Legislature(2007 - 2008)CAPITOL 106
02/27/2007 11:00 AM House ECONOMIC DEV., TRADE, AND TOURISM
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| Presentation by Douglas Ward of Alaska Ship & Drydock, Inc. | |
| Adjourn |
* first hearing in first committee of referral
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ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL
TRADE AND TOURISM
February 27, 2007
11:05 a.m.
MEMBERS PRESENT
Representative Mark Neuman, Chair
Representative Carl Gatto
Representative Kyle Johansen
Representative Bob Lynn
Representative Andrea Doll
Representative Mike Doogan
Representative Vic Kohring
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Scott Kawasaki
COMMITTEE CALENDAR
PRESENTATION: ALASKA SHIP AND DRYDOCK, INC.
-HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
DOUGLAS WARD, Director
Shipyard Development
Alaska Ship and Drydock, Inc. (ASD)
Ketchikan, Alaska
POSITION STATEMENT: Provided the presentation by Alaska Ship
and Drydock, Inc.
REPRESENTATIVE JAY RAMRAS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Reported on his recent tour of Alaska Ship
and Drydock, Inc.
ACTION NARRATIVE
CHAIR MARK NEUMAN called the House Special Committee on Economic
Development, International Trade and Tourism meeting to order at
11:05:23 AM. Representatives Doll, Doogan, Lynn, Johansen,
Gatto, and Neuman were present at the call to order.
Representative Kohring arrived as the meeting was in progress.
Representative Kawasaki was also in attendance.
CHAIR NEUMAN announced that the only order of business would be
a presentation by Alaska Ship & Drydock, Inc.
^Presentation by Douglas Ward of Alaska Ship & Drydock, Inc.
11:07:14 AM
DOUGLAS WARD, Director, Shipyard Development, Alaska Ship and
Drydock, Inc. (ASD), informed the committee that ASD is the
private sector contract operator of the state-owned shipyard in
Ketchikan. The shipyard operates with the Alaska Industrial
Development and Export Authority (AIDEA) as its direct partner.
CHAIR NEUMAN inquired as to the source of funding for ASD and
how AIDEA is involved with the shipyard.
MR. WARD responded that the Ketchikan Shipyard was originally
opened in 1985 and reopened by ASD in 1993. The state
contracted with a private firm in Ketchikan to re-open the
shipyard with the goal of reducing the cost to the Alaska Marine
Highway System (AMHS) for maintenance and construction of
ferries. The shipyard was primarily meant to be a support
facility for AMHS and to provide jobs and economic diversity for
Southeast Alaska. He continued to explain that the shipyard has
always been an economic development project. In fact, the
operating agreement with the State of Alaska Department of
Transportation and Public Facilities (DOT&PF) specified the
following three goals: to reactivate the Ketchikan Shipyard, to
maintain AMHS ferries, and to seek capital to expand and improve
the shipyard. Mr. Ward informed the committee that the shipyard
is located on the Sunny Point Cannery site and shipbuilding and
repair began on that site 100 years ago. Now, ASD hopes to
become a globally competitive ship building facility through
modern production techniques, workforce expansion and
improvement, and innovative design. The directors of ASD
determined that cruise line business is necessary to be
competitive in the shipping industry. The average ship
operating in Alaska, not including oil tankers and large cruise
ships, is roughly 250 feet in length and displaces 2,500 long
tons. This average includes, for example, work boats, research
boats, excursion cruise vessels, National Oceanic and
Atmospheric Administration (NOAA) charting vessels, and the M/V
Fairweather.
11:14:40 AM
MR. WARD, responding to a question, said that the tonnage of a
vessel depends on the classification and type of construction.
He noted that there is no rule equating weight to length. A
ton, he explained, is 2,000 pounds and a long ton is 2,200
pounds. He continued to explain that "displacement" is
equivalent to the volume of water that is displaced by the hull.
The tonnage of a vessel is a volumetric measure that is needed
for the U.S. Coast Guard to determine how much freight a vessel
can transport. Mr. Ward continued with the presentation by
noting that shipbuilding and repair in Ketchikan is not a new
industry to Alaska; in fact, a fleet of 250 halibut boats was
wintered there 70 years ago and U.S. Forest Service patrol boats
were built nearby on Gravina Island. However, modern ships are
much larger and complex and the older shipways are closed. He
said the shipyard today can support a cross-section of AMHS
vessels, and though incomplete, the shipyard is a functioning
maintenance facility able to support a variety of marine assets.
Its 10,000 ton floating dry dock is capable of hoisting a ship
450 feet in length.
11:22:01 AM
REPRESENTATIVE GATTO noted that the M/V Chenega is two years old
and inquired as to the ages of the M/V Matanuska and the M/V
Malaspina.
