After initial talks run aground, port invites bids to get bankrupt shipbuilding yard afloat.

After initial talks run aground, port invites bids to get bankrupt shipbuilding yard afloat

Los Angeles port officials last week ended talks with one group of entrepreneurs and cleared the decks for anyone else capable of reviving the port's 110-acre shipbuilding yard.

Todd Shipyards had built dozens of ships on the site, including 18 frigates for the U.S. Navy, and employed about 5,000 workers at its height in the mid-1980s. But it went bankrupt in 1989 and left behind shipbuilding equipment and a plant worth $60 million, which lie idle today.

The ruling Board of Harbor Commissioners on Feb. 12 voted 4-0 to end its exclusive negotiations with Los Angeles Shipyard Co., frustrated with two months of unsuccessful talks with the company and unable to wrench earnest money from it.

"They were notified to deliver $500,000 back on Nov. 28 but have never delivered a dime," complained port spokesman Chuck Ellis.

He said the port then reduced its deposit request to $250,000 and advanced the deadline, but with no luck.

"It was time to fish or cut bait," stated Ellis. "Now, we are ready to negotiate with any viable party who wants to make that shipyard work, and has the resources to do it, for the long term."

A prime suitor is a rival project whose proposal was considered second-best last year, LA-LB Shipyards, allied with the local union.

"Our proposal was viable, and remains viable," said Brian M. Freeman, a New Jersey financial consultant to the San Pedro local of the Industrial Union of Marine and Shipbuilding Workers of America-International Association of Machinists and Aerospace Workers. LA-LB Shipyards is headed by retired U.S. Navy Admiral Stuart Platt.

Does Platt have sufficient finances? "We'll have what we need. Our proposal requires less capital." LA-LB once offered to set up a ship repair facility that could evolve into a builder. "We'll be revising and improving our prior proposal with the city." Last week union national representative Kevin Sullivan said he would ask the membership "to put LA-LB back together again and approach the port." That concern has said it would supply a $7 million initial investment, about $1.75 million of it in equity, with $500,000 coming from member pledges.

"We're going to go ahead," said Freeman, who advised an employee group in the restructuring of Western Airlines in the mid-1980s.

"It's an open game now," said union executive secretary William Trejo. "I've got over 1,000 workers that I could put to work."

Los Angeles Shipyards, though, hasn't given up, said its manager of human resources, John Chernesky. He expressed bitterness over the rejection, calling the harbor commissioners' attitude "whimsical and capricious."

He said demanding a non-refundable deposit was too tall an order, and one his company never agreed to in writing. "No investor that's not in jail - well, maybe (junk bond king Michael) Milken - would put up hard money to continue to talk to them."

LA Shipyard had boasted about a "contract" for building two 40,000-ton oil tankers for OSCO Group, a Norwegian shipping company. That agreement, however, proved only a letter of intent to sign a contract, contingent upon LA Shipyard securing a lease.

"It's a Catch-22: Our financier won't commit until we have the lease. The port has the lock (on the land) and won't turn the key without taking money," explained Chernesky.

All sides know the 1980s ended with a less than robust economic environment for shipbuilding, and all said they "don't want another Todd Shipyards."

"I don't know if you realize the distress Chapter 11 (bankruptcy) brings to the workers and the community," said union official William Trejo. He said many Todd workers took aerospace jobs. "But aerospace has taken a downturn, and all manufacturing in the South Bay area is down in the dumps," said Trejo.