Stew Magnuson of National Defense Mag. Reports: Small US Boatyards Take on Competitive Export Market

For immediate release: May 16, 2011

Original Article:

While major U.S. ship manufacturers have seen a steady decline in exports over the last few decades, some small boatyards are unwilling to give up on foreign markets.

Seattle-based company Kvichak Marine Industries Inc. came to the IDEX tradeshow in Abu Dhabi, United Arab Emirates, to leverage some of the notoriety garnered after Kvichak won the U.S. Coast Guard’s fast response boat-medium contract, said Sales Manager Art Parker.

Kvichak, which began its life as a supplier of aluminum fishing boats, is manufacturing 180 to 250 boats for the Coast Guard. It has about 200 workers.

It’s the right time for the company to come to the Middle East. “We are about 25 percent of the way through the Coast Guard contract, so we have some visibility. We have some credibility. And it is time to start marketing on the [foreign military sales] side,” Parker said.

“Where we see the market are search-and-rescue agencies that are looking for that credible, proven product. They look to the U.S. Coast Guard and say, ‘Wow. The U.S. Coast Guard has spent a lot of time and money developing that boat. We want some.’”

Kvichak, which produces only aluminum hulls, supplies oil skimmers to the U.S. Navy, and there is at least one in every port the service operates in to clean up after spills. It also recently sold three pilot boats to a customer in the Netherlands.

“It’s a very rare thing for a U.S. yard to deliver boats to Europe,” he said.

The company is looking to the Middle East and South America to win its first major military export contract. For now, it is more interested in working on foreign military sales, where the customer is the Defense Department, and it handles all the contracting issues, he said.
Also using foreign military sales to export boats is Swiftships Shipbuilders LLC. The company’s main boatyard is in Morgan City, La., but it recently moved its corporate office to Washington, D.C., said Craig Arndt, director of business development. The shipyard employs about 450 workers now, he said.

In March, it was given a $42.1 million modification to a previously awarded Naval Sea Systems Command contract to build three 35-meter Iraqi navy patrol boats, with an option to build three more. The cumulative value of the FMS contract is $83.5 million.

Swiftships and its parent company, Sewart Seacraft, built the legendary swift boats of the Vietnam War that patrolled inland waterways. Since 1949, it has constructed some 3,110 ships ranging from 30 to 225 feet. It has more than 100 designs in its portfolio.

The IDEX show this year introduced a new section, NAVDEX, which is alongside a cove across a walkway from the massive Exhibition Center. Among the numerous shipbuilders there from India, South Korea, India, Russia, the United Arab Emirates, and Italy, Swiftships was the only U.S. boat manufacturer.

Swiftships has a strong customer base in the Middle East, Arndt said. It’s also building two 54-meter diving support vessels for Kuwait, and a 28-meter patrol boat for the Egyptian navy, which will be co-produced in Alexandria, Egypt. Seventy-five percent of the work will be done in Louisiana and 25 percent in Egypt.

Swiftships is also the only U.S. manufacturer in the running to build coastal patrol vessels for Saudi Arabia. A down-select for that contract is expected this year. Arndt declined to comment on the status of that competition.

“We’re a small company and we have to pick and choose our targets,” Arndt said. “We can compete with anyone on the quality of our product,” he said. However, low labor costs in Asian countries makes foreign sales difficult, he acknowledged.