Introductory Materials
Introduction
Coos Bay Meetings about Shipbreaking/Ship Recycling
Has the Port Commission of Coos Bay Handled Shipbreaking, Their Land Deal for the Liquefied Natural Gas (LNG) Terminal, and Other Issues with Due Diligence?
23 May 2006 Letter to U.S. Rep. Peter DeFazio with Copies to U.S. Senators Ron Wyden and Gordon Smith about the Possible Shipbreaking Facility at Coos Bay, Inadequate Funding of U.S. Maritime Administration (MARAD) and Navy Ship Disposal Programs, and Congress' and MARAD's Continuing Efforts to Export Obsolete Government Vessels to Be Scrapped (June 12 Addenda)
8 May 2006 Letter to Oregon International Port of Coos Bay about the Economics of Ship Recycling at Coos Bay (June 17 Addenda)
** Is "Ship Recycling" Different than "Shipbreaking," "Ship Scrapping," or "Ship Salvaging"? Or Is Its Exclusive Use Euphemistic?
West Coast Sites Considered for Shipbreaking of U.S. Maritime Administration (MARAD) Ships
What Is Environmental Recycling Systems' Plan for Proposed Drydock Shipbreaking at Coos Bay?
Shipbreaking or Recycling of U.S. Navy Ships
Port of Newport Turned Down Bay Bridge's Proposal for Shipbreaking at Yaquina Bay on Jan. 24, 2006
** Some Other Web Pages about Shipbreaking/Ship Recycling
Advantages to Doing Shipbreaking in Drydocks
Why Is It Preferable to Do Shipbreaking in Drydocks?
General Sources of Information About U.S. Shipbreaking (Ship Recycling)
Is There A Pulitzer Prize Winning Series about the U.S. Shipbreaking Industry?
Are There U.S. Department of Transportation and U.S. GAO Reports about U.S. Shipbreaking?
Does the Environmental Protection Agency (EPA) have a "Guide for Ship Scrappers"?
Photos of In-water U.S. Shipbreaking Sites
Bay Bridge Enterprises (BBE) in Chesapeake, Virginia on the Elizabeth River
Photos of U.S. In-Water Shipbreaking Sites Other Than in Virginia
U.S. Maritime Administration (MARAD) Ships to Dismantle Along the West Coast
What is the Source of Vessels That West Coast Shipbreakers Will Scrap?
Photos of Ships in Suisun Bay Fleet, East of San Francisco.
How Long Are MARAD Ships to Scrap at Suisun Bay?
Stability of the U.S. Ship Salvaging Industry
Has U.S. Ship Recycling Been a Stable Industry Without Environmental and Safety Violations?
Do Scrap Material Prices Affect the Stability of a Shipbreaking Company?
Can Inadequate Funding by the U.S. Government Destabilize the U.S. Shipbreaking Industry?
Does An Irregular Supply of Ships to Salvage Affect the U.S. Shipbreaking Industry?
Does the Possibility of Exporting MARAD Ships Affect the U.S. Shipbreaking Industry?
Is There Competition and Potential Competition to Scrap U. S. Maritime Administration (MARAD) Ships at Suisun Bay Near San Francisco, California?
Will a West Coast Shipbreaking Facility Be Sustainable for 5 Years or "for Generations"?
Background of Some U.S. Shipbreaking Companies
Brief and Unstable History of Adani's Bay Bridge Enterprises LLC (Limited Liability Company) that Has a Chain of Ownership
Does the City of Chesapeake Like the Bay Bridge Enterprises In-Water Shipbreaking Facility in Virginia?
Environmental Recycling Systems
International Shipbreaking Limited, LLC
Esco Marine
Does a Shipbreaking Company Have Any Connection to Overseas Shipbreaking?
Potential Shipbreaking Jobs on the West Coast
Will a Shipbreaking Company Bring Steady, Family Wage Jobs with Benefits?
Are Periodic Layoffs and Losses of Trained Workers Likely at Shipbreaking Companies?
How Many Jobs Are Ship Scrapping Companies Suggesting They May Bring to the West Coast?
What Wages Are West Coast Ship Salvage Companies Proposing to Pay Workers?
Are Shipbreaking Jobs Likely to Be Union or Nonunion?
Is There a Concern that the Proposed Bay Bridge Facility in Newport May Cause a Loss of Jobs or Reduce Property Values?
Job Safety Concerns
What Are Work Conditions during Ship Salvaging?
How Safe Are Shipbreaking Jobs?
Are Community Fire Departments Prepared for Fires Onboard Ships to Be Scrapped?
Taxpayer Concerns about Shipbreaking Facilities
Was There Enough Time for Adequate Public Input After the Proposed Bay Bridge Lease Was Announced for Newport?
Will There Be Opportunity for Public Input about the Two Proposed Shipbreaking Facilities at Coos Bay?
May Taxpayers Pay for Attracting a Shipbreaking Company?
Setting Priorities: Did the Port of Newport Consider How Its Handling of the Proposed Bay Bridge Lease May Affect Its Proposed Bond Issue?
Dredging
Will the Arrival of A Shipbreaking Company Guarantee Federal Dredging Funds?
General Environmental Concerns about Shipbreaking
Does the Environmental Protection Agency (EPA) have a "Guide for Ship Scrappers"?
Are Toxic Materials Encountered During Shipbreaking?
How Much Environmental Experience Do Shipbreaking Companies Have with Shipbreaking?
Are Any Shipbreaking Companies "Green Certified"?
Do U.S. Shipbreaking Companies Have Any Environmental Violations?
Environmental Concerns about Proposed Shipbreaking in Oregon or Washington
May Accidents Happen While Vessels Are Towed from Suisun Bay to the Shipbreaking Facility?
May Invasive Species Be Introduced into Oregon or Washington Estuaries by Scrapping MARAD's Ships?
Will Bay Bridge Do Much of Its Shipbreaking While a Vessel Is in Water at an Open, Exposed Aquatic Site in the Pacific Northwest?
Do MARAD Ships Leak Oil While Moored or Do They Contain Oil When They Are Brought to a Shipbreaking Site?
Could Booms for Containing Oil and Oily Water During In-Water Shipbreaking Be Compromised by Winds, Waves, and Tides in the Pacific Northwest?
Could Ship Paint Chips Drop Into the Water and Cause Contamination at a Shipbreaking Site?
Could Rainfall during Shipbreaking Create Contaminated Bilgewater?
Could Water Used to Put Out a Shipbreaking Fire Create Contaminated Bilgewater?
Do In-Water Shipbreaking Companies Ever Remove Parts of A Ship's Hull and Bow While It Is Still in Water?
Could Metal Slag or Particulates Produced While Cutting a Ship's Superstructure or Hull Fall Into the Water?
Could Tracked Vehicles Operating in Water during In-water Shipbreaking Create Contamination?
Do Some Shipbreaking Companies Have Onshore Scrapping Operations on Unpaved Surfaces?
Will Toxic Materials Be Stored at a Shipbreaking Site?
May Any Birds Be Affected by a Shipbreaking Facility?
Maps of Proposed Bay Bridge Enterprises LLC Site at Yaquina Bay, Oregon
Monitoring Safety and Environmental Concerns about Shipbreaking
Introduction to Concerns about Safety & Environmental Monitoring of Shipbreaking
How Objective is MARAD?
How Often Has MARAD Inspected Shipbreaking Companies in Virginia and Texas?
How Often Has OSHA Inspected Shipbreaking Companies in Virginia and Texas?
How Often Has the EPA Inspected Shipbreaking Companies in Virginia and Texas?
How Often Did the Virginia DEQ Do Reconnaissance Inspections of Bay Bridge Enterprises in Virginia?
Has Any Agency Tested Water or Sediments in Bay Bridge's Shipbreaking Slips for Contamination?
Is Self-monitoring by a Shipbreaking Company Adequate to Prevent Contamination?
Can the Oregon DEQ Prevent Contamination by Ship Recyclers?
Are Anonymous Tips Adequate for Monitoring Ship Dismantling Companies?
May Monitoring of Shipbreakers by Citizen Groups Be Adequate?
Liability Concerns
How Much Liability Insurance Does Bay Bridge Obtain For Each Vessel?
Why Are Contamination Cleanups of Shipyards at Yaquina & Coos Bays Relevant to an In-water Shipbreaking Facility?
Recreational Fishing and Crabbing Concerns
May Recreational Fishing and Crabbing Be Affected by the Proposed Shipbreaking Site at Yaquina Bay?
Aesthetic Concerns
Are There Aesthetic (including Noise) Concerns about Shipbreaking?
Photos of Ships in Suisun Bay Fleet, East of San Francisco.
When Bay Bridge Enterprises LLC's proposal to construct a shipbreaking facility primarily for U.S. Maritime Administration (MARAD) at Newport (Yaquina Bay) was first announced on Nov. 18 (1), I was somewhat in favor of it because the newspaper report indicated that it would bring many family wage jobs without degrading the environment. But after researching Bay Bridge Enterprises' history, ownership, operations, and statements, I have great concerns about their doing shipbreaking in the Pacific Northwest. Their lure of 125 jobs is enticing but appears to be a mirage. In my opinion, some government officials, newspaper reporters, and citizens have accepted Bay Bridge's claims too unquestioningly.
Shipbreaking of MARAD ships is necessary, but it needs to be done right to prevent environmental contamination. There are, to my knowledge, no man-made slips in Oregon estuaries like used by Bay Bridge in Virginia or like the Brownsville channel used by four Brownsville firms for MARAD shipbreaking. Shipbreaking in slips makes it more possible to somewhat monitor and control accidental spills of hazardous materials that result from shipbreaking, but spills in slips can still leak out into the main channel. In my opinion, shipbreaking needs to be done where a ship being scrapped can be fully contained and all liquids could be captured and properly disposed of such as in a drydock.
However, at Yaquina Bay, Bay Bridge proposed to do shipbreaking adjacent to the Yaquina channel and in a small unprotected cove. The proposed site is very exposed to storm winds and waves. It is also exposed to debris such as root wads that float down the channel during floods. These conditions compromise the effectiveness of booms or absorbent materials placed around vessels to contain oil spills during inclement weather when accidental spills are more likely to occur.
This web site was originally about Bay Bridge's shipbreaking proposal for Yaquina Bay. After the Port of Newport withdrew consideration of the Yaquina Bay site because Bay Bridge wanted the Port and taxpayers to spend too much money to prepare the site for Bay Bridge, I started expanding this web site to Bay Bridge and other companies considering shipbreaking sites in the Pacific Northwest because I am very concerned about exaggerated, unrealistic claims that may be made by Bay Bridge or perhaps other shipbreaking companies.
