Carlyle Group to Acquire Ship Repair Firm
Southwest Marine, the Navy’s largest ship repair contractor on the West Coast, will be acquired by Washington, D.C.-based Carlyle Group, the companies said Monday. Terms were not disclosed.
One of only three remaining full-service shipyards on the West Coast, Southwest Marine does more than 90% of its business with the Navy. Edward Ewing, a former General Dynamics executive and now Southwest Marine president, will take over as chief executive once the purchase closes over the next 90 days. No layoffs are planned at the company.
The Carlyle Group is an investment firm whose principals include former Defense Secretary Frank Carlucci and former Secretary of State James Baker.
Southwest Marine grew by acquisitions and aggressive business practices to become one of the nation’s dominant ship repair firms. In addition to San Diego, the company operates shipyards in San Pedro, San Francisco and Ingleside, Texas.
The rise of the company was largely the work of entrepreneur Art Engel, who founded the company in 1976 at the age of 30 and owns it with three other shareholders. The company’s biggest current project is a $26-million contract to overhaul the ammunition ship Kiska.
Southwest Marine was buffeted by Defense Department cutbacks, dropping from about $350 million in annual revenue and 4,000 employees in 1990 to about $200 million in revenue and 1,800 employees currently. After steep losses in the early 1990s, the company has turned profits the last two years, Engel said Monday.
As vice chairman of the Shipbuilders Council of America, Engel led a controversial lobbying effort to close Navy shipyards on grounds they were unfair competition for private firms. Those efforts succeeded in 1995 when the government decided to close the Navy’s San Francisco and Long Beach shipyards, costing 10,000 jobs.
Southwest Marine was the target of a Pentagon investigation in connection with fraud charges leveled last year by a former employee. But no charges have been brought, and a company spokeswoman on Monday declared victory in the case.
Carlyle Group has made several purchases of defense businesses, including a former General Dynamics subsidiary called GDE Systems Inc., the leading supplier of automatic test equipment and diagnostic systems.
