UPDATE | Shipyard lays off 30 employees
November 23, 2008 · Updated 8:24 AM
Nichols Brothers Boat Builders of Freeland announced a temporary layoff of 30 workers effective Friday. The layoff is expected to last three months.
The company said the reductions were due to a California buyer’s plan to acquire and rebuild existing vessels rather than purchase a new vessel from Nichols Brothers.
Len York, Nichols Brothers chief executive, said Friday that laid-off employees were given one week’s severance pay, and additional pay for the Thanksgiving holiday for those eligible.
He said the total company payout was about $20,000.
Meanwhile, employee health insurance benefits will continue through the month, York said.
He said it was his understanding that the laid-off workers could apply for state unemployment insurance and receive it in about a week.
“The cuts are pretty much across the board in terms of skills and years of service,” York said. “There were a few people out of just about every department in the company.”
He said the remaining 150 employees were promised on Friday that there would be no further cutbacks.
“We don’t like to go through these things,” York said. “But we have to do the things that are financially responsible for the company.”
“A lot of really good people are going through this,” he added. “Hopefully we can get them back to work pretty quickly.”
York stressed that the future prospects for the company are good, with several contracts in the pipeline, and that the layoffs aren’t a reflection of what happened a year ago.
In November 2007, Nichols Brothers laid off its entire workforce after 43 years on Whidbey Island and filed for Chapter 11 bankruptcy.
The company was later sold to a company in Dallas, Texas and restructured.
Since then, the company, one of Whidbey Island’s largest private employers, has maintained a steady 175 to 250 employee workforce, injecting about $12 million into the local economy.
The layoff announcement came on the heels of the impending approval by a California transportation district to buy two used ferries from Washington state, rather than one new ferry from Nichols Brothers.
York said the company had maintained its employment level to allow for training in anticipation of that ferry contract.
Bid rejected in California
The Golden Gate Bridge, Highway and Transportation District has been looking to buy new high-speed passenger ferries since June 2006. In July, Nichols Brothers submitted a bid of $18.6 million for building the ferry.
The district then began meeting with Nichols Brothers to negotiate the bid price and contract terms, and eventually come to a bid price of $16.9 million, with financing, bonding and insurance costs totaling approximately $500,000.
However, the district now has decided to buy two used ferries, the M/V Snohomish and M/V Chinook, for $4 million.
The M/V Snohomish is the ferry that was temporarily used on the Keystone-Port Townsend route in November 2007 when the Steel Electrics were pulled from service.
The Golden Gate district also plans to spend approximately $19.1 million to refurbish the ferries.
The purchase of the used ferries was approved by the Golden Gate district’s Building and Operating Committee on Thursday. The district board met Friday morning and voted to approve the purchase.
District officials said rejecting the bid from Nichols and buying the used ferries will mean that a high-speed ferry can be added to the Golden Gate fleet “almost immediately,” instead of the 18 months it would take for a new high-speed vessel to be built and delivered.
Mary Currie, spokeswoman for the Golden Gate district, said the deal to buy two existing ferries rather than one new one made financial sense, especially since ridership is up and one of the Washington ferries can be put into service right away as the district’s ferry the M/V Del Norte is refitted with new engines.
“We could end up with two vessels for a little bit more than a million and a half dollars more that gives us a lot of flexibility for the future,” Currie said.
In September, the transportation district discovered Washington state was selling the M/V Snohomish and Chinook, and the district offered $2 million each if the vessels passed inspection.
They did, and the transportation district now expects to buy and refurbish the two ferries at a combined cost of $23.5 million.
District officials said the conditional offer was accepted, and the district and its consultants have since inspected the ferries to check the condition of the hull plating on the vessels and other major structural components.
The district has also examined the prospects of installing more seats on the ferries so they can carry a minimum of 450 passengers. The two ferries can currently carry 350 passengers.
As part of the proposed refurbishment project for the M/V Snohomish and M/V Chinook, the transportation district will add new embarkation doors for passengers on the upper decks of the vessels, put in new restrooms, seating and tables, bicycle racks and a snack bar, and update the navigational equipment in the pilot house. The vessels will also be repainted.
The district hopes to complete the purchase this year, and award a contract for refurbishment of the Washington ferries in May.
The first rebuilt ferry is expected to be delivered in late 2009, with the second arriving in mid-2010.
Currie said it was too soon to tell if the Washington state ferries would remain in Washington for refurbishment at a shipyard here.
“It’ll be a bid situation and we’re not sure where that will actually occur,” Currie said.
Outlook is good
Nichols Brothers officials said that despite the loss of the Golden Gate contract, business remains upbeat for the company.
“This is a temporary workforce adjustment, not an indication that Nichols Brothers is headed into any serious financial issue,” York said.
The first of four sleek twin-hulled passenger ferries destined for the San Francisco Bay area is currently undergoing sea trials at the Langley marina.
The $8.8 million catamaran, built in partnership with Kivchak Marine Industries of Everett, is scheduled to be delivered to the Bay area’s Water Emergency Transit Authority in December.
Construction of a second WETA catamaran already is underway at the Freeland boat yard, and two more have been ordered, Nichols said.
The next one is scheduled for delivery in March, and the other two for late next year. Two additional vessels are being discussed.
Nichols Brothers has built 41 similar models of the Australian-design catamarans since 1982.
Meanwhile, the company is midway through contracts to build five large tugboats. The $10-million tractor vessels are 100 feet long and weigh 85 tons.
The third and latest tug was delivered recently to the Minette Bay Co., of Prince Rupert, B.C. The remaining two tugs will be built for BayDelta Marine in the Bay area.
WSF has bid in hand
Nichols Brothers, in conjunction with Todd Pacific Shipyards in Seattle, also has submitted a bid to construct a portion of two new 64-car high-speed ferries for the Keystone-Port Townsend run.
That bid, the only one submitted, was opened by Washington State Ferries on Nov. 13. A decision is expected next week, Ron Wohlfrom, project engineer with the ferry system, said Friday.
Steve Welch, Todd chief executive, said the joint bid was $65.5 million for one ferry and $124.4 million for two. The state originally projected $84.5 million for two boats.
Wohlfrom said the state may order one boat, two boats, or call for new bids.
“We are still working through the cost analysis,” Wohlfrom said.
If the contract is awarded, the first vessel would go into service in April 2010, and the second later that fall, state officials said.
The state Department of Transportation ordered the two new ferries for the Keystone-Port Townsend run after four 80-year-old Steel Electric vessels were pulled from service a year ago by Washington State Ferries because of safety concerns.
A vessel leased from Pierce County is serving the route until the new ferries come on-line.
The new vessels would be modified versions of the Island Home, a 255-foot ferry operated by the Nantucket Steamship Co. that has run the seven-mile, 40-minute route between Woods Hole and Martha’s Vineyard in Massachusetts since March 2007.
The Island Home was designed by the Elliott Bay Design Group of Seattle and built by VT Halter Marine Inc., of Moss Point, Mass.
It can carry 76 vehicles and 1,200 passengers.
Nichols Brothers said if the Freeland firm gets the contract, it would build the top sections of the boats, including the entire passenger deck and galley, and the pilot houses and machinery compartments for the heating and air-conditioning systems.
York said Friday that even if the company gets the ferry job, there would be three or four months of engineering work before additional workers could be added.
As for the mood around the company on Friday, York said workers were disappointed.
“My sense was that the employees understand that we’re going though pretty difficult economic times right now. They’re disappointed, and so am I,” he said.