State has no timeline for new operator to take over Ketchikan Shipyard

The state agency that owns the Ketchikan Shipyard wants to find a new operator quickly, hoping to avoid a work gap after deciding that the current contractor needs to vacate the facility this fall.

But few specifics about the process for selecting a new operator, the transition timeline and prospects for current shipyard workers if there is a gap between operators were available May 4 during a nearly two-hour public meeting in Ketchikan hosted by the shipyard owner, the Alaska Industrial Development and Export Authority.

AIDEA Executive Director Randy Ruaro conducted the meeting, at several points voicing the agency's interest in having little to no gap in operations during the transition period.

"We hope there's a very short transition window - that it's not months; that it's not even days," Ruaro said.

The yard performs maintenance and repairs on state ferries, the Ketchikan airport ferries and other government and privately owned vessels. It also has built a couple of ferries for the state.

The uncertainties over future operations weighed heavily among shipyard workers in the room, concerned about their jobs. The facility employs about 100 workers.

The meeting was the first public event since shipyard operator Vigor Alaska was notified in late February that AIDEA would not extend Vigor's operating agreement for another 10-year period after the current extension expires on Nov. 30.

"AIDEA will promptly identify a new operator," according to an April 17 press release from the agency. "While it was necessary for AIDEA to terminate the existing use and occupancy agreement to maximize the shipyard's potential, AIDEA is committed to minimizing the impact on Vigor's existing workforce during this transition."

AIDEA's decision against extending Vigor's operating agreement was based, in part, on what the agency believes is an insufficient return on its investment in the shipyard. The state built the yard in the 1980s and leased it to several different operators over the years.

Vigor took over operations in 2012.

"Frankly, we got to this point, I guess, probably because of a disagreement between ourselves and the current operator on what the maximum potential of the yard was," Ruaro said.

Looming large in Ruaro's early remarks at the May 4 meeting was the condition of the shipyard's large concrete "transfer slab." The slab contains rail tracks that allow for the transfer of vessels between one of the shipyard's drydocks and the assembly hall. One end of the slab is sinking badly, he said, and the rails themselves are up to 4.5 inches out of tolerance.

AIDEA is studying the slab, which was installed as an Alaska Department of Transportation project, but "it could be a massive repair ... and it's a major maintenance issue that is falling toward AIDEA's side of the ledger." The repair costs could range up to $30 million.

There also were references at the meeting that AIDEA had received relatively small amounts of revenue from the shipyard.

"In our view, there were a number of factors" to end the contract with Vigor, Ruaro said. "We looked at the revenue level, I mean, the amount of business coming in or not coming into the yard. It was a number of those things."

In the February letter notifying Vigor of the non-extension of the operating agreement, AIDEA indicated it would soon issue a Request for Information from entities potentially interested in operating the yard. No such request had been issued by early May. Ruaro said the AIDEA board later decided to request proposals to operate the yard.

In addition to employment issues, there were questions and comments about whether Vigor would be taking all of its equipment and, if so, how that might affect the incoming operator's ability to gear up and start work.

Ruaro said AIDEA owns some of the equipment at the yard, and Vigor owns its own equipment and can do what it wants with that equipment.