Land Use
 

Is Avondale’s owner sabotaging possible sale of the shipyard?

A “Save Our Shipyard” rally for the imperiled Avondale facility is set for  tomorrow at 10 A.M. on the Poydras Street side of the Superdome. Supporters of Avondale will then march to the Federal Building at 500 Poydras, for speeches and cheers. The event is sponsored by the AFL-CIO and other unions, and all “stakeholders in Avondale Shipyard’s future” are invited.

Avondale, one of the largest private employers in Louisiana, is operated by Huntington Ingalls Industries Inc. (HII), a shipbuilding spinoff of defense giant Northrop Grumman. Last year, Northrup Grumman announced that HII would close Avondale in 2013, raising the specter of 4,800 jobs lost (plus thousands of indirect job losses). Already, HII is scaling down its workforce with rounds of “rolling layoffs,” HII also owns shipyards in Newport News, Virginia and Pascagoula, Mississippi.

In response to a call I made about the march and other matters, the HII public affairs office sent me the following statement, and declined to comment further:

As was announced in July 2010, we plan to consolidate all Gulf Coast shipbuilding to Mississippi to better align the industrial base with the projected needs of our customers.  The consolidation will reduce future costs, increase efficiency and address shipbuilding overcapacity. That being our plan of record, we also deliberately allowed for a two-year transition from the time of announcement to provide the opportunity to work with federal, state and local officials to explore other uses for these facilities and also allow time for an orderly adjustment of our workforce.  That is continuing and it would be premature for us to speculate on any potential outcome at this time.

That hasn’t stopped others from speculating about Avondale, however. For some time now, news reports have alluded to deals and contracts “in the works,” but nothing has come of them. Public officials remain optimistic, labor leaders less so. This month, the local religious community united in prayer for the shipyard’s future.

Perhaps in answer to the prayers, this week New Orleans CityBusiness reported:

American Feeder Lines, a new company, wants to construct at least 10 small container vessels at Avondale as part of its plan to build a domestic container shipping business. AFL Chairman Percy Pyne will outline the plans Oct. 1 at a workers’ rally in downtown New Orleans.

Unfortunately, there’s a “but” to the story (my emphasis):

But there are two immediate factors to consider. For one thing, Pyne said AFL has only about 10 percent of the $250 million it needs. Also, Pyne said Huntington Ingalls has been “very frank” that it does not traditionally work in the commercial sector.

Ah, Tradition!  It’s what keeps us balanced in challenging times. CEO Pyne will be speaking at the rally tomorrow, explaining how his firm might be a part of Avondale’s future.

Far be it from me to suggest something untraditional, but I’m hearing that other firms besides American Feeder Lines are making offers for Avondale. My sources say that a foreign buyer has already made a solid offer to buy the yard  …  but HII doesn’t want to sell. Rather, HII is holding out for a big cash windfall from a package deal on all three of its shipyards. Thus, negotiations have stalled.

The identity of the foreign buyer is unclear, but it might be Scandinavian ship-builders like Aker or Maersk, or perhaps the Australian firm Austal, the grapevine advises. In such a scenario, the Avondale shipyard would manufacture commercial vessels.  Unfortunately, since commercial vessels don’t have the outfitting requirements of Navy ships, employment at the shipyard would still be painfully reduced, perhaps down to 2,500. But that’s better than zero. For a sobering perspective on the industry’s decline (and not just here), consider that Avondale, at its peak, employed over 26,000 workers.

Now, I realize it’s simplistic to look at a complicated situation externally, through rumor-colored glasses. For example, some very disturbing workmanship issues at Avondale are no doubt complicating the shipyard’s future. Also, one wonders if HII feels a burning incentive to sell Avondale (to a potential competitor) for, say, $280 million if the government is prepared to reimburse them nearly the same amount if they simply close the lot and consolidate operations in Pascagoula.

Nonetheless, if these rumors are true, perhaps future labor rallies will be aimed at pressuring Northrup Grumman to stop holding out for a more profitable group deal. Signs at a future “Save Our Shipyard” rally might encourage the defense giant to “Sell Our Shipyard.”

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  • Johnny

    Good luck HII/Noc will sell the yard after the government gives them 280 million to double dip
    By that time AFL will already have its ten ships running. Another thing the ship cost is 75 million each, they by the Avondale shipyard and the cost goes up to about 125 million per ship, okay what kind of deal did they make with the government, in other words this is nothing but bullcrap

  • whitmergate

    Please let me know if there is any sighting of any Jefferson Parish Officials ie, Parish President and/or Council members at that ‘stakeholders’ rally on Poydras … and send pics to prove it …