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Louisiana’s Bollinger Shipyards has agreed to buy Halter Marine in Pascagoula, Mississippi from its Singapore-based parent company, a major expansion aimed at turning around the struggling shipbuilder and delivering on its $750 million U.S. Coast Guard contract for Artic icebreakers.
The acquisition, announced late Sunday, offers Bollinger two active and two dormant shipyards in the Pascagoula area, where about 1,200 workers build and repair a wide range of military and civilian vessels.
Bollinger CEO Ben Bordelon said he decided to take on the loss-making Halter Marine yards after a vetting process that started earlier this year. The aim of the $15 million purchase, he said, is to integrate Halter Marine into Bollinger’s own defense contracting segment and turn the Mississippi shipbuilder’s losses, which amounted to $256 million over the last five years, to profits.
“Shipbuilding is not an easy business, we understand that, and the losses they had were a big consideration in the price we paid,” said Bordelon. “We know we have some challenges ahead of us, and the next one is to integrate them into how we do business…starting by transitioning some folks over to Mississippi to start building our team.”
Ben Bordelon, CEO and President of Bollinger Shipyards. He is the grandson of Donald Bollinger, who founded the company in 1946.
He said it was too early to make any commitments on jobs, but noted that Halter Marine’s deep order book was a big attraction for Bollinger and makes it unlikely they’ll be looking to shed employees. Indeed, Bordelon said, Bollinger’s own order backlog means they are currently looking to fill more than three dozen vacancies.
Singapore Technologies Engineering, which is listed on the Singapore Stock Exchange and is controlled by the Singapore government has owned the Halter Marine shipyards for nearly two decades. Its U.S. operations also include land-based defense contracting, aerospace and “smart city” technologies.
In a prepared statement, ST Engineering said that it had decided to sell both VT Halter Marine and ST Engineering Halter Marine and Offshore, the two companies that operate the Pascagoula shipyards, after a review of their performance. It had hired investment bank Macquarie Capital to find a buyer.
Third generation owners
The two companies will be renamed Bollinger Mississippi Shipbuilding and Bollinger Mississippi Repair when the transaction closes, which is expected before the end of the year. Bollinger might pay an additional amount up to $10.25 million if future contract options are exercised.
Bollinger, which was founded by Bordelon’s grandfather Donald Bollinger in 1946, is now the largest privately owned shipbuilder in the United States, with 2,000 employees and annual revenue estimated at around $1 billion.
It started out in Lockport, in Lafourche Parish, building barges and workboats for the burgeoning oil and gas industry after World War Two. After Donald “Boysie” Bollinger took over from his father in the 1980s, the company expanded considerably by moving into federal contracting, including for the U.S. Coast Guard and Navy.
Welding crews work on one of several U.S. Coast Guard cutters being built at Bollinger Shipyard in Lockport on Monday, September 27, 2021. (Photo by Chris Granger | The Times-Picayune | The New Orleans Advocate)
It now operates a dozen shipbuilding and repair facilities throughout Louisiana, including a shipyard in Algiers and a quick repair facility in Harvey.
Bordelon, who became CEO in 2014, last year bought Gulf Island Fabrication’s Houma shipyard assets for about $29 million, which added four dry docks as well as long-term contracts to build three research vessels for Oregon State University and five towing, salvage and rescue ships for the Navy.
Halter Marine was founded in the 1950s in New Orleans East by Harold Halter and Jimmy Dubuisson to make pleasure boats. It boomed in the 1970s as a maker of vessels for the oil and gas industry, then went through various owners’ hands in the ’80s and ’90s before ending up as part of ST Engineering when the Singapore company bought Vision Technologies in 2003.
Second bite of the apple
Bordelon said the Halter Marine purchase further strengthens Bollinger’s U.S. defense industry footprint and brings stability and certainty to ongoing commercial and government programs, especially the Polar Security Cutter program.
Bollinger Shipyards lost out to Halter Marine on the Coast Guard’s coveted Polar Security Cutter contract three years ago. Bordelon said that the potential for the PSC contract and the knowledge Bollinger had acquired while bidding for it were big factors when considering taking over Halter Marine.
“When we had a chance to review and compare how we bid I felt the earlier we (could get control of the program by buying Halter Marine) the better our chances would be to have success in that program,” he said, noting “they haven’t cut steel yet.”
The CEO who had presided over the company when it won that contract, Ronald Baczkowski, was fired a year later and replaced by Bob Merchent from rival Huntington Ingalls, making him the company’s third CEO in four years. The company had acquired a reputation for under-bidding and promising more than it could deliver; the timeline for the first icebreaker has already been delayed a year until 2025.
Still, Bordelon sees the icebreaker contract as potentially the biggest in the company’s history. The contract won by Halter Marine was for $746 million for the first vessel, and could rise to about $1.9 billion if options for another two are exercised.
Last month, the White House published its strategy for the Arctic region which committed to expanding the Coast Guard’s icebreaker fleet over the coming decade to ensure patrols of the U.S. and European Arctic sectors.
Other advantages of the purchase for Bollinger is that it gives the company a nearby deep water facility, which allows it to work on bigger ships. There is 225,000 square feet of covered area where Panamax-sized vessels up to 50,000 deadweight can be built.
Investment in robots
Bordelon noted that ST Engineering already had made substantial capital investments to prepare for the icebreaker program, including the purchase last year of state-of-the-art Inrotech welding robots from Denmark.
Bordelon said that both companies also have deep histories making civilian vessels which still includes oil and gas and now have moved into construction and repurposing vessels for the emerging offshore wind industry. They also make vessels for private sector space programs.
“Having these programs with longevity gives me the opportunity to recruit better and say to people, ‘Hey, we do cool stuff like build icebreakers for the Arctic’,” he said. “I’m excited.”