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Full steam ahead for Nassco shipyard in San Diego

The last major shipyard on the West Coast has outlasted the competition by making sure that every new vessel has been built better, faster, cheaper and with fewer injuries than the one that came before, says its president, Frederick J. Harris.

July 03, 2011|By Ronald D. White, Los Angeles Times

At the West Coast's last major shipyard, the action never seems to stop.

In one part of the Nassco yard, on the shores of San Diego Bay, the U.S. naval ship Medgar Evers is nearing completion. The 690-foot vessel is the 13th in a line of T-AKE ammunition and dry cargo ships built by Nassco for the Navy and is scheduled to roll into the ocean Oct. 29 wearing bunting and steamers to the blare of "Anchors Aweigh."

Next to it, No. 14 — this one called the Cesar Chavez — sits at a much earlier stage of construction. Nearby, the keel has been laid on a new Navy project called the Mobile Landing Platform, which can act as a wharf at sea or a floating dry dock.

Nassco, once known as National Steel & Shipbuilding Co., hasn't survived by doing every new job as well as the last. The General Dynamics Corp. subsidiary has outlasted the competition by making sure that every new vessel has been built better, faster, more cheaply and with fewer injuries than the one that came before, said Nassco President Frederick J. Harris, a former merchant marine with an MBA and a no-nonsense style.

Failure on one or more of those points might have put Nassco on the same path as the many dozens of closed U.S. shipyards. Instead, Nassco's performance helped it land a $744-million contract announced in May for a new kind of Navy support vessel, he said.

"In five years, we have reduced the amount of labor required to build these ships by more than 60%. We'll complete construction on the last one in less than half the time it took to build the first," Harris said. Among manufacturers, he added, "we have the best learning curve in the U.S."

Repairs are an important part of the mix. To land a $1-million contract to repair the Navy frigates Vandegrift and Curts, shipyard officials had to figure out how to put them both in the same dry dock at once. They did, with just 10 feet to spare in separation. Then they found room to fulfill a $20-million repair contract for the amphibious warship Pearl Harbor.

Southern California has a rich shipbuilding heritage, from smaller vessels that once formed the world's largest commercial fishing fleet — also locally based — to the construction of 467 of the so-called Liberty Ships for the Navy during World War II. At the height of that war, California Shipbuilding Corp. employed 40,000 workers on Terminal Island, according to American Merchant Marine at War, a website devoted to merchant marine history.

The American shipbuilding industry declined after the end of the Cold War, when it was surpassed by Japan. In a race to the lowest labor costs, Japan was overtaken by South Korea in 2005. China took the lead in 2009. The U.S. industry had some protection from the Jones Act and related laws that require U.S.-built, -flagged and -manned vessels for travel between U.S. ports, but the toll has been steep.

Across the U.S., 85,000 to 105,000 workers are still employed at more than 300 U.S. shipyards of all sizes, the numbers depending on the ebb and flow of government and commercial construction and repair contracts, according to the Shipbuilders Council of America.

Of 12 major U.S. shipyards operating in the 1980s, six remain. General Dynamics Marine Systems owns Nassco, Bath Ironworks in Maine and Electric Boat in Connecticut. Huntington Ingalls Industries Inc. owns the three other yards: Newport News in Virginia, Ingalls in Mississippi and Avondale in Louisiana. Avondale is scheduled to close in 2013.

In California, recent losses have included the old Southwest Marine shipyard in San Pedro, now a rusting relic that has served as a set for prime-time television dramas including "24" and "CSI," and the Long Beach Naval Shipyard, which once employed 4,300 people.

There is nothing else on the West Coast on the scale of Nassco, which since it began building ships in 1959 has put together 63 auxiliary and support ships for the Navy and an additional 51 ships for commercial customers, including oil tankers, ferries, containerships and oceanographic research ships. The Navy also relies on Nassco as its primary repair facility for the Pacific Fleet.

Wall Street analysts said Nassco and the other General Dynamics shipyards thrived because of strong performance on contracts and by maintaining one of the industry's best workforces.

"Among the best-performing major marine shipyards, General Dynamics is at the top of the leader board. They have had a more highly skilled labor force. It's a veteran workforce. Ingalls by comparison has had a lot more turnover," said Peter Arment, managing director of Gleacher & Co. Securities.

"The other difference for General Dynamics is in better execution," Arment said. "General Dynamics is a large, well-run defense company, and they tend to have a history of performing well on open contracts. They know how to take a program from its early development stages and move it into major production."

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