Legislature(2009 - 2010)CAPITOL 106
02/23/2010 05:15 PM House ECON. DEV., TRADE & TOURISM
| Audio | Topic |
|---|---|
| Start | |
| Overview(s): Strengthening the Alaskan Economy - the Ketchikan Shipyard, by Douglas Ward, Director of Shipyard Development, Alaska Ship & Drydock. | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL
TRADE AND TOURISM
February 23, 2010
5:16 p.m.
MEMBERS PRESENT
Representative Jay Ramras, Chair
Representative Reggie Joule
Representative Mark Neuman
Representative Harry Crawford
MEMBERS ABSENT
Representative Mike Chenault
Representative Nancy Dahlstrom
Representative Kyle Johansen
Representative Lindsey Holmes
Representative Chris Tuck
COMMITTEE CALENDAR
OVERVIEW(S): STRENGTHENING THE ALASKAN ECONOMY - THE KETCHIKAN
SHIPYARD~ BY DOUGLAS WARD~ DIRECTOR OF SHIPYARD DEVELOPMENT~
ALASKA SHIP & DRYDOCK; ADMIRAL TOM BARRETT, DEPUTY FEDERAL
COORDINATOR, OFFICE OF THE FEDERAL COORDINATOR FOR ALASKA
NATURAL GAS TRANSPORTATION PROJECTS.
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
DOUG WARD, Director of Shipyard Development
Alaska Ship & Drydock (ASD)
Ketchikan, Alaska
POSITION STATEMENT: Gave a presentation on the Ketchikan
Shipyard.
ADMIRAL TOM BARRETT, U.S. Coast Guard Retired; Deputy Federal
Coordinator
Office of the Federal Coordinator
Alaska Natural Gas Transportation Projects
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on
Strengthening the Alaskan Economy.
DAVID SCOTT, Staff
Representative Kyle Johansen
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on
Strengthening the Alaskan Economy.
ACTION NARRATIVE
5:16:22 PM
CHAIR JAY RAMRAS called the House Special Committee on Economic
Development, International Trade and Tourism meeting to order at
5:16 p.m. Representatives Ramras, Crawford, and Neuman were
present at the call to order. Representative Joule arrived as
the meeting was in progress.
5:16:31 PM
^OVERVIEW(S): STRENGTHENING THE ALASKAN ECONOMY - THE KETCHIKAN
SHIPYARD, BY DOUGLAS WARD, DIRECTOR OF SHIPYARD DEVELOPMENT,
ALASKA SHIP & DRYDOCK.
OVERVIEW(S): STRENGTHENING THE ALASKAN ECONOMY - THE KETCHIKAN
SHIPYARD, BY DOUGLAS WARD, DIRECTOR OF SHIPYARD DEVELOPMENT,
ALASKA SHIP & DRYDOCK.
5:16:32 PM
CHAIR RAMRAS announced the first order of business would be a
presentation by Doug Ward, Director of Shipyard Development,
Alaska Ship & Drydock, on the Ketchikan Shipyard.
5:17:37 PM
DOUG WARD, Director of Shipyard Development, Alaska Ship &
Drydock (ASD), informed the committee that Alaska Ship & Drydock
is striving to provide not only cost reductions for Alaska's
marine transportation system, but to help Southeast Alaska
recover from the collapse of the timber industry and to form an
industrial base in Ketchikan that will allow the state to
participate in energy projects and resource development
projects. The Ketchikan Shipyard is owned by the Alaska
Industrial Development & Export Authority (AIDEA) in an
effective public and private partnership between AIDEA, Alaska
Ship & Drydock (ASD), and the City and Borough of Ketchikan.
Mr. Ward described the effectiveness of the successful
partnership in that AIDEA is fulfilling its mission and, through
the revenue sharing agreement, ASD is helping AIDEA contribute
to the general fund.
CHAIR RAMRAS urged the representative from AIDEA to schedule a
House Special Committee on Economic Development, International
Trade and Tourism meeting to hear success stories about AIDEA
projects.
5:20:49 PM
MR. WARD recalled that the Ketchikan shipyard was built by the
state to help reduce the cost of operating the Alaska Marine
Highway System (AMHS), and to provide economic diversification
for the state by the addition of an industrial base for advanced
manufacturing.
The committee took a brief at-ease for technical difficulties.
