Hauling Off Cruise Ship Refit May Signal Major Shift for Shipyard

Workers at Southwest Marine on Wednesday completed a complex, $75-million refurbishing of the Viking Serenade, which later this month will become one of the largest cruise ships to make regular calls at Southern California ports.

The extensive renovation, which included the addition of nearly 300 cabins, a new bow, a huge disco and expanded galley and dining facilities, was the largest commercial cruise-ship refurbishing completed by a U.S.-based shipyard in at least 20 years, cruise industry sources say.

Although Southwest officials said the overhaul was successfully completed, waterfront sources said the local shipyard now must settle a contract dispute with Royal Caribbean Cruises Ltd., the ship’s Miami-based owner and operator.

The contract dispute, which became public in April, led to a work stoppage that kept the ship from returning to service in mid-May. Royal Caribbean officials at the time said that “construction delays” would delay the ship’s return to service until June 17.

Southwest executives have declined to comment on the work stoppage or the contract dispute. However, Arthur Engel, Southwest’s president, in April described the job as being worth $100 million, while Royal Caribbean spokesmen have described the renovation as a $75-million project.

Waterfront sources said Royal Caribbean and Southwest are at odds over the timetable that governed the complex refurbishing. The initial contract called for the job to be completed in just 13 weeks. However, the job, which began in January, took more than four months to finish.

The Viking Serenade contract is important for Southwest because the yard faces a dramatic dip in Navy contracts. Like most shipyards in the United States, Southwest is heavily dependent on the Navy for repair work.

Southwest recently was awarded a $31-million contract to overhaul the guided missile cruiser Sterett, which is scheduled to arrive in San Diego from Persian Gulf duty on July 8. The contract includes the upgrading of combat systems on the ship.

However, Southwest expects a “dwindling Navy workload” during coming years as the Navy reduces the size of its fleet, Engel said. The Sterett, for example, is the only Navy ship scheduled to have its weapons systems upgraded during this fiscal year at a West Coast shipyard, Engel said.

Southwest has been seeking more cruise-ship work to replace Navy jobs. The company hopes to eventually have a “50-50 balance between government and commercial work,” Engel said.

Before the Viking Serenade job, Southwest handled almost exclusively government repairs.

Engel in April said the Viking Serenade job would prove to the world’s cruise lines that U.S. shipyards in general--and Southwest in particular--can compete with lower-cost yards in Asia and Europe that have dominated cruise-ship conversions for two or three decades.

The ship will sail between Los Angeles and Ensenada, with calls at San Diego and Avalon on Santa Catalina Island.