Much a-Fumo about nothing?

Aker Kvaerner is on schedule to fulfill its obligation to build three containerships at the former Navy Yard by the end of 2004, and that has Sen. Vincent Fumo calling for the reorganization of shipyard management.

The state established the Philadelphia Shipyard Development Corp. to monitor Kvaerner’s local operations. Fumo said in an announcement released a week ago that PSDC was not doing its job. He also questioned Kvaerner’s commitment to Philadelphia.

PSDC has a five-member board. The governor appoints three members, another comes from the Delaware River Port Authority, and the city selects the final delegate.

Fumo based his argument for reorganizing PSDC on a report from the Senate Democratic Appropriations Committee, which he chairs. It recommended that Gov. Rendell replace his three appointed members within three months and asked the DRPA to do the same.

"The appointments to that board are holdovers from the [former Gov.] Ridge administration," said Fumo spokesperson Gary Tuma on Monday. "The senator thinks that Gov. Rendell ought to appoint his own people to that board and make sure that they are paying close attention" to Kvaerner’s activity.

PSDC officials released a statement that downplayed Fumo’s complaints as a political maneuver.

Kvaerner Philadelphia president and CEO Dave Meehan responded with a statement on Friday that said the company would not get involved in the debate.

"Instead, we will focus all of our activity and energies on issues that we can control," Meehan said, "and that is the building of a sustainable and profitable shipbuilding operation here in Philadelphia."

Kvaerner completed construction of its first ship here last summer. The 712-foot-long container vessel was the first ship completed by Kvaerner since it began operations in the Navy Yard in 1997, and the first to be built in the city in 34 years.

The CV2600 Philadelphia Class Containership was sold to Matson Navigation for $115 million and christened the Manukai. In August, it floated out of the Delaware River destined for the Pacific Ocean, where the San Francisco-based cargo hauler will use it to shuttle goods between Hawaii and the mainland.


Kvaerner’s local facility currently has the capacity to construct two ships per year. Matson also has ordered a second identical vessel that is expected to be ready in April, and Kvaerner is ready to begin building a third but has no buyer.

The company has a contract with the state to build at least three ships in Philadelphia. After that, Kvaerner assumes ownership of the shipyard — which, Fumo fears, means it can freely shut down its operations here. Or the company could split town sooner by paying a $20-million penalty to break its lease, the senator added.

On Friday, there were reports that Kvaerner was negotiating a deal to build six vessels for an unnamed company. Tuma said if this were true, it would reinforce the company’s commitment to the city.

"It would satisfy some of the concerns about how much work is going to be at the yard in the future. It would not necessarily satisfy the concerns about the oversight," the aide said.

The State Democratic Appropriations Committee’s report referred to an audit released in 2000 by Pennsylvania Auditor General Bob Casey. It criticized the state for failing to encourage Kvaerner to use regional businesses to construct the yard. At the time, nearly 80 percent of the $60 million spent on equipment contracts had been awarded to foreign firms, including the assembly of the yard’s Goliath-class gantry crane.

The same 174-page audit detailed what Casey called the "abuse of tax dollars" by Kvaerner executives between December 1997 and January 2000. PSDC had approved $1.8 million in expenditures by Kvaerner employees for home furnishings, cars and electronics.

The Ridge administration dismissed the audit as misleading and said some of the expenses were part of the cost of doing business in the private sector.

Pennsylvania has subsidized $429 million to Kvaerner to pay for construction of the yard and its initial operations, including job training. In return, Kvaerner agreed to open a modern shipbuilding facility at the Navy Yard, creating 1,000 jobs and building three containerships by December 2004.