Shipyards get financial breathing room from military contracts

For duly certified shipbuilders, a military contract provides a lifeline when clients in other industries are in free fall. Just ask the principals of the shipyards division of Houston-based Gulf Island Fabrication Inc.

The Navy exercised options that awarded the company’s Houma, La.-based Gulf Island Shipyards LLC a two-year, $130-million contract this spring to build two additional Navajo-class (T-ATS) towing, salvage and rescue vessels. The new contract swelled the company’s backlog to an historic high, just as its oil and gas business cratered in the wake of the coronavirus-provoked economic plunge.

“These awards put our shipyard backlog at an all-time high and will add critical man hours to our backlog that will provide a strong base of work for our Houma shipyard operations going into 2021 and 2022,” said Gulf Island Fabrication president and CEO Richard Heo. “In addition, the further diversification of our shipyard division’s backlog away from oil and gas will help us as we navigate through this challenging low oil price environment.”

Gulf Island was awarded an initial $63.5-million contract in March 2018 for the design and construction of the new T-ATS-class of open-water salvage vessels. The since-designated Navajo-class vessels are built to a minimum 263’x59′ with payload capacity of 1,796 tons.

Elsewhere, when United States Marine Inc. (USMI), Gulfport, Miss., was awarded a five-year $108 million Department of Defense (DOD) contract in April to build an undisclosed number of 41′ combatant craft assault (CCA) boats, the company not only retained its more than 180 employees, but plans to “expand as production proceeds,” CEO Barry Dreyfus Jr., told WorkBoat in July. “Right now, we are in pre-production for the craft.”

The five-year CCA contract was awarded through the DOD’s unified U.S. Special Operations Command (USSOCOM). USSOCOM/U.S. Naval Special Warfare (NSW) Command special boat teams will operate the CCAs. The work is expected to be completed by April 2025.

Part of the contract includes the first nine-meter (29.5′) multiuse expeditionary response craft (MERC) USMI has produced in a year, Dreyfus said.

Meanwhile, despite the challenges imposed by the Covid-19 pandemic, USMI has managed to meet all delivery dates. “In fact, after DOD lifted the travel ban for military personnel, we had a total of nine craft accepted within a two-week period of time,” Dreyfus said.

About the author

Jim Redden

Jim Redden is a Houston-based independent petroleum writer, focused largely on the upstream oil and gas industry. He can be reached at jimredden@sbcglobal.net.

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