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November 20, 2008

Nichols Brothers cuts workforce

Washington State shipbuilder Nichols Bros. Boat Builders announced today a temporary workforce reduction of 30 employees due, it said, to "a buyer's plan to acquire and rebuild existing vessels rather than purchase a new vessel from Nichols Bros." The reduction in personnel, expected to last an estimated three months, brings the company's number of employees to 150.

Nichols was a participant in bidding for a project with the Golden Gate Bridge, Highway and Transportation District and hoped to produce one ferry for the system.ŹNichols was the sole bidder on the project, with a price of $18.6 million, compared to a Golden Gate District engineer's estimate of $12 million. At its September meeting, the Golden Gate District Board noted that negotiations were underway with Nichols Bros. to explore ways of reducing the price--including reducing the size of the ferry, but also gave the go ahead to explore the acquistion of two mothballed Washington State Ferries' passenger-only high speed vessels.

Nichols says it was notified early this week that the District had chosen to purchase used vessels from the Washington State Ferry System instead of building a new ferry, negatively impacting Nichols Bros.' projected workload, personnel needs and income.

Chief Executive Len York said, "This is a temporary workforce adjustment, not an indication that Nichols Bros. is headed into any serious financial issue. Our current backlog includes building two new vessels, in partnership with Kivchak Marine Industries, for the WETA in San Francisco and two new tug boats for BayDelta Marine, all of which are good projects."

Nichols Bros. filed for Chapter 11 Bankruptcy in November, 2007, when it was sold to Ice Floe LLC, backed by Treadstone Capital Management, L.P. of Dallas and Joseph E. Usibelli, owner of Usibelli Coal Mine in Alaska.

Nichols Bros., a sub-contractor of Todd Pacific Shipyard, is awaiting the Legislature's approval of the bid to construct one or two new Island Home ferries for the Port Townsend-Keystone route of the Washington State Ferry System. The new vessels would carry up to 64 cars and replace the ailing ferries that were taken out of service last year due to safety concerns.

"If the Island Home ferries contract is approved, we could ramp up our workforce again and put many of those who were laid off back to work sooner," said York. "We are hopeful that the contract for the 64-car ferries will be awarded soon."


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