With the Feb. 17 Coos Bay World article that two shipbreaking firms, Environmental Recycling Systems and an unnamed firm, are considering shipbreaking in Coos Bay, I am trying to make this web site about shipbreaking of MARAD ships in the Pacific Northwest. MARAD's shipbreaking program is for governmental merchant-type vessels of 1,500 gross tons or more; the Navy's shipbreaking program is for combat vessels (p. 4 and 6 in 73, p. 2 of 187).
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On 9 March 2006 at the Oregon Institute of Marine Biology (OIMB) in Charleston at the southwest end of Coos Bay, James Carlton of Williams College (who has studied exotic species in Coos Bay) gave a presentation about invasive species that could be brought in on ships (161, 165).
An article in the March 13 Coos Bay World about a March 8 Port of Coos Bay press release indicates that the Port in partnership with South Slough National Estuarine Research Reserve was planning to hold three meetings in an information series over a three-month period (164).
The first public forum, with 2 days notice in the Coos Bay World, was on April 6 (183). It was to be about environmental concerns and regulations to protect the environment and workers (183), and "almost 100 people" attended (184).
The April 7 Coos Bay World reported that the Port of Coos Bay is "planning another forum in early May to further talk about the risks and opportunities, particularly on the business side of ship recycling" (184). During the second week in May, the Port's Martin Callery said this meeting has been postponed.
According to the April 7 Coos Bay World, the Port of Coos Bay's Martin Callery indicated that "written comments, questions and answers, and documentation are to be posted soon on the port's Web site" (184), but this information was not posted as of 11 June 2006. Their web site is http://www.portofcoosbay.com/
The Coos Bay shipbreaking facility appears to have been abandoned by October 2006.
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Language and word selection can be used to shape opinion.
"Shipbreaking," "ship scrapping," "ship salvaging," and "ship recycling" all refer to taking apart ships, selling whatever is possible to recycle or reuse, and disposing of the rest. "Recycling" obsolete ships is not new. Companies make money by the amount of scrap material they can recycle by selling. Fluctuations in the price of recyclable steel can make or break a company that salvages ships.
"Shipbreaking" is used in the name of International Shipbreaking Ltd. of Brownsville (Texas) and "ship recycling" in the name of North American Ship Recycling of Baltimore (Maryland); both companies salvage MARAD ships (section XI of 23, 155). In 1998, the GAO mostly used "ship scrapping" (147), and "ship scrapping" was part of the title of a hearing in the U.S. Congress (156). In 2000, the EPA titled their regulatory guide as being for "ship scrappers" (22). In 2004 and 2005, OSHA used "shipbreaking" (23, 105). In 2005, a GAO report about MARAD generally used "ship scrapping," though forms of "dismantle" and "recycle" were also used (66). In 2005, MARAD primarily used ship or vessel "disposal," and, in reference to the process of scrapping ships, MARAD used forms of "dismantle" or "recycling" (41, 48, 50, 149, 152). "Disposal" refers to all methods of getting rid of ships including sales, sinking in Navy exercises or for reefs, as well as scrapping ships. In 2006, the Wall Street Journal and Christian Science Monitor generally used "shipbreaking" to refer to the process with forms of "scrap" also often used, and forms of "dismantle," "recycle," or "salvage" were also sometimes included (92, 95).
Based on analyses of root words (scrap, salvage, shipbreak, dismantle, and recycle) and their variants, the Fact Sheet for Bay Bridge Enterprises at the start of the debate about their proposed shipbreaking facility in Newport most used "salvage"; "recycle" was used second most, but they also used the other words, too (Word Table). In a sample of articles, the Newport newspaper most often used "salvage" or "shipbreak," and the Portland Oregonian newspaper tended to use "scrap," though they also used the other words (Word Table).
In contrast, a sample of Coos Bay newspaper articles and editorials indicates that they often did not use "scrap" or "salvage," and, prior to the Port of Coos Bay's statement about the interest of two shipbreaking companies in Coos Bay at the Port's Feb. 16 meeting (163), did not mostly use "recycle" (Word Table). However, the Port of Coos Bay's statement used "ship recycling" 12 times and "ship breaking" only once (163, Word Table). The Coos Bay newspaper's report by Elise Hamner of the Port's Feb. 16 meeting and statement followed the Port's direction by amost exclusively using forms of "recycle," though Hamner's articles prior to the Port's statement and meeting did not generally use "recycle" (Word Table). If a particular word is often used during a meeting, it could also be frequently used by a reporter of the meeting. The newspaper's March 13 article concerning the Port's news release announcing future informational meetings on unknown dates about shipbreaking only used the term "ship recycling" (164, Word Table).
The Port's Martin Callery continued this shift to "ship recycling" in his May 10 email, with his use only of "ship recycling." The choice of words by two different Port of Coos Bay staff is telling, given the variety of terms used by others such as OSHA and the Government Accountability Office (GAO). If the Port's choice of words was not very important to them, they would be expected to use a variety of words because using the exact same words over and over again is unnecessarily repetitious when there are alternatives.
After Bay Bridge Enterprises LLC was turned down by the Port of Newport, the Northwest Environmental Defense Center's Mark Riskedahl (169) pointed out that proponents of ship scrapping "will certainly try to reframe ship-scrapping in less offensive terms, such as shipbreaking or recycling." After the negative publicity about shipbreaking, ship scrapping, and ship salvaging at the Port of Newport in previous months, ship recycling sounds like it might be different, and referring to the process as ship recycling may reduce environmental objections. However, it can be expected that the same amount of materials will be recycled whether the process is called "ship scrapping," "ship salvaging," "shipbreaking," or "ship recycling" as long as it is profitable to do so.
On April 8, the Coos Bay World's Elise Hamner wrote about the choice of words to describe the process (185).
"Shipbreaking or ship recycling. Are they the same or does one represent public relations verbiage? The first term refers to the business of taking obsolete ships to port facilities to tear them apart. Hazardous materials are removed and carted away for disposal to meet federal environmental standards. The metals and other items with value are sold. The second and newer term - ship recycling - refers to the exact same thing. The obvious emphasis is on the product rather than the process. Some people question whether the terminology is a sneaky ploy. Others say that's precisely where the discussion needs to go locally, nationally and around the world."She stated that Denny Vaughan is "adamant" about recycling being the focus of the Coos Bay facility that Vaughan's Environmental Recycling Systems would like to have and that Vaughan stated that it is "almost sinful to not reuse these ships" (185). But Vaughan's idea of recycling MARAD ships is not new. U.S. shipbreaking companies already have recycled many MARAD ships (e.g., see p. 4 of 149) and want more ships to recycle. Some of MARAD's ships in their California fleet have already been recycled in Brownsville. But Environmental Recycling Systems is not listed as a shipbreaking company by OSHA for MARAD or Navy ships (section XI in 23) nor have I found any evidence that Environmental Recycling Systems has ever recycled any MARAD ships. During 2004-2005, Environmental Recycling Systems was negotiating to export all obsolete ships in MARAD's California, Texas, and Virginia fleets to recycle in Mexico and Turkey.
So is the term "ship recycling" being used euphemistically about Coos Bay shipbreaking?
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WORD TABLE. Words or variants of words used in a small sample of written materials about proposed shipbreaking (ship recycling) operations in Oregon. Variants of words are included; for example, recycle, recycler, recycling, and recyclable are included with "Recycle." No.=footnote number.
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Root Word_________________________
Sal- Ship- Dis-
No. Source or Author Scrap vage break mantle Recycle
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NEWPORT PUBLICATIONS
46 Bay Bridge Fact Sheet Dec. 1 3 9 4 3 6
1 Gail Kimberling Nov. 18 0 10 1 2 2
2 Joel Gallob Nov. 25 1 5 0 0 0
35 Gail Kimberling Dec. 2 4 11 4 0 4
* Joel Gallob Dec. 9 0 1 22 0 1
PORTLAND OREGONIAN
42 Peter Sleeth Dec. 4 10 5 4 3 2
117 editorial Dec. 22 3 3 2 2 1
104 Peter Sleeth Jan. 8 11 4 6 0 2
COOS BAY PUBLICATIONS
80 Elise Hamner Dec. 17 0 0 5 1 2
** Elise Hamner Dec. 20 6 1 4 2 2
140 editorial Dec. 22 0 0 1 3 1
141 Carl Mickelson Jan. 11 0 0 10 0 0
144 editorial Feb. 11 0 0 3 1 1
163 Port of Coos Bay's
Jeffrey Bishop Feb. 16 0 0 1 0 12
131 Elise Hamner Feb. 17 0 0 2 0 11
164 Report about a Port of
Coos Bay Press Release Mar. 13 0 0 0 0 6
- Port of Coos Bay's
Martin Callery email May 10 0 0 0 0 11
*=nine articles by Gallob on Dec. 9: 70, 71, 72, 74, 75, 76, 87, 88, 89.
** two articles by Hamner on Dec. 20: 81, 82.
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Only three estuaries in Oregon are designated for deep-water shipping that would also be appropriate for scrapping U. S. Maritime Administration (MARAD): Columbia River, Yaquina Bay, and Coos Bay.
Elise Hamner of the Coos Bay World reported on Dec. 20 that Bay Bridge Enterprises' President and CEO Mike Dunavant said that his company could do shipbreaking in California except for labor costs and regulations, so that is why they were looking for sites in Oregon and Washington (82).
In a Dec. 22 editorial, the Coos Bay World objected to shipbreaking along the Oregon Coast (140):
"Those ships [mothballed U.S. military ships] shouldn't be towed up the Pacific Ocean into any of Oregon's bays. Yes, that's turning away jobs. But the risk for an accident or invasive species just isn't worth it. The ships under discussion are in the San Francisco Bay Area and that's where they should be dealt with. ... If the United States government has to pay more to do the work under California's stricter environmental laws and higher labor costs, so be it."
On Jan. 8, the Oregonian's Peter Sleeth wrote (104):
"Shipbreakers eyeing a mothballed fleet in Suisun Bay, Calif., have for at least a year been quietly prospecting along Oregon from Coos Bay to Astoria. They seek the right mix of land and politics that would let them come aboard, according to private companies and landowners who have met with the companies."and (104):
"Bottom line: Oregon is the cheapest place for shipbreakers to set up shop on the West Coast. Labor costs are lower here, as is the cost of space in which to cut massive vessels apart and clear them of toxic loads."and (104):
"Bay Bridge's McPherson said the costs of shipbreaking in California -- labor, waste disposal and land -- are too high."
