Page 34: of Maritime Logistics Professional Magazine (Q4 2013)

Aker Philadelphia Shipyard (Oslo: AKPS) is the second-largest commercial shipbuilder in the United States, having built more than one-half of the large ocean-going vessels in the US market since 2003. The key word in all of that is ?commercial.? Aker Philadelphia is a Jones Act builder, and was hit hard in the wake of the recent  nancial crisis. At the nadir of the market crisis, the company was forced to make more than 700 layoffs. In February 2011, Pennsylvania and Philadelphia taxpay- ers took a signi cant gamble, infusing $42 million into the company to build two oceangoing petroleum product tankers on spec. The gamble ? Aker prefers to call it ?market vision? ? paid off handsomely in August 2012 when Aker sold the two ships to Crowley. Since then, it?s been fair winds and fol- lowing seas for the Philadelphia-based shipyard. Figuring out what comes next requires a look back. How Aker (it rhymes with ?soccer?) went from merely surviving to its current con- dition of thriving is therefore one of the more interesting mari- time stories of this year; if not the entire decade.First time visitors to Aker?s Philadelphia operation immedi- ately notice the massive, modern 660 metric tonne, 64 meter (210 feet) tall Goliath crane. Only slightly less impressive is the gleaming infrastructure, re ecting a shipyard that has been completely refurbished and in some places, rebuilt from the ground up. Established  rst in 1801 ? with a rich history with Navy work at its heart ? the yard was eventually was closed in 1996. With several starts and stops and hiccups along the way, the location is now, like many other American yards, a thriving beehive of activity. In late November, MarPro traveled to Pennsylvania for a  rsthand look at this pure commercial, Jones Act builder. Market Conditions A booming shale crude oil industry has created high demand for US- agged ships for the coastwise transport of oil, gasoline and chemicals. Since the suc-cessful sale of the spec ships, Ak er Philadelphia has landed contracts for two petroleum tankers for Exxon Mo- bil af liate Sea River, as well as a $500 million agreement to build and share in the operation of up to eight additional product tankers for Crowley. And in November, Aker also inked a deal with Matson for two 3600-teu Jones Act con- tainerships ? the largest ever to be built in the United States. The contract price was reportedly $418 million for the pair, with deliveries quoted for the 3rd and 4th quarters of 2018.With four of the Crowley tankers  rmly contracted and both parties looking hard at the additional four options, these are heady times for Aker. The shipyard?s solid backlog and strong cash position have pushed its stock price up more than 30 times its market low in mid-2012. Despite the large run-up in market capitalization, the company?s debt load and Total Enterprise Value (TEV) to EBITDA ratio both seem to be rea- sonable, as compared with its peers. That said; major risks include cancelled contracts and changes to the Jones Act, nei- ther of which seem to be likely in the current political and economic environment. Steering the ShipJust 30 years old, Kristian Rokke joined Aker Philadelphia Shipyard in 2007. Prior to that, the Aker CEO held various roles, including SVP Operations and Senior Shop Manager within the shipyard and has experience from offshore service and ship- building from several companies in the Aker group. A Board Member of TRG Holding AS, which owns 66.7% of Aker ASA, Rokke is currently completing his MBA at The Wharton School and has also studied economics and mathematics at Colby Col-lege, London School of Economics, and Political Science at the Norwegian School of Management (BI). Joining Rokke is Scott Clapham, SVP Projects and Business Improvements and Jeffrey Theisen, the  rm?s Chief Financial Of cer. Together, they have helped engineer the shipbuilding giant?s remarkable turnaround, and they have done so in an arguably unconventional style. As a management team, the trio is remarkably closemouthed, but Rokke, in his own quiet, understated manner, summed up some key metrics in the box to the left.The Aker Way: Lucky or Prescient? Kristian Rokke eagerly looks ahead to what will come next. He told MarPro in November, ?Our order backlog gives us a golden opportunity to strengthen the commercial edge of our shipyard and puts us in good position for whatever comes next.? According to Aker?s CEO, the shipyard?s success in recent years has as much to do with Aker?s attitude as anything else. He insists, ?We be- lieved in the product tanker market and put our own money behind that belief.? AKER PHILADELPHIA SHIPYARD My Advice Kristian Rokke President & CEO, AkerQuality ?Pleased, but never satis ed.?Government/Navy Work ?We offer value to our customers by focusing 100% on commercial projects.?Foreign ß ag newbuild bids?Our attention is directed toward the Jones Act, but; never say never.?Repair Work?We have been approached, and there is poten- tial, but our current focus is on newbuildings.?34 Maritime Professional I 4Q 2013MP #4 34-49.indd 34MP #4 34-49.indd 3412/11/2013 1:12:47 PM12/11/2013 1:12:47 PM