The Guam Shipyard will see major ship projects in the coming months and additional overhaul and repair contracts providing steady work for its labor force of 310 and increased revenue for the shipyard.
Over the next six months the shipyard is expected to begin major repair or overhaul on three ships: the USNS Niagara Falls USNS Concord and USNS Flint.
The Niagara Falls a stores supply ship entered the shipyard dry dock on July 29 to begin a regular overhaul.
The Concord is also a stores supply ship and the Flint is an ammunition supply ship. The Concord is scheduled for some time in the first week of October until some time in November; and the Flint is scheduled for the end of January through the first week of April.
Additional repair contracts mean increased revenue for Guam’s economy. Mathews Pothen president and CEO of Guam Industrial Services Inc. which does business as Guam Shipyard said the shipyard already purchases around “$2 million to $3 million per year in parts and supplies” from local vendors.
But while the shipyard is facing a glut of Naval overhaul and repair contracts over the remainder of 2005 a skilled-labor shortage is crippling the capacity of Micronesia’s only U.S. Navy ship-repair facility. “We don’t have sufficient people with the skills needed to operate. Skilled labor is not there period ” Mathews Pothen told the Journal.
The shortfall restricts overall capacity at the shipyard by one third. He said “The facility can handle 500 to 600 man-days per year.” The company can only produce about 400 man-days per year. A man-day per year is the industry unit for measuring capacity and productivity where each unit equals one full-time employee’s labor for an entire year.
At the moment the shipyard is operating at 300 man-days per year. Activity has risen to this level over the last five to eight years Pothen said. “We have seen a slow increase in military activity and military contracts. From our perspective military activity is out of the woods ” he said. In 1998 the facility was producing about 150 man-days per year.
However without a major effort to develop local labor resources the shipyard may face a plight similar to many other local companies when work requires skilled labor: limited capacity resulting in inefficiencies and lost revenue.
To address this issue the shipyard is working out strategies for the short and long-term. These include “pulling what [labor] we have in Guam” to cover the shortfall and working to develop and strengthen a local trade program of its own Pothen said. “We are not very happy with the current [Guam Community College] program ” he said “because the recurring shortage in skilled labor “is a real big problem for us.”
Guam Industrial Services has a 15-year lease from 1997 from the U.S. Navy and the government of Guam. The federal government does not subsidize Guam Shipyard which operates under a fee structure set by the Navy.
Pothen said “We do small private repair work but do not do large scale private repair work because we are not in a shipping lane. Plus it is cheaper to get work done in Korea and other parts of the world. Labor rates are cheaper.” Consequently all private repair work is for Micronesia-based clientele. Despite a labor shortage the shipyard has managed to maintain a level of efficiency that yields an adequate profit margin Pothen said. Meanwhile the Guam Shipyard remains the “cheapest [private sector] shipyard in the whole of the United States ” he said.
In the Deloitte & Touche/Guam Business survey of the Top 50 Companies in Guam and Micronesia Guam Industrial Services Inc. reported revenues of $45.63 million for fiscal 2004 and $22.85 million for fiscal 2003 with fiscal years ending Sept. 28. The shipyard has also been the site of an estimated $7.5 million in initial docking and repair work on the USS San Francisco the nuclear submarine that hit an underwater mount on Jan. 8. The San Francisco entered the shipyard on Jan. 26 and is expected to leave Guam for Bremerton Wash. in the coming weeks. Pothen estimated man-days per year for the shipyard at about 350 for fiscal year 2005. MBJ