Point company gets contract to scrap 2 Navy cargo ships

Sparrows Point's ghost town of a shipyard lands a small contract that could lead to much more work.

September 14, 2004|By Paul Adams | Paul Adams,SUN STAFF

The investment partnership trying to revitalize the defunct Sparrows Point shipyard has won a $2.3 million federal contract to break two retired Navy reserve cargo ships into scrap in what the new owners hope is just the initial installment of an ambitious plan to bring hundreds of workers back to a historic waterfront industrial site in Baltimore County.

North American Ship Recycling, a subsidiary of Boston-based Barletta Willis LLC, won the contract as part of the U.S. Maritime Administration's efforts to scrap dozens of rusting ships mothballed on the James River in Virginia. The relatively small contract will bring about 50 jobs to the shipyard, but U.S. Transportation Secretary Norman Y. Mineta said yesterday that the company could be selected to scrap potentially dozens more World War II-era ships if it can do the work for the right price.

"They [the mothballed ships] served this great nation very well at the time, but time has passed them by and they don't meet our modern requirements, so we've been looking for some help in disposing of them," Mineta said at a news conference held at Sparrows Point.

The sprawling shipyard employed 8,000 workers at its peak in World War II, when it was operated by Bethlehem Steel Corp. In recent years, a drastically scaled down operation struggled under the management of now bankrupt Baltimore Marine Industries Inc.

Barletta Willis Investments bought the 250-acre shipyard for $9.75 million in February with plans to turn it into a vast industrial park that is to house ship repair companies and barge building companies, as well as an assortment of manufacturers that the developers estimate could employ more than 1,000 within two to three years.

Barletta Willis is a partnership between Vincent Barletta, president of Boston-based heavy construction firm Barletta Co., and Boston venture capitalist Robert Willis. Including the purchase price, the pair has invested "north of $20 million" into the shipyard since taking it over this year, said Barletta, 34, a fourth-generation owner of his family's construction business.

"I refer to it as a first step," he said of the shipbreaking contract. "But you know, you have to take a small win. A win is a win is a win."

The revitalization effort has been hailed by state economic development officials, who have praised the project as a potential economic engine. Barletta has been short on specifics about his plans for the site, but he describes an industrial park that will house a diverse array of tenants. Among the possibilities are steel manufacturers, ship repairers, a few larger manufacturers and unspecified smaller tenants that would complement other businesses there.

Barletta said he answered a request for bids from the Maritime Administration about 10 months ago. Work is expected to begin near year's end. Sparrows Point is one of only a handful of U.S. facilities that do shipbreaking.

The federal agency has been in a desperate hunt for a safe way to dispose of hundreds of derelict ships since 1998, when the Clinton administration issued an executive order barring the sale of ships for scrap to other countries. The measure came after lawmakers and environmentalists pressured the White House to stop the flow of retired ships to other countries after The Sun published a series of articles in 1997 highlighting environmental hazards and worker deaths related to shipbreaking abroad, particularly in Southeast Asia.

The Maritime Administration has a mandate to dispose of all obsolete ships in the reserve fleet by 2006. The National Defense Authorization Act of 2003 called for a pilot project to test disposal of a small number of ships in foreign facilities, a move that prompted an outcry from some lawmakers who want to see the business stay in the United States.

To win the shipbreaking contracts, North American Ship Recycling had to lay out its plans to properly dispose of environmental contaminants on the ships. The two ships are the Lauderdale, a World War II troop transport and cargo ship, and the Mormacmoon, a 1965-era freighter.

Capt. William G. Schubert, maritime administrator for the U.S. Department of Transportation, said there are 60 more ships in the James River awaiting disposal, most of which are World War II-era vessels. Of those, 16 are under contract for removal, leaving another 44 for North American Ship Recycling to potentially bid on. Another 50 are expected to be added to the list over the next five years, Schubert said.

The Sparrows Point facility has few competitors. Marine Metals of Brownsville, Texas, was recently awarded contracts to scrap two ships, and ESCO Marine, also of Brownsville, was awarded three ships. One other Texas company, International Shipbreakers, and Bay Bridge Enterprises, of Chesapeake, Va., also compete for the business in the United States.

Federal transportation officials are hoping to create more domestic competition for the business. The reopening of Sparrows Point is hailed as progress in that effort.

"The quicker we get rid of these ships, the better off that we'll be and, to the extent that we can't shuffle them off to some foreign contractor to take them apart, then we've got to build that capacity here," Mineta said.

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