Challenging times for shipyards

For shipyards navigating through the current choppy market, geography and diversification often dictate how well they are doing.

Yards in the Gulf of Mexico with close ties to the offshore and inland markets are feeling the effects of sluggish demand from two sectors with equipment overhangs. Gulf yards have seen the supply of newbuild contracts from these sectors dry up in recent years. As a result, it’s a dogfight out there, with yards having to be more aggressive and flexible. For some that may mean bidding for both government and commercial contracts, and building in both steel and aluminum.

In WorkBoat‘s cover story on shipyards that will be out later this month, Senior Editor Ken Hocke talked to shipyards from around the U.S. about the state of the market. All admit that it is a challenging time for the shipyard industry, with yards in the Gulf of Mexico, the heart of the offshore energy industry, facing the most challenges.

“To give you an example of how competitive it is in the Gulf, there’s an owner who wants to build five new small barges, and bids went out to 18 shipyards for that project,” Dan Conrad of Conrad Shipyard in Morgan City, La., told WorkBoat. While the company is doing OK, Conrad said that more than ever it’s “a waiting game.”

Out West, for the most part, yards are doing better than their Gulf peers, but that doesn’t mean everything is rosy. At Vigor, CEO Frank Foti said it’s been a challenging market, one with “depressed opportunities.” Conrad and Vigor are two of the lucky ones, boasting fairly strong backlogs. Another yard with a diverse orderbook that has bucked the trend on the Gulf Coast is Eastern Shipbuilding Group. The Florida Panhandle yard, which is currently wrapping up its final OSV contracts, was a big beneficiary of the post-Deepwater Horizon building boom offshore. The yard was diverse before, but now boasts contracts ranging from Coast Guard cutters to tugs to towboats.

Eastern said they learned their lesson back in 1986 and have since diversified. The hope now is that shipyards have followed Eastern’s lead.

About the author

David Krapf

David Krapf has been editor of WorkBoat, the nation’s leading trade magazine for the inland and coastal waterways industry, since 1999. He is responsible for overseeing the editorial direction of the publication. Krapf has been in the publishing industry since 1987, beginning as a reporter and editor with daily and weekly newspapers in the Houston area. He also was the editor of a transportation industry daily in New Orleans before joining WorkBoat as a contributing editor in 1992. He has been covering the transportation industry since 1989. He has a degree in business administration from the State University of New York at Oswego, and also studied journalism at the University of Houston.

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