THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, December 16, 1994 TAG: 9412160502
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: THE JOURNAL OF COMMERCE
LENGTH: Medium: 71 lines
Newport News Shipbuilding executives this week said they hope to announce a second commercial deal for the construction of its groundbreaking Double Eagle tanker design.
``I assure you that you will be hearing more about our Double Eagle soon in the industry news,'' said W.R. ``Pat'' Phillips, Newport News chief executive, in a speech to maritime industry leaders Tuesday in New York.
The giant Peninsula shipyard, known for building nuclear-powered aircraft carriers and submarines for the Navy, may have more than one other deal in the works.
W. Gregory Cridlin Jr., the yard's vice president of marketing, told Forbes magazine in its Dec. 5 issue that ``I'm working on four other deals I hope to have wrapped up by the end of the year.''
The Double Eagle tanker broke new ground for U.S. yards and their hopes to weather the sharp decline in naval work when Newport News announced earlier this year that it had made a sale to Eletson Corp. of Greece. It was the first commercial export sale for a U.S. yard in nearly three decades.
``As American yards, we do need to diversify our product lines,'' Phillips said.
He said the Double Eagle program and other commercial projects are a key part of the yard's long-term strategic plan, although the yard still sees building nuclear-powered naval vessels as one of its core businesses.
Newport News recently signed a $2.5 billion contract with the Navy to build the nation's next aircraft carrier, scheduled for delivery in late 2002. Naval work is generally more lucrative than commercial work and employs more people. Industry analysts expect tankers in the Double Eagle class to sell for between $35 million and $40 million, a mere fraction of the value of an aircraft-carrier deal.
But Phillips said that Newport News hopes commercial work will constitute as much as 40 percent of the company's future business, up from about 15 percent today. To succeed in doing that, the yard will have to drop its construction costs substantially, Phillips said.
Keeping costs down will mean choosing the lowest cost suppliers of ship components, even if that means going outside the United States.
``We're going to go where we get the best price in the world,'' Phillips said.
Newport News also hopes to keep its costs down through automation and through the cost savings that come from building a large number of the same kind of ships, he said.
The Eletson deal is for two tankers with an option to build two more. The deal was made possible with the help of a U.S. loan guarantee program called Title XI. Other U.S. yards are hoping to use Title XI to attract foreign commercial work, but Newport News is the only yard to get an application approved for a vessel export deal.
Although Newport News plans to concentrate on tanker sales for its commercial business at the moment, it also hopes to get involved with building liquefied natural gas carriers and cruise ships, Phillips said.
Newport News is a subsidiary of Tenneco Inc. of Houston. ILLUSTRATION: Color photo
MARTIN SMITH-RODDEN/Staff file
The giant Peninsula shipyard's goal is to increase its commercial
work.
by CNB