The sailing has been far from smooth for the U.S. economy of late, and New Orleans feels the effects right along with many other cities. But through the fearsome economic storms, at least one local industry appears buoyant.
The shipbuilding business has a long history in the local area, nurtured in part by links with the U.S. military, forged by several area shipyards.
For many decades, Avondale Shipyards, owned since 2001 by Northrop Grumman Ship Systems, has produced massive combat ships and other vessels for the U.S. Navy.
Nearby Textron Marine & Land Systems, which also has deep military ties, is a longtime builder of the air-cushioned landing craft that are a cornerstone of the Navy’s amphibious operations. The company also turns out the rugged lifeboats commonly used by the U.S. Coast Guard in search-and-rescue operations.
While most area shipyards also do commercial work for private clients, military contracts tend to weather economic downturns better than the private sector, thus providing some stability to the industry as a whole. Recently, Lockport-based Bollinger Shipyards Inc. landed one of those coveted contracts.
In late September, the Coast Guard awarded Bollinger an $88 million contract to design and build a series of Sentinel-class patrol boats known as fast-response cutters. Each 153-foot cutter will be capable of speeds exceeding 28 knots, accommodate 22 crew members and be able to operate independently for five days at sea.
The Sentinel boats “will provide a superior platform from which Coast Guard men and women will save lives, enforce U.S. and international maritime law and ensure national security along the United States’ 95,000 nautical miles of coastline,” according to a Coast Guard release.
The contract with Bollinger provides for construction of as many as 34 patrol boats over six to eight years, producing employment for some 500 people. The total potential value of the work is around $1.5 billion.
“This has been a long time coming,” says Donald “Boysie” Bollinger, CEO and chairman of the company.
Bollinger says his company began laying the groundwork to bid on the Coast Guard vessels seven years ago. While management expected to bid for the work as a subcontractor to another yard, the Coast Guard changed its procurement strategy midway through the process and allowed Bollinger Shipyards to bid as a prime contractor.
Bidding that way carried more risk, Bollinger says, “but now we have a direct relationship with the Coast Guard.”
He adds that the current program won’t be the last one of its kind that the Coast Guard will undertake. “They actually need more vessels than they are buying under this contract, so we’ll be back at the table to bid again,” he says.
The company landed the work at an important time. Traditionally, the backlog of business at Bollinger Shipyards has been divided about evenly between commercial work and government contracts. In the past several years, however, the government work lagged after problems arose with eight patrol boats the yard had worked on for the Coast Guard.
Additionally, Bollinger lost a big piece of the Navy’s Littoral Combat Ship program when the government canceled the entire program due to cost overruns.
Robert Socha, head of sales and marketing at Bollinger Shipyards, says the cancellation of that program left the builder with “a lot of capacity to fill.” As the company continued to work on its bid for the fast-response cutters, it tried to beef up its business in the construction, maintenance and repair of offshore oil supply vessels.
“We were building oilfield supply boats on speculation, to fill the gap to when this Coast Guard program would be awarded,” he says.
The strategy worked. Socha says Bollinger’s commercial backlog will carry the company through the next couple of years, to the point when the heavy work on the Coast Guard contract actually begins.
Meanwhile, Bollinger Shipyards will keep seeking both government and commercial contracts, including the work boat, barge and tugboat construction that the oil and gas sector continues to demand.
“We’re still the hub of marine activity,” Bollinger says. “The central Gulf of Mexico is where most of the offshore drilling activity occurs. Geographically, we’re in the middle of it.”
Pointing out that demand for oil is opening the way for drilling in waters that previously were off-limits, Bollinger says the energy industry looks to be on a tear. “The energy problem is not going away, and interest in getting less dependent on foreign oil is stronger than ever,” he says.
That bodes well for area shipbuilders. Bollinger describes the current condition of the industry in south Louisiana as “very healthy,” and he expects shipbuilding will continue to show its strength.
Meanwhile, other area yards also are finding new sources of work to help build their backlogs.
Recently, Textron Marine & Land Systems landed a $24 million contract to build six search-and-rescue boats for the Mexican navy. Mexico plans to create an agency much like the U.S. Coast Guard, and the boats Textron will build are similar to vessels the company previously built for the Coast Guard.
The 47-foot boats, which will have aluminum hulls, are designed to right themselves if overturned in rough water.
The contract is the first Textron has received from the Mexican navy.