McDermott: Blazing A Unique Trail Towards International Business

Ayear and a half ago, it appeared that McDermott Shipyard might become a big Gulf Coast winner in the MarAd Title XI competition. The company was named to build 30 cargo ships under the Title XI program. The deal collapsed when MarAd rejected the owner's application. Now, McDermott has taken a different tack in the "other Gulf of Mexico." Last March, a restructured McDermott International Shipbuilding, one of five business groups of McDermott International, took over the operation of a shipyard in Veracruz, Mexico, in a joint venture with Mexican partners. The plan is to concentrate on large shipbuilding and repair at the Mexican yard with smaller vessel and barge building as the focus at the Morgan City, La., facility. "We're hedging our bets," said McDermott Shipbuilding Vice President and General Manager Mike Pearson. "We can plan to make Morgan City the number one barge builder in terms of quality and performance, as we aggressively market ... a portfolio of vessel designs ranging from 3,500-dwt mini-bulk carriers to product and bulk carriers in the 40,000- to 70,000-dwt class." McDermott is spending $12 million to upgrade the Veracruz yard with a new panel line and automated welding technology, and is making similar improvements on a smaller scale at Morgan City. "Within three weeks of taking over in Veracruz, we booked our first major repair job, a Panamaxsize (80,000-dwt) vessel, and won a master service agreement for our performance," said Mr. Pearson. "Since then, we have completed 22 major repairs and never missed a bonus when one was available. We completed repairs to a Pemex rig in the fastest time ever, the company told us." Although the Mexican yard cannot benefit from it, Pearson believes Title XI is important to the U.S. shipbuilding industry. At the same time, he strongly supports the OECD shipbuilding agreement, even though some of its provisions designed to curb foreign governments' shipyard subsidies might impact the Veracruz operation. McDermott is no stranger to working with foreign nationals overseas. The company presently operates two yards in Russia in joint ventures and is "looking at" the possibilities in Korea and China, two of the world's hottest shipbuilding nations, reported Mr. Pearson.