THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, December 17, 1994 TAG: 9412170206
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 80 lines
Tenneco Inc. will pump $68 million into Newport News Shipbuilding to help make the yard more competitive for commercial shipbuilding, the company announced Friday.
The investment shows Tenneco's commitment to the long-term viability of its giant Peninsula shipyard.
The planned improvements will cause some job loss. But those reductions were included in the shipyard's work force projections in April. The company said then that it would reduce employment to between 14,000 and 15,000 by the end of 1996. The yard employs just under 20,000 workers.
By improving the design and steel-fabrication processes, Tenneco hopes that the yard will become more competitive and get more work - more work that could, in turn, help preserve some jobs.
``We think by doing this, by reducing the time it takes to turn out steel, we'll be able to get more work,'' said Michael Hatfield, a shipyard spokesman.
Houston-based Tenneco began restructuring this year to focus on its best growth opportunities. Tenneco has been saying it would concentrate on and invest in its natural gas, packaging and automotive parts businesses.
But Friday's announcement shows that the company is also committed to Newport News Shipbuilding, which accounted for 14 percent of Tenneco's 1993 revenues and 19.2 percent of its 1993 profit.
The capital-investment program, called the World-Class Shipbuilder Project, will position the shipyard to compete more effectively against other shipbuilders worldwide in the commercial shipbuilding market.
``Completing this project is a crucial piece of our strategy to position Newport News to be the most versatile and cost competitive shipyard in the world,'' said W.R. ``Pat'' Phillips, the shipyard's chairman and chief executive.
Tenneco will buy advanced robotics to automate the yard's steel-fabrication and assembly processes.
The shipyard's computer-aided design and manufacturing systems will be upgraded and integrated with robotics as well. The new system will allow design data to be transferred directly to robots that manufacture parts for ships.
The investment is the largest in the shipyard since Tenneco spent $250 million in the mid-1980s on the Modular Outfitting Facility used to build submarines. Earlier this year Tenneco announced plans to build a $30 million, 500-foot extension to the shipyard's biggest drydock, which will allow for two ships to be built there end-to-end.
The improvements announced Friday will double the shipyard's productivity in steel fabrication when it builds ships in a series. Modern serial-shipbuilding involves building a series of similar ships so that design, engineering and fabrication can be standardized and costs reduced. It's a process similar to building automobiles, but on a much larger scale.
Most of the improvements are scheduled to be completed by 1996, with all work to be completed by 1997.
The improvements in productivity and overhead costs should help the yard win more contracts to build ships.
It's marketing a double-hulled petroleum-product tanker design known as the Double Eagle and a fast-frigate design for foreign navies.
It won a contract Oct. 31 from a Greek shipping concern to build up to four 46,000-ton Double Eagles. Both Phillips and the yard's vice president of marketing, W. Gregory Cridlin Jr., have said that several other contracts for more tankers are pending.
Newport News Shipbuilding is the only U.S. shipyard on the United Arab Emirates' short-list of five yards to build four to eight fast frigates for the tiny Persian Gulf nation's navy. The shipyard recently agreed to develop a shipbuilding and ship-repair yard in that nation in what many see as a good sign for the company's chances for the $2 billion fast-frigate contract.
And the $3 billion contract to build a new aircraft carrier for the U.S. Navy, which it was awarded Dec. 8, should help keep the shipyard busy as it tries to develop new customers.
The shipyard has not built a ship for a customer other than the Navy since 1979, though it has built more commercial vessels in its history than Navy ships. by CNB