business

Shipyard's full speed ahead

Henry J. Holcomb, Inquirer Staff Writer

Updated: Saturday, June 30, 2007, 2:27 AM

A view from the Goliath crane at Aker Philadelphia Shipyard shows the tanker Overseas Los Angeles under construction, with the Delaware Riverin the background. The shipyard is scheduled to build 14 additional 600-foot-long double-hulled tankers. Other deals are for ships due in 2010.

From his high perch on the Goliath crane, Roberto Bernal surveyed the bustling shipyard below and said: "When I came to work here in 2000, all of that was empty."

A view from the Goliath crane at Aker Philadelphia Shipyard shows the tanker Overseas Los Angeles under construction, with the Delaware Riverin the background. The shipyard is scheduled to build 14 additional 600-foot-long double-hulled tankers. Other deals are for ships due in 2010. CLEM MURRAY / Inquirer Staff Photographer
as shipfitter Jamal Abdullah works on a hull. The yard has a four-year apprentice program. Sparks fly
Photo Gallery: Shipyard's full speed ahead

This week, 200 feet above the clang of hammers and hiss of welders at the Aker Philadelphia Shipyard, Bernal watched work on four big tanker ships. And the yard's order book has enough work to keep it going full speed ahead for five years.

"It took us three years to build our first ship," said Scott B. Clapham, the yard's vice president for engineering and development. "Now, we're building three a year."

Bernal operates the big saw-horse-shaped crane, a South Philadelphia landmark that can lift 660 metric tons. Earlier this month, it hoisted a 400-ton, six-story-tall deckhouse onto a ship being assembled in the dry dock.

One of the four ships below, the Overseas Long Beach, was preparing to leave. It is the sixth oceangoing cargo ship delivered by the yard, which began work on its first vessel in 2000 and is now the nation's most prolific builder of oceangoing merchant ships.

The first four were sold to the Matson Navigation Co., a unit of Alexander & Baldwin Inc. of Honolulu. They carry containerized cargo westbound from California to Hawaii and Guam, then pick up U.S.-bound cargo in China.

The next two were 600-foot-long double-hulled tankers, the first of 16 identical vessels the yard is scheduled to build under a unique arrangement crafted by Kjell Inge Røkke, the Norwegian fisherman turned industrialist who owns a majority interest in the yard.

That new approach saved the yard, built with $430 million in public assistance on the site of the former Philadelphia Naval Shipyard.

When, unlike Matson, operators of American-flagged ships kept patching aging fleets instead of tying up capital to buy new U.S.-built vessels, Røkke formed Aker American Shipping. It owns the shipyard and some vessels it builds.

Overseas Shipholding Group Inc., New York, has agreed to lease the first 16 tankers, about $1.5 billion total value, confident that it can line up charter agreements as ships are completed.

The response has been stronger than expected. "The ships have been snapped up quickly," Clapham said. Charter agreements are already in place for ships to be completed in 2010.

American yards usually build one-of-a-kind merchant ships. Røkke drastically cuts costs by turning out multiple copies of one design.

His success has been a boon to industrial workers who lost jobs when the Navy pulled the plug on its yard here and when other operations shut down. Bernal, 62, the crane operator, who lives in Sicklerville, came to the shipyard eight years ago after the Budd Co., where he worked for 32 years, closed its Hunting Park plant.

About 1,300 people now work at the shipyard, including specialty contractors. In its early years, 200-plus workers were from European yards, brought here to help implement new technology.

"Today, there are only 11 Europeans, and they are here to help us work through issues where they have expertise," said Michael P. Giantomaso, the yard's human-resources vice president. The yard's chief executive officer, Dave Meehan, is a Pennsylvania State University graduate. The new chief financial officer, Jeffrey Theisen, and others on the management team are longtime residents of the region.

The yard has 100 vacancies for skilled union welders and shipfitters that it cannot fill, so it still relies on a subcontractor to supply workers from other parts of the United States, Giantomaso said.

To ease the shortage, the yard has a four-year apprentice program, which pays 60 percent of the starting wage plus benefits. Earlier this year, the unions negotiated a four-year contract that included higher wages and more paid vacation.

The Philadelphia yard has a long-term agreement with Hyundai Mipo Dockyard Co. Ltd., which allows it to use its well-tested ship designs and the buying power the South Korean yard has achieved as it has grown into one of the world's largest shipbuilders.

About 70 percent of the money spent by the Philadelphia yard "stays in the States," Clapham said. This includes all 25,000 tons of steel the yard purchases annually, mostly from mills in Conshohocken and Coatesville and one in Indiana.

The yard defends the 30 percent it spends overseas, saying the massive diesel engines that propel ships and some other components are no longer built in the United States. It also imports bulbous bows from Hyundai Mipo to save money. The South Korean yard will build 70 tankers like the ones built here in 2007, so it mass-produces the bow sections.

The yard here is under pressure to keep refining its systems, reduce absenteeism, and take other steps to improve productivity. It plans to build its 10th tanker with half the work hours required for the first. If productivity keeps improving, the long-term outlook is good, Clapham said.

The federal Jones Act requires that U.S.-built ships be used for transporting cargo from one domestic port to another. About 20 tankers in the U.S.-flagged fleet lack double hulls and thus must be retired by 2015 under the Oil Pollution Act of 1990, passed in the wake of the Exxon Valdez oil spill in Alaska.

In addition, the U.S. fleet has been aging because other domestic yards have gone after military contracts instead of aggressively seeking commercial work.

Beyond that, with highway and rail networks expected to reach capacity, the yard sees a potential for so-called short-sea ships to carry cargo up and down the nation's coasts.

See a time line of shipyard events

at http://go.philly.com/shipyard

Contact staff writer Henry J. Holcomb at 215-854-2614 or hholcomb@phillynews.com.

Henry J. Holcomb, Inquirer Staff Writer

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