Page 22: of Maritime Reporter Magazine (January 2014)

Ship Repair & Conversion Edition

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22 Maritime Reporter & Engineering News • JANUARY 2014

A s the energy profi le of the United States chang- es, so too do the pros- pects for it commercial shipbuilding and repair sector, which virtually overnight has enjoyed an infl ux of new construction orders and general maritime business.

The ATB and tank barge markets were long-thought dead, but with vast new sums of oil and gas in both the offshore and land-based being produced, so too comes the need to transport the goods to refi nery and market, as well as the need to feed the inland energy production frenzy born from hydraulic fracturing, or Fracking.

Shipbuilding and repair in Mobile, Al- abama is certainly not novel, as Mobile holds a long and proud tradition. While rich in history, this is not a story of look- ing back, rather forward, starting three years ago when BAE Systems took over the yard in Mobile and enacted a revi- talization of a storied shipbuilding and repair facility that continues in earnest today. “The main batteries of our business are the capital investment in piers, dry docks and cranes,” said Vic Rhoades,

Director, BAE Systems’ Mobile, Ala- bama shipyard. Since the acquisition in July 2010 we have invested nearly $30m in capital improvements, and an- ticipate spending $10m over the next 24 months.

Upgrading the new construction facil- ities with robotics and automation, and investing in people has been one of our big successes.”

Repair & Conversion Coexist “We have two business approaches here: one is repair and conversion and the other is new construction,” said

Rhoades. “Both co-exist equally in the yard. Our repair business is 70% com- mercial; 30% other government, specif- ically MSC, MarAd and Coast Guard,” as well as others. Predictably, the re- pair business is dominated by domestic

Jones Act carriers, with about 15% of the shipyard’s repair business coming from international carriers.

But as anyone in the ship repair and conversion business can attest, it is al- ways a delicate balancing act to plan workload on the repair side of the house: when times are bad, owners tend to re- quire bare bones work to keep ships in good regulatory order. When business is booming, owners want to keep assets in the market earning money, not sitting in drydock for maintenance and repair.

In assessing the impact of the global economic meltdown of 2008 and lin- gering tough economy through 2012,

Rhoades offered this: “As an industry, it made us stronger. Smaller players and those without the fi nancial wherewithal disappeared, and those that remained came back stronger. This business is not for the weak at heart: it’s cyclical, it’s feast or famine, diffi cult to level load; today we don’t have enough people, tomorrow I don’t have enough work due to the operators charter and repair schedules.”

If running an effi cient and effective repair yard were not diffi cult enough, running newbuild and repair opera- tions in the same facility is traditionally a diffi cult act, too. “There is a reason why companies don’t do both … and that’s because it is very diffi cult to do,”

Rhoades succinctly summarized. “I am not sure we have a secret. It’s two dif- ferent mind-sets (on both accounts). On the repair side, it’s about fi xing what is pre-existing (similar to taking your car to a mechanic), and it doesn’t neces- sarily have to be brand new when it is done,” Rhoades said. “The work can be spec’d to that level but the owners nor- mally decline due to cost. Owners want quality and timely repairs. On the new- build side, everything is fi t and fi nish, prim and proper … it is a higher level of completion. It’s like buying a brand new car. It is diffi cult to make the transition from one side to the other. It’s a differ- ent mindset of how you go about your day’s work.”

While Rhoades maintains there is no secret to success, he does admit that the cornerstone to the company’s future lies not necessarily in machinery or space, rather people. “The primary strength of our shipyard is without question our highly skilled workforce. Our employees commitment and professionalism are what makes us successful. The labor market on the

Gulf Coast is very challenging. We compete daily with Tier 1, 2 and 3 yards for skilled labor. There isn’t enough qualifi ed personnel to go around. We’re currently bringing in people from out of town. Long-term we’re working with the state to establish educational grants, develop an apprenticeship program and


Timing, they say, is everything. Cliché, for sure, but BAE

System’s strategic decision a few years ago to buy, invest and reinvigorate newbuild and repair operations in Mo- bile, Alabama, seems poised to pay off handsomely as the

U.S. maritime mar- ket faces a historic rebound.

By Greg Trauthwein

A Rebirth in

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