The Todd Shipyard at San Pedro, last shipbuilder operating at the Los Angeles Harbor, will close after 72 years and lay off its already emaciated work force of about 400, it was announced Friday.
The yard has failed in recent years to land any new Navy construction contracts, and like American shipyards on all coasts it has been uncompetitive in bidding against low-wage foreign yards to build commercial ships. Its owner, Todd Shipyards Corp. of Jersey City, N.J., has been operating under the protection of federal bankruptcy law for nearly two years.
“This is the highest paid shipyard in the world,” said Tom O’Toole, assistant general manager at the San Pedro yard and a Todd employee for 33 years. “Great claim to fame. Look where it got us.”
When the shipyard began operation as Los Angeles Shipbuilding & Dry Dock Corp. in 1917, it was turning out wooden-hulled cargo ships, as well as steel-hulled combat ships for the Navy. Many of the decrepit-looking buildings at the shipyard today date to World War II when the facility built or repaired 960 ships.
Todd Shipyards President Hans K. Schaefer said in an interview that the company is discussing a sale or lease of the shipyard with three other companies that may continue to operate it as a ship repair facility, but he declined to identify them. Todd owns the equipment at the yard but not the 112 acres of land owned by the Harbor Commission.
Under federal law, the facility cannot be closed until the expiration of a 60-day notice to employees. Such a notice is expected to be sent shortly, O’Toole said.
Just two decades ago, the West Coast had 27 shipyards, but the vast majority of them failed to compete in commercial shipbuilding and have closed. Today, fewer than five shipyards continue to operate, and those survive by building smaller ships than in the past.
Many former shipyard workers in Southern California have since moved into jobs in the region’s booming aerospace industry.
5,600 Workers in ’83
As recently as 1983, Todd employed more than 5,600 workers on a multibillion-dollar Navy program to build 18 frigates. Ironically, Todd signed over the last ship built under that program to the Navy on Friday in a ceremony held just an hour after the company disclosed that it would shut down the shipyard. The frigate, the Ingraham, may be the last Navy combat ship built on the West Coast.
“It is frustrating for us to see Todd deliver an excellent product to us today and then announce they are closing,” said Capt. Bill Donnelly, the Navy’s supervisor of shipbuilding in Long Beach. “It may not be good for Los Angeles, but the good news is that taxpayers will get a good deal in having ships built in some of the lower wage areas (of the country).” The Navy’s surface ships are built at the Ingalls Shipyard in Pascagoula, Miss., and Bath Ironworks in Maine.
But that was little solace for workers at the shipyard, many of whom had spent their working lives there and had agreed to a wage freeze for the last seven years.
“I am not sad. I am bitter,” said E. R. Moreno, a machinist at the yard for 23 years and an activist in the union representing Todd workers. “I am bitter for the people they made promises to and didn’t keep.”
John Andrews, a shop steward for the Industrial Union of Marine & Shipbuilding Workers of America, which represented many Todd workers, added: “They use these excuses, and it is just a front that the union brought down this company. The company brought down themselves.”
But Schaefer insisted that the shipyard was not profitable and could not be operated profitably under current agreements with the Harbor Commission and the union. Those agreements include the lease on the land occupied by the yard and the union labor contract, which expires late this month.
Filed for Protection
Todd Shipyards filed for protection from its creditors under Chapter 11 of the Bankruptcy Code in August, 1987, hoping to preserve its assets and develop a long-term business plan. (Under Chapter 11, a company is permitted to continue operating under its existing management while it attempts to work out a plan to repay its creditors).
Todd has suffered losses that severely depressed its stock price in recent years, and its shares closed Friday at $3.25, down 25 cents.
Also Friday, Todd disclosed that it lost $84.8 million on sales of $375 million for the fiscal year ending April 2, compared to a loss of $28.1 million on sales of $351 million last year, results that include a profitable industrial products subsidiary.
The firm’s San Pedro and Seattle shipyards alone posted a net loss of $95.9 million in fiscal 1989, attributable primarily to a $100-million charge against earnings for the closure of the San Pedro yard. The charge includes $78 million for the write-off of assets and $22 million for other employee and environmental costs.
Stuart Platt, a retired rear admiral who reviewed Todd’s contracts while he was at the Pentagon, said: “The company diverted much of its potential for work to its Seattle yard.” The Seattle yard has an average hourly wage of $12 versus $13.48 at San Pedro.
Todd has unsuccessfully bid on several major Navy contracts in recent years, arguing that the Navy should maintain at least one yard on the West Coast in the event that ships could not be moved easily from the East Coast during a war. Assistant Navy Secretary Everett Pyatt, however, has dismissed that rationale.
In recent congressional testimony, Pyatt defended the Navy’s opposition to rescuing ailing shipyards for the sake of keeping a wartime “mobilization base.”
“The Navy does not support and maintain idle industrial capacity for other critical hardware; aircraft, missiles and electronics,” he testified. “The Navy as currently and historically budgeted cannot afford to support excess industrial capacity beyond that required to support peacetime production.”
Many of the Todd workers who will lose their jobs have put in more than 20 years at the San Pedro yard. “I went from production to assistant general manager and then they locked the gates on me,” O’Toole, the 33-year veteran, said. “It’s a bitch.”
Ed Hickey, assistant facilities manager and an employee at Todd for 22 years, said: “We all knew down the line that it could come to this point, but the true believers certainly didn’t expect it. I certainly didn’t. I haven’t made plans that far ahead.”