MR. WARD continued his presentation and said that planning for
the shipyard began in the late 1970's to repatriate the funds
spent to maintain and operate AMHS ships. Ketchikan was
selected for the shipyard because of its location on the
shipping route, its proximity to Seattle, and its protected,
deep water port at Ward Cove. Furthermore, Ketchikan is the
traditional industrial and transportation hub of Southeast. At
the opening of the shipyard in 1987, planners recognized that
the facility would become the AMHS winter maintenance facility,
but would also need capacity for other ship works. One aspect
of ship repair in Alaska is that it is a countercyclical
industry, thus in the fall it creates a wintertime demand for
employment. Since last year through this spring, ASD has
performed $9 million of AMHS repair work resulting in savings to
the state of $3.5 million over work done in Seattle.
5:27:25 PM
CHAIR RAMRAS asked whether there was there a real savings
realized-beyond savings for transportation costs-over the price
of work done in Seattle.
MR. WARD reminded the committee the shipyard must compete for
federal, AMHS, and other commercial projects. For example, last
February the M/V Lituya broke loose from its moorings and
required repairs to its hull plating. The repairs were
estimated at $450,000, and he said the shipyard won the bid over
Seattle shipyards on a "straight up basis." Another example is
the construction of the new Ketchikan International Airport
ferry because ASD's bid of $6 million saved the Ketchikan
borough about $1 million.
5:29:16 PM
CHAIR RAMRAS questioned the accuracy of the estimate.
5:29:42 PM
MR. WARD explained ASD could build the ferry for $1 million less
because it understands the procurement practices of the state,
understands the logistics, and has a multi-skilled, globally
competitive workforce that is more productive than those in the
Lower 48. A third example was the Chevron Legacy refueling
station built for Chevron Canada. Delivered in November, it is
in-service and can be seen during the television broadcasts of
the Olympic Winter Games from Vancouver, Canada. This was a
fairly complex barge project involving many fuels and safety
measures. Mr. Ward stressed the barge is registered with the
"Made in Alaska" trademark, and it is one of the few Jones Act
vessels the U.S. has exported in the last 50-60 years. In fact,
the U.S. shipbuilding industry exports less than 1 percent of
the global demand for commercial ships. The shipbuilding
industry is successful in the export of military vessels, but
not in the commercial market. Mr. Ward said the state, like
Ketchikan, should be proud of exporting complicated manufactured
products into the world market. He then called attention to the
M/V Susitna, another "Made in Alaska" project, which is the
ferry that will operate between Anchorage, the Matanuska-Susitna
Borough, Tyonek, and Kenai. The ferry is an Office of Naval
Research demonstrator vessel designed as part of the U.S. Navy's
forward Seabasing Initiative that will have very large, floating
structures stationed 100 nautical miles offshore. The M/V
Susitna is designed as the "truck" that will carry marines and
tanks from the stations through the surf and onto the shore.
Mr. Ward described many of the capabilities and the innovative
design-build engineering of the vessel; in fact, it has been
described as "the most complicated ship to have been designed in
100 years."
5:36:02 PM
REPRESENTATIVE NEUMAN asked for the cost.
5:36:14 PM
MR. WARD said the cost was $70 million. In further response to
Representative Neuman, he said the ship was very expensive
compared to other ferries. A lot of the cost went into the
concept design, hull design, and the geometry and mechanisms to
change configurations to meet military and sea trial benchmarks.
The business model was to take military technology and transfer
it into commercial markets. By building the ship in Alaska, ASD
is learning innovative and advanced manufacturing practices and
building a "purpose-built" tough ship that will work in Alaska,
and demonstrate unique and new capabilities in the marine
transportation market. Mr. Ward concluded the commercialization
of the technologies surrounding the ship will give Alaska a
"leg-up" on developing new vessels and marine transportation
systems. Several slides of a PowerPoint presentation titled,
"The Ketchikan Shipyard" showed the ship in its different
configurations and he pointed out that the ship achieves
stability at high speeds because its flotation remains
underwater. However, to unload cargo on the beach, the cargo
deck is lowered and the draft of the vessel is reduced from
thirteen feet to three feet. In Alaska, the ability to load and
unload on the beach means services can be delivered to villages,
communities, and sites on the Arctic Ocean that do not have
shore-side facilities.
