“Vikings” rescue Philadelphia Shipyard, twice
Recent government contracts bring yard—and workers—back
Business and Sports Editor, The Norwegian American
When your shipyard is in trouble, send in the Vikings.
Philadelphia is the birthplace of the U.S. Navy and has had a port presence since 1776. The current site of Philly Shipyard, previously a portion of the Philadelphia Naval Shipyard, opened in 1917. During World War II, it had 40,000 employees. The yard was responsible for building 53 warships and repairing an additional 1,218. But the last new ship—Blue Ridge—was delivered in 1970. Closure of the yard was announced in 1991, but because of court challenges, it didn’t completely close until 1996, its last assignment a two-year overhaul of the USS John Kennedy.
Negotiations between the city of Philadelphia, Commonwealth of Pennsylvania, and the U.S. government with a German company, Maya, broke down. They looked toward Norway giant Kvæner. An agreement was reached among the city, commonwealth, and U.S. government that stipulated that local and state residents would be hired.“At that time, Kvæner was the fourth largest shipyard group in the world, with shipyards in Norway, the United Kingdom, Germany, and Finland,” said current CEO Steinar Nerbøvik. “They were quite big. They came to a public private partnership agreement with city and state, and U.S. government, which was signed in 1997.”
The city, state, U.S. government, and Kvæner made a combined $650 million investment to rebuild the yard. Most of it was for training, because so much time had passed since the yard had built a ship.
Mayor of Philadelphia Ed Rendell (1992 – 2000) said he wanted the yard to look like a yard in Germany. “The layout of the yard is a copy of the most modern German shipyard at the end of the ’90s,” said Nerbøvik. “We had training apprentice programs. They sent delegations to Germany and Norway and other countries to make sure that they got the top-notch training at that time. Coaches came over to Philadelphia to train the next generation of shipbuilders.”
The first container ship was delivered to Matson Navigation Company in Oakland, Calif, in 2003, and Matson received five of the first six container ships into 2004.
Norwegian shipping magnate Kjell Inge Røkke was not happy, though. Back in Norway, Nerbøvik was working at the Langsten shipyard on the other side of the fjord from his hometown, Molde. Nerbøvik’s father had also worked in the Molde shipyard from the time he was “15 years old to the age of 65 … walked two minutes to work from his house.” Nerbøvik is the oldest of three brothers, all of whom are in shipbuilding.
“Mr. Røkke owned the former Aker yards, with yards in Norway, including Langsten, with my boss, and nearby Aukra, [yards in] Finland, Germany, and the Philadelphia yard. He built the Molde football stadium since he’s from Molde” said Nerbøvik laughing. “Mr. Røkke tells my boss, ‘I need to strengthen my management team in America. I have to send some Vikings over there.’ My boss recommended me. I got the chance to make it in America. I was lucky to be in the right place at the right time with owners who believed in me.”
Nerbøvik started as vice president for engineering on Oct. 30, 2003, arriving the same day as new CEO David Meehan. “He made sure the management team was one strong group working for each other,” he said of Meehan. “We improved our efficiencies greatly in 2003 and onward.”
They needed another product to create more work. They signed a 10-tanker contract with Overseas Shipping Group (OSG) in New York. South Korea had supplanted Germany and Europe as “champions of shipbuilding.” Nerbøvik, Meehan, and the chair of OSG went to South Korea in May 2005 and signed an agreement for the South Koreans to provide the design and equipment so an exact replica of what they were building could be made in the Philadelphia shipyard.
“We didn’t need to reinvent the wheel,” said Nerbøvik. “We didn’t have to come out with a new design. We said to our Korean friends, ‘You guys are building seven ships a year. We only want to make one, maybe two, maybe three, so when you’re buying equipment, buy 73 engines, 73 pumps, and 73 of everything for the same price you are paying. Then, we can get access to worldwide knowhow and pricing.’ That’s how we became the most competitive commercial shipyard in the United States.”
In 2005, control of the shipyard moved to Aker. In 2008, Meehan and Nerbøvik left, and Jim Miller became CEO until 2011, when Røkke’s son, Kristian (then 28), became CEO. In 2014, Kristian asked Nerbøvik to return to Philadelphia to be CEO. Kristian is now chair of the board, and Miller is an adviser.
