical, military or competitive advantage by knowing the specifications of vessels responsible for defending Canadian waters and Canadian sovereignty,” RCMP Chief Superintendent Jennifer Strachan said.

The RCMP said that after it was informed of Huang’s actions, it initiated a criminal investigation dubbed Project Seascape.

In a statement released the day of the arrest, Irving Shipbuilding President Kevin McCoy said Huang didn’t have direct access to any classified or controlled information relating to vessels built as part of the Arctic Offshore Patrol Ship project.

“Security of information surrounding the AOPS project, and all NSPS programs is tightly controlled at Irving Shipbuilding,” McCoy said. “We adhere to all security protocols required by our customers.”

Huang, who has been suspended without pay, was one of 20 marine engineers at Lloyd’s Register’s Burlington, Ontario location since April 2006. His was a structural design appraisal engineer tasked with assessing ship designs for compliance with industry standards.

Russian, Korean Companies to Build New Shipyard

Russian petroleum company Rosneft, Gazprombank & Sovcomflot and Korean shipbuilding company Daewoo Shipbuilding & Marine Engineering have signed an agreement to establish a shipbuilding and industrial cluster in the Russian Far East.

The parties say they’ve agreed to jointly complete the construction and launch the new shipyard and shipbuilding complex in 2016 in the southern part of Primorskiy Krai. The contract was signed in the presence of Russian President Vladimir Putin and Park Geun-hye, the President of the Republic of Korea, as part of an official visit by Putin to the Republic of Korea.

The companies say they plan to establish a Russian-Korean engineering center for shipbuilding and marine equipment for offshore projects. The companies also have agreed to key terms for technology exchange, localization of production and contracts placement.

Rosneft has a large-scale program to develop offshore projects in Russia. The company, according to President & Chairman Igor Sechin, has obligations to localize in Russia shipbuilding and marine equipment production necessary for offshore projects implementation and is actively working in this direction. Sechin said his company and Daewoo Shipbuilding are implementing a project expected to have a “considerable multiplying effect on all related industries.”

“We are glad the project will be implemented with the support of such an experienced technological partner as DSME, which owns cutting-edge technologies, as well as globally recognized reputation for shipbuilding, engineering and production of marine equipment for offshore projects,” Sechin said in a prepared statement. “We are convinced the cluster will become a center for high-tech arctic shipbuilding in Russia.”

China Reveals Shipbuilding Industry Revival Plan

China, home of the world’s biggest shipbuilding market, has revealed a three-year plan to restructure its shipbuilding industry in order to help end a prolonged slump.

The 2013-2015 strategy, which was publicly unveiled by the Chinese State Council August 4, outlines multiple areas of focus to raise the efficiency of the sector and position it as a global competitive industry.

One of the plan’s components is disallowing financial institutions to lend to companies embarking on new shipbuilding facilities. Among the other components are: the advancement of technology in the shipbuilding sector, an expansion into offshore shipbuilding and equipment construction, controls on adding new yard capacity, faster phasing out of old vessels and the capturing of a larger global market share.

The capacity controls involve local authorities and governments strictly controlling new capacity by halting approvals of new shipbuilding facilities as well as stopping projects that had proceeded without first securing the necessary permits.

China had previously said it plans to force consolidation in a number of industries struggling with sluggish demand and severe overcapacity to rebalance the economy. As part of the consolidation, the government wants aging ships dismantled and shipbuilders to build high-end offshore engineering products, which it expects will have higher market demand.

Although the country’s shipbuilding sector is the world’s largest, since the most recent global recession, it has suffered from overcapacity, a shortage of new orders, price declines for building ships and a slump in the freight market.

Under its new three-year plan, the government says, Chinese shipbuilders should aim to secure 25 percent of the global market share for high-tech ships and one-fifth for the global offshore engineering product market by 2015.

 

Los Angeles Port Email Warns Against Proposed Shipyard

The Port of Los Angeles, concerned about a proposed plan to build a ship repair facility at the port, sent out an email Monday to roughly 250 local, state and federal government officials criticizing the plan and making the argument that any further consideration of the proposal could seriously delay an Army Corps of Engineers channel deepening project and ongoing terminal development at the port.

Gambol Industries, Inc. has been working for more than a year to move forward with the $50 million plan to re-develop the shuttered South West Marine shipyard along the main channel of the port into a modern ship repair facility. The Long Beach-based firm, which claims it has a solid business plan that would create hundreds of jobs at the proposed facility, has faced stiff criticism from the port, shipping industry, and longshore unions.

The port email warned that the Gambol plan threatens to delay the port's Main Channel Deepening Project, a major navigation project by the port which would provide access for the largest of modern container vessel to areas deep within the port's channels. The MCDP is also key, according to the email, to an ongoing $350 million expansion and redevelopment of two port container terminals.

The main conflict with the MCDP is that the port has already identified the area of the abandoned South West Marine facility as the dumping area for the material to be dredged by the Army Corps.

"In the face of Gambol's proposal, the Army Corps has said they would shut down our project while a 24 to 36 month supplemental EIR/EIS is done," said the port email. "Staff of the California Coastal Commission has advised Gambol that the changes it has proposed to date to our contaminated sediment fill are not feasible or environmentally optimal. The Los Angeles Area Chamber of Commerce and ILWU also oppose Gambol's plan because it would delay our channel deepening project."

For it's part, Gambol has received the support of at least one key area politician – Los Angeles City Councilmember Janice Hahn. Daughter of famous City Councilmember Kenneth Hahn and brother of former Los Angeles Mayor James Hahn, Janice Hahn currently represents the port area. She also chairs the City Council's Trade, Commerce and Tourism Committee, which oversees the Port of Los Angeles, the Los Angeles International Airport and the city's Convention & Visitors Bureau.

Earlier this month, Hahn wrote an op-ed piece for the port-area Torrance Daily Breeze newspaper in which she supported the Gambol Industries proposal, citing the $50 million investment in the hard-hit port-area economy and the creation of hundreds of union jobs as main reasons for her support.

Another supporter of the Gambol plan is the Los Angeles County Economic Development Corp. (LAEDC), a local economic think-tank who was commissioned by Gambol to study their shipyard proposal. LAEDC found that the Gambol facility would be "a welcome addition to a city that has struggled to create employment opportunities for its growing population."

The LAEDC estimated that "When the [Gambol] shipyard reaches full capacity, it [could] generate total annual economic activity of over $219 million and sustain 2,040 full-time jobs in Los Angeles County with [payroll] earnings of $79 million."

The port argues in Monday's email that Gambol's business plan is "highly speculative" and in a play on the firm's name, a "gamble."

Port officials point to the fact that major shipyard employment in the United States has fallen precipitously in the past 30 years and that there is simply not enough work to support the Gambol facility.

"Nationwide, over 70 percent of shipbuilding revenue and over 75 percent of ship repair revenue comes from the U.S. Navy," the port wrote. "There is no such patron to fuel a rebirth of shipbuilding in the San Pedro Bay. In fact, other shipyards have announced layoffs and eliminations, including 560 jobs eliminated recently at NASSCO in San Diego."

The port's five-member governing board is expected to officially reject the Gambol plan at their Aug. 19 board meeting.