Energy industry may play a part in future of Avondale shipyard

12 19, 2012 by The Times-Picayune

State officials and executives at Huntington Ingalls Industries are looking toward heavy manufacturing, with an eye on the energy industry, to lure a potential partner to retain thousands of jobs at the Avondale shipyard site beyond its scheduled closure next year.

Defense giant Northrop Grumman said in 2010 that it would shutter the yard and consolidate its shipbuilding operations in Mississippi. The shipbuilding unit of the company was then spun-off last year into Huntington Ingalls, which has remained on schedule to close the facility in 2013.

Huntington Ingalls CEO Mike Petters told investors at the Credit Suisse Aerospace and Defense Conference in New York City in November that the company was still on track to shutter the yard next year after finishing work on a transport ship for the U.S. Navy.

In the meantime, Petters said that entering the energy industry was appealing given Avondale's proximity to the nation's oil and gas hub along the Gulf Coast, adding that "more projects that have been announced in that area and more projects planned than there are workers to do the work."

"Our view of it is that's a way to take an asset that really is headed to nothing, and turn it into something," Petters said at the conference, according to a transcript of his remarks.

In October 2011, Louisiana officials and representatives of the military shipbuilder expressed confidence that a new $214 million incentive package would quickly draw out potential partners for a joint venture at the facility. The deal, which would pay for workforce training and significant upgrades to the facility, was based on an assumption of 3,850 full-time workers at the site, once the largest manufacturer in Louisiana.

That number is now down to about 2,200 workers, Beci Brenton, a Huntington Ingalls spokeswoman, said Tuesday.

"We're actively pursuing opportunities and targeting the energy industry market along the Gulf Coast," said Brenton, adding that the company believes "the engineering and the construction elements of those kinds of projects are very comparable to shipbuilding."

After nearly a year of radio silence on the fate of the shipyard, several local officials said Tuesday that Huntington was close to an agreement with a South Korean shipbuilder in recent months, but the deal fell apart.

"I certainly thought we would've had a decision made by now, but it hasn't been because of a lack of effort on our part," said Jefferson Parish President John Young, who is scheduled to meet with Huntington executives on Wednesday for an update on the effort.

But Young and others said that while they believe the company has worked in good faith to find a potential partner, the final decision is ultimately in their hands.

"The problem we have is that they own the facility, and there's nothing we can do except push them and go to work with them through the state," said Young, who acknowledged that "it's in their best interest to get something through."

U.S. Rep. Cedric Richmond, D-New Orleans, who has been active in discussions about the shipyard's future, said the company had "gone down the road with a potential partner and it fell through, and that might be some of the delay."

Stephen Moret, the secretary of the Louisiana Department of Economic Development, said in an interview last month that state officials have "spent increasingly more time" working with the company on "a variety of potential options to secure the future of the facility."

He said the state has been helping "identify and cultivate relationships with specific other major companies that they can partner with to help keep the facility open."

"We've had very good progress, but we're not yet at the finish line" said Moret, who described his outlook as "cautiously optimistic."

To help workers in the meantime, the Jefferson Chamber of Commerce is staffing a mobile transition center with computers in the parking lot at the shipyard, said Todd Murphy, the chamber's president. The center uses a $158,000 grant from the state, which is designed to run for 18 months.

Murphy said the two-person effort, which started about a month ago, is intended to provide employees with career counseling and job placement assistance. The staff has met with about 250 employees so far, but Murphy expects the number will grow as the potential closure gets nearer.

"We just think it's very important to help them transition back into the workforce," he said. "It's a lot of people out there, men and women, with some great skill sets that we really don't want to lose."

Richmond said Tuesday that he hoped those workers could continue at the facility past next year.

"I'm still optimistic that we're all working on something to keep Avondale as an anchor in Jefferson Parish," Richmond said.

Petters, the company's CEO, hasn't ruled that out yet, either, but said he's prepared in case that doesn't happen.

"We will tread softly, we will tread carefully, and if we don't find anything, Avondale closes," he said at the conference.