Welcome to MSW’s Scuttlebutt! Here’s the news for the day.
Feature - XIV AMA Model Show Ship Report
MSW "plank owner" Rui Matos (Skipper) shares his annual AMA Model Show Ship Report.
Government of Canada to Acquire New Joint Support Ships
Source: Canadian Department of National Defense
HALIFAX –-- The Honourable Peter MacKay, Minister of National Defence, together with the Honourable Rona Ambrose, Minister of Public Works and Government Services Canada and Minister for Status of Women, and the Honourable Tony Clement, Minister of Industry, today announced the Government is moving forward with procurement of new Joint Support Ships (JSS).
The new ships will be built in Canada and will be an important part of our Navy’s work at home and abroad, as part of the Canada First Defence Strategy.
“This government is providing our men and women in uniform the tools and equipment they need to do the jobs asked of them,” said Minister MacKay. “The Joint Support Ship will be a new vessel for our Navy that better enables our sailors to protect Canadian coastlines and sovereignty, and support international operations.”
The Government will acquire two support ships, with the option to procure a third. The JSS project represents a total investment by the Government of Canada of approximately C$2.6 billion. The presence of a JSS increases the range and endurance of the Canadian Navy, permitting it to remain at sea for significant periods of time without going to shore.
The primary role of the JSS will include supply of fuel, ammunition, spare parts, food, and water. The JSS will also provide a home base for the maintenance and operation of helicopters, a limited sealift capability, and logistics support to forces deployed ashore.
“As part of Canada’s National Shipbuilding Procurement Strategy, this announcement will lead to the creation of long-term, skilled jobs for Canadians and will reinvigorate Canada's marine industry, allowing it to compete on the world stage,” added Minister Ambrose.
“Today’s announcement will mean jobs for Canadian workers, as shipyards across the country produce elements of this fleet,” said Minister Clement. “When all is said and done – we are beginning the process to build these ships, and that is great news for our Navy, for our Shipbuilding industry, and for Canada.”
This first step in the replacement of the Navy’s current Auxiliary Oiler Replenishment vessels, known as the definition phase, will involve the assessment of both new and existing designs. Existing ship designs are those already built, operating, and meet key specific Canadian requirements.
A new ship design is being developed by government and industry officials working side-by-side. The selected ship design will be based on the best value in terms of capability and affordability, ensuring the successful delivery of the JSS. The design is expected to be available in approximately two years, at which time a Canadian shipyard, selected as part of the National Shipbuilding Procurement Strategy, will be engaged to complete the design of and build the Joint Support Ships.
The Government of Canada will ensure both value for taxpayers’ dollars and opportunities for Canadian communities and the Canadian marine industry. The Government is committed to getting the right equipment for the Canadian Forces, at the right price for Canadian taxpayers, with the right benefits for Canadian industry.
Northrop Grumman to Consolidate Gulf Coast Shipyards
Source: Northrop Grumman
-- Future Gulf Coast Ship Construction to be Consolidated in Mississippi Facilities
-- Ship Construction at Avondale Facility to Wind Down in 2013
-- Company will also Explore Strategic Alternatives for Entire Shipbuilding Business
-- Company to Record an Estimated Q2 2010 Pre-tax Shipbuilding Charge of $113 Million Related to the Consolidation
-- Q2 2010 Financial Results will also Include a $296 Million Tax Benefit Unrelated to the Shipbuilding Decisions
-- Net Impact of Tax Benefit and Shipbuilding Charge to Increase Q2 2010 Earnings from Continuing Operations by About $0.73 per Diluted Share
-- 2010 Guidance to be Updated with Announcement of Q2 2010 Financial Results on July 29
LOS ANGELES ---Northrop Grumman Corporation announced today plans to consolidate its Gulf Coast shipbuilding operations and explore strategic alternatives for its Shipbuilding business. As a result of the Gulf Coast consolidation, the company will recognize an estimated pre-tax charge of $113 million in the second quarter of 2010.