However, the Jan. 28 Oregonian editorial points out that in-water shipbreakers such as Bay Bridge want to locate in Oregon because of looser environmental regulations in Oregon (136):
"Bay Bridge told Newport leaders the work can't be done profitably in California because of higher labor and real estate costs there. That was a smokescreen. The huge expense of towing ships to Oregon would gobble up most of any savings on labor and land. What Bay Bridge really seeks to escape is tighter environmental regulation. California officials say that state's regulators would be highly unlikely to allow any company to break up old ships -- permeated with hazardous materials -- in the manner Bay Bridge proposes doing in Oregon, with vessels still sitting in the water for much of the dismantling. California would almost certainly insist the work be done in dry-dock, or something close to that higher level of environmental safety. In Oregon, the rules are looser. A Department of Environmental Quality spokesman said the state's foremost requirement for the Bay Bridge operation will be a stormwater runoff permit, and the company should have no trouble getting one."
The Feb. 11 Oregonian editorial wrote (143):
"Officials in the California Environmental Protection Agency say it's extremely unlikely regulators in that state would permit Bay Bridge to dismantle ships that way [in water] in San Francisco. Hence the idea of towing vessels 500-plus miles to Oregon, where environmental rules on shipbreaking are more relaxed, if not virtually absent."
Astoria (Columbia). Bay Bridge Enterprises had narrowed their choices for a site to Astoria and Newport in October 2005 (135). A Dec. 5 Daily Astorian article wrote that Bay Bridge had looked at Astoria and that "other firms have considered similar operations at North Tongue Point in prior years, raising significant environmental concerns" (132). According to the Jan. 26 Oregonian, Bay Bridge Enterprises had looked at a location in the previous 30 days at Astoria (94).
Coos Bay. According to the Port of Coos Bay's Martin Callery, a group of investors about a decade ago wanted to do shipbreaking of 800 ft or longer ships at Coos Bay, but the idea failed (142). Coos Bay World's Elise Hamner reported that Bay Bridge Enterprises toured a few Coos Bay sites in September 2005 (142). In early Jan. 2006, Robin Stevenot, owner of 216 acres of waterfront property and a dock that goes into deep water, told the Oregonian (84) that she was negotiating the sale of her property to Bay Bridge Enterprises and told the Newport News-Times (138) that she was negotiating with Bay Bridge's parent company, the Adani Group. However, Bay Bridge and Adani denied such negotiations (139, 141), and Stevenot told Coos Bay World's Carl Mickelson (141) that she was not negotiating with Bay Bridge but as Mickelson worded it, "with companies that do the same type of work as Bay Bridge."
According to the Jan. 26 Oregonian, Bay Bridge Enterprises had looked at a location in the previous 30 days at Coos Bay (94).
On Feb. 11, just prior to the Port of Coos Bay's Feb. 16 meeting, the Coos Bay World's editorial wrote that it was essential that Coos County agencies and decision-makers include the general public in decision making processes about industrial development (144).
The Coos Bay World's Elise Hamner wrote that the Port of Coos Bay announced at their Feb. 16 meeting that two shipbreaking companies had proposed to operate in Coos Bay (131). One company was identified as Environmental Recycling Systems, and the other was not named (131). On Feb. 22, Elise Hamner of the Coos Bay World indicated in email that she was unable to confirm the name of the second company seeking to do shipbreaking at Coos Bay. Environmental Recycling Systems has proposed to take all U.S. Maritime (MARAD) ships from MARAD's Virginia, Texas, and California fleets and scrap them at Environmental Recycling Systems' facilities in Turkey and Mexico. See Environmental Recycling Systems' description of their plan for Coos Bay.
In a written statement for the Port's Feb. 16 meeting, the Port's Executive Director used "ship breaking" only once and used "ship recycling" 12 times (163) to refer to what had been termed "shipbreaking" at Newport. The Port's predominate use of "recycling" appears euphemistic.
The director of the University of Oregon's Oregon Institute of Marine Biology (OIMB) at Charleston has expressed concerns about Bay Bridge's proposed in-water shipbreaking at Coos Bay because of water contamination and invasive species issues (84, 124). A Dec. 22 editorial in the Coos Bay World indicated that the ships should not be towed "into any of Oregon's Bays" because of risks of accidents and invasive species (140).
The Port of Coos Bay is holding public forums about ship recycling prior to deciding whether to negotiate with a shipbreaking company for a facility at Coos Bay.
Linnton (Columbia). According to the Jan. 26 Oregonian, Bay Bridge Enterprises had looked at a location in the previous 30 days in Linnton on the Willamette River (94). On Jan. 31, the Portland Tribune reported that Linnton community leaders were outraged that the Portland Development Commission had not contacted them about negotiations with Bay Bridge (137).
Newport (Yaquina Bay). The Port of Newport turned down Bay Bridge Enterprises LLC's proposal on Jan. 24.
Portland (Columbia). According to the Jan. 28 Oregonian (136), Bay Bridge Enterprises was "seriously" considering "sites" in Portland's harbor. According to the Jan. 26 Oregonian, Bay Bridge Enterprises had looked at a former ship repair site below the St. Johns Bridge (94).
St. Helens (Columbia). According to the Jan. 26 Oregonian, Bay Bridge Enterprises had looked at a location in the previous 30 days in St. Helens on the Columbia River (94).
See discussion about proposed shipbreaking in Oregon that may also apply to Washington.
Grays Harbor. The Port of Grays Harbor's deputy executive director Leonard Barnes said that the Port was to meet with Bay Bridge Enterprises on Jan. 27 (133).
Puget Sound. A Jan. 26 article in Aberdeen's The Daily World indicated that Leonard Barnes (the Port of Grays Harbor's deputy executive director) "understands that the company [Bay Bridge Enterprises] is also looking at Puget Sound sites" (133).
Vancouver (Columbia). According to the Jan. 26 Oregonian, Bay Bridge Enterprises had looked at two sites in the previous 30 days at Vancouver (94). The Feb. 5 Vancover Columbian indicated that Bay Bridge's contact with the Port of Vancouver had resulted in "nothing substantive" and that the Columbia Business Center that is owned by Portland's Schnitzer Investment Group had told Bay Bridge that the Center did not have room and wasn't interested in ship scrapping (134).
"Washington." According to the Jan. 28 Oregonian (136), Bay Bridge Enterprises was "scouting locations" in Washington state on Jan. 27.
California has stricter environmental regulations and higher land and labor costs than Oregon, which is why shipbreaking firms such as Bay Bridge Enterprises wants to scrap MARAD ships in Oregon. A Coos Bay World editorial recommended that shipbreaking of MARAD ships in the San Francisco Bay area should be done in the San Francisco Bay area because of concerns about accidents and invasive species from transporting the ships to Oregon (140).
There are two sites in the San Francisco Bay area with drydocks that have been mentioned as possible shipbreaking sites for MARAD vessels at Suisun Bay.
Mare Island. Former Navy commander Gary Whitney of Allied Defense Recycling LLC worked in 2004 and 2005 to get a lease to open the former Naval shipyard and drydocks at Mare Island near Suisun Bay to salvage MARAD ships from Suisun Bay. The major problem appears to be to find funding to dredge the channel so that the large ships could be brought in. However, the nearby community may recall the 1997-1999 abandonment of a partially scrapped aircraft carrier (USS Oriskany) after the shipbreaker company defaulted, and their memory may also dampen future shipbreaking efforts there (see Mare Island).
Hunter's Point. This was a former naval shipyard that was considered in 1994 for shipbreaking (115). The cost to re-open it to scrap ships would be "huge" according to Alan Sprott of Cascade General, a shipyard in Portland (145).
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On Feb. 16, the Oregon International Port of Coos Bay announced at their meeting that two shipbreaker firms were interested in Coos Bay (131). One firm was not named in the article by Coos Bay World's Elise Hamner, but the other was Environmental Recycling Systems, represented by G. Dennis Vaughan, of Environmental Recycling Systems (131). Hamner wrote (131):
"Vaughan, who's based in Seattle, isn't ready to discuss his idea in great detail. At this point, he and investors are proposing to build two graving docks large enough to take in tankers or ships up to 900 feet long. The operation would start small, with maybe 100 employees. But it's the graving dock technology Vaughan wants to develop. It would be self-contained, he explained, kind of like sailing a vessel into a lock at the Panama Canal. All water around the vessel or that falls from the sky into the specialized lock would be filtered. The environmentally conscientious Norwegians come close, he said, with their eco-dock concept. 'We want to be 100-percent self-contained. Once a ship goes in those doors close behind it,' he explained.
"Vaughan's familiar with the shipping industry on several fronts. He grew up in Coos Bay. He graduated from Marshfield High School, moved on to Oregon State University and eventually found a career with the U.S. Navy. The retired rear admiral said Thursday that he entered into the ship recycling business two years ago. And ironically it seems, his enterprise is steering him back to Coos Bay."
I have not found any information about Environmental Recycling Systems's history or experience with shipbreaking in the United States, but that is important information to know because some shipbreaking firms have gone bankrupt or closed or have had environmental or safety violations. Environmental Recycling Systems is not listed as one of the "active" shipbreaking companies by OSHA for MARAD or Navy ships (section XI in 23), and it was also not invited by MARAD to bid for ships to scrap in December 2005 (159, 160).
In 2004-2005, Environmental Recycling Systems was negotiating to scrap MARAD's ships in MARAD's Virginia, Texas, and California fleets at Environmental Recycling Systems' facilities in Turkey and Mexico. So perhaps they have overseas experience with scrapping ships.
Sources of ships for Environmental Recycling Systems to recycle at Coos Bay include "former U.S. military vessels" and "the potentially thousands of other privately owned ships, tankers and barges that are and will become obsolete" (131). However, the Toxic Substances Control Act does not prohibit private vessels from being sent overseas to be scrapped like it does for government-owned ships (p. 11 in 73), and scrapping ships overseas is more economical because of lower labor costs and higher demand for scrap (130). Cascade General in Portland has drydocks and has scrapped two private fishing boats but is not interested in doing more (85). So it is unclear if scrapping private ships would be able to sustain a shipbreaking company.
