Philly Shipyard has an order backlog approaching $1.8bn, but it is still struggling to make money.
In the third quarter, the south Philadelphia shipbuilder recorded a $17.2m loss even following the completion of a training vessel for students at the State University of New York Maritime College in September and four more on the way.
In its earnings report, the Oslo-listed company said the five-ship series would be a loss-maker.
“Philly Shipyard continues to forecast the five-ship [national security multi-mission vessel or NSMV] series to be a loss-making contract,” it said.
“At the end of [the third quarter] 2023, Philly Shipyard has recognised more loss on the NSMV contract that it anticipates to incur when the five-ship contract is completed.”
Still, it argued that the contract model for the vessels — for which Tote Services is construction manager and Philly Shipyard the builder — has the potential to spur more shipbuilding by the US government.
It said there was “growing interest” from Congress in the model, which helps “reduce costs, accelerate delivery times and build more vessels”.
The NSMVs are being constructed for five US state-run maritime academies. They are built to train mariners and have both container ship and ro-ro capabilities.
It is not the only drag on the yard’s performance.
Despite aggressive recruiting efforts and seeking government grants to help fund its apprenticeship programme, Covid-19 and federal contractor vaccine mandates have kept it from ramping up its workforce.
The pandemic caused supply chain disruptions that slowed construction of the NSMV and overall labour shortages.
The company is reportedly the subject of a takeover bid by South Korea’s Hanwha Ocean.
Philly Shipyard declined to comment last month on the speculation, but said it was looking at strategic alternatives.
Its backlog includes the four remaining NSMVs, a subsea rock installation vessel ordered by Great Lakes Dredge & Dock and three LNG dual-fuelled container ships ordered by Matson.
The last two ships Philly Shipyard built for Matson, in 2018 and 2019, were another loss-making effort.
The yard was idle for several months following their completion, until it announced it would pivot to a mix of government and commercial contracting.
