SPOTLIGHT: United States Marine Repair

By GORDON I. PETERSON, Senior Editor

Sea Power: Mr. Krekich, United States Marine Repair [USMR] is the largest non-nuclear ship-repair organization in the United States. What does this mean in terms of competitive advantage?

Krekich: Our USMR yards are strategically located on all three coasts of the United States. Of importance, our San Diego [Calif.] and Norfolk [Va.] facilities are situated in Navy megaports. These locations provide the government with full-service facilities in close proximity to the fleet and enable the Navy to have repair, modernization, overhaul, conversion, and emergent work performed where the ships are homeported. This greatly enhances the quality of life for Sailors by keeping families together.

Additionally, all of our yards share experiences on various projects and build on that knowledge to offer our customer the best service at a competitive price. USMR also is very selective regarding our subcontractors, and we view them as our partners. By using only selected vendors and subcontractors in all of our yards, we are able to obtain the best rates based on volume. This keeps the costs to our customers competitive.

The past decade's shipbuilding "holiday" for the U.S. Navy threatens to drive the size of the fleet down to 220 ships if not reversed by the Bush Administration. Doesn't this trend also have serious implications for USMR and other U.S. shipyards?

The very real possibility of a significant decline in ship force levels is a matter of basic math. Not only does this have serious overall implications for U.S. shipyards, but it also profoundly threatens the safety and security of our nation and that of our Sailors.

As a nation we are terribly dependent on the sea and are wedded to our maritime heritage. You hear constant talk of change and transformation. Oceans and geography do not change. From a repair standpoint, if fewer ships are being built, the need to repair and modernize the existing fleet increases. However, the flip side of this coin is that fewer ships mean fewer opportunities for repair work.

To what degree are your yards engaged in modernizing and repairing U.S. Coast Guard cutters and service craft?

The Coast Guard recently asked our Southwest Marine San Pedro [Calif.] yard to submit a bid on the preservation of deck machinery on Coast Guard cutters. Over a period of years, the San Pedro facility has also sandblasted and painted Coast Guard sea buoys. Pierside availabilities and regular overhauls, which included dry-docking, have also been performed in San Pedro. San Francisco Drydock and NORSHIPCO in Norfolk also are capable of performing pierside and dry-docking work on all classes of vessels, including the largest of the Coast Guard's ships. The focus in both facilities is mostly on work on the larger cutters.

San Francisco's most recent Coast Guard project was an emergency dry-docking on USCGC Munro, a high-endurance cutter. Later this year, San Francisco Drydock is anticipating repair work on the [high-endurance cutter] Morgenthau. Over the last several years, NORSHIPCO also performed planned dry-dockings on two medium-endurance 270-foot cutters. We value the Coast Guard as a key customer.

Your shipyards in San Diego and Norfolk have received major environmental-protection awards in recent years. Why does USMR place such a high premium on protecting the environment?

We are very proud of our company's environmental record. NORSHIPCO recently received Model Level Recognition, the highest recognition possible in The Elizabeth River Project's "River Stars" program. We received this honor for making dramatic site improvements, which greatly reduced pollution from storm-water runoff. We also were honored for adding 50,000 square feet of native vegetation along the Elizabeth River. Southwest Marine has won comparable recognition in San Diego.

All USMR shipyards have systems in place to protect the environment because it is simply the right thing to do. We continuously strive to be a leader in protecting the air, land, and water for our customers, employees, people living and working in the surrounding neighborhoods, and for future generations. It's one of the ways we give back to our communities. We are committed to conducting our business in a way that respects and preserves one of our greatest gifts, our natural resources.

What in your opinion is the most significant trend affecting the U.S. ship repair-and-modernization industry today?

By virtue of the geographic locations of our major shipyards, USMR does more than two thirds of its repair work for the U.S. Navy. But the inability of the Navy to plan for non-nuclear ship depot maintenance work, especially funding allocations, has had a negative impact on our business and, I believe, the overall ship-repair industry.

In late September 2000, for example, less than a week before starting the 2001 fiscal year, the Atlantic Fleet's commander in chief cancelled 20 scheduled ship availabilities for 2001--16 in Norfolk alone--because of a lack of non-nuclear ship funding. Congress is being asked to provide a third 2001 supplemental funding source for ship-depot maintenance. There is a tremendous gulf between non-nuclear surface-ship maintenance requirements and matching funding.

Admiral Clark [Chief of Naval Operations Adm. Vern Clark] has promised to address this issue in the 2002 budget by bringing non-nuclear surface-ship funding into line with funding for nuclear-powered submarines and aircraft carriers--which provides a funding level of approximately 95 percent. Current non-nuclear surface-ship funding has been closer to 80 percent of the requirement. These significant requirement-and-funding mismatches play havoc with private-sector repair-yard planning. It is a real challenge to match projected workload to your work force in this very uncertain environment.

On the other hand, the public shipyards have work "guaranteed" yearly. While we as a nation need the public yards to do necessary nuclear work, non-nuclear surface-ship work should be competed in the private sector. This will ensure a healthy private ship-repair capability, at a lower cost to the taxpayer--and will free scarce financial resources either to fund high-priority warfighting equipment currently not funded or to provide quality-of-life requirements for our nation's Sailors.