* Company eyes orders from $10 mln to over $100 mln
* Avondale did commercial work two decades ago
* Will reevaluate plan to close Avondale later this year
By Andrea Shalal-Esa
WASHINGTON, Feb 5 Huntington Ingalls Industries
Inc is actively pursuing infrastructure orders from the
oil and natural gas industry for its Avondale shipyard near New
Orleans, which had been slated to close at the end of 2013.
The shipbuilder for the U.S. Navy said on Tuesday it is
opening an office in Houston to chase orders and is in active
discussions with various companies in the oil and gas sector. It
plans advertisements in Gulf Coast newspapers on Wednesday.
Chris Kastner, corporate vice president and general manager
of corporate development, told Reuters Huntington Ingalls would
reevaluate plans to close the Avondale facility, or lay off more
workers, depending on how the new business did this year.
He declined to give a target for how much revenue would be
needed to keep the facility open, saying the company was more
focused at the moment on validating its business model for the
Ron Ault, president of the metal trades department of the
AFL-CIO, welcomed the news and said the union would continue to
work closely with company management on the new endeavor.
"While the success of this new business endeavor is not set
in stone, the Metal Trades Department, AFL-CIO applauds
Huntington Ingalls Industries for its unwavering commitment to
keep Avondale Shipyard operational," Ault said.
He said Avondale's shipbuilding workforce had many of the
same skills needed in the energy sector.
Citing over capacity in the shipbuilding market, Northrop
Grumman Corp announced plans to close the 268-acre
Louisiana shipyard in 2010, later deciding to spin off its
entire shipbuilding business into Huntington Ingalls.
Mike Petters, chief executive of Huntington Ingalls, said
the workforce at Avondale, which numbers around 2,000 now, had
unique engineering and manufacturing capabilities that would
help the company compete in the energy sector.
Petters first raised the possibility of changing the focus
of the shipyard during an analyst call in November. Last month,
he told reporters he was "under no illusions ... about the
challenges that something like this would present."
On Tuesday, Petters sounded more upbeat as he highlighted
Avondale's location in a region where manufacturing demand is
outstripping supply, especially in the energy markets.
"Coupling this talent with our world-class facilities leads
us to believe we have everything in place at Avondale to excel
in this market," Petters said in a statement announcing the
company's thrust into energy infrastructure work.
Kastner told Reuters the company would bid for projects in
the $10 million to $100-million range.
He said Huntington Ingalls could bid for orders covering
above-water equipment for offshore oil rigs to downstream
facilities for processing natural gas, such as a big liquefied
natural gas (LNG) facility in Lake Charles, Louisiana.
About $60 billion in such downstream energy projects have
been announced in recent years, company officials said.
Kasten said the company was open to a possible partnership
for the Avondale facility, but did not view that as necessary to
start bidding for smaller orders.
The Avondale shipyard has worked on other commercial
projects in the past. About two decades ago, it built equipment
for a hydroelectric plant in Vidalia, Louisiana, which is still
operating, as well as a prison barge in New York, Kastner said.
The company's Newport News shipbuilding division also has
two units that work on nuclear energy projects and alternative
energy, but they are small compared with the company's main work
building destroyers and aircraft carriers for the U.S. Navy.
"Avondale has a rich history in competing for a very diverse
amount of work," he said.
Huntington Ingalls shares closed four cents lower at $44.17
on the New York Stock Exchange on Tuesday.