Shipyard Deal Done
Signing of pact with Kvaerner seen creating thousands of jobs.
By Paul Davies
DAILY NEWS STAFF WRITER
Philadelphia's ship just came in.
State and city leaders inked a deal in Germany yesterday with
Europe's largest shipbuilder to jointly reopen the Philadelphia Naval Shipyard.
Gov. Ridge and Mayor Rendell jetted to the German port town
of Rostock to close the deal with Norwegian-based Kvaerner ASA.
The deal calls for $399 million in taxpayer subsidies in
return for Kvaerner's agreement to hire 1,000 shipyard workers and spend $165 million over
15 years at the shuttered yard.
"This agreement will generate thousands of jobs, in
Philadelphia and across Pennsylvania," said Ridge, who is expected back in
Philadelphia today along with Rendell via Crown Cork & Seal's corporate jet. "And
it is an agreement that includes extraordinary commitments by Kvaerner to ensure that the
significant investments of Pennsylvania taxpayers will pay off with jobs."
Ridge expects the deal to create up to 6,000 direct and
indirect jobs for the yard and its suppliers, while remaking the yard into a high-tech
center.
Philadelphia's struggling economy stands to gain the most
from the deal, since the city puts in the least amount of cash but gets most of the jobs.
Virtually none of the city money will come from the treasury. Almost half of the city's
contribution is from federal funds Philadelphia received for defense conversion.
Rendell expects Kvaerner to lure other companies to the yard
as well.
In return, Kvaerner will invest $45 million over five years
for capital infrastructure, the company said.
Two-thirds of that money "will be provided through a
loan from the Pennsylvania parties at preferential rates of interest."
Additional investments would be made for unspecified capital
improvements over 10 years.
As a "measure of its commitment," Kvaerner said it
would buy the first three ships built in Philadelphia at cost -- about $80 million -- and
re-sell them.
Infrastructure work could begin at the yard by the end of the
year, and may take up to a year to complete.
The first ships should be ready by 2000.
Kvaerner would lease the shipyard for 99 years.
Kvaerner dropped anchor here after receiving the $399 million
taxpayer-financed package that includes $182 million from the state, $49 million from the
city, $103 million in federal aid and $65 million from the Delaware River Port Authority.
Another $30 million in low-interest loans is expected from
the city and state.
"The public money will pay for renovations to the yard,
which will remain publicly owned, and for on-the-job training that will be necessary to
teach Kvaerner's advanced shipbuilding techniques to our workers," Ridge said.
The Pennsylvania delegation toured Kvaerner's Warnow yard in
the Baltic port of Rostock, the model for the Philadelphia project.
The delegation met with German government leaders, Kvaerner
officials, union leaders and workers before wrapping up the deal and popping the corks in
a champagne toast.
Once the leading shipyard in former East Germany, Warnow was
overstaffed and outmoded when Kvaerner took it over in 1992, after German unification.
Aided by a $600 million subsidy from the German government,
the Norwegian company revamped Warnow into one of the world's most modern shipyards,
specializing in container freighters.
It now employs about 1,400 workers and trainees, less than a
quarter of its communist-era staffing level.
Discussions with Kvaerner began nearly two years ago, after
talks on a deal fell through with German shipbuilder Meyer Werft.
The shipyard's two 1,092-foot dry docks are among the world's
largest. It stopped new ship construction after World War II and was used for ship repairs
until the Navy closed it in 1995.
New Jersey is not putting up any money for the shipyard deal,
but Gov. Christie Whitman has backed the plan. About a third of the former shipyard
workers live in New Jersey.
Manny Stamatakis, chairman of the Delaware River Port
Authority, who helped negotiate the deal, said there's much more potential beyond the jobs
in Philadelphia.
"Philadelphia is the birthplace of shipbuilding in this
country," Stamatakis said in a telephone interview from Germany. "This could be
the model that shows the U.S. how to compete both nationally and globally."
The Associated Press contributed to this report.