Using drydocks is the preferable way to scrap ships, but Environmental Recycling Systems would have competition and potential competition for scrapping MARAD ships from Suisun Bay. Cascade General in Portland already has graving drydocks but is not interested in doing shipbreaking for MARAD because it is too risky financially, and they cannot compete with the lower wages offered by Brownsville shipbreakers (85, 90, 91), so one may wonder about the financial viability of Environmental Recycling Systems if it will have the additional cost of constructing graving drydocks. Alan Jones of Cascade General estimated that it would cost "$30 or $40 million, minimum" to build a graving drydock at Newport (108). Environmental Recycling Systems proposed Coos Bay facility was said to be comparable to an Ecodock (131), and the cost of two Ecodock facilities in Europe has been estimated to be $72-79 million (208, 209). That is a lot of money considering that Bay Bridge Enterprises (an in-water ship recycling company in Virginia) was sold for less than $10 million in June 2005 (92), MARAD was appropriated $16.1 million in Fiscal Year 2004 and $21.6 million in 2005 for their entire ship disposal program (p. 21 of 66), and the president of Esco Marine (a ship recycling company in Brownsville, Texas) was worried that their recent $1 million expansion would be wasted (28). How much of the money will come from local and state taxpayers?
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MARAD and the U.S. Navy both have ship disposal programs, with two companies (International Shipbreaking Limited and Esco Marine of Brownsville, Texas) participating in both programs (p. 4 and 15 of 149, 196). Both programs are linked and included in MARAD's reports to the U.S. Congress (e.g., 149, 152, 187, 188). For example, in Fiscal Year 2001, the U.S. Congress only allocated $10 million for both programs, and the Navy transferred their portion to MARAD because MARAD's ships were a greater environmental hazard (p. 1 in 188).
MARAD's shipbreaking program is for governmental merchant-type vessels of 1,500 gross tons or more; the Navy's shipbreaking program is for combat vessels (p. 4 and 6 in 73). In October 2005, MARAD had a total of 113 vessels in their California, Virginia, and Texas fleets, and the Navy had 54 vessels available for disposal (p. 2 and 16 of 149).
In 1999, Cascade General shipyards in Portland bid to recycle a Navy frigate, but International Shipbreaking's bid was much lower and won the contract (189). So recycling of Navy ships in the Pacific Northwest has been seriously considered.
MARAD ships were proposed to be recycled by Bay Bridge Enterprises' at Newport in November 2005. In February 2006, the Port of Coos Bay reported that ship recycling companies were interested in Coos Bay and mentioned MARAD ships but did not state if shipbreaking would also include Navy vessels (163). Some Coos Bay World articles mention the U.S. Navy in connection with ship recycling, though it is not clear in these articles if ship recyclers are proposing to salvage Navy ships at Coos Bay (e.g., 183, 185). Further, initial plans may be to scrap MARAD vessels, but a company may decide to also recycle Navy ships after it starts operations, as does International Shipbreaking and Esco Marine
This web site will concentrate on MARAD's ship recycling but will include the Navy's ship recycling program where feasible. It appears that many of the same concerns are applicable to both programs.
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At the Port of Newport's Meeting on Jan. 24, the Port Commissioners voted to not have shipbreaking at Yaquina Bay because of financial investments to prepare the site that neither the Port nor Bay Bridge Enterprises were willing to make (202, 203). Port Manager Don Mann said that environmental concerns were not a factor (202, 203).
I attended the Jan. 24 meeting, and the way the Port stated their objections, it seemed that if money to pay for the site preparation costs became available that the Port Commission might be in favor of further negotiations. However, I doubt if they would do so because there is a very large opposition to shipbreaking in Newport that seemed to grow as citizens learned more about Bay Bridge's proposal.
In an Opinion letter to the Oregonian, Bay Bridge President & CEO Mike Dunavant said the Port "apparently" turned down Bay Bridge's proposal (99).
On Feb. 10 and April 3, it was reported that Gov. Kulongoski indicated that shipbreaking should be done in Oregon to the environmental standards of drydocks or better. Accordingly, Bay Bridge's in-water ship recycling seems doubtful not only for Newport but also elsewhere in Oregon.
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There are many web pages about this subject. The following are some that may be the most relevant.
In Oregon in General
* South Slough National Estuarine Research Reserve's Resource Library: Recycling Ships in Oregon
* Oregon Shores Conservation Coalition's
1) "Oregon Shores' Statement on Port of Newport's Ship-breaking Proposal."
2) "Port of Newport Considering Shipbreaking Proposal." [Includes photos showing that proposed site was near Yaquina channel.]
* Association of Northwest Steelheaders' Wet Shipbreaking in Oregon Action Center Web Page. (Includes links to news articles about Oregon shipbreaking, people to contact, and supporting information.)
* Surfrider Foundation Comments in Opposition to the Proposed Ship Salvage Facility in Newport.
* Scroll down the page for Northwestern Environmental Defense Center's Oregon Ship-scrapping Proposal
* Lincolncounty@hotmail.com's Shipbreaking plan STOPPED in Newport!
* By 17 February 2007, Oregon State University Hatfield Marine Science Center's (HMSC) "Response to Proposed Shipbreaking in Yaquina Bay" has been removed from their Internet site.
* Friends of Yaquina Bay (http://www.foyb.info/). (Information about Friends of Yaquina Bay, which was organized to oppose the proposed shipbuilding facility at Newport. On 17 Feb. 2007, little information remained about shipbreaking.)
* Save Our Bay Committee's No Shipbreaking in Yaquina Bay! (This organization split from Friends of Yaquina Bay.)
* SeaLionRecords.com's Don't Gamble with Yaquina Bay
Web Pages With Concerns about Shipbreaking Elsewhere
* Project: The Mothball Fleet in Suisun Bay, Toward Job Development & Preventing Future Bay Contamination
by Arc Ecology. (The U.S. Maritime Administration [MARAD] ships that Bay Bridge Enterprises proposes to scrap on the West Coast would come from Suisun Bay in California.)
* The Canadian Broadcasting Corporation's "The Big Break: Resources." (This page includes information about U.S. "Ghost" fleets.)
* Basel Action Network (BAN) is an international network of activists seeking to prevent the globalization of the toxic chemical crisis under the Basel Convention.
* Greenpeace International--Shipbreaking.
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Also see Oregon Senate Bill 432: Shipbreaking Only in Dry Dock Without Introduction of Hazardous Materials or Fouling Organisms (Invasive Species) (Feb. 2007)
There are two types of drydocks: graving and floating (108; Wikipedia). A graving drydock is excavated in the ground, walled in concrete, and separated from water by a watertight gate; in operation: it is filled with water, a ship is floated in, the gate is closed, and the water is then pumped out. A floating drydock is constructed of floodable buoyancy chambers; in operation: it rests in water, the chambers are filled with water, the dock sinks, the ship is moved in, and then the water is pumped out.
Baltimore Marine Industries (which after bankruptcy became North American Ship Recycling [32, 190]) in Baltimore, Maryland, and Metro Machine in Philadelphia, Pennsylvania have scrapped MARAD or Navy ships in drydocks (186, p. 20 of 200). Ship Dismantlement and Recycling Joint Venture also scrapped Navy ships at a drydock in the Hunters Point drydock near San Francisco until late 2001, when it announced that it would shut down because of the high cost of maintaining a drydock with no work under contract and insufficient projected contracts (p. 10 of 188). So scrapping MARAD or Navy ships in a drydock in Oregon would not set a precedent.
In 2004, the Virginian-Pilot's Scott Harper wrote about the Bay Bridge ship dismantling in Virginia (6):
"Much of the work is being done while the ships sit in the water, a fact that bothers some environmentalists. They fear that wastes might fall into the Elizabeth River, and say dry docks would be safer. Dunavant scoffs at the criticism, saying that, if done correctly, there is little difference between wet and dry shipbreaking."
Alan Jones with Cascade General, a shipbuilding yard in Portland that also has done shipbreaking in a drydock and is a potential competitor with Bay Bridge (85, 91), stated in December 2005 about shipbreaking (108):
"You need a 100 percent contained environment or else paint and metal goes into the water or soil. You have to have a dry dock."
Peter Sleeth's Oregonian article on Feb. 10 reported that Gov. Kulongoski indicated that shipbreaking should be done in Oregon drydocks because of environmental concerns (107). The Governor was reported to have ordered state job recruiters to withdraw the welcome to Bay Bridge Enterprises that proposed to do shipbreaking in water (107). The article stated that:
" 'He's not interested in having this company come if it is (working) in the water,' said Anna Richter Taylor, a spokeswoman for the governor. 'The federal government is the one who benefits from this. If Bay Bridge wants to work with the federal government to locate a dry-dock in Oregon, then let's talk.' "
I was unable to find a press release for the Governor about this, but, on 3 April 2006, the Oregon DEQ wrote (182):
"Concerns were raised earlier this year when a ship breaking facility was proposed for the Port of Newport. After several environmental issues were raised, Governor Kulongoski stated that any ship breaking operations locating in Oregon would have to ensure the level of environmental protection offered by a dry dock operation. DEQ will examine any proposed operation to ensure that it would offer equal or better environmental protection than a dry dock."
Perhaps, the next Governor will change this executive directive, but, for the present, this applies.
The Oregonian reports that California environmental regulations require shipbreaking to be done in drydocks (117), and Gary Whitney of Allied Defense Recycling LLC proposes to scrap MARAD ships in drydocks at the former Naval base at Mare Island near Suisun Bay.
The Coos Bay World's Elise Hamer reported on Feb. 17 that G. Denny Vaughan of Environmental Recycling Systems proposes to construct two graving drydocks to recycle (scrap) ships up to 900 ft long at Coos Bay.
Shipbreaking in drydocks is preferable to reduce environmental risks for the following reasons:
Shipbreaking is necessary, and groups such as Basel Action Network (p. 5 in 109) and Greenpeace (110) recommend that shipbreaking be done in drydocks for the safety of workers and to protect from environmental contamination.
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The Baltimore Sun won the Pulitzer Prize for an investigative report series by Will Englund and Gary Cohn about the U.S. shipbreaking industry in 1998. An index with links to the articles is at the Pulitzer web site, http://www.pulitzer.org/year/1998/investigative-reporting/works/).
Two of the 13 articles in the series are:
Englund, Will and Gary Cohn. 1997. Scrapping Ships, Sacrificing Men. Dec. 7, Baltimore Sun.
Cohn, Gary and Will Englund. 1997. The Curious Captains of a Reckless Industry. Dec. 8, Baltimore Sun.
The Virginian-Pilot's Scott Harper wrote an article in March 2005 about the Brownsville shipbreakers (28) that serves as a partial followup.
Please note that the U.S. shipbreaking industry is different than the foreign one, so it is important to focus on the U. S. shipbreaking industry when considering a shipbreaking facility in the Pacific Northwest.
