Effort To Keep Shipbuilding Alive Here Goes Into High Speed A German Firm May Come To The Navy Yard. Area Business And Labor Leaders Are Moving To Help.

Posted: March 06, 1995

After a sluggish start, Mayor Rendell's campaign to save 4,000-plus jobs by reviving shipbuilding at the soon-to-be-closed Philadelphia Naval Shipyard is picking up steam.

Over the last week, engineers stepped up planning, business executives huddled, labor leaders got organized, and hundreds of potential suppliers and would-be subcontractors made phone calls.

And research continued on the bottom-line question: How much does it cost to build a ship in Philadelphia?

A proposal announced by Rendell on Feb. 15 would bring Meyer Werft, of Papenburg, Germany, one of the world's top shipbuilders, to Philadelphia. Meyer would lease the two longest drydocks at the shipyard and build a variety of complex ships, some costing more than $1 billion.

Meyer has, under the agreement with the city, until June 13 to determine that it can make a profit here and line up $410 million in investment capital and loan guarantees, half government and half private.

Work on those issues moved ahead on several fronts last week:

* Meyer Werft engineers from Papenburg began detailed planning for the improvements they would have to make at the yard, mainly construction of a building large enough to build two ships at drydock No. 4.

* A group of business leaders, convened by Meridian Bank chief executive Samuel A. McCullough, huddled for a detailed briefing on Meyer's proposal. ''They're certainly serious about what they're doing," McCullough said later of the Meyer team.

* Peco Energy Co. and other firms assembled internal task forces to evaluate their opportunities with Meyer Werft.

* John P. Morris, the state's top Teamsters official, and others began putting together a coalition of union officials to support the proposal.

* Paul Drayton, the Delaware River Port Authority's chief executive, negotiated access to market studies that will allow a leading maritime consultant to assess the economic benefits of a Meyer Werft shipyard within two weeks.

* Harris Wofford, the former U.S. senator who has strong ties to the Clinton administration, spent an evening brainstorming about potential Washington strategies with Meyer's Philadelphia team. Federal defense- conversion funds and loan guarantees could play a key role in the needed shipyard improvements.

* Paul Zelenkofske, a leading accounting and management consultant and Gov. Ridge's point man on the Port of Philadelphia and Camden board, started his own detailed evaluation. "I'm doing my own due dilligence, in my own way. . . . The governor hasn't asked me to do it. He has his own team working on this."

* The Shipyard Community College, a consortium that includes Drexel University and community colleges in Delaware County, Philadelphia and Camden, stepped up recruiting for its courses, a move that could reduce Meyer Werft's anticipated $60 million training cost.

"It has taken us a year to get going, but now we're making strides," said Ron Smith, an engineering professor at Drexel. "We can offer basic English to computer skills, and everything in between."


Meyer Werft's own consultants, meanwhile, kept gathering information about the cost of parts and material here.

At one point, they were having trouble getting detailed data. State Rep. William Keller, a South Philadelphia Democrat, learned of their problem and quickly volunteered to ask every member of the Legislature to track down potential suppliers in their districts.

"I'm not sure the suppliers across the state know how much business this will generate," Keller said. "We're going to tell them, and urge them to go after a piece of it."

Hundreds of potential suppliers did respond to initial news reports, jamming the phone line into the Rittenhouse Hotel apartment of Michael Schwarz, president of the German firm's new U.S. subsidiary, Meyer Werft Philadelphia Inc.

By week's end, Meyer Werft had set up an information hotline for potential suppliers - 215-968-0168.

"Things are starting to move. Philadelphia is getting its act together," said Peter Hearn, a lawyer involved in the project.

Fred Dedrick, economic-development director of Greater Philadelphia First, a group of top executives that promotes regional business interests, defended the mayor's staff, which has been criticized for responding slowly to the Meyer Werft opportunity.

"Three years ago, a consultant's report said shipbuilding was a dead issue at the Navy Yard," he said.

Dedrick said his board was not ready to endorse the Meyer proposal, but added that he, like others, was enthusiastically exploring the opportunity. ''It would change the momentum at the Navy Yard," he said. "It preserves the jobs there. If they're not saved, people with valuable skills could disperse, and we'll never have them again."

Meyer Werft could trigger an expansion that would create three local jobs for each of the estimated 2,000 jobs that would be created at the shipyard, Dedrick said.

"The thought that we could be the place in America where shipbuilding returns, that we could have one of best shipbuilders, building beautiful ships right here, is incredibly exciting," Dedrick said.

The already difficult project was made more difficult by government downsizing resulting from the November election, Dedrick said.

Former Gov. James J. Florio of New Jersey agrees. "Sadly, this is taking place when Washington is going through an internal struggle about what its role will be," he said.

"We're trying to play catch-up. Other (countries) have been subsidizing shipbuilding for many years . . . and are coming up with creative mechanisms to accelerate subsidies" before an international treaty banning them takes effect Dec. 31, 1998.

Government spending in Philadelphia, Florio said, "comes under the appropriate label of defense conversion," which is not banned by the Organization of Economic Cooperation and Development treaty.

Meyer Werft presents a good opportunity, he said. "It is a wonderful company. There is a real need for what they do best. High-end cruise ships are in great demand."

Florio has met recently with heads of several cruise lines, "and they are all planning on expansion, both building new ships and stretching existing ships."

The training issue, which the shipyard college consortium could address, has been the biggest concern of Bernard Meyer, chief executive and owner of Meyer Werft, since his first visit here last September.

The consortium was initially focused on the needs of soon-to-be-unemployed workers. But it recently made a "handshake agreement" with the city to continue using facilities at the shipyard, including a television station, long after the Navy leaves.

It offers courses in computer-assisted design, computer uses, electronics, and heating, ventilation and air conditioning. It also assists workers in obtaining any professional licenses that might be required in a civilian job but were not required for government work.

"We're pushing more advanced techniques, to really get people trained for the 21st century. Our goal is to provide education programs on demand so when a guy finishes a work shift, he can go right to a computer terminal and begin class," Smith said.

As enthusiasm mounted over the week, McCullough and others sought to add a note of caution. "There's got to be a lot of local and state government involvement," McCullough said, "and no commitments have been made." It's too early in the process to say what the final decision should be, he added.

Huge financial and political questions and very tough negotiations loom.

As Greater Philadelphia First's Dedrick put it: "Gov. Ridge could say you can have this, but not this, this, this and this, and the city could have to make a difficult choice."

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