Buoyant New Business

August, 2004

When Hawaii’s private ship-repair business was sailing into troubled waters during the late 1990s, Bill Clifford was there to help navigate it in the right direction. As the president and chief executive officer of Pacific Shipyards International LLC, Clifford has aided in the rescue of an ailing industry and is working to put Hawaii’s ship-repair business back on the map.

As a consortium of two shipyards, Honolulu Shipyard Inc. and Honolulu Marine Inc., Pacific Shipyards International was formed in 2001 to consolidate a fragmented local ship-repair market. At the time, the ship-repair industry was faltering due to cutbacks in Navy contracts, a lack of commercial work and intense competition from shipyards on the West Coast.

Under the name Team Hawaii, Pacific Shipyards International put together a group of local ship-repair companies and joined forces with Mainland-based Southwest Marine Inc., to win a five-year Navy contract to do surface ship maintenance and repair at Pearl Harbor Naval Base. This contract helped breathe new life into Hawaii’s ship-repair business.

Clifford also helped form a lucrative public-private partnership with the Navy for the use of Dry Dock 4 at Pearl Harbor, one of the largest dry docks in the Pacific Rim. “What we need to do as a partner is increase the size of the pie for Hawaii,” says Clifford. “We’re all interested in more work, more jobs. So if we work together and get more ships to Hawaii, everyone benefits, and the partnership has opened that door.”

This partnership led to a milestone in 2003 for Pacific Shipyards International, when the 760-foot Matson flagship vessel, Matsonia, was brought in to Dry Dock 4 for emergency repairs. Not only was the Matsonia one of the largest ships ever to be repaired in Hawaii, it was also crucial in retooling Hawaii’s ship-repair image and proving that local shipyards, with the help of the Navy, could handle the work.

Using one of the largest dry docks at one of the only naval shipyards nationwide accepting commercial work has also enabled Pacific Shipyards International to compete with Mainland shipyards and gain some of the revenue that was previously bypassing the state. “Something in the vicinity of $4 million to $5 million a vessel went to the Mainland,” says Clifford. “But it looks like right now we’re hoping to capture probably two to three ships a year, which is about $10 million a year in revenue.”

Clifford is hoping to increase those numbers by working on a project that would bring some of the 11 vessels pre-positioned in the Pacific naval fleet to Hawaii for maintenance and repairs. Currently, these ships bypass Hawaii, traveling through the Panama Canal to offload military equipment in Florida, then dock on the East Coast for repairs. “So we’ve come out with a program that says, wait a minute, in this world of security problems, why would you want to go through the canal? Why don’t you have them stop in Hawaii and we’ll do the work [on both the ships and the equipment aboard them] here?” says Clifford.

This battle to retain the ship-repair business in Hawaii has enabled Pacific Shipyards International to enter the Top 250 list for the first time at No. 111. With more than $63 million in gross annual sales in 2003, up from $52 million the previous year, the company has rapidly expanded from 225 employees in 2002, to 350 in 2003. A recently awarded $3.6 million government contract to do maintenance work on inactive naval vessels at Pearl Harbor has also helped to buoy Pacific Shipyards International’s place on the list.

Clifford hopes to continue Pacific Shipyards International’s success by attracting more ships to Hawaii. In the past three years, the company has docked three commercial vessels, including the Matsonia, and Clifford is currently in talks with several commercial cruise lines to book their vessels in dry dock for 2005. Pacific Shipyards International should see a combination of commercial cruise ships, Matson vessels and ships controlled by the military over the next five years. The mix should keep Hawaii’s ship-repair industry competitive and make for clearer sailing ahead.

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