MR. WARD replied that the AMHS fleet is between 30 and 40 years
old.
11:22:58 AM
REPRESENTATIVE DOLL asked for further information about how the
limited capacity of the dry dock can affect future business for
the shipyard.
11:23:24 AM
MR. WARD explained that the capacity of the dry dock is not the
primary factor in successfully marketing the shipyard. In a
global market, the shipyard must look to the volume of ships
needing its services. Most of the ships operating in Alaska's
waters are 250 feet in length, he noted. Therefore, the
components of the shipyard will be sized to be competitive in
that market. Mr. Ward described the extensive plans for
expansion and improvement of the shipyard through the
installation of world class facilities. At this time, he said,
an additional dry dock is being built in China for delivery to
Ketchikan in June. The new floating dry dock is sized for the
average ship of 250 feet in length and it is equipped with
unique pile-supported grounding grids that will use the changing
tide to lift and launch ships.
11:26:48 AM
CHAIR NEUMAN noted that the ASD shipyard is trying to reduce the
cost of repair and operation of AMHS.
11:27:33 AM
MR. WARD agreed that AMHS is important to the long-term success
of the shipyard; however, the Ketchikan Shipyard must keep its
costs competitive in the global market. He expressed confidence
that success in the global market will result in additional
revenue sharing with ASD's public partner AIDEA. Grants in the
amount of $75 million have already been secured for the
expansion and improvement of the shipyard. A unique component
of the operating agreement between ASD and AIDEA specifies that
royalty fees will be paid to AIDEA to support a repair and
replacement fund.
11:29:34 AM
REPRESENTATIVE JAY RAMRAS, Alaska State Legislature, informed
the committee that he recently participated in an extensive tour
of the Ketchikan Shipyard and he was pleased and excited to see
the extraordinary amount of innovative, value-added
manufacturing at the shipyard and throughout Ketchikan. He
expressed his support of the $3.5 million capital budget request
for the Ketchikan Borough sponsored by Representative Johansen.
He also reported that AIDEA Chairman, Mike Berry, is very
supportive of the shipyard project. Representative Ramras said,
"[The shipyard] is one of the most impressive projects that I
have been privileged to see in the whole state of Alaska. [The]
project makes sense and blends Alaskan grit and know-how with
true innovation."
11:32:47 AM
CHAIR NEUMAN praised ASD's program of workforce development
through education at the high school and college levels.
11:33:32 AM
MR. WARD turned the committee's attention to the M/V Susitna, a
$50 million U.S. Office of Naval Research (ONR) demonstrator
vessel currently under construction. Also known as the E-Craft,
this vessel will be used as a ferry across Knik Arm connecting
the Matanuska-Susitna Borough to Anchorage. The concept design
is by Lockheed Martin Corporation and fulfills specific
requirements for a U.S. Navy, Sea Base Naval Capability Pillar
(NCP) craft with the capability to launch and recover men and
materiel on a beach. The ship must also operate as a vehicle
and passenger ferry.
11:35:42 AM
CHAIR NEUMAN congratulated ASD for its ability to fulfill the
contract for the construction of this ship.
11:36:03 AM
MR. WARD informed the committee that the Matanuska-Susitna
Borough submitted a request for proposal (RFP) to Lockheed
Martin for a ferry to cross Knik Arm with the condition that the
ship is built in Alaska.
11:37:13 AM
CHAIR NEUMAN noted that the Alaska coastline will provide the
testing ground to determine if the design of the M/V Susitna
meets the requirements of the U.S. Navy.
11:37:50 AM
MR. WARD went on to explain that the M/V Susitna is a small-
water plane area twin-hull (SWATH) mode ship, and is now in the
detail design process. The ship is a variable draft, ice-
strengthened vessel that is very stable, due to the displaced
hull which stays under the water. The M/V Susitna is able to
travel at a speed of 30 knots in 15 foot waves. The complex
design includes a center cargo deck/hull that descends into the
water and allows for the ship's approach to the beach for the
launch and recovery of men and material. The ramp can also be
lowered onto a boat ramp for the transfer of passengers and
vehicles. This design is particularly useful in Alaska to open
transportation routes that do not have shoreside facilities in
place. The M/V Susitna will take two years to build and will
add to the commercial stability of the shipyard. At the present
time, the shipyard has a backlog of projects to 2009. In
addition to the new ships, ASD is building agile and advanced
manufacturing products. Using federal funds, DOT&PF constructed
a fabrication structure to facilitate the hull module process
that ASD will be using to construct ships. The ship building
process will be semi-automated in order to allow downhand
welding, which is a more efficient system than overhead welding.
