Kvaerner Philadelphia Shipyard, Formerly Facing Closure, Signs $1 Billion Double-Hulled Tanker Deal;
OSG, Inc. agrees to long-term charter.
Former President Bill Clinton Delivers Keynote Remarks At Shipyard
Oh, yeah. The kind of people that buy/borrow/operate tankers are likely to be really impressed by the running mate of the author of Earth in the Balance.
The team that rescued Kvaerner’s Philadelphia Shipyard (KPSI) from closure in 2001 today announced a $1 Billion, 10 double-hulled tanker deal and the formation of a new wholly-owned, U.S.-based subsidiary that will charter the environmentally-sound ships in the growing Jones Act domestic shipping market. The ships will be chartered for at least five years at a cost of more than $500 Million after delivery to Overseas Shipholding Group, Inc. (NYSE:OSG) for service in the Jones Act domestic shipping market.
A ceremonial contract-signing was held in the heart of the shipyard along the Delaware River. It was attended by more than 1,000 workers, customers, suppliers, and friends of the Yard, including former President Bill Clinton, who served as the keynote speaker. He signed into law the 1993 National Shipbuilding Initiative that mightily helped a struggling American maritime industry through streamlining regulations and a $220 million new technology support package. President Clinton said he was proud to play a role in the successful, bi-partisan public-private partnership that set the stage for the shipyard revitalization.“I never lost faith in the American shipbuilding industry and neither did so many of our public servants, workers and private businesses,” said President Clinton. “I salute the men and women of Kvaerner Philadelphia Shipyard for showing all of us once again that it is possible to achieve great things even in the face of seemingly impossible odds. Today’s announcement is good news for the workers here, for America’s maritime industry and for the environment.” On the site of America’s first naval base, completely rebuilt by Kvaerner to world-class specifications, company officials were also joined by Gov. Ed Rendell, Mayor John F. Street, U.S. Representative Curt Weldon, and numerous other local, state, and federal government officials who came together under the red-white-and-blue banner, “Building the Future”. There were several major positive announcements for the region and America’s commercial shipbuilding industry. These included:• Kick off a new, five-year, 10-ship (plus an option for two additional vessels), $1 Billion Product Tanker Program, believed to be the largest of its kind in American commercial shipbuilding. KPSI will build efficient, cleaner-burning, environmentally sound double-hulled tankers for the domestic Jones Act market. The leading-edge ship design is being provided through an exclusive, five-year agreement with Hyundai Mipo Dockyard. The order, which includes an option for two additional tankers, calls for the fist delivery in 2006 and order completion by 2010. • Formation of ASC (American Shipping, Inc.) as part of Kvaerner ASA, which will in turn own KPSI and charter the new tankers to domestic customers, including major oil and chemical producers and suppliers. Brad Mulholland, the former President of Matson Navigation Company, Inc is serving as CEO of the new subsidiary. He said the new, MT-46 Veteran Class, 46,000 dwt tankers will be among the most efficient tankers ever built• ASC’s first new customer, pending the approval of both company boards of directors, is OSG, the second largest publicly listed tanker owner in the world (measured by number of vessels.) Its fleet totals 99 and with this charter, it would be doubling the size of its Jones Act fleet. • News that the turnaround initiated in December 2001, under Kvaerner’s new management, headed by Mr. Røkke, is succeeding. He rebuked previous management plans to close the yard and focused significant energy and resources on building a stable future supported by steadily increasing efficiency and productivity, KPSI recently declared its first annual profit for calendar year 2004 It has sold its first four ships to Matson with two ships in service and reporting excellent results. The next KPSI-built Matson container vessel is scheduled to be christened May 21.• Start of construction of a new permanent office building on the KPSI site replacing temporary trailer offices the company has occupied since acquiring the facility in 1997. This is another tangible sign that KPSI is “here and here to stay.”Mr. Røkke, the self-made industrialist who believed from the outset that the Philadelphia yard could aggressively compete in the Jones Act market, thanked President Clinton for his contributions to the American maritime industry and to the health and safety of the world. He praised the shipyard’s tireless supporters and the dedication and determination of shipyard workers and the job they are doing to make Kvaerner Philadelphia a more efficient – and profitable – business.“I am proud to be able to show how well the people at the yard have stood up to the challenge of turning this Navy yard into the most competitive yard in the Jones Act market”, he said. “Based on the foundation of bold political decisions in the 1990s, a committed work force now produces great ships, built efficiently and with love and care. I lived and worked in the United States for 15 years, and I know this is a can-do country. We have proven that we are the can-do shipyard in the United States.”Gov. Rendell, who as Mayor of Philadelphia, helped attract Kvaerner to the city and forge a landmark public-private economic development partnership said, “Thousands of jobs have been created and are continuing to be created through our joint efforts. With the help of so many elected officials, including my predecessor, Gov. Ridge, and countless others, Kvaerner Philadelphia stands as a model to the rest of America of how you can transform a former military base into a successful major employer and economic engine that benefits not just one region, but an entire nation.”The Governor noted that more than 140 KPSI workers were rehired and retrained after they lost their jobs in the Naval Shipyard closing.“The proposed bareboat charters of ten newbuild Jones Act product tankers by subsidiaries of OSG represent a significant commitment,” said Morten Arntzen, President & CEO of OSG. “For the Jones Act fleet to grow, it will require yards like KPSI and shipping companies like OSG that are committed to quality and willing to think and act creatively and boldly. The ten ship program is OSG’s first giant step to building a world-class U.S. flag shipping business.”David Meehan, Kvaerner Philadelphia’s CEO, and a Pennsylvania native, said, “This is a proud moment for us as a company that is building the highest quality ships our nation’s maritime economy depends on”. He said while performance and productivity are continually improving, the KPSI team recognizes they are in a fiercely competitive market place. “In this business you are only as good as the next ship you build so we strive for continuous improvement in every area, from productivity to profitability.” Meehan also noted that the new fleet of tankers meets the international standards for double-hulled tankers which must be in service by 2015, replacing an aging fleet of single-hulled tankers. He said the disastrous crude oil spill from a single-hull tanker in the Delaware River last year is a stark reminder to his team of the vital need for their new ships.He also praised the contributions of Manny Stamatakis, the former Chair of the Delaware River Port Corporation (DRPA), and now Chair of the Philadelphia Shipyard Development Corporation (PSDC) and others who have worked to preserve and promote the highest standards of shipbuilding at the Kvaerner yard. About Kjell Inge RøkkeMr. Rokke, the Main Shareholder of Kvaerner ASA, is an entrepreneur, an industrialist, and an internationalist. His career in business began in 1982 in Seattle, Washington, with the purchase of a fishing trawler and that led to his building a network of leading worldwide fisheries. A builder of businesses in diverse sectors, ranging from shipbuilding to materials handling, he has invested significantly in the United States and Norway. His business interests include the Aker Group, Norway’s largest employer in the private sector and Kvaerner, the parent company of both KPSI and newly-formed ASC. The Aker Group is a global technology and service provider to the oil, gas energy and process industries, the fifth largest shipbuilding group in the world, and one of Europe’s leading providers of fresh fish to consumer markets.
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