In addition, as previously disclosed, in the second quarter of 2010, the company will record a tax benefit of $296 million related to the final settlement with the Internal Revenue Service of tax returns for the years 2004 through 2006.
The net impact of the charge and the tax benefit will increase second quarter 2010 earnings from continuing operations by about $0.73 per share. Neither of these items is reflected in the financial guidance the company provided on April 28, 2010.
Consolidation Actions
"Our decision to consolidate the Gulf Coast facilities is driven by the need for rationalization of the shipbuilding industrial base to better align with the projected needs of our customers. The consolidation will reduce future costs, increase efficiency, and address shipbuilding overcapacity. This difficult, but necessary decision will ensure long-term improvement in Gulf Coast program performance, cost competitiveness and quality," said Wes Bush, chief executive officer and president.
"We are extremely proud of our Avondale shipbuilders and their dedicated contributions to our company and our nation. We will work with federal, state and local officials and others to explore alternate uses for Avondale as the last two ships under construction reach completion," said Bush.
The consolidation of Gulf Coast ship construction is the next step in the company's efforts to improve performance and efficiency at its Gulf Coast shipyards, which began with the integration of its shipbuilding operations in early 2008. Since that time, Gulf Coast organization and leadership, operating systems, program execution, risk management, engineering, and quality have been the focus of intense improvement efforts.
Consolidating new ship construction on the Gulf Coast in one shipyard will position Shipbuilding to achieve additional performance improvement and efficiency over the long term. Ship construction at Avondale will wind down in 2013. Future LPD-class ships will be built in a single production line at the company's Pascagoula, Miss. facility. The company anticipates some opportunities in Pascagoula for Avondale shipbuilders who wish to relocate.
Strategic Alternatives
"Our decision to explore strategic alternatives for Shipbuilding is the result of a portfolio assessment to determine how to best serve our shareholders, customers, and employees. The performance improvement initiatives underway in our Gulf Coast operations will be further enhanced by the facilities consolidation. Recognizing our company's long-term strategic priorities, we foresee little synergy between Shipbuilding and our other businesses. It is now appropriate to explore separating Shipbuilding from Northrop Grumman," said Bush.
The company will evaluate whether a separation of Shipbuilding would be in the best interests of shareholders, customers and employees by allowing both the company and Shipbuilding to more effectively pursue their respective opportunities to maximize long-term value. Strategic alternatives for the Shipbuilding business include, but are not limited to, a spin-off to Northrop Grumman shareholders. The company has engaged Credit Suisse as its lead financial advisor. The company is also being advised by Perella Weinberg Partners.
Financial Impacts
As a result of the consolidation, the company expects higher costs to complete ships currently under construction in Avondale due to anticipated reductions in productivity and, as a result, is increasing the estimates to complete LPDs 23 and 25 by approximately $210 million.
Of this amount $113 million will be recognized as a one-time, pre-tax cumulative charge to Shipbuilding's second quarter 2010 operating income. The balance will be recognized as lower margin in future periods, principally on the LPD 25. The company also anticipates that it will incur substantial restructuring and facilities shutdown-related costs including, but not limited to, severance, relocation expense, and asset write-downs.
These costs are expected to be allowable expenses under government accounting standards and recoverable in future years under the company's contracts. The company estimates that these restructuring costs will be more than offset by future savings expected to be generated by the consolidation.
Panama Canal Museum
Today’s website is the Panama Canal Museum. Enjoy.
This Day in U.S. Naval History
1862 - Congress creates rank of Rear Admiral. David G. Farragut is named the first Rear Admiral.
1912 - Rear Adm. Bradley Fiske receives patent for torpedo plane, or airborne torpedo.
1915 - First Navy ships, battleships USS Ohio (BB 12), USS Missouri (BB 11), and USS Wisconsin (BB 9) transit Panama Canal.
1945 - First atomic bomb test at Alamogordo, N.M.
Photo of the Day
Former President George H.W. Bush looks at a display of his former ship, the aircraft carrier USS San Jacinto (CVL 30), in the tribute room of the aircraft carrier that bears his name, USS George H.W. Bush (CVN 77).
Gator
