FREELAND — One of Whidbey Island’s largest private employers, Nichols Bros. Boat Builders Inc. abruptly laid off its employees and closed its doors Friday, citing financial problems and a pending lawsuit.
The company, which has employed about 250 people in recent years at facilities in Freeland and Langley, had operated on Whidbey Island since 1964.
“NBBBI has faced significant financial challenges in recent years and has sought additional capital to assist in restructuring the company,” officials said in a news release. “Those efforts have been unsuccessful, due in part to pending litigation and cash-flow challenges ultimately forced NBBBI to make the difficult decision to close its doors.”
Company Chief Executive Matt Nichols declined comment about closing the business he’s led since 1972. Nichols is the third-largest employer on the island and has operated for 43 years.
In recent years, many small shipbuilders have closed their doors. Nichols carved out a niche in building ferries for communities and private companies, and also won a contract from the Navy for an experimental high-speed vessel.
The shipbuilder in July joined in a partnership brokered by Gov. Chris Gregoire to share the work in a $348 million contract building new vessels for Washington State Ferries. The agreement established Todd Pacific Shipyards Corp. of Seattle as lead contractor with J.M. Martinac Shipbuilding Corp. of Tacoma and Nichols as the primary subcontractors in building up to four 144- vehicle ferries.
The three shipbuilders had previously competed for the ferry construction contract.
Earlier this year, Florida-based Expoships, LLLP, filed a breach of contract complaint against Nichols Brothers when the Whidbey Island company allegedly failed to deliver a 600-passenger sailing vessel on time, according to court documents. In 2006, when Nichols Bros. was scheduled to begin work on the boat for Expoships, the company was in “extreme financial distress,” according to court documents. Nichols Bros. “were tapped out on their Frontier Bank loan” and “had been unable to pay approximately $1.3 million in payroll taxes.”
Kenneth Kagan, a Seattle-based attorney for Expoships, said he does not believe his client’s case spurred Nichols Bros. to close. Rather, a new lawsuit filed by a different company may have led to Friday’s announcement.
Federal court records also show a multi-million dollar lawsuit from a Florida firm, Hornbeck Offshore Services LLC, alleging that Nichols Brothers failed to meet time constraints in a contract to build one boat for $12 million and another for $13 million.
The Florida company owns a fleet of 80 vessels and supplies offshore oil rigs.
U.S. Rep. Rick Larsen, D-Wash., said his office would try to help employees laid off by Nichols Bros. to get resources they may need to find new jobs.
“This announcement is a great surprise,” Larsen said. “Matt and all the workers have consistently developed quality boats that are used all over the United States.”