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In October 1998, the U.S. Government Accounting Office (GAO) issued "Federal Surplus Ships: Government Efforts To Address the Growing Backlog of Ships Awaiting Disposal" about problems that the U.S. Maritime Administration (MARAD) and the U.S. Navy were having in getting rid of ships (147).
MARAD is part of the U.S. Department of Transportation. In May 2000, the U.S. Department of Transportation released a report "Maritime Administration: Limited Progress In Disposing of Obsolete Vessels" that indicated that MARAD was not disposing of obsolete ships fast enough and discussed alternative methods to dispose of ships other than by scrapping (73).
In March 2005, the U.S. Government Accountability Office issued a report "Maritime Administration: Improved Program Management Needed to Address Timely Disposal of Obsolete Ships" that was critical of the way that MARAD had been disposing of its obsolete ships (66). The GAO report addresses issues about shipbreaking and explores alternatives so that MARAD can more quickly dispose of ships (p. 26-31 in 66). Many of these alternatives were also discussed in the GAO's 1998 report (147) and in the Department of Transportation 2000 report (73).
Bay Bridge Enterprises (BBE) in Chesapeake, Virginia on the Elizabeth River
Photos of U.S. In-Water Shipbreaking Sites Other Than in Virginia
On Dec. 2, the News-Times' Gail Kimberling reported (35) that "vessels being considered for the proposed Newport salvage site would come from a ghost fleet located in Suisan [Suisun] Bay, at Bernicia, Calif." Suisun Bay is east of San Francisco.
The Bay Bridge "Fact Sheet" for the Port of Newport (46) states:
"* Bay Bridge West, as it will be called for its west coast location in Newport, will salvage and recycle decommissioned U. S. vessels that are owned by the federal government, through the Maritime Administration (MARAD). Bay Bridge West will bid on vessels destined for salvage, currently stored at Suisun Bay near Richmond, California.
"* In addition to MARAD vessels, Bay Bridge West will augment its salvage work by scrapping barges, tug boats and other private industrial vessels."
Environmental Recycling Systems has offered to dismantle ships in MARAD's California, Virginia, and Texas fleets by sending them to Turkey and Mexico, according to a 19 July 2005 article (130). In Feb. 2006, it was announced that Environmental Recycling Systems would also like to dismantle U.S. military vessels [presumably MARAD ships at Suisun Bay] as well as privately owned ships, tankers, and barges in Coos Bay.
Allied Defense Recycling LLC has worked in 2004 and 2005 to get a lease to open the former Naval shipyard and drydocks at Mare Island near Suisun Bay to salvage MARAD ships from Suisun Bay.
Thus, the primary source of vessels for West Coast shipbreakers would be MARAD ships at Suisun Bay. Currently, MARAD ships are prohibited from being sent abroad to be scrapped because of a pending lawsuit and a provision in the Toxic Substances Control Act (TSCA) that makes granting exemptions unlikely. However, the TSCA does not prohibit private vessels from being sent overseas to be scrapped (p. 11 in 73). Scrapping overseas is more economical because of lower labor costs and higher demand for scrap (130).
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The News-Times' Gail Kimberling reported on Nov. 18 (1) that the Bay Bridge facility in Newport: "could initially handle smaller ships up to 200 feet in length and eventually work up to vessels 350 feet and longer."
The Oregonian's Peter Sleeth (42) reported on December 4 that Bay Bridge would scrap ships "from 100 to 350 feet long, or longer in rare cases."
Bay Bridge's "Questions and Answers" (45) for the Port of Newport states that Bay Bridge would salvage vessels "from 100 feet to 350 feet. Occasionally, larger vessels may be salvaged, but at least at the beginning, Bay Bridge will work on smaller vessels."
At the Port of Newport's Dec. 6 Public Forum, they had a limited number of 11 x 17 inch maps entitled "Bay Bridge Project Site Drawing." This map shows four vessels at Bay Bridge's proposed Newport site: 220 ft, 350 ft, and two 455 ft vessels. This suggests that Bay Bridge really plans to often have vessels longer than 350 ft.
On Dec. 20, the Coos Bay World's Elise Hamner (82) reported that Bay Bridge's Mike Dunavant indicated that ships brought to Oregon "each year likely would be 450-footers or less."
The major source of ships to scrap for proposed shipbreaking operations on the West Coast will be MARAD vessels at Suisun Bay, California. Accordingly, it is appropriate to look at the length of ships at Suisun Bay that are available for scrapping.
For 60 Suisun Bay ships to be scrapped in February 2005 (see p. 7-10 in 47), I calculated that the average length was 514.8 ft, the minimum length was 214 ft (3 ships), the maximum length was 718 ft (1 ship), and only 7 of the 60 vessels were 350 ft or less. The Table below gives the length classes of the 60 vessels to be scrapped. Clearly, the typical length of ships to be scrapped is considerably longer than indicated by Bay Bridge Enterprises.
These ships will also be larger than are normally at Yaquina Bay. For example, the dredge Yaquina, which is now a big ship for Yaquina Bay, is only 200 ft long (51).
TABLE. Number of MARAD ships available for scrapping at Suisun Bay, California on 8 February 2005 in various vessel length classes. These data are compiled from p. 7-10 in 47.
-------------------------- Vessel Number Total of Length Vessels --------------------------- less than 100 feet 0 100-199 feet 0 200-299 feet 5 300-399 feet 4 400-499 feet 17 500-599 feet 18 600-699 feet 13 700-799 feet 3 800-899 feet 0 Total 60 --------------------------
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In the 1990's, the Navy repossessed 20 of the 62 ships it had sold to domestic shipbreaking yards in California, North Carolina, and Rhode Island because of environmental, safety, and contractor performance issues and had to tow them back to federal storage facilities (28, 33, 34, p. 6 in 147). One of the shipbreaking companies involved was Sigma Recycling of Wilmington, North Carolina that started in 1994 (28, 34). Part of the Pulitzer Prize winning investigative report stated that Sigma's experienced shipbreaker owner, Richard Jaross (34):
"had promised to set up a model yard, but what he delivered was far different. One worker was killed, another seriously injured. A minesweeper sank. Asbestos, oil and lead contaminated the site. Oil spilled into the river. It was next to impossible to keep track of the people and companies involved in the scrapping operation. Over two years, at least 16 companies and partnerships had a financial stake in the ships or the yard. In July 1996, the state finally shut the operation, forcing the Navy to reclaim 12 ships. If it hadn't been for anonymous tipsters, state officials said, they never would have known of the problems at the yard."The Virginian-Pilot's Scott Harper wrote about the raid that closed Sigma's facility in 1996 (28):
"Investigators discovered multiple environmental violations, including the improper handling of asbestos and waste oil. Several ships waiting for disposal, including Navy and Maritime Administration vessels, were confiscated. 'There was oil all over the ground, loose asbestos, too,' said Rick Shiver, who supervised site inspections for the North Carolina Department of Environment, Health and Natural Resources. It took until 2003 to clean up the site, nearly seven years. Eventually, business connections to Jaross paid about $1 million to remove tons of contaminated soil and purge other contaminants."
Residents of Vallejo, California may remember that six Navy ships were awarded to a shipbreaking firm (Pegasus Inc.) at the former Naval base at Mare Island in 1995 but that the company went bankrupt in 1997 (p. 6 in 147, 148). A year later, the five smaller ships were taken to Suisun Bay, but the partially scrapped USS. Oriskany (a large aircraft carrier) remained until April 1999, when it was towed to Texas, after the City of Vallejo had threatened lawsuits and went to the U.S. Congress to get it removed because it was taking up valuable property without compensation (145, 146, 148).
A pattern of bankruptcies and closures were found during a 1998 Pulitzer Prize winning investigative report series on shipbreaking by the Baltimore Sun. One article of the series (33) states:
"Ship scrappers frustrate regulators by constructing a maze of corporate names and moving frequently. The Defense Department has repeatedly sent ships to scrappers who have records of bankruptcies, fraud, payoffs to government inspectors, and environmental and safety violations."
The "maze of corporate names" sounds like the current ownership of Bay Bridge Enterprises LLC, which is through a chain of subsidiary companies across the world.
Another article in the 1998 Pulitzer winning series reports (34):
"The shipbreaking industry, which involves about a dozen key operators, has left a dismal record of spills, accidents, deaths, lawsuits, bankruptcies and indictments at ports across the country."
During a 1998 U.S. Congressional hearing, a representative of Simsmetal America, Mike Dunavant, testified that they had scrapped Navy ships but had lost $2 million in scrapping an aircraft carrier in California, which is why they stopped recycling ships (p. 45 of 156). Dunavant also testified (p. 34 of 156):
"Simsmetal America is very interested in doing ship breaking again. We know we can do it safely, environmentally sound, and by following all rules and regulations from both State and Federal agencies because we have done it before. We are also aware that there are a number of other responsible companies in the United States that can properly dismantle these vessels, but we are businesses. We need to turn a profit. We did it right, we did it correctly, and we lost money. We believe, as a result of our experiences, to dismantle a complete vessel in the United States today, including proper remediation and appropriate safety measures will result in a loss. As the cost of remediation, including preparation of recyclable materials will always exceed the saleable value."
For Simsmetal (p. 45 of 156): "To do it right, the costs just outweigh what a recycler like us would get from that saleable scrap."
In 2000, the Deputy Assistant Inspector General for Maritime and Departmental Programs of the U.S., Dept. of Transportation (which includes MARAD) wrote (p. 13 of 73):
"Even when it has been able to sell vessels, MARAD has encountered problems with domestic contractors. In 1999, MARAD sold 17 vessels to 3 ship scrapping companies located in Brownsville, Texas. At the time of our review, we found that only two companies were actively scrapping ships, and only one of these companies was currently scrapping a MARAD ship. MARAD has granted a number of extensions to contractors, and in one instance, MARAD had to resell vessels because of contractor default. During our review, we also found that another company had not taken possession of any vessels because of an ongoing dispute with the Port of Brownsville regarding contamination of its scrapping site. It has since taken possession of its vessels."
Further, the Deputy Assistant Inspector General stated about one of MARAD's shipbreaking contractors (p. 14 of 73):
"The company completed scrapping four MARAD vessels during 1998 and 1999; however, it defaulted on a contract for another five MARAD vessels in August 1999."
In 2001, Ship Dismantlement and Recycling Joint Venture announced that it would stop recycling ships in drydocks at Hunters Point in San Francisco because of marginal profitability and an inadequate supply of ships to scrap (p. 10 of 188, 192). If this facility had remained open, it could have also recycled MARAD ships in California in drydocks.