As the E-Craft is a science and technology vessel design, the
shipyard is able to develop innovative new vessel construction
processes; in fact, the gib to form the plates for the hull was
made in Ketchikan.
11:46:28 AM
CHAIR NEUMAN pointed out that creative technology will be a
selling point for the shipyard in the future.
11:47:32 AM
MR. WARD informed the committee that the Office of Naval
Research chose ASD to build the E-Craft through an "other
transaction" agreement that is only available to small
businesses. This is a cost-plus agreement and its purpose is to
distribute defense manufacturing contracts around the country.
REPRESENTATIVE DOLL requested further information about the
"automatic welders."
11:47:50 AM
MR. WARD confirmed that there are semi-automated welding
processes that can be adapted for future tasks. He continued to
say that ships cannot be built by robots, and modern production
methods in the industry will require skilled labor. Alaska Ship
& Drydock has developed a "Job Entry Career Path to Employment"
guide for use at Ketchikan High School where students are
encouraged to explore employment opportunities. Jobs at the
shipyard include, but are not limited to, designing, purchasing,
fabricating, finishing, and support services.
11:52:15 AM
REPRESENTATIVE DOLL commented that ship building and repair must
be applicable to ships of modern design and also to those 40
years of age.
MR. WARD reassured the committee that the shipyard can apply
modern production standards to AMHS required maintenance of
older vessels by the use of an optical imaging and measuring
system.
11:54:07 AM
MR. WARD reported that ASD recently began an in-house basic
welding class taught by a certified instructor. In fact, three
employees have graduated from the class. ASD recognizes that
the education of the next job force is a necessary part of
business, and it is supporting the Alaska System of Shipyard
Education and Training (ASSET), in collaboration with the Alaska
Department of Labor & Workforce Development, the U.S. Department
of Labor, the University of Alaska (UA), and the Northrop
Grumman Newport News Shipyard (NNS). Mr. Ward, in closing,
pointed out that Alaska is located at the center of the Pacific
Rim, and that Ketchikan is one and one-half days "steaming time"
closer to Asia than is Seattle. This geographic location is a
major advantage to the shipyard when competing in the modern
shipbuilding industry. The nearly complete Port of Prince
Rupert Container Port in Canada will also be a source of future
contracts for the shipyard. Mr. Ward said he anticipates the
shipyard's future business to be one-third new shipbuilding,
one-third ship repair, and one-third agile and advanced
manufacturing.
12:00:15 PM
CHAIR NEUMAN stated that the projects for the U.S. Navy, the
contracts from AMHS, workforce training, the fabrication and
design of new products, and the partnership with AIDEA, are all
factors contributing to ASD's bright future.
12:01:08 PM
REPRESENTATIVE GATTO asked Mr. Ward to compare the cost of the
M/V Susitna to that of a fishing boat of similar size.
MR. WARD replied that a fishing vessel of equivalent size would
cost $10 to 20 million. In the future, commercial vessels based
on the E-Craft design will not have military defense components
and will cost much less.
12:03:43 PM
MR. WARD, in response to questions, informed the committee that
in 1993, ASD employed 25 workers and its gross revenue was $2.5
million. In 2007 ASD employs 130 workers and its gross revenue
is $20 million. Wages paid at the shipyard range from $10 per
hour for entry level positions to $25 per hour for skilled
production workers. Alaska Ship & Drydock employs a multi-
skilled work force with a good work ethic. Mr. Ward also
mentioned that to be a sustained and enduring enterprise, an
industry must be able to work with a soft environmental
footprint. To further that goal, ASD has included in its
capital budget request sufficient funds to upgrade its process
water treatment facilities. He also said ASD has a zero
discharge policy in place.
12:08:00 PM
CHAIR NEUMAN noted that ASD's economic impact on the community
of Ketchikan is significant.
MR. WARD noted his agreement and said that today ASD's gross
revenue is $20 million per year and that at the completion of
its expansion project gross revenue is projected to be $35
million to $50 million per year. Total gross revenue earned by
ASD since 1993 is $150 million. In response to questions from
Representative Doll, Mr. Ward stated that future Navy
shipbuilding contracts will depend on the success of the M/V
Susitna. He also informed the committee that ASD is receiving
an increase in business from Canada, including a contract for
the repair of one of the British Columbia ferries.
REPRESENTATIVE JOHANSEN thanked Mr. Ward for his presentation.
He recalled that in the past the economic base in Ketchikan was
supported by one large employer; however, with the help of the
shipyard, Ketchikan is now moving toward a more level economy.
He said the stability of the shipyard is the result of hard work
by the directors of ASD. Furthermore, establishing
manufacturing in Alaska is another step toward economic
strength, diversity, and providing jobs for the next generation.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, Trade and Tourism
meeting was adjourned at 12:17 p.m.
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