One of the most important ship-repair companies on the East Coast hopes to capitalize on a new surge in U.S. defense spending. Edward N. Chaves takes a look at Norshipco, one of a select group of “Best Managed” companies in the United States according to the American Institute of Management.
Founded in 1915, Norshipco (Norfolk Shipbuilding & Drydock Corporation) began business in the Norfolk area repairing tugboats and wooden hull schooners. When the United States entered World War I the company started repairing Navy vessels. Ever since the war, the U.S. Government and, more specifically the U.S. Navy, has been one of the company’s primary customers. Norshipco has not only served the nation through Word War I, but also World War II, Korea, and many other conflicts. Over the years, Norshipco has successfully evolved into the largest and most capable private-sector ship-repair company on the East Coast.
Today, there are certain events that have led to growing expectations within the company that U.S. Navy spending will continue to increase in the next several years. In recent years, the Navy’s spending for ship repairs and new shipbuilding has been modest. Moreover, the armed services’ anti-terrorism campaign has increased the workload of America’s naval fleet. Taken together, both of these events have led to significant wear and tear on U.S. ships. As a result, the Navy is likely to invest more funds to maintain its aging fleet. U.S. Defense Secretary Donald H. Rumsfeld also has discussed a desire to funnel more Navy repair jobs to private shipyards. Since its Virginia yard serves the homeport of many Navy ships, Norshipco is poised to benefit even more from increased defense spending.
In addition to its work for the U.S. Navy, Norshipco is a leader in the refurbishing and conversion of all types of commercial vessels including ferries, tankers, LNG carriers, cargo liners, container ships and cruise vessels, plus all crafts connected with the exploration, production and transportation in the oil industry, from service and crew boats to drilling platforms, pipe barges and heavy lift ships.
Norshipco is the largest private shipyard in South Hampton Roads, Va. The full service repair facility encompasses 110 acres of property, with a 1,000-foot channel and controlling depth of 45 feet. Norshipco has three floating dry docks called “Titan”, “Virginian” and “Challenger”. Norshipco provides the international maritime community with 24-hour service, 365 days a year.
Norshipco is one of the first shipyards in the world to receive ISO 9000 certification. Listed below are the capabilities offered by Norshipco’s shops:
• Plate Shop: Hull and structural steelwork.
• Blacksmith Shop: Heat treating and custom forging.
• Welding Shop: All modern joining processes.
• Boiler Shop: Cleaning, repair and retubing; refractory installation; casing and door replacement.
• Pipe Shop: Repair and renewal of steam lines, plumbing and drainage systems and piping systems.
• Sheet Metal Shop: Heating, air conditioning and ventilation ductwork; marine furniture and sheathing installation; lifeboat repair.
• Outside Machine Shop: Repair of steering gear, shafting, turbines, gears and propellers.
• Inside Machine Shop: Valve and pump repairs; dynamic balancing and vibration analysis; shaft microfinishing and extra-size lathe capabilities; centrifugal babbitting and micarta bushing replacement.
• Paint Shop: Waterblast, grit blast and recoating; application of all marine coatings.
• Electric Shop: Motor rewinding and repair; meter calibration; generator and regulator overhaul; cable replacement; AC and DC rewiring; electronics installation.
• Insulation Shop: High and low temperature insulation; pipe covering; portable insulation pad fabrication; asbestos removal under controlled conditions.
• Carpentry Shop: boat chock, keel block and wooden decking fabrication; tile flooring, drop ceiling, paneling and cabinetry installation.
• Rigger Shop: Staging of shipboard areas for removal and refitting of systems; tests and repairs of anchor chains, lifeboats, davits and mast wires.
Customers also have at their disposal a number of Norshipco services, including the following:
• Testing Services: chemist for gas-freeing and other services; non-destructive X-ray, ultrasonic, magnetic particle, liquid penetrant testing.
• Security Services: Round-the-clock security force; gangway watches as needed.
• Boiler and Compressor Services: Compressed air and steam piped to all piers; AC and DC shore power, oxygen, acetylene, fire and flushing salt water, potable water, sewage and slop disposal.
• Sandblasting Services: In-house, thorough, and safe sandblasting of hulls, tanks and other components.
• Diesel Parts and Services: Worldwide diesel supply and exchange; repairs, equipment and spare parts for low-speed diesels to any U.S. port.
Norshipco Industrial Repairs and Conversions
Because of its diversified trades people and equipment, Norshipco also offers a wide range of industrial services to non-naval sectors. Norshipco is capable of manning very large projects with minimal or no subcontracting. The company’s diversity allows it to support fieldwork with full fabrication and machining expertise. Norshipco has a tremendous amount of experience in steel, aluminum and alloy fabrication, mechanical repair, boilers, heat exchangers, and piping installations. Norshipco offers a large and experienced work force for field projects, in supplying parts, machining, and fabrication work.
Norshipco is a Class A contractor providing around the clock services to hotels, hospitals, factories, universities, textile mills, oil refineries, office buildings, bridges and dams, construction sites, industrial facilities, and military installations.
U.S. Marine Repair
Norshipco is a subsidiary of United States Marine Repair, Inc. (USMR), America’s largest non-nuclear ship-repair, modernization, conversion and overhaul company. USMR is owned by The Carlyle Group, a Washington, D.C.-based private investment firm. USMR has 2,500 employees, including 1,000 at its Norshipco yard in Norfolk. In addition to its Norfolk yard, USMR has ship-repair operations in San Diego, San Francisco and San Pedro, Calif.; Pearl Harbor, Hawaii; and Ingleside, Texas.
USMR evolved from The Carlyle Group’s purchase of a San Diego shipyard, Southwest Marine, in 1997. A year later, Southwest bought and absorbed Norshipco, which had been privately owned. Afterward, Southwest’s name was changed to U.S. Marine and its headquarters shifted to Norfolk.
USMR filed with the Securities and Exchange Commission in March 2002 for an initial public offering. The offering was intended to raise cash for repayment of debt and allow existing USMR shareholders to sell some of their shares. The company had expected to complete the stock offering in June 2002. In May 2002, however, the company opted out of the IPO and instead agreed to a buyout. United Defense Industries Inc. has decided to acquire USMR for $316 million. According to United Defense, the company will be a distinct business unit. United Defense makes artillery, shipboard guns and missile launchers. The transaction is expected to close by the end of June 2002.
Recently, USMR has reported stellar financials. USMR – which credits about 91 percent of its business to defense-related work – more than doubled its net income between the first quarters of 2001 and 2002. The company earned $4.1 million in the first three months of this year, compared with $1.9 million a year ago. Revenues grew 53 percent to $117.8 million in the first quarter of 2002 from $76.8 million in the same period last year. The great news on the net income and revenue front is set to continue because of the Navy’s need for additional overhaul and repair work.