Marad figures indicate that the number of workers in U.S. shipyards continues to decline, though estimates indicate that this year's total could run slightly ahead of the 2001 total

More consolidation in U.S. shipbuilding

Another year, another major round of shipyard consolidation in the U.S. The latest involves the long-rumored deal between troubled Friede Goldman Halter, Inc. and family-owned Bollinger Shipyards. It comes after last year’s megamerger in which Northrop Grumman outmaneuvered General Dynamics for Newport News Shipbuilding.

FROM BIG SIX TO BIG TWO
At one time, America's builders of large naval ships were collectively referred to as the Big Six. These days, the vessel hull and propulsion are only a comparatively small part of the total cost of a warship to the taxpayer and the Big Six have been swallowed up by the giant defense contractors General Dynamics and Northrop Grumman. GD's yards are pretty disparate in both the nature of what they build and in their location. So Electric Boat, NASSCO and Bath Iron Works seem set to retain at least some of their individual identity, heritage and corporate culture. That's not likely to be the case at the three Northrop Grumman controlled yard. "We're being Ingallized," one Avondale exec said gloomily at a recent industry cocktail party. Word is that Newport News managers are now having a similar experience.

WILL HALTER BE BOLLINGIZED?
After months of speculation and at least one rejection of an earlier offer, it has been announced that Bollinger Shipyards, Lockport, La., will acquire substantially all of Halter Marine’s operating assets, properties, extensive design library and construction projects in progress from Friede Goldman Halter, Inc., Jackson, Miss., for $48 million in cash and other considerations. The deal is subject to the approval of the U. S. Bankruptcy Court. (That could always mean a surprise. FGH's naval architecture unit, Friede & Goldman ,wound up going to Russian buyer at a bankruptcy auction after its sale to a managment-led team had been announced. There are at least two other buyers, both with Singapore connections, who are known to have shown interest in Halter,)

If the deal does go through, Bollinger would solidify its position as the largest “little ship” builder and the third largest shipyard group in the U.S., trailing only Northrop Grumman and General Dynamics. It would put Bollinger squarely in position to build big ships, such as product tankers, containerships and yes, maybe even a car carrier or two. Bollinger will also strengthen its portfolio of military and government vessels, including designs for foreign military sales and its positioning for the Coast Guard’s Deepwater Initiative. And, its joint venture, Bollinger/Incat USA, to build high-speed ferries and military logistics vessels is still intact.

Up until now, Bollinger has done quite well in building its reputation on the hulls of offshore service vessels, liftboats, and double-hull tank barges on the commercial side and patrol boats and derrick barges on the government and military side.

According to a Bollinger spokesman, the company would absorb about 800 Halter employees as well as some contracts.

The backlog for the Vessels Segment, as FGH termed Halter, as of Feb. 28 was $77.9 million, according to an SEC filing. This has diminished because of some recent deliveries.

The deal involves eight new construction yards, including seven in Mississippi (Halter-Pascagoula; Halter-Moss Point; Moss Point Marine; Halter-Port Bienville; Halter-Central; Gulfport-East, and Halter-Three Rivers) and one Louisiana (Halter-Lockport).

If the transaction is approved, Bollinger would control 11 new construction and 11 repair and conversion shipyards with 43 drydocks located from Pascagoula, Miss. to Houston. Bollinger would employ about 3,300 workers. Closing on the deal is expected to take place in late July or early Aug.

“BOYSIE” BUOYANT ABOUT ACQUISITION
Donald “Boysie” Bollinger, Bollinger chairman and CEO said, “We are very excited about this pending acquisition as it will expand our capacity and capabilities in new construction, establish our visibility and presence in new foreign and domestic markets and compliment our extensive inventory of designs. Best of all, we will retain substantially all of Halter’s dedicated employees thereby gaining hundreds of highly talented and skilled designers and shipbuilders whose excellent reputation is known around the world. We look forward to welcoming them to the Bollinger family.”

“Our goal,” said Bollinger, “is to make the transition for our new employees and customers as seamless as possible. The transition went very smoothly when we acquired Halter’s repair division in August 2000, and we will do it again.”

Back in Aug. 2000, Friede Goldman Halter, Inc. sold five vessel repair yards in Louisiana and Texas to Bollinger for $80 million in an all-cash transaction.

Jack Stone, FGH president and CEO said, “The sale of Halter Marine to Bollinger Shipyards is a major step in providing a return to the creditors. The continued loyalty of the employees and customers has made this possible.”

A THUMBS UP
The early indications are that the deal has been welcomed by industry analysts. It got a “thumbs up” from one long-time maritime consultant and ex-Friede Goldman Halter executive.

“This development is good news for everyone except Bollinger’s and Halter’s competitors,” wrote Tim Colton on his website, www.coltoincompany.com.

Colton, now principal of Maritime Business Strategies, says the deal works on several levels:

Back in Dec. 1999, Halter Marine signed a $70 million contract for the construction of a 579 ft x 102 ft, 4,000 car-carrier vessel for transport of vehicles between the West Coast and the Hawaiian Islands. Later, it signed a $69 million option to build a second vessel.

According to an SEC filing, after filing Chapter 11 reorganization on April 20, 2001, FGH anticipated additional funding was to come from the surety company which wrote the performance bond for the project. The surety company provided additional funding for the project under a court order until July 27, 2001, when it informed FGH that it would not fund completion of the vessel. Construction was suspended when this funding ceased. FGH and Pasha Hawaii Transport Lines maintain that this is a violation of the terms of the performance bond. Pasha has sued the surety in U.S. District Court, and The U.S. Department of Justice, which represents MarAd and Pasha have also sued the surety in Mississippi state court. These suits are seeking specific performance of the surety under the terms of the performance bond and are pending. Pasha has signed a letter of intent with FGH to complete the project with or without the surety's participation subject to FGH's financial status as the it emerges from Chapter 11.

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