Amid layoffs, members of Congress and Mayor Kenney try to buoy Philly Shipyard
During 2018, the shipyard downsized from about 1,200 workers to around 400, and the last ship it is working on is due to be delivered this month. It faces an uncertain future without a new contract.
Members of Congress and Mayor Jim Kenney took to the waterfront Tuesday, pleading the case for a federal contract to land in the Philly Shipyard, which laid off about two-thirds of its workforce last year.
Officials urged the U.S. Department of Transportation to award a contract for a new training ship quickly.
“Philadelphia is the optimal location” for this contract, said Kenney, surrounded by about a dozen union workers in front of the shipyard’s main entrance.
“This contract is an opportunity to put this workforce back to work,” said U.S. Rep. Mary Gay Scanlon (D., Pa.), whose district includes the shipyard.
Occupying a corner of the storied Navy Yard, the commercially run Philly Shipyard has struggled to line up work beyond a massive container ship -- the second of two such vessels -- that it’s scheduled to finish this month.
During 2018, the shipyard downsized from about 1,200 workers to about 400.
The shipyard “faces significant risks if it is unable to secure new orders and/or financing for vessels” after the last container ship is finished, according to its most recent financial disclosures. The company’s corporate parent is based in Norway, and the shipyard is traded on the Oslo stock exchange.
Long focused on private customers, the shipyard is trying to attract more work under federal contracts -- including awards to build a heavy polar icebreaker for the U.S. Coast Guard and the new training ship for maritime academy students.
The shipbuilder Fincantieri Marine Group partnered with Philly Shipyard to come up with polar icebreaker design recommendations for the government, before bids on the project were due last fall. Appropriations for the first ship were in flux during the debate over funding President Donald Trump’s border wall with Mexico. But with $650 million now in the budget, the Coast Guard expects to award the contract in late 2019, according to the trade publication Homeland Security Today.
In the near term, Philly Shipyard told shareholders its “main focus” was pursuing the chance to build up to five “national security multi-mission vessels" for state maritime academies. The U.S. Maritime Administration will award the contract for the first ship to a “vessel construction manager," which will, in turn, choose a shipyard to build it.
Philly Shipyard hopes to win that job in the second quarter and considered itself a “leading candidate” in its annual report. The company has “not been working with any potential” vessel construction manager, spokesperson Kelly Whitaker said, but it is familiar with the firms “from our commercial business delivering oil tankers and container ships to them over the years.”
Scanlon said that Philly was competing against shipyards in other parts of the country but that it has an advantage: “This is the only shipyard right now that’s ready to go. The others have existing projects.”
Last month, a dozen members of Congress from Pennsylvania, New Jersey, and Delaware lobbied the Department of Transportation to send that work Philly’s way, touting the shipyard’s record of “timely, on-budget deliveries” and a history of “cooperation” with labor unions that have never gone on strike there.
Building the maritime training vessels at the Philly Shipyard would “ensure the continued vitality of this important shipbuilding asset and preserve a critical component of our defense industrial base,” the 12 U.S. representatives said in a letter to Transportation Secretary Elaine Chao. The signers included Pennsylvania Republican Congressmen Brian Fitzpatrick and Lloyd Smucker.
More than $350 million in public and private funding has gone into the shipyard’s facilities since 1997, the letter said.
The congressional representatives asked Chao to make sure that the contract for the first ship is signed this spring so that the ship can be delivered in time for the 2022 summer sea term. “Delay benefits no one,” the delegation wrote.
The shipyard recovered from a previous dry spell, during 2010 to 2011 when its workforce dwindled to 300 people. CEO Steinar Nerbovik told the Inquirer last year that he was optimistic about new orders, “but it will hurt in ’18 and ’19.”
Nerbovik did not attend Tuesday’s event. Asked afterward whether the shipyard was at risk of closing without the Maritime Administration contract, he said by email that the “training ships are essential to the future operations of Philly Shipyard.”
The shipyard has already idled parts of the operation, he said, and “will continue to do so without work."