Between June 2014 and March 2019, the shipyard completed eight of the 22 tankers delivered since 2006, many next-generation ships. On Dec. 1, 2015, shareholders of Aker Philadelphia Shipyard ASA agreed to change the company’s name to Philly Shipyard ASA.
The last two container ships delivered to Matson in 2019, were “the largest container ships ever built in the States. That was quite an achievement for our shipyard. We had renewed the tanker market,” said Nerbøvik.
Then the orders dried up.
“We had to lay off more than 1,100 workers,” said a distraught Nerbøvik. “Plus, approximately 100 who do the repair jobs. It really took a toll to layoff fantastic people, workers, support, staff. There wasn’t enough work for them.”
They decided they needed to branch out, where they would always be busy at different points in construction. They decided to bid on governmental contracts.
He talked excitedly about the new projects, but was just as excited saying, “Today, we have 250 people in the yard, staff and workers. At the end of this year, we will increase to 600 and early next year, 1,200.”
First, they “scaled down and fixed” two 50-year old cargo ships owned by the U.S. Department of Transportation Maritime Administration (MARAD).
They are involved with four design studies as well as construction and repair projects. On April 8, 2020, they were awarded $630 million for the first two of five ships for National Safety Multi-Mission Vessels, also called training ships (MARAD), with it rising to $1.5 billion if all five ships are completed. These are modern diesel electric training vessels for American state maritime academies. Delivery of the first ship to MARAD and State University of New York Maritime College is in less than two years. This enabled the shipyard to restore jobs.
“The academies are training the cadets, the new generation of seafarers,” said Nerbøvik. “They can have 700 cadets and 100 hundred officers training them on board. We are designing and building the state-of-the-art training ships. These are electric propulsion sophisticated machinery automation. On the lower level is a copy of the main bridge so the cadets can be trained in how to maneuver all propulsions.
“We have General Electric as a big contractor. These are diesel electric ships that use four engines that are driving four generators. The generators are producing electricity that goes back to the propeller and throughout the ship and keeps everything cool. The ship can run on four speeds and four engines or three or maybe only use one. It depends on what you want to do. They can make sure that they can produce the necessary electricity without running all four engines at the same time.”
The four design studies include: building a better type of cargo vessel that can do a process called submarine tender (CHAMP) for the U.S. Navy; ocean surveillance ships that “gather underwater acoustical data,” for the T-AGOS program of the Navy; cable ships for the T-ARC program of the Navy—“they want to put cables on the sea bottom,”—and the Offshore Patrol Cutter (OPC) for the U.S. Coast Guard.
According to the U.S. Coast Guard website, the OPC will be a middle ship between the national security cutter, whose purview is in the open ocean areas, and the fast response cutter, which operates closer to land. This is “the Coast Guards’ highest priority investment.”
Philly Shipyard has also been contracted to repair the USNS Charlton, scheduled for completion in third quarter of 2021.
Things look promising at the yard.
“The government, navy market will put food on our table in the coming years,” said Nerbøvik. “Our future strategies will be diversified with government and commercial shippers and repair. That gives me a three-legged stool. Hopefully, we can have 1,200-1,400 people constantly. When there’s too little in the government market, the commercial or repair market may be better. We can move people around. We are reopening our apprenticeship and training programs. We’ve had some success in contacting former workers and getting them back in the shipyard. We’re happy to have them back. We’re recruiting a lot of staff and qualified workers, engineers, finance people, planners.
“A lot of new faces and also these old-timers. They want to come back. It’s so fun to be a part of this business. My motto is, ‘Every day is a good day to be a shipbuilder.’ I say it and I mean it. My old boss said, ‘There’s two good days to be a shipbuilder, the day you sign the contract and the day you deliver.’ I say, ‘I respectfully disagree. Every day is a good day for a shipbuilder.’ It’s more like a way of living. I was raised to design and build ships. I love to be around seafarers and suppliers and Coast Guard and everything. I love my job. That’s the gospel I’m trying to spread.”
This article originally appeared in the April 23, 2021, issue of The Norwegian American. To subscribe, visit SUBSCRIBE or call us at (206) 784-4617.