From ballpark to shipyard Rescuer? Baltimore Orioles owner Peter Angelos hopes to buy BethShip to save blue-collar jobs in his hometown.

December 29, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

The case against BethShip Inc.'s return to shipbuilding appears overwhelming.

U.S. shipyards, which delivered 23 merchant ships in 1980 alone, completed one in 1995 . Over the same period, the yards' employment dropped from 178,000 to 106,000.

The Sparrows Point yard can find the forbidding signs in the last two ships it built, in the 1980s. Although both were intended to be Navy survey ships, one serves as a training ship and the other is in the Navy's reserve fleet. It turns out the Navy didn't need them.

Still, Peter Angelos says he wants to buy Bethlehem Steel Corp.'s shipyard and modernize it to build ships -- a shift from its repair-only business that would easily double its work force of 700.

"I'm 100 percent committed," said Angelos, whose investment group is the only publicly known prospective buyer of BethShip. "I don't consider it a headache. I consider it a challenge."

Angelos' group is betting that government programs, millions of dollars for improvements and the remnants of Baltimore's shipbuilding labor can revive BethShip as a competitive shipbuilder. The motive for Angelos, who grew up in East Baltimore, is jobs, associates said.

The Sparrows Point yard, which will be closed if it isn't sold, was once part of Bethlehem Steel's sprawling shipbuilding operation, which, during World War II, included 15 yards and 180,000 people.

"They had quite a little empire," said Tim Colton, a shipbuilding consultant in Arlington, Va.

The Sparrows Point yard employed 8,000 at its peak in 1943. After the war, the yard excelled as a builder of tankers. By the mid-1970s, employment had dropped to 4,000 workers and the yard built five supertankers.

The U.S. commercial shipbuilding industry all but disappeared in the early 1980s, after President Reagan eliminated a subsidy program that helped U.S. yards compete with lower-cost, foreign yards, Colton said.

The Navy gave BethShip the last of its shipbuilding work in the 1980s. Sparrows Point built Navy cargo ships that included the CPL Louis J. Hauge Jr. and the PFC James Anderson Jr., and the two Navy survey ships, Maury and Tanner.

As shipbuilding vanished, Sparrows Point diversified into tunnel construction and ship repair work. The ship repair work includes building deckhouses, modifying Navy ships and reburbishing cruise ships.

Now, Bethlehem Steel plans to close BethShip unless the company finds a qualified buyer shortly after Jan. 1. The company said the division has performed poorly because of a weak ship repair market.

The asking price for BethShip is believed to be about $30 million.

The steel giant would not release financial details about BethShip. But Murphy Thornton, president of Local Lodge S33 of the Industrial Union of Marine & Shipbuilding Workers of America, said BethShip's finances are not dire.

He said the yard earned money in 1993 and 1994. He said BethShip reported a loss of about $3 million in 1995 and will report a smaller loss this year. "We're the most profitable of the four divisions they want to get rid of," Thornton said.

Richard Singer, an Owings Mills real estate developer and a member of Angelos' group, would say only that the yard has had profits in all but one of the last five years, and that it had positive cash flow in every year.

"The experience of the past five years strongly suggests that it's a profitable operation," Angelos said. "It could survive as a repair yard, without a doubt."

But his focus is returning BethShip to shipbuilding, which would likely add at least 1,000 jobs.

"It could be transformed from a repair yard into an employment center with hundreds of additional jobs," Angelos said.

Angelos, a lawyer and the Baltimore Orioles' chief executive, got his start working for a steelworkers union local at Bethlehem Steel Corp. and won $1 billion in liability payments for thousands of clients injured by asbestos.

His interest in BethShip began as a rant over lunch against the disappearance of American jobs, Singer said.

"Well, you're in a position to do something about it," Singer said he told him.

"Yeah sure, like buy BethShip?" Angelos joked.

A few weeks later, Angelos came back and said, "Let's buy BethShip."

Singer said Angelos, who was about 10 at BethShip's peak, believes strongly in blue-collar workers. "Those were always the people he fought for," he said. "They're the people he grew up with. Pete remembers where he came from. There's one thing he always quotes: 'If the little guy's got money, everybody's got money.' "

Singer said that while the motivation was borne of sentiment, the financial analysis is sound. "If we buy this thing, it will make a profit," he said.

If Angelos buys the yard and tries to convert it, he would get help from 1993 federal legislation aimed at helping U.S. shipyards.

One federal program guarantees 87.5 percent of the financing for ships built in U.S. yards for foreign shipowners. That program helped Newport News Shipbuilding land a contract to build four tankers for Eletson Corp., a Greek shipowner.

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