Editorial: Local shipyard should get shot to build state ferries

By The Herald Editorial Board

For more than 50 years, state law required that vessels for Washington State Ferries be built in the Evergreen State, a reasoning that — even with the recognition that they could typically be built elsewhere at a lower cost — kept family-wage jobs and economic benefits within state boundaries.

That reasoning was challenged two years ago when state lawmakers — in desperate need of five new vessels to bolster an aging fleet that is the largest ferry system in the U.S. — dropped the “Build in Washington” requirement, opening up bids to other U.S. shipyards. (Federal law, specifically the 1920 Jones Act, still rules out international shipyards for such work.) An earlier contract for those ferries was canceled when the state and Vigor Shipyards in Seattle couldn’t agree on final cost and other issues, prompting the shift in policy.

It worked, in that when the state Department of Transportation sent out requests for bids for five new ferries — which will carry 164 vehicles and 1,500 passengers and can be powered either by electric batteries, diesel or a combination of the two — the state got back two bids: one from the Freeland- and Everett-based Nichols Brothers Boat Builders and another from Eastern Shipbuilding Group, in Panama City, Fla. As expected, the East Coast bid is significantly lower than the local bid.

Eastern has estimated the cost of its first ferry at $251.3 million, about 2 percent lower than the state’s estimate; and the total bid for three boats at $714.5 million. The Nichols Brothers bid came in at $338.6 million for the first boat and more than $1 billion for three ferries.

Even with a 13 percent credit for state shipyards that was included in the new law in recognition of state jobs and other considerations, the low bid still goes to the Florida yard. But the low bid is not necessarily the winning bid, as the change in state law still requires a “best value” consideration of offers.

Overall cost will have to factor into the decision, as the Legislature allocated about $1.68 billion for up to five ferries, with 11 more planned in coming years.

But local officials — specifically Port of Everett CEO Lisa Lefeber; Ray Stephanson, president of Economic Alliance Snohomish County; and Everett Mayor Cassie Franklin — now are making the case to Washington State Ferries, state transportation officials and Gov. Bob Ferguson to recognize the “best value” advantages that building in Washington — specifically in Snohomish and Island counties — offers.

The big cost difference between the bids, said Lefeber, is in the prevailing union wages that are paid in Washington state, delivering higher family-wage jobs, as opposed to those in Florida, a so-called “right to work state,” paying lower wages throughout a shipyard.

While that increases the costs of a ferry, she said, it also delivers broad economic advantages to communities and the state, prompting the call for an economic impact report that outlines the value that building the ferries in the state can provide.

“That’s one of the reasons we did this economic impact study, is to show that while it may be more expensive in the short term, in the long run, we’re creating 1,200-plus jobs for each ferry,” she said.

The report, by Martin Associates, a Lancaster, Pa.-based economic and transportation consultant, concluded that the each ferry built in the state would deliver more than 577 direct jobs in Everett and Freeland as well as another 721 induced and indirect jobs, with the direct jobs earning average annual wages of $104,000, totaling $60 million in income impact; and all jobs producing a total of $131 million in wages. As well, the report estimates $338 million in business revenue to state and local firms and $31.9 million in state and local tax revenue.

“Outsourcing this, all five of the ferries to Florida, does not help Washington state at all,” Franklin said, in a joint interview Friday.

Stephanson, who preceded Franklin as Everett mayor, agreed.

“Why would we reward the state of Florida with this contract?” he said. “There’s just something that doesn’t sit right with me about that, when we have the workforce here, and it’s not just the construction of these ferries, it is the long-term maintenance of the ferry system. Having that expertise here just makes sense.”

There are other factors that favor keeping the work in state, Lefeber noted, including the state’s recent investment in apprenticeship programs that can train workers, provide jobs and help build industries. And it’s training, Stephanson noted, that shares skills used in maritime and aerospace trades, supporting both industries.

“The state is investing in these things,” Lefeber said. “We’ve got the Maritime Training Center; we’ve got Sno-Isle Tech Maritime; we’ve got a welding program,” only to ultimately send those workers outside the state, to Florida and elsewhere if there aren’t boats to build here.

As well, there are logistical considerations. Since maintenance work on the ferries will need to be done locally to return boats more quickly to their routes, there’s an advantage, Stephanson noted, in having the facilities where the boats were built perform the maintenance as well.

Nichols Brothers has floated a compromise — echoed in a letter to the editor by Island County Commissioner Janet St. Clair — that would satisfy concerns over cost and quicker delivery of ferries, suggesting that the contract be split between the two coasts. Nichols CEO Gavin Higgins told the Seattle Times earlier this month that having each shipyard build two of the ferries could provide a balance of state jobs and cost savings, while adding to the fleet sooner. The state had earlier signed off on such an arrangement.

While a case can be made to keep all five ferries in state, there’s ample reason to split the contract, giving each company the opportunity to build boats and better show the advantages of the competing shipyards, in the boats built and the economic benefits provided as the state looks ahead to who will build future ferries.

Nichols Brothers — and the larger shipbuilding and maritime maintenance industry in Washington state — should be given an opportunity to prove the “best value” of building in Washington, while at the same time providing a stronger foundation for that industry.

The state and its ferry system have been heavily criticized in recent years for not investing sustainably in its maritime highway system, denying needed work to the industry and its workers and frustrating ferry passengers and their Salish Sea communities with sailing cancellations and reduced runs.

Here’s an opportunity to again Build in Washington, support family-wage jobs and help rejuvenate the state’s maritime industry.