Further, ASD manufactured pieces and parts for the ship that are
similar to those needed for the off-shore oil and gas industry;
for example, ASD has an in-line boring machine-the largest on
the West Coast-that is now ready to work on large projects in
the oil and gas industry.
5:41:01 PM
MR. WARD displayed slide 8 that showed the assembly of the
Chevron Legacy modules on the lot. He pointed out that the
shipyard has the capability to lift 250 foot long, 2,500 ton
ships out of the water and into enclosed repair halls. He then
turned to the construction of the airport ferry that will
transport passengers and cars to and from the Ketchikan airport.
Delivery of the ferry will be in the spring of 2011. The
shipyard is also building AmphibAlaska, which is an amphibious
truck that was designed in Ketchikan, and is capable of
traveling 25 miles per hour on land and 30 knots in the water.
The U.S. Army Corps of Engineers and the U.S. Environmental
Protection Agency are interested in this working vessel for
beach erosion surveys, airport rescue, and fisheries
restoration.
CHAIR RAMRAS, to illustrate the export potential of marine
craft, informed the committee that Allen Marine of Sitka built
25 ferries that were used in New York to replace the collapsed
subway system after the terrorist attacks of September 11, 2001.
5:44:59 PM
MR. WARD displayed slide 11 that was a schedule of shipyard
career paths and major processes to develop a local workforce
educated and trained in shipbuilding and advanced manufacturing.
He opined the biggest strides to make in productivity are to
increase the skills of laborers, and to establish a stable
multi-skilled workforce in Ketchikan to build and repair ships.
Infrastructure is not helpful without workers who can think,
reason, and understand the purpose of their tasks. He provided
a short history of the U.S. shipbuilding industry and efforts to
strengthen the industry through skill standards developed by the
National Shipbuilding Research Program (NSRP). Research in
Japan and other countries revealed that shipyards complete ship
construction, conversion, and repair through corrosion control,
structural, mechanical, and electrical services. These
processes are achieved by workers using fabrication, assembly,
installation, and testing. ASD organized this research with the
intention to take a new, nontraditional, Alaskan workforce and
teach skills that are common to shipbuilding and other trades.
After two years, workers move on to production training and
learn a variety of skills. In addition, ASD is using a
"training within industry" methodology developed during WWII
that actively recruits women and minorities. Slide 12 showed
highly skilled welders at work. Mr. Ward gave examples of
successful training experiences for some of ASD's workers. The
ASD workforce reflects the demographics of Ketchikan with 30
percent minority hire. Slide 13 showed the location of
Ketchikan in the North American hemisphere. He concluded that
Ketchikan builds purpose-built vessels to operate in the Arctic
Ocean and the North Pacific, and works to support Alaska's
upcoming energy and resource projects with advanced
manufacturing.
5:52:39 PM
REPRESENTATIVE NEUMAN asked about training.
5:52:48 PM
MR. WARD noted that ASD is focused on structured, on-the-job
training that does not take place in the classroom, but in the
workplace, where learning is more effective.
CHAIR RAMRAS spoke of the lack of covered working areas to deal
with 150 inches of annual rainfall in Ketchikan. He inquired as
to what role Ketchikan could play in building Arctic-ready ships
if it can demonstrate it is globally competitive from a quality
and cost standpoint.
5:55:23 PM
MR. WARD responded ASD is reframing its 1999 development plan in
light of the addition of $38 million in new Federal Transit
Administration (FTA) funds. Members of ASD management recently
toured other shipyards to gauge large ship assembly and
production halls. The next phase of development at ASD will be
a very large assembly hall and production line. He opined this
will create a globally competitive infrastructure; however, just
as important as infrastructure is how the ships are built. ASD
has a detailed plan to build ships that will be globally
competitive; in fact, ASD anticipates the assembly line will be
operating in time to bid for the $120 million Alaska-Class
ferry, and to build a fleet of modern ships to support the new
industry along the outer continental shelf.
5:58:10 PM
CHAIR RAMRAS asked whether ASD has the capacity to grow and
accommodate large orders, such as 100 amphibious trucks. Also,
he inquired as to the effect of a large order on the company's
employment base.
