WisBusiness: Marinette Marine sees potential to double in size

By Brian E. Clark

For WisBusiness.com

Within a few months Marinette Marine will find out if it will become Wisconsin’s biggest defense contractor. It’s waiting on a Navy decision that could pump $500 million a year into northeast Wisconsin and Michigan’s Upper Peninsula – a region with high unemployment – for the next decade or more.

Marinette Marine, which has built one Littoral Combat Ship (LCS) for the Navy and is working on a second, will find out in late July if it has won the contract to supply more of the speedy, 378-foot-long vessels, company president Richard McCreary said Tuesday.

He said the USS Freedom LCS, which was launched in 2008, now has sailed more than 15,000 nautical miles. Backers say it has performed well.

Each of the ships costs $480 million and can travel nearly 50 miles per hour. McCreary called the LCS a modern version of the frigate. The Navy has said it may want as many as 60 of the vessels over the next 15-plus years.

“If we win this contract, the giant sucking sound you hear will be people (who work in shipyards) leaving the Gulf Coast to come up here,” said McCreary, who spoke at a Wisconsin Innovation Network luncheon in Madison.

McCreary said Marinette Marine now has 950 employees, but that number could rise to more 2,000 over the next few years. He said the new jobs would pay from $10 an hour for apprentices to nearly $40 an hour for journeymen in skilled trades.

Tom Still, president of the Wisconsin Technology Council, said the deal would be a huge economic boost for the state. He said it would make Marinette Marine the state’s largest defense contractor, even bigger than Oshkosh Corp., a heavy truck manufacturer.

Earlier this month, the Army placed a $410 million order with Oshkosh for 2,634 Medium Tactical Vehicles trucks and trailers scheduled for delivery next year. The company already has gotten orders worth $690 million for under a five-year contract for the vehicles and has other military orders.

McCreary lauded the state and Gov. Jim Doyle for recently offering $50 million incentives to help bring the LCS contract to Wisconsin. The package includes tax credits for recruiting and training workers and buying equipment, according to the state Commerce Department.

McCreary is competing with Austal, which has a shipyard in Mobile, Alabama. That state has already said it would provide Austal roughly $60 million in incentives. Austal is an Australian company, while Marinette Marine is owned by an Italian firm.

Sen. Dave Hansen, D-Green Bay, attended the luncheon and said the state is “partnering with Marinette Marine” to bring jobs to northeast Wisconsin. He said the incentives would “level the playing field with Alabama.”

McCreary said the contract would have a major supply chain ripple effect in the state, with roughly 50 percent of the materials for the ship coming from this region. The USS Freedom’s diesel engines were built by Fairbanks Morse of Beloit.

“This would be a huge win for our area and we’ll need cable, pipe, fittings and many other components from companies in Wisconsin and Michigan,” he said.

McCreary said Marinette Marine became a defense contractor in World War II when it built five wooden barges. In recent years, it has built research vessels, icebreakers and tugs, but its main work has been for the government, much of it for the Coast Guard.

He said he believes his company is well positioned to win the LCS contract because it has a proven track record based on past performance.

“The government needs to be treated like any customer,” he said. “You don’t want to roll over, but you have to operate in a professional way by producing quality projects delivered on schedule with attention paid to the details.”

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