In 2001, Bay Bridge Enterprises LLC in Virginia that now scraps MARAD ships was created from two defunct scrapyards, and Bay Bridge was sold in June 2004 and June 2005.
Brownsville, Texas has been the hub of recycling MARAD ships (e.g., 28, 33, 34, p. 13 of 73, 92, p. 4 and 19-21 of 149, 155, p. 4 in 188, 189, 193, 194, 196, 198). Many ship recycling companies have come and gone in Brownsville. Prior to 1997, some of the companies included Andy International, JR-Steel, Luria Brothers, Consolidated Steel, and Brownsville Steel and Salvage (207). In 1997, ship recyclers included International Shipbreaking Ltd., Transforma Marine, and Best Group (207). Four years later in 2001, two of the 1997 companies remained (International Shipbreaking Ltd. and Transformer Marine), one (Best Group) was gone, and there were two new companies: Esco Marine and Bedoli Group (206). Another four years later in 2005, only two of the companies from 2001 remained (International Shipbreaking Ltd. and Esco Marine), and there were another two new companies Marine Metals, Inc. and All Star Metals, Inc. (28, p. 4 of 149). In addition, MARAD awarded D&D Steel, Inc. of Brownsville contracts during at least 1999-2002 (p. 4 of 188), but not recently (p. 4 of 149), so it has also stopped shipbreaking for MARAD. The Virginian-Pilot's Scott Harper (28) wrote in 2005 that Brownsville has been a center for ship salvage companies since the 1960's and:
"Only the names of the yards have changed over the years, due to bankruptcies and closings."
In June 2003, another shipbreaking company, Baltimore Marine Industries, Inc. at the Sparrows Point shipyard in Baltimore, Maryland filed for bankruptcy (190). In 2004, it was reported (32) that North American Ship Recycling LLC (which with Bay Bridge is on the list of six ship scrappers for the U. S. Maritime Administration [section XI in 23]) in Baltimore at the Sparrows Point shipyard:
"reopened this year after emerging from bankruptcy with new owners and a new focus."
Company stability is important because bankruptcies leave unpaid creditors and perhaps environmental contamination that taxpayers may have to pay for, like the shipyards at Yaquina and Coos Bays.
MARAD and the Navy have attempted to improve their ship disposal programs since the 1990's (e.g., 149), but the U.S. shipbreaking industry has remained unstable, in part because of variable scrap prices and inadequate government funding that results in an unsteady supply of ships to recycle and subsequent periodic layoffs. The domestic ship recycling of MARAD ships is also threatened by the possibility of MARAD exporting vessels for scrapping.
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STEEL FIGURE. Average monthly U.S. prices for Heavy Melting No. 2 Steel Scrap. This is from the RAND Corp. report (p. 138 in 200). There are more than 100 classes of scrap, depending upon the size and source (p. 137-141 of 200), and prices differ among classes. Note the monthly variability in prices and also that West Coast prices in Seattle and San Francisco were consistently lower than in Houston.
Shipbreaking firms can make money by selling scrap (especially steel) and reusable materials (Appendix B in 200). Excluding submarines, the RAND Corp. estimated that 79-90% of Navy and MARAD ships of various types would be ferrous scrap (i.e., containing iron), 0-4% aluminum, 1-4% copper or copper alloys, 0-4% lead, and about 9% waste (p. 124 in 200). So if the price of scrap drops, a company's profits diminish, and they may even lose money.
The RAND Corp. notes that the amount of money a ship recycler may earn depends on "the very volatile scrap metal market and on the recycling contractor's resourcefulness in finding the best price for scrap and reusable equipment" (p. 31 of 200). RAND also notes that overseas ship recyclers, especially those in Asia, recycle and reuse more equipment and materials than U.S. recyclers (p. 113 and 126 in 200).
MARAD's 2001 report stated about its sales to domestic ship recycling companies (p. 3 of 187):
"Since 1994, MARAD has sold 22 vessels, only eight of which have been scrapped. The purchasers did not accept the remaining vessels and most of the sales contracts were terminated. Key factors were the marginal profits stemming from ship scrapping, which were influenced by the constantly changing market prices for scrap metal versus the costs for removal and disposal of hazardous material."
The value of scrap varies monthly and with location (Steel Figure). For example, International Shipbreaking Limited wrote in 1998 (196):
"Currently, foreign scrappers can receive $240 to $250 of revenue per ton from their scrapping operations."
But in 1998 (196)(boldface added):
"Ship scrappers in the Gulf Coast area of the United States currently receive approximately $180 of revenue per ton for scrapped vessels. This is the highest scrap market price in the nation due to the proximity to so many mini-mills in the United States and Mexico."
The RAND Corp. also reports that the price is directly related to the proximity to where the scrap will be processed and that the price for Heavy Melting No. 2 Steel Scrap in August 2000 was about $60 per ton greater in Houston, Pittsburgh, or Chicago than in Seattle or San Francisco (Steel Figure).
Additionally, in a 2005 interview with Alan Jones and Alan Sprott of Cascade General, Joel Gallob wrote (204):
"The market for scrap steel is not uniform across the country. Steel fetches $100 per ton more on the Gulf Coast than on the West Coast, Jones explained, because a lot of Mexican mills are competing for the metal. 'Say that's $260 per ton there versus $150 per ton in this area, that makes a big difference when you're talking about a 10,000-ton ship,' says Sprott.' "
If a ship recycling company is distant from high scrap prices (e.g., along the Oregon Coast), not only may it receive less for its scrap metal, but it may have higher transportation costs to transport the scrap to market. Such a company would have a more challenging time competing in bids for MARAD or Navy ships with ship recycling companies in Brownsville that are closer to markets with higher scrap prices.
In 2006, the Wall Street Journal reports about Bay Bridge Enterprises' Harsh Mishra (92):
" 'This is an inherently risky business. You could lose your shirt or you could get lucky,' says Mr. Mishra. He points out that shipbreakers must bid on contracts months in advance and 'you don't know what the steel scrap prices will be four or five months down the line.' "
Shipbreaking companies may not finish disposing of ships until 6 months or more after winning a contract. For example, Esco Marine was awarded two ships by MARAD in August 2004 but had not completely disposed of the ships until 8-10 months later, and Bay Bridge Enterprises was awarded contracts for three ships in late August 2003 but had not entirely disposed of them until 15-17 months later (p. 4 in 149).
Scrap steel prices dropped during 1997-1999, and International Shipbreaking, Ltd in Brownsville, Texas lost more than $3 million, reduced staff from 170 to 15 workers, and was on the verge of bankruptcy (155).
Calculations from U.S. Government Accountability Office data indicate that the annual average international scrap steel price dropped 21% from 2000 ($101/ton) to 2001 ($79.4/ton)(p. 42 in 66). The average price increased to $204 in 2004 (p. 42 in 66) and to as high as $350 in 2005 (42). Experts are not sure what prices will do (201), but it seems likely that they will change as they have done in the past (p. 42 in 66, p. 138 in 200). A price drop to 1994-2003 levels of $79-157/ton (p. 42 in 66) could test the finances of shipbreaking firms. This would be particularly true for companies that get contracts for several ships at one time, like Bay Bridge Enterprises did for five MARAD ships in 2003 (4).
Drops in the price of scrap steel can be one reason why shipbreaking and scrap metal firms sometimes go bankrupt or close.
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Inadequate funding can lead to instability for a shipbreaking company because it leads to uncertainty for ship recycling companies, an irregular supply of ships to salvage, and periodic layoffs. With inadequate and irregular funding, potential ship recycling companies may decide to not salvage ships because it is too financially risky.
A report about the Navy's ship scrapping program stated (p. 10 of 188):
"In November 2001, Ship Dismantlement and Recycling Joint Venture advised the Navy that it was shutting down its Hunters Point, San Francisco shipyard operations due to the high cost of maintaining a drydock facility dedicated to ship dismantling with no work under contract and insufficient projected future throughput."
"In 2001, VSE decided to discontinue SRR's ship remediation and recycling efforts at the Hunters Point Shipyard in San Francisco, California, due to the limited business opportunities associated with ship dismantlement work, due in part to an absence of any significant amount of government funding for these efforts. Profitability from the SRR work was marginal for VSE relative to the risk."
During Fiscal Years 2001-2005, MARAD was appropriated 0-$31 million for ship disposal (MARAD Budget Table). The News-Times' Joel Gallob interviewed Alan Sprott and Alan Jones of Cascade General (90, 108), and Gallob reports (90)(boldface added):
" 'Funding for shipbreaking,' said Alan Sprott, environmental manager for Cascade General company, a shipbuilding company in Portland, 'is sporadic. It depends on the whim of Congress. They allocated $21 million for 2006. But I've been told by International Shipbreaking' - one of the companies doing shipbreaking in Texas - 'that half of that money will go to the Navy because MARAD takes custody of some Navy ships, too.' The Navy has a parallel program, with a few contractors across the country approved to bid for ship disposal. 'So that leaves about $10 million, for all three of the MARAD (ghost) fleets, in California, Texas and Virginia. With $10 million you might get five ships scrapped,' warns Sprott. 'The rest of the ships will wait until Congress approves the money again. It's a poorly funded program, it's not dependable. It is not something to build a solid business model upon,' said Jones."
However, Congress appropriated as much or more than MARAD requested during FY 2003-2005, but not in 2002 (MARAD Budget Table). So it appears that MARAD did not request enough funding to recycle more ships each year; for example, a General Accountability Office report in 2005 noted (p. 20 of 66)(boldface added):
"In its 2001 report to Congress, MARAD provided a general estimate of costs to dispose of its inventory of 155 ships by the 2006 deadline, and it stated that it planned to further refine cost estimates as additional data relating to merchant-type vessels were collected during fiscal years 2001 and 2002. However, these costs were not converted into a long-term funding plan linked to disposing of all obsolete ships by 2006. In addition, MARAD did not revise its cost estimates based on actual contracting experiences. For example, the 2001 report estimated that it would cost about $350 million to scrap 140 of the 155 vessels--an average of about $2.5 million per ship--using ship scrapping services contracts. However, MARAD's budget requests for ship disposal for fiscal years 2002 through 2005 have totaled only $54.1 million, about one-sixth of the $350 million estimate."