5:59:03 PM
MR. WARD responded that ASD now has 170 workers; within 10 years
after the "build-out" of its development plan, ASD will support
306 direct ship building and repair jobs, and 200 indirect jobs,
in Ketchikan. Nationwide, 1,100 permanent jobs will result from
this investment. He advised that these jobs will replace the
jobs lost by the closure of the pulp mill. In fact, the ships
under construction now are the economic engine that will attract
new investment and new vendors to support shipyard activity.
6:00:25 PM
CHAIR RAMRAS asked whether the development of the shipyard was
tied to the presence of Mr. Ward.
6:01:00 PM
MR. WARD assured the committee that succession planning is part
of ASD's plan. The company continues to recruit for skills in
management, administration, and engineering. He spoke of a
future grant to partner with the high school and its new
advanced manufacturing center. The high school program uses
software that will attract young people to engineering, green
science, and ocean engineering.
6:02:41 PM
CHAIR RAMRAS asked about the demographics of the workforce at
ASD.
6:03:06 PM
MR. WARD advised that the workforce of ASD will always reflect
the demographics of Ketchikan and Alaska. However, the global
shipbuilding industry is overcapitalized, and ASD receives many
job applications from outside Alaska. ASD may hire a good
candidate who is willing to move to Ketchikan and mentor
apprentices. Of ASD's 170 employees, 30 percent are minority.
Vendors are happy with the dedication of ASD's workers and there
is no tension between outside vendors and shipyard workers.
6:06:09 PM
CHAIR RAMRAS announced that the committee would now hear
testimony from Admiral Tom Barrett, Deputy Federal Coordinator,
Office of the Federal Coordinator for Alaska Natural Gas
Transportation Projects.
ADMIRAL TOM BARRETT, U.S. Coast Guard Retired; Deputy Federal
Coordinator, Office of the Federal Coordinator, Alaska Natural
Gas Transportation Projects, described his background in the
Coast Guard and in private and public service related to
pipeline safety and transportation. He expressed his belief in
the natural gas pipeline project and his interest in supporting
the economic development of the state.
6:09:00 PM
CHAIR RAMRAS described Admiral Barrett's trip to Ketchikan to
visit the shipyard.
6:09:49 PM
ADMIRAL BARRETT stated that the pipeline is not a "corridor
issue up in the north," but has implications and opportunities
for industrial capabilities statewide. It is important for his
office to review capabilities around the state, such as the
shipyard in Ketchikan, relative to the gas line project. He
expressed his interest in workforce issues as they are also
enormously important to the project and to the state. Admiral
Barrett advised that the Alaska Works Partnership, Inc.,
Pipeline Training Center in Fairbanks is "a very solid step"
toward getting a workforce capable of working effectively in the
oil and gas industry. The state must attract, train, and retain
a qualified workforce. Furthermore, the Arctic region will be
of interest for the next 20-50 years with developments in ocean
engineering, marine engineering, and shipping. Admiral Barrett
reminded the committee that the M/V Susitna is an Arctic-class
vessel built to operate in cold weather, ice, and cold water
conditions. The vessel must also deal with moving heavy
equipment in shallow conditions, and rivers, and to coastal
communities without docks. At the shipyard he observed a
variety of work such as the construction of new, high-tech
ships, ship repair on the M/V Lituya and M/V Taku, ship repair
on a commercial fishing vessel, heavy duty fabrication, and
industrial fabrication. He listed details on the specifications
of the M/V Susitna and the methods of its construction.
6:16:05 PM
ADMIRAL BARRETT recognized the Ketchikan shipyard for its
innovative modular construction because that is "how modern
shipyards work." The Ketchikan shipyard demonstrated: high
quality in construction to tolerances of 1/32 of an inch, or
better; the use of variable strengths of steel; the use of
stainless steel; auto-welding; involvement in the design-build
of the M/V Susitna; efficient handling of materials; efficient
logistics of the two dry docks; flexibility of the docks; and
the use of a rail system to move ships to sheltered areas for
work.
6:20:16 PM
ADMIRAL BARRETT, returning to the subject of a workforce, said
he heard that the shipyard has partnered with the school
district to bring back welding at the high school through
apprenticeships. He encouraged further partnering between the
education system and business. Lastly, he relayed that the
attention to quality at the shipyard was good. Shipyard
operators and customers require this to save costs and avoid re-
work. Admiral Barrett concluded that the shipyard is a
learning, growing activity with some great skill sets, and a
strategy to move forward. In general, shipyards need a balance
of government contract work and commercial work, and the
Ketchikan shipyard appears to be adaptive to the future market
environment.
