Huntington Ingalls eyes alternate uses for Avondale shipyard

WASHINGTON Thu Jan 10, 2013 4:02pm EST

WASHINGTON Jan 10 (Reuters) - Huntington Ingalls Industries Inc on Thursday said it will decide this year about converting its Avondale, Louisiana, shipyard to work on commercial construction and engineering projects instead of closing the facility by the end of 2013.

Mike Petters, chief executive of the U.S. shipbuilder, said the company was in ongoing discussions with other firms about converting the facility to work on energy and infrastructure projects in the Southeast region, but gave few details.

Northrop Grumman Corp announced plans to close the 268-acre shipyard outside New Orleans in 2010, later deciding to spin off its entire shipbuilding business into Huntington Ingalls.

Petters first disclosed plans to look at converting the shipyard to work on offshore oil platforms or work on modular construction for oil and gas refineries at an investor conference in November.

On Thursday, he told reporters the company saw some opportunities to apply what it had learned about deriving efficiencies and cost savings from modular construction to the energy sector, but those discussions were still at an early stage and "the aperture is very wide open."

"There's a lot of opportunities for those plants to be modularly constructed and we have a pretty good sense of how to do that both from an engineering standpoint and a construction standpoint," Petters said.

He acknowledged that Navy shipbuilders had struggled in the past when they moved away from their core business, but saw this as slightly different since the company had already decided to close the facility and other companies were actively seeking out Huntington Ingalls' participation.

"Our plan is to close this facility so if we're able to do anything else, we're going to make something out of nothing," he said, adding, "I'm under no illusions here about the challenges that something like this would present."

Petters said the company was more likely to proceed if it found a strategic partner for the new business direction, which would reduce the risks involved.

He said there were still about 2,000 workers at the Avondale shipyard but it was unclear how many of them would be kept on if the company decided to keep the plant open.

"There's clearly a clock ticking because the most valuable asset we have at Avondale is the workforce that's there," he said. "We are working this very hard ... This is something that we will be resolving this year."

Huntington Ingalls shares rose 27 cents or almost 1 percent to $43.47 in late trading on the New York Stock Exchange.

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