Speculation on the forthcoming year has become remarkably sparse in the last couple of years because of the tumultuous events in liner shipping and uncertainty over the international economic situation. But a year-end port-related takeover is a probable indication of which way US shipbuilding is headed.
Portland, Oregon yard Vigor Industrial has bought the venerable (94-year-old) Todd Shipyards in the Seattle area for $130 million, creating a company with 1600 employees. Todd’s management will remain, as will all existing contracts. “A lot of ship repair and building work is lumpy and regional,” said a Vigor “In periods where they’re seeing a slack in work, we can transfer people to their location to do work and vice versa.”
So, what sort of work is Vigor acquiring? Unsurprisingly, Todd is big in the naval and Coast Guard business. This month it won a contract to give the Nimitz a new electronic and general equipment sparkle, on top of a contract awarded previously. All told, there is an order book of $100 million.
While Todd has a fairly sizeable private order book as well, it’s the government side that is of the greatest interest.
Which is the pointer to 2011 trends. Other west Coast yards are likely to change hands as profitability becomes increasingly difficult, with two that spring immediately to mind.
The burden of bureaucracy and form filling is also behind Todd’s sale, another pointer for the year. “Being publicly owned is a tremendous management drain, in terms of spending significant amounts of time making sure your disclosures are accurate and up to date,” is how a Todd boss put it.
But, even shipyards are not immune to lawyers trying to make money out of a deal. At least four law firms have announced they are investigating the deal for “breach of fiduciary duty”, which means that some shareholders reckon Todd could have got a better offer.
That too is an indication of what the next 12 months hold.