6:24:54 PM
CHAIR RAMRAS agreed and asked for the Admiral's opinion on the
future of the Arctic, and Alaska's strategic relationship to the
Arctic as the nearest Arctic port.
6:25:57 PM
ADMIRAL BARRETT stated that because the Arctic is an ocean,
firstly, there are maritime issues, and secondly, more
activities are taking place. There are also enormous energy and
fish resources and a growing interest in tourism. In addition,
indigenous people have a presence in the Arctic with cultural,
well-being, and security issues. Opportunities for development
must simultaneously protect the environment and the Native
people. Admiral Barrett cautioned that there are many
misconceptions about the Arctic and about open water. Ocean
melting means there is less ice, but vessels will still operate
in ice for environmental responses and oil spill recovery. It
is important to be adaptive, with Alaska at the epicenter of the
convergence of tough issues and opportunities for the U.S.
6:29:31 PM
ADMIRAL BARRETT, in further response to Chair Ramras, said
interest in the Arctic will steadily increase for decades,
although the initial interest in transportation is related to
energy. However, Canadian authorities have reported an increase
in small passenger vessels transiting to the Northwest
Territories. He warned that the U.S. will not be alone in
energy development in the Beaufort Sea.
6:30:30 PM
CHAIR RAMRAS asked for information regarding Arctic-class ships.
6:31:27 PM
ADMIRAL BARRETT was unable to provide specific information on
this market; however, he said there are many types of ships such
as ice holding and ice strengthening for tankers. Arctic
vessels will vary with the type of ship; in fact, "Arctic
classing" under international standards is tied to a specific
type of vessel. Standards are well-defined and specific, thus
are different for a general cargo barge and a petroleum tanker.
The market for Arctic ships is growing, and although the
Ketchikan shipyard will not be able to build a drilling
platform, there will be a market for smaller vessels and ships.
Furthermore, the experience gained during the construction of
the M/V Susitna is valuable for this evolving market.
6:35:05 PM
CHAIR RAMRAS asked how a shipyard develops a reputation.
6:35:21 PM
ADMIRAL BARRETT opined reputation is driven by repeat customers
and products that are built on time, on budget, and to the
standards in the specifications. Shipyards build a reputation
based on performance. The reputation of the Ketchikan shipyard
is evolving and he asked whether ASD surveys its customers.
6:37:11 PM
MR. WARD reported that ASD's largest customer, AMHS, has
confidence in the yard to repair and build its vessels. Also,
two panels of the NSRP visited ASD and declared the welds on the
M/V Susitna were superior. ASD also received good reports from
the environmental panel of the same organization. He expressed
his belief that ASD has a "pretty dog-gone good reputation."
ADMIRAL BARRETT acknowledged that environmental issues are
important to a shipyard and to his knowledge the Ketchikan
shipyard had no environmental violations. Another factor of
reputation comes in when bids are for best value, and not just
for the lowest bid, because a shipyard's performance record is
considered in the award.
6:41:46 PM
MR. WARD added that for the expansion of the shipyard, AIDEA is
preparing an alternative procurement process called Construction
Management General Contractor. This "special experiment"
alternative procurement process takes into account reputation
and the ability to meet schedules and standards. Furthermore,
he understood that the Department of Transportation & Public
Facilities (DOT&PF) will be using a similar process to solicit
bids for the construction of the Alaska-class ferry.
6:43:49 PM
ADMIRAL BARRETT advised that most effective federal contracts
have an incentive.
MR. WARD, on behalf of the employees of ASD, thanked the
committee.
CHAIR RAMRAS asked what the development of the shipyard has
meant to the displaced workers of Ketchikan after the mill shut
down.
6:45:08 PM
DAVID SCOTT, Staff, Representative Kyle Johansen, Alaska State
Legislature, opined the jobs created at ASD bring pride and a
sense of purpose to those who work there.
6:46:12 PM
CHAIR RAMRAS then asked how an expansion to 1,100 jobs would
affect the community of Ketchikan.
MR. SCOTT said it would be like the old days in some ways, and
"more jobs are better."
6:46:58 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, International Trade
and Tourism meeting was adjourned at 6:46 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Alaska Ship Drydock Feb 23 Short.pdf |
HEDT 2/23/2010 5:15:00 PM |