Ship recycling sailing south
by Elise Hamner - City Editor, Coos Bay World
26 May 2006 –
There are shipbreakers and then there are ship recyclers.
Richard Owen of Metro Machine counts his Philadelphia shipyard among the best when it comes to ship recycling. He's understandably proud, having been the plant manager for the company's ship dismantling program for four years and worked in the shipyard business for 47.
In 2001, Metro Machine was one of 25 companies honored by Pennsylvania's governor with an Environmental Excellence Resource Protection award. It spotlighted projects that brought measurable and direct environmental benefits to the air, land or water.
"We wanted to be the best that we could be in safety and environmental health and we were,” Owen said.
Were - is the key word.
Out of business
This month, Metro Machine announced it will close its Philadelphia operations. It couldn't bid low enough to win any more U.S. government ship dismantling contracts. A few of the 100 remaining workers will move to jobs at the company's Norfolk, Va., shipyard. The rest will be out of work.
Metro opened its Philadelphia facility in 1994 in an old U.S. Navy facility. It repaired Navy ships and hired low-skilled workers putting them through specialized training, Owen said.
The city invested millions into the project to help bring the dry dock and facilities online. Eventually, the Navy repair business went away, but in 1999 Metro signed onto the Navy's pilot program for ship dismantling, working with US-OSHA. A similar program was in operation at Hunter's Point in San Francisco for two years, but it closed when Congress eliminated funding for a year.
In Philadelphia, Owen said, Metro Machine survived. It hired union and offered benefits, with wages averaging $13 to $14 an hour. But two factors - heavy on one - drove the facility out of business. First was the price for scrap metal. Despite climbing prices in the recycling market, Metro Machine has only one scrap buyer. The company is forced to barge big chunks of metal to Camden, N.J. Had Metro cut the steel into smaller pieces it could have won a higher price, but that would have required more labor, he said.
The Navy's ship recycling business went south to Brownsville, Texas. That's where four companies are pulling in the majority of the Navy and U.S. Maritime Administration's shipbreaking work. Metro can't compete. That's even with costs estimated at $1 million per vessel to tow a ship to Brownsville.
"In Texas, you'll find there's an awful lot of migrant workers coming over from Mexico, and (they) don't pay the wages and benefits that we have,” said Owen, who believes Texas wages top out at $9 an hour.
Brownsville is right on the border with Mexico, where there is a big labor pool and Mexican steel mills hungry for scrap metal aren't too far away. Those companies are required to meet OSHA worker safety protocols before they can bid on a ship. But from the U.S. government's perspective, according to U.S. Navy congressional testimony in 2000, old ships go where recycling is cheapest, regardless of work force quality or environmentally sound practices.
Owen is not alone in complaining that his company can't compete against the Brownsville shipbreakers. But neither the Navy nor MARAD has wage level requirements,
The Texas companies aren't necessarily hiring illegal workers. Then again, INS officials aren't necessarily looking, either.
"What we've been emphasizing for the last few years, at least as far as workforce, has been is critical infrastructure,” said Carl Rusnok, Central Region director of communications for Immigration and Customs Enforcement.
It's a national safety priority due to the Sept. 11, 2001, and ongoing fear of terrorist attacks. Immigration officials have gone knocking on personnel doors at nuclear power plants, airports, military bases and oil refineries - to make sure they employ properly documented workers. ICE also is focusing on deporting people with criminal records. In 2005, the United States sent home 84,300 aliens with criminal histories, Rusnok said.
Some shipyards have hired illegal workers. But none of those listed in busts over the past three years on ICE's database were in Texas. In the five shipyard cases listed, all searches occurred at Northrop Grumman facilities in Mississippi and Louisiana.
On the issue of environmental protection in this country, the laws and ship recycling practices vary. That, too, makes it tough for new companies to enter into the business.
Texas ship recyclers and one in Chesapeake, Va., don't use dry docks or graving docks to do the work. Rather, the vessels are pushed into shoreside slips next to a scrap yard. Crews string out oil-gathering booms behind the ships and go to work.
No water around the ship is filtered. There are no protections against invasive species.
California officials and Oregon Gov. Ted Kulongoski have said that style (open slip) of ship recycling won't happen in their states. In Oregon, Kulongoski won't consider any ship recycling project unless the work would be done in a dry dock or graving dock.
That's not to suggest the governor can say no to business, but he controls development incentives and tax breaks.
"The governor has pure discretionary authority over the Strategic Reserve Fund,” said Anna Richter Taylor, the governor's deputy director of communications, in an interview earlier this year. "He utilizes that tool when it's a company he feels compliments Oregon's values.”
He also directs the Oregon Economic and Community Development Department.
"... When they work with companies, it's the governor's discretion who he wants them to work with,” she added.
When Chesapeake-based Bay Bridge Enterprises was proposing a controversial ship dismantling facility in Newport and then looked to Portland when the project fizzled, the governor stepped in.
"He said to the company, "We're interested ultimately, if you can locate a dry dock - then we'll talk,” Richter said.
But there's one more catch.
If a community won't support it, Kulongoski won't either.
But even if a company can win Kulongoski's support, it still has to compete with Brownsville in the short term. Ultimately the competition may spread to Mexico and other countries. At this point, the only barrier to old U.S. military ships heading straight to Mexican shipyards is a U.S. ban on exporting toxic substances. And the lobbying and legal pressure is on to punch a hole in the regulations clear the way for obsolete military ships to again sail to international shipyards.
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