But MARAD maintains that the capacity of domestic ship recyclers is too limited, not that they are inadequately funding domestic recyclers. For example, MARAD's 2005 "Report to Congress" states (p. 6-7 of 149):
"Domestic Recycling -- To date the domestic approach is the most expedient but also the most costly disposal alternative and remains the least cost effective disposal option for MARAD and Navy obsolete ships. Limited domestic ship recycling facilities (i.e., lack of cost-effective and productive capacity and industrial throughput), make this disposal method effective only for the removal of a small number of ships on a per contract basis. ... In light of the export limitation, and continuing challenges associated with alternative disposal methods, the rate of disposal is highly dependent on the availability of cost effective domestic facilities. Industrial capacity, in terms of annual ship disposal rates, is difficult to quantify because of several factors including the variance in vessel condition and the scope of hazardous material remediation that is necessary. However, due to capacity and resource limitations, the six domestic facilities that have been awarded contracts over the past few years have demonstrated a potential cost effective capability to dismantle and recycle up to a total of 17 to 22 vessels per year. Further, even at award rates that are lower than the 17-22 ship potential, the limitations of many domestic facilities often result in significant delays of months after contract award before the facility finally takes possession of the vessels and commences dismantling work. It is also not uncommon for domestic facilities to request significant extensions for completing the work beyond the original contract performance period. Over the past two years, with the exception of two facilities, domestic facilities have had significant production throughput problems, which significantly delayed completion of recycling projects awarded by MARAD."
MARAD made a very similarly worded rebuttal in response to criticism by the 2005 General Accountability Office (p. 52-53 of 66).
However, MARAD's estimate of an average cost of $2.5 million per ship in 2001 (p. 6 of 187) multiplied by 17 ships per year is $42.5 million per year. But MARAD requested 51% or less of this during 2002-2005 (MARAD Budget Table), so why didn't MARAD request an adequate amount?
Further, the lack of government funding may limit ship recycling capacity. In 1998, International Shipbreaking Limited wrote the U.S. Interagency Panel on Ship Scrapping (196) that the profit margin for domestic shipbreakers is "insufficient" to "attract the necessary risk capital to expand domestic capacity" and:
"And we would like to expand capacity to 180,000 tons of metal production per year (approximately 25 vessels per year). However, it would be imprudent for us to invest this capital unless and until we were assured that there are a steady supply of vessels to cut."
To get a steady supply of ships will require sufficient funding.
If there was more funding and ships were consistently supplied, would more domestic ship recycling firms participate, would more ships be scrapped, or current ship recyclers scrap ships more on schedule? The current situation leads to periodic layoffs and loss of trained personnel, so that it is predictable that it would be more difficult to dismantle ships on schedule when a ship becomes available. Further, if more funding was available, shipbreaking companies could also be more cost-effective; for example, MARAD stated in their 2001 report that scrapping costs are also dependent, in part, on "economies of scale savings for multiple awards" (p. 6 of 187).
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MARAD Budget Table. MARAD budget requests and appropriations during Fiscal Years 2001-2005. This is part of the U.S. General Accountability Office's Table 3 on p. 21 of footnote 66. NA=Not applicable.
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Current dollars (in millions)
Fiscal year__________________
2001* 2002 2003 2004 2005
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Budget request NA 10.0 11.1 11.4 21.6
Direct appropriation NA 0 11.1 16.1 21.6
Appropriations provided
through the Navy 10.0* 0 20.0 0 0
Total appropriated funds 10.0* 0 31.1 16.1 21.6
* MARAD did not request any fiscal year 2001 appropriations because it did not receive authorization to pay for scrapping services until late in the budget cycle.
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One of the factors leading to an unstable domestic ship salvage industry is an irregular supply of ships. If the supply of ships is intermittent, then there will be periodic layoffs and some shipbreaking companies may go bankrupt or quit ship recycling and other companies that have the facilities and ability to recycle ships may choose to not do so. U.S. shipbreaking companies are dependent upon the availability of ships from the U.S. Maritime Administration (MARAD) (e.g., 4, 6, 42) and Navy (188, 190).
The U.S. Interagency Panel on Ship Scrapping's report in 1998 stated (195):
"Representatives of the US scrapping industry have stated that it is more difficult for companies to scrap ships profitably in the domestic market as a result of more protective environmental, safety, health and labor laws in the United States. Another factor affecting profitability of the US scrapping industry has been the inconsistent supply of ships to be scrapped. Still, some US ship scrapping organizations told the Panel that ship scrapping can be profitable, provided a steady supply of ships is available either from the US Government or from the commercial shipping industry."
However, MARAD wrote in 2001 that private ships continue to be recycled overseas (p. 16 of 187).
In 1998, International Shipbreaking Limited wrote the U.S. Interagency Panel on Ship Scrapping about the importance of a continual supply of ships to scrap (196):
"Like any commercial project which requires dedicated investment capital and a trained workforce, the domestic industry requires a steady stream of work in order to attract the capital and train the worker base. If there are disruptions in supply, costs skyrocket on a per ton basis. ... Finally, since a successful dismantling operation requires substantial amounts of heavy equipment, such as heavy lift cranes, hydraulic shears and moving equipment, this type of equipment must be effectively utilized in order to generate an adequate return on invested capital. Obviously, if the equipment is utilized sporadically due to an inconsistent supply of vessels, it will be difficult to receive an appropriate return on capital and therefore difficult to raise the necessary capital in the first place."
MARAD's 2001 report stated (p. 6 of 187):
"In February 2001, the President of the Shipbuilders Council of America indicated that 'the domestic capacity and expertise already exists to dismantle all of the surplus vessels in MARAD's custody within a five-year period.' According to some shipyards, their interest is dependent, in part, on some continuity of work. The assignment of more than one or two ships to a facility is necessary to justify the capital and labor costs required to integrate scrapping into normal shipyard activities. Moreover, a regular supply of vessels should allow for long-term cost savings as shipyards become more experienced at scrapping."
A 2001 National Defense Magazine stated in an article about the U. S. shipbreaking industry for MARAD and Navy ships (194):
"Every company official interviewed for this story said that he was concerned about keeping a trained crew on board. In order to maintain a trained workforce, Chambers [chief executive officer of International Shipbreaking Limited, ISL] explained, 'We need the ships to sustain it.' 'If Congress doesn't fund the program, the ships continue to languish and we have to let the people go,' he said. ISL laid off 85 people for five months and now only got half of them back, because there was no additional funding for the ships. According to Strem [vice-president of Metro Machine], Metro Machine could scrap about seven ships a year, but it is pacing the work from six to eight months per ship, to keep a steady workflow."
The 2002 Navy report about their ship disposal program states (p. 10 of 188)(boldface added):
"In November 2001, Ship Dismantlement and Recycling Joint Venture advised the Navy that it was shutting down its Hunters Point, San Francisco shipyard operations due to the high cost of maintaining a drydock facility dedicated to ship dismantling with no work under contract and insufficient projected future throughput. ... Ship Dismantlement and Recycling Joint Venture was the only privately operated facility on the west coast for dismantling of government ships in accordance with strict Federal, State, and local environmental and occupational safety laws and regulations. The establishment of another contractor ship dismantling facility on the west coast, if required or desired, will require new start-up costs to re-establish compliant ship dismantling processes. However, the requirement for another west coast ship dismantling facility will remain questionable without a long term funding stream that supports the award of at least three to four ships per year per facility."
In June 2003, Baltimore Marine Industries, Inc. at the Sparrows Point shipyard in Baltimore, Maryland filed for bankruptcy, and one of the contributing factors to its bankruptcy was an unsteady supply of MARAD and Navy ships to scrap (190).
Because the costs of scrapping ships in an environmentally sensitive way exceeds the value of recyclable materials, the government needs to pay shipbreaking companies to recycle ships (p. 3 of 187). If adequate funding is not available, then the supply of ships will be irregular.
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MARAD may export obsolete ships overseas and did so in 2003, though this was legally challenged. Denny Vaughan, senior partner with Environmental Recycling Systems that was coordinating a plan to export all MARAD ships in MARAD's California, Texas, and Virginia fleets to Turkey or Virginia indicated in a July 2005 article (130) that:
"Dismantling ships in developing countries is cheaper because of lower labor costs and high demand for the ships' metal, boilers and generators, said Vaughan, a retired Navy rear admiral."
Domestic shipbreaking companies would probably not be able to compete with foreign companies. In March 2005, Brownsville shipbreakers were concerned that the Bush Administration will seek exemptions and resume export of MARAD ships overseas to recycle because of recent trips by Bush aides to China's shipyards and MARAD's export of four ships to Able UK in 2003 (28).
In 2005, the president of Esco Marine, Richard Jaross, was described as being worried that their recent $1 million expansion would be wasted if MARAD exports more ships (28). Such fears may discourage companies recycling MARAD ships from more capital investment and discourage new companies from recycling MARAD ships.
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Brownsville (Texas) Shipbreaking Companies Are Already Scrapping Some of MARAD's Ships at Suisun Bay
There are currently no West Coast shipbreaking sites included among the six active MARAD shipbreaking locations (section XI in 23), but Navy ships in California were towed to International Shipbreaking Ltd of Brownsville to be scrapped as early as 1997 (189, 207).
In 2005, four "obsolete" MARAD ships at Suisun Bay on February 28 were listed with a homeport of Brownsville and a status of "Disposal" on 30 November 2005 (49), and MARAD gave contracts for two MARAD ships to International Shipbreaking Ltd. and ESCO Marine of Brownsville on 30 September 2005 (48). The four Brownsville ships and one ship (the Nemasket), whose status has changed from disposal to "historic" review in November 2005 (p. 16 in 50), represented five of the six highest priority ships for disposal at Suisun Bay in February 2005 (47). Further, a copy of the presentation by Alan Sprott and Alan Jones of Cascade General of Portland during their Jan. 6 presentation in Newport indicates that five MARAD vessels from Suisun Bay were awarded to 3 Brownsville shipbreaking firms in 2005 (85). Gary Whitney has often towed the ships to Brownsville (104, 127, 205). So Brownsville shipbreakers are currently scrapping MARAD ships from Suisun Bay.
Potential Additional Competition for Shipbreaking of MARAD's Ships at Suisun Bay
"In addition, MARAD is currently involved in litigation challenging an existing vessel export contract for various environmental issues concerning the export of solid PCBs. Therefore, any quotation submission that proposes the export of solid PCBs will be reviewed but may not be considered further until the pending litigation/legal challenges are resolved."
If the lawsuit is decided to allow exports for scrapping of MARAD ships with solid PCBs, then MARAD ships at Suisun Bay that shipbreaking firms propose to scrap in the Pacific Northwest could go overseas. If the verdict in the lawsuit is to not allow exports of MARAD ships with solid PCBs, then perhaps the PCBs could be removed in the United States and the ships could be exported overseas for dismantling as suggested by Gary Whitney (126). Reduced labor costs overseas could make shipbreaking overseas more profitable than in the United States. If this happens, then shipbreaking firms in the Pacific Northwest would not get as many MARAD ships as if there was no competition, so they may not do shipbreaking very long.
