San Pedro Shipyard Could Reopen Early Next Month : Industry: A deal that would put North American Shipyards at the site where Todd Shipyards operated for four decades looks as if it just may float.
Six months after Todd Shipyards announced it was shutting down its operation in San Pedro, officials at the Port of Los Angeles say they expect a new company to open a ship repair facility there, possibly as soon as the beginning of March.
News that the San Pedro yard might again open for business--albeit as a scaled-down facility that will only repair ships, not build them--was greeted with cheers in this seaside community, where shipyard work has been a way of life since World War I.
“As far as we’re concerned, the sooner the better,” said Leron Gubler, executive director of the San Pedro Peninsula Chamber of Commerce. “We would like to save the ship repair industry.”
The announcement that the port is negotiating a lease with North American Shipyards, an Agoura-based investment group, came as the last loose ends were being tied up at Todd.
Wednesday, a handful of Todd managers packed up what remains of their records and moved them to a Wilmington warehouse, where 16 employees will wrap up the company’s affairs after four decades of business in Los Angeles Harbor.
Beginning today, the only Todd workers left at the sprawling San Pedro yard--which in its heyday employed as many as 6,000--will be the security guards.
“We’re all moving out this morning, and then we’ve got a barbecue at lunch, and that’s it,” Tom O’Toole, the yard’s assistant general manager, said Wednesday. “It’s real sad. The last day.”
Todd’s parent company, Todd Shipyards Corp. of Jersey City, N.J., announced in July that it was shutting down the 104-acre San Pedro yard, which stretches across the Los Angeles Harbor waterfront in the shadow of the Vincent Thomas Bridge. Soon thereafter, it laid off most of its remaining 400 workers and has since operated with a skeleton crew, at the yard, which it still rents from the Harbor Department at $225,000 a month. The yard’s closure is part of a reorganization plan for the parent company, which has been operating under the protection of federal bankruptcy law for more than two years.
In the wake of July’s announcement, a group of Todd managers, including O’Toole, proposed a leveraged buyout of the yard. But port officials said the buyout plan was less viable than the proposal they received from North American Shipyards.
The North American group includes a British marine engineer and financier, two retired Navy admirals, one of whom was in charge of evaluating Navy contracts, and a publicist. In addition, a former general manager of Todd’s San Pedro shipyard has expressed interest in joining the group, North American spokesman Jack Taylor said.
Its proposal, which has been praised by the union that represented Todd workers, envisions a streamlined shop with lower overhead, fewer managers, an employee stock ownership plan, profit-sharing incentives and a union seat on the board of directors.
“We see them as a solid base,” said Bill Trejo, who, as the union executive director, was often at odds with Todd. “They’ve got some excellent individuals as far as marketing and background people, and we’ve got the workers.”
Taylor said the company expects to employ between 150 and 175 people at first and that it would prefer to keep a steady, if small, roster of employees rather than let the ranks swell with new contracts and drop when work falls off. Such fluctuations caused frustrations at Todd, which experienced massive layoffs throughout the 1980s.
“We don’t want to get into a lot of on-again, off-again stuff,” Taylor said. “We would prefer to be a continuing source of employment.”
The news about North American’s plans follows U.S. Defense Secretary Dick Cheney’s announced list of military facilities that may be closed--among them, the Long Beach Naval Shipyard. In light of this, Gubler, the chamber’s executive director, said he is especially anxious to see the San Pedro yard reopen. He said that the two shipyards operate in separate markets, however, and thus would not compete in any case.
But before North American can open for business, three agreements must be completed:
North American and Todd must agree on a purchase price for the shipyard’s machinery and other assets. Although he would not reveal specifics, Taylor said Todd has accepted an offer from North American and that the deal is now being reviewed by Todd’s lawyers. Todd officials could not be reached for confirmation. The company president, Hans Schaefer, is out of the country, and other officials were unavailable.
North American and the port must agree on the terms of the lease for the property. Tay Yoshitani, the port’s deputy executive director for maritime affairs, said the port will lease half the property to North American and convert the other half into a shipping terminal.
Yoshitani said the parties are negotiating such issues as rent and what the new borders of the shipyard property will be. “I think we have a meeting of the minds on most of the key deal points,” he said. Although he would not disclose the terms being discussed, he said he is confident that “there’s nothing there that is a major deal-breaker” and that North American Shipyards can begin work as soon as March.
Todd and the port must agree on who will pay for an expensive cleanup of environmental contamination at the Todd site--an issue the two sides have been wrangling over for months. Port officials have estimated that the cleanup, which will involve the removal of toxins that may have contaminated the soil or sediment in the waters, will cost “tens of millions” of dollars.
In the past, Harbor Department officials have said that if the matter could not be resolved, they may resort to filing a claim for the cleanup cost with the bankruptcy court--a move that Todd says could have a serious effect on the company’s plan for reorganization.
However, Yoshitani said this week that the two sides are now close to a settlement. He said the port has agreed not to file a claim with the bankruptcy court if Todd pays the port an undisclosed amount of cash and gives the port its Syncrolift--a state-of-the-art lift and dry dock that cost Todd nearly $50 million to install six years ago.
According to industry analysts, the lift is of little value to Todd because it would cost the company as much to remove it as to build a new one elsewhere. But Yoshitani said the Harbor Department does not look at the lift as an economic bargaining chip.
“The real focus has been, and continues to be, to provide the facility on a low-cost basis for the next operator to come in here and hit the floor running and provide jobs,” he said.
Trejo said the union rank and file is anxious for that. Although some have found work at refineries or in the aircraft industry, he said, “they’re anxious to get back to the waterfront.”
