THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, August 9, 1995 TAG: 9508090454
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 88 lines
Earl Industries Inc., a Portsmouth-based ship-repair firm, has plunged into the highly competitive Navy ship-overhaul business in Hampton Roads.
Earl Industries became eligible to compete for such Navy contracts in July and has just won its first bid. The Navy awarded Earl a $3.7 million contract to dry dock and overhaul the guided-missile frigate Robert G. Bradley.
Earl, which doesn't have its own shipyard, will dry dock the warship at Metro Machine Corp.'s Norfolk shipyard.
The contract has angered executives at at least one other shipyard in the region because Earl has won a contract usually awarded to yards with waterfront facilities.
``This artificially skews the market,'' said Doug Forrest, vice president at Colonna's Shipyard Inc., which won the bidding for two previous frigate overhauls this year. ``Their new position as a competitor will change the way they are viewed in the industry.''
Earl President Jerrold Miller seemed unconcerned. Earl's primary customer has been the Navy, not other shipyards, he said. ``I've got to look out for my business, and I think this is what's best for my business,'' Miller said.
Other active ship repairers in Hampton Roads include Norshipco and Newport News Shipbuilding. A Norshipco spokeswoman said Earl won the contract fairly with the lowest bid.
``This is a real competitive market,'' said Capt. Robert B. Ploeger, head of the Navy's ship-repaircommand in South Hampton Roads.
Founded in 1984, Earl has specialized in ``downriver'' repair jobs for the Navy, performing dockside repairs at a Navy base or subcontracting work from other shipyards. It employs more than 300 people.
``Whether Earl can make the quantum leap from being a bicycle shop to being a major-league shipyard remains to be seen,'' Forrest said. ``I wish them luck. They're going to need it.''
Miller characterized the Bradley contract as an experiment. ``We'll see how it goes,'' he said.
Earl only became eligible to bid on overhauls involving dry docking last month after it applied for and signed a Master Ship Repair Agreement with the Navy.
``My company's been doing what (Master Ship Repairers) do for years now and the customer is very happy with us,'' Miller said. ``The only thing that was missing was access to a dry dock.''
Metro Machine agreed to let Earl use its dry dock. Earl will take shop work back to its facility in the Port Norfolk section of Portsmouth, Miller said.
Metro President Richard Goldbach declined to discuss his company's deal with Earl, except to say there is a business strategy behind it.
The job will help keep Metro's dry dock full this year, said one ship-repair source.
Miller said Metro Machine is set up to do more-complex repair jobs such as the $14.1 million, eight-month overhaul it recently won for the sophisticated guided-missile cruiser Yorktown.
The frigate overhaul is a relatively simple job, Miller said.
But where Earl sees an opportunity, other shipyards may see potential business going to a company that wasn't a competitor until now.
Without costly waterfront repair facilities, Earl may have a pricing advantage over the shipyards.
Colonna's Forrest doesn't understand why the government granted Earl Industries a Master Ship Repair Agreement in such a competitive market.
Since the Navy began cutting back after the demise of the Cold War, the region's shipyards have been scrambling for slices of a shrinking Navy ship-repair pie. Another competitor just makes the slices smaller.
The scramble has already claimed one victim - Jonathan Corp., which closed its shipyard and went out of business in June. Another repairer, Marine Hydraulics International Inc., is trying reorganize its finances in bankruptcy court.
Earl was a competitor already, Miller said. ``I've always told people we're a shipyard without a yard,'' he said.
Ploeger suggested that it wasn't really up to the Navy anyway. Earl applied and met the Navy's requirements, which included access to a dry dock and the capability to overhaul a minesweeper.
Work on the frigate Bradley will begin Aug. 28 and take three months. The Bradley and other Atlantic fleet frigates are being transferred to Norfolk from closing Navy bases in Charleston, S.C., and Newport, R.I.
In May, Miller sold Earl Industries to Arlington-based Digital Systems Research Inc., an engineering services firm. Miller took a minority stake in Digital Systems and agreed to stay on and run Earl Industries. ILLUSTRATION: Jerrold Miller, President Earl Industries
by CNB