MARAD may export ships irregardless of the outcome of the pending court case because there is a provision in the Toxic Substances Control Act (TSCA) for MARAD to petition the EPA for an exemption to allow the export of PCBs (p. 11-12 in 73, p. 6 in 149). However, MARAD notes that the process would take a long time and would be subject to legal challenge, "which is likely" (p. 6 in 149). Accordingly, MARAD believes that it is "nearly impossible to pursue any export ship recycling/dismantling contract" (p. 6 in 149) "due to statutory constraints contained in the Toxic Substances Control Act" (p. 1 in 149). The U.S. Congress could loosen the "statutory constraints," so that MARAD could dispose of its ships overseas, and MARAD has said in April and October 2005 that it is available to assist Congress in making such changes (p. 11 in 149, p. 10 in 152). The threat of export may be affecting domestic ship recycling companies.
Plans have been prepared to export MARAD's ships. Retired rear admiral Denny Vaughan of Environmental Recycling Systems has offered to dismantle ships in MARAD's California, Virginia, and Texas fleets by sending them to Turkey and Mexico, according to a 19 July 2005 article (130)(boldface added):
"The federal government is moving forward with a tentative deal to send all the remaining obsolete James River Reserve Fleet ships to recycling yards in Turkey or Mexico at a reduced cost. All the rotting ships in the James River ghost fleet could be gone in two years if the proposal succeeds, said Denny Vaughan, senior partner with Environmental Recycling Systems, a shipyard in Turkey that is coordinating the plan.
"The James River fleet currently has about 55 obsolete ships. Vaughan's group is also offering to dismantle 77 ships in reserve fleets in Texas and California.
"It's far from a done deal. Environmental Recycling Systems must compete with other shipyards vying for the recycling work. And the foreign deal needs approval from the Environmental Protection Agency, which would have to waive federal laws that forbid exporting hazardous waste.
...
"Environmental Recycling Systems is offering to dismantle the ships in the Texas and California fleets for free, and charge only preparation, pre-cleaning and towing costs for the James River fleet ships, Vaughan said.
"The Turkey-Mexico proposal has been in the bidding process for about two years.
...
"Environmental Recycling Systems is a shipyard near the Aegean Sea in Aliaga, Turkey, and has a coalition of 29 additional yards interested in taking American ships. Dismantling ships in developing countries is cheaper because of lower labor costs and high demand for the ships' metal, boilers and generators, said Vaughan, a retired Navy rear admiral.
"Vaughan would not disclose the exact locations of the Mexican shipyards in the proposal, other than saying they were on the country's east and west coasts.
"Vaughan said that shipyards in Turkey and Mexico should not be compared to those in India and Bangladesh, where concerns about deplorable work and environmental conditions in the 1990s caused a global outcry.
"Shipyard workers for Environmental Recycling Systems wear protective clothing, including steel-tipped shoes and hardhats, and hazardous materials will be handled according to EPA standards, Vaughan said. 'We want to abide by the highest standards,' he said."
As part of the lawsuit against MARAD and the U.S. Environmental Protection Agency (EPA) to remove MARAD vessels from Virginia but not necessarily to ship them to Environmental Recycling Systems' facilities in Turkey and Mexico (130):
"An EPA spokeswoman said that the agreement has been reached in principle, but not all the parties have had a chance to sign the settlement. A Maritime Administration spokeswoman did not respond to requests for information.
"In the settlement, EPA agreed to process, 'without unreasonable delay,' the Maritime Administration's request for a waiver to the Toxic Substances Control Act, which bans the export of solid PCBs.
"The administration is seeking the waiver to move ahead with sending the remaining nine James River ships that are part of the Able UK deal to England. The Maritime Administration, known as Marad, also agrees, 'without unreasonable delay,' to award contracts for removing the remaining reserve fleet ships and to apply for more EPA waivers as needed."
Basel Action Network and the Sierra Club sued MARAD about sending ships to England to be dismantled and are opposed to send hazardous wastes overseas (130, p. 5 in 149). So they may sue if this deal goes through. But perhaps Environmental Recycling Systems recognized that they were unlikely to get an exemption to export ships with PCBs, so in February 2006 Environmental Recycling Systems is proposing to construct drydocks in Coos Bay (Oregon) for dismantling MARAD ships from Suisun Bay.
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In Bay Bridge's Jan. 26 Opinion piece to the Oregonian, Bay Bridge's Mike Dunavant and Marc McPherson said that their West Coast shipbreaking facility would have "plenty of work to keep 100-plus employees busy for generations" (99). They indicate that they would be supplied by existing federal ships and federal ships retired each year as well as by recycling private barges and tugboats (99). Similarly, for their proposed Newport facility, they stated that there was enough MARAD vessels currently at Suisun Bay to provide approximately 10 years of work, that more vessels would become available each year, and that they would also scrap barges, tug boats, and other private industrial vessels (46).
Their statements are inconsistent with MARAD statistics. In February 2005, MARAD had 60 ships available for scrapping at Suisun Bay (see p. 7-10 in 47). Bay Bridge planned to scrap 12-15 vessels each year at Newport (45; Mike Dunavant's statement at Dec. 6 public Port of Newport meeting [fide Carol Cole]). If so, in 5 years, they would scrap 60-75 vessels, which is equal to or greater than the number currently available. During four Fiscal Years from 2001 to 2004, the U.S. General Accountability Office found that there was a total average of 10.5 obsolete vessels per year (range 2-20 vessels) being transferred into MARAD's three fleets in Virginia, Texas, and California (p. 15 in 66), so the number added to just the California fleet at Suisun Bay could be expected to be less than that. Further, in 2001, MARAD estimated that after their current backlog of ships is gone that "an annual scrapping rate of about 6 ships per year is expected" (p. 10 of 187).
Accordingly, it is questionable that there would be enough MARAD ships at Suisun Bay to sustain a Bay Bridge facility for 10 years, especially since there is already competition for MARAD ships from Suisun Bay, and there may be increased competition if MARAD finds alternative ways to dispose of ships, such as exporting them.
Further, it is doubtful that one shipbreaker company would get all vessels because MARAD is under a statutory deadline to dispose of current obsolete ships by September 2006 (66). MARAD has been strongly criticized by the Government Accountability Office and others for not disposing of ships fast enough (66). Will MARAD accommodate Bay Bridge's or another shipbreaker's plan for 12-15 vessels each year for "generations" or will MARAD try to satisfy congressional wishes to dispose of ships faster?
It is also very questionable that scrapping private ships would be able to sustain a West Coast shipbreaking company for "generations." Privately owned vessels are not prohibited from being sent overseas to be scrapped as are government-owned ships (p. 11 in 73), and scrapping ships overseas is more economical because of lower labor costs and higher demand for scrap (130).
In addition, it appears that Bay Bridge was not planning to be in Newport for "generations." The Bay Bridge "Fact Sheet" for Newport (46) indicated that "the Port is considering a ten-year agreement." At the end of the Dec. 6 public meeting by the Port of Newport, Carol Cole heard one of the Port Commissioners say that the lease might only be for 5 years. A 5 year lease seems more realistic and sustainable based on current competition and fluctuations in the value of scrap steel and uncertain government contracts.
But if a shipbreaking lease is only for 5-10 years, is permitting shipbreaking worth the environmental risks, loss of aesthetic values, and, if the shipbreaking site is near recreational fishing and crabbing areas as Bay Bridge planned at Yaquina Bay, the loss of those uses?
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Bay Bridge's President and CEO Mike Dunavant talked to Newport News-Times' editor Gail Kimberling about the origins of Bay Bridge Enterprises. Kimberling wrote on Dec. 2 (35):
"Dunavant explained a company called Mercer was invited by the state of Virginia to bid on a shipbreaking site in Chesapeake, Va. When successful, Mercer immediately changed the name of its new acquisition to Bay Bridge Enterprises so as not to replicate the company name already being used in New Jersey. 'They went from Mercer to Bay Bridge in one day,' he said.
'I was general manager of Bay Bridge from 2002 until Adani (a firm based in India) came in and purchased the shipbreaking operation. I stayed and they made me CEO,' Dunavant said."
The Port of Newport's "Fact Sheet" for Bay Bridge Enterprises stated (p. 1 of 46):
"Bay Bridge Enterprises' operation in Chesapeake has been in the marine salvage recycling business for five years."
These accounts are not supported by independent reports that indicate that Bay Bridge has had a shorter history and has had several owners. In February 1999, Recycling Industries Inc. of Englewood, Colorado filed for Chapter 11 bankruptcy in Colorado (37). On 11 December 2000, the bankruptcy judge dismissed the company's case, and the same day many subsidiaries of Recycling Industries Inc. (including Jacobson Metal Co., of Chesapeake, Virginia and Peanut City Iron & Metal Co. Inc. of Suffolk, Virginia) closed down and left hundreds of employees jobless (37). In January 2001, security personnel at many of these subsidiaries told telephone callers that the facilities were "indefinitely closed" (38). In August 2001, Mercer Wrecking & Recycling (Trenton, New Jersey) arranged to buy Jacobson Metal Co. and Peanut City Iron & Metal Co. Inc. (39, 40). In reporting about what the Mercer president said, Recycling Today wrote: "When the deal is finalized, the scrap yards will operate under the name Bay Bridge Enterprises LLC" (39, 40). The description of the two scrap yards suggests that they were scrap yards; there is no mention of shipbreaking (39, 40).
Less than three years later, in June 2004, Sims Group Limited of Australia bought Bay Bridge Enterprises (25, 26), and a year later in June 2005 Adani Virginia, Inc. bought it (7a, 46, 92).
In recent newspaper reports, the current owner of Bay Bridge Enterprises LLC has been reported to be the Adani Group in India. For example:
1) On Jan. 6, the Oregonian's Peter Sleeth wrote that Bay Bridge "is owned by an Indian company, Adani Global" (84).
2) On Jan. 10, the Wall Street Journal's Paul Glader reported that the Adani Group based in Ahmedabad, India owns Bay Bridge Enterprises LLC; essentially the same article was also given in the Baltimore Sun on Jan. 16 (92).
3) In an article in the Jan. 17 USA Today and the Jan. 18 Christian Science Monitor, reporter Brad Knickerbocker wrote that Bay Bridge had been "recently acquired by the multinational corporation Adani Group, headquartered in India" (95).
4) On Jan. 25, the Albany Democrat-Herald