11 April 2012

Vallejo shipyard business reflects on first year on Mare Island:

In its second year of operation on Mare Island in Vallejo, Allied Defense Recycling is supplementing its larger ship efforts with smaller vessel contract work. The photo shows a worker busy on a barge dismantling job. (Chris Riley/Times-Herald)

Gary Whitney's vision for the future of Allied Defense Recycling's Mare Island Shipyard is equal parts pragmatic and hopeful.

In a recent interview at the company's Nimitz Way office -- more than a year after Allied began bringing its first ship dismantling work into two dry docks -- Whitney said he defines the word "potential" as "you ain't never done nothing."

Whitney, the shipyard's general manager, recited the company's accomplishments as it heads into its second year:

Allied kept 40 full-time employees, with "peaks and valleys" of up to 150 workers during boon times. This month, the shipyard's Dry Dock 3 is seeing the frequent turnaround of ships needing hull-scouring and repair, and is just finishing a five-barge dismantling contract in neighboring Dry Dock 2. Students from the California Maritime Academy are frequently brought to the shipyard for hands-on experience, and former crewmembers of the ships passing through Mare Island often stop by for a final peek at the past.

Although Allied has breathed new life into the aging dry docks, its dismantling work has not led to as dramatic a comeback as some predicted.

Only two federal contracts to dismantle the nearby Suisun Bay Reserve "mothball" Fleet vessels have come to Mare Island. The rest have been tugged thousands of miles -- through the Panama Canal to ship dismantlers in Texas. Some 20 vessels, broken up into four bidding periods, have left the fleet since Allied took in the SS Solon Turman and the SS President (later traded for the SS Lincoln). Most, if not all, have stopped by Mare Island to be cleaned before continuing on to Texas.

Competitors seemed to have taken note of Allied's emergence as the only West Coast dismantling facility, with its own permanent dry docks. Other dismantlers began paying the U.S. Maritime Administration -- the mothball fleet's caretakers -- for its old ships, instead of requiring government subsidies to break them down.

"It's been a surprise in a sense," Whitney said of Allied's first year. "The surprise is we do not know how our competitors are going to react or how they're going to bid. But ... it's a competitive bid in which the government determines the best value, and the government has determined that we have only been the best value so far on the first few."

Whitney speculated that his competitors may be playing hardball, though he cannot say for sure.

"You've got a new player on the block, called us. That's the only thing I can think of," Whitney said. "The price of metals, it's up a little, but it still fluctuates up and down. ... So, you look at common denominators. What has changed? The only thing that has changed is you have a new player on the West Coast that wasn't there before."

Vallejo officials served in the early days as Allied's champion and liaison with outside officials. They continue providing help, such as talking to environmental agencies, but have not been hand-holding to get Allied business, city officials said.

Vallejo Economic Development Director Ursula Luna-Reynosa said her department helps Allied where it can, but indicated that it cannot help a business sink or swim.

"It's self-evident that Mare Island, in general, is good for maritime uses (like Allied,)" Luna-Reynosa said. "(But) at the end of the day, economic development is not specifically about winners and losers. It's about creating an overall environment that supports business."

The Maritime Administration's announcement last month of nearly $10 million worth of small shipyard grants did not include Allied Recycling Defense, and that's because the company did not apply for it, Whitney said.

"The biggest problem with the grants normally is that you have to have matching funds, in a lot of cases. At the present time, as you can see," Whitney said, gesturing around a sparsely furnished office space, "most of our dollars are going straight into the business, not being set aside."

To make ends meet and keep Allied's workers employed, the shipyard has also sought out commercial work, earning contracts to maintain, store and repair barges. Whitney is keeping an eye on available contracts for the Coast Guard, National Oceanic and Atmospheric Administration and obsolete Navy vessel disposal. It recently bid on two abandoned fleet tug boats in Richmond and further barge disposal work.

Whitney said he continues to see a bright future for Allied.

"(The first year's) been decent," Whitney said. "And where we're going from here is upward and onward."

Contact staff writer Jessica A. York at (707) 553-6834 or jyork@timesheraldonline.com

Source: Times Herald. By Jessica A. York. 10 April 2012

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