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Report: Philly Shipyard Could Close

Monday, May 14, 2018

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Philadelphia's Philly Shipyard (PSI) is facing yet more economic challenges and possible closure—the company’s order book is empty, and few are looking to buy new vessels.

This most recent downturn has prompted the shipyard to lay off 250 employees, according to The Inquirer, lowering its workforce total to 950 people. Currently, the shipyard is under the gun to complete two 850-foot-long cargo vessels for the Hawaii-Pacific market.

Layoffs and Economic Downturn

As the early 2019 completion date of the final ship draws near, layoffs are slated to continue—there is no new work scheduled. Yet according to Steinar Nerbovik, PSI's chief executive, the shipyard expects to post losses in 2018 and 2019. Nerbovik remains optimistic about the future, however.

Philly Shipyard’s future financial security relied on striking a deal with Tote Maritime for four new container ships, intended for Hawaii trade. The deal, which included $16.5 million in design work on part of the shipyard, fell apart in January, and the company is now looking for buyers.

Philly Shipyard, the majority shareholder of which is Norwegian holding company Aker ASA, specializes in producing vessels for the Jones Act market; this market requires cargo shipped between national ports, including the U.S. mainland, Hawaii, Alaska, Puerto Rico and Guam, to use American-made vessels, staffed by U.S. crews. As it stands, pickings are slim.

After the current work is completed for Matson Inc., “it would be challenging for Philly Shipyard to continue shipbuilding operations” if new orders don’t come in, noted PSI.

Currently, the shipyard is also exploring new markets, specifically focusing on specialized vessels including fishing trawlers, cable layers and ships needed for the offshore wind industry. The company is also working in collaboration with Fincantieri Marine Group and Vard Marine to engineer the newest heavy polar icebreaker for the U.S. Coast Guard.

Philly Shipyard was founded in 1997 by the City of Philadelphia, the state of Pennsylvania, the U.S. Government and the Kværner Shipbuilding Division on the site of the old Philadelphia Naval Shipyard, and was completely rebuilt from 1998 to 2000. The shipyard became part of Aker American Shipping in 2005. To date, the company has produced more than 50 percent of all Jones Act merchant ships.

   

Tagged categories: Business matters; Ships and vessels; Shipyards

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