DATE: Sunday, May 25, 1997                  TAG: 9705250065

SECTION: LOCAL                   PAGE: B3   EDITION: FINAL 

SOURCE: ASSOCIATED PRESS 

DATELINE: NEWPORT NEWS                      LENGTH:   39 lines

SHIPBUILDER CALLS SEALIFT CONTRACT MIXED BLESSING

Newport News Shipbuilding has completed its first Navy contract in decades to build something other than an aircraft carrier or a submarine.

The yard has finished converting the second of two Danish container ships into tank-toting Sealift vessels - a project that provided important lessons for the yard as it continues to diversify.

The Navy took ownership of the amphibious cargo ship Gilliland on Friday, and a public renaming ceremony was held Saturday.

The ship was named for Cpl. Charles L. Gilliland, who died defending his platoon in the Korean War and was posthumously awarded the Medal of Honor. Its sister ship, the Gordon, was handed over to the Navy last July.

When Newport News Shipbuilding released its 1996 earnings in February, yard chief William P. Fricks said he would not be sorry to get the Sealifts off the books. The yard lost $50 million on the contract last year.

But the two ships played a significant role when they showed up in 1993. The $425.6 million contract for the two vessels came when work was needed and set the yard on a course toward diversification.

In 1993, construction on two carriers and three subs was under way, but the Navy had not ordered a new ship since 1989 and future sub work was in question.

The conversions helped bridge a gap until work began on the carrier Ronald Reagan, now under construction, and the yard agreed to share work with Electric Boat of Groton, Conn., on the Navy's next class of attack submarines.

Since it began the conversions, the yard has continued to diversify. It has returned to the commercial shipbuilding business for the first time since the 1970s. It also has sought new surface ship contracts as the Navy looks for cheaper, simpler designs that mesh with commercial standards, such as the military's planned arsenal ship.

``The Sealift ships were important as the first step, but we're not done,'' Thomas C. Schievelbein, the yard's executive vice president of operations, said.

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