Vigor, which also owns a 27-acre facility on Seattle’s Harbor Island for new construction and repair of mid-sized vessels (what’s left of the famed Todd Shipyards here), answers to a new master. Private-equity giant Carlyle Group is acquiring Vigor and combining it with a Virginia shipyard.
Between 1953 and 2016, the number of major U.S. shipyards declined from 30 to six. This astounding collapse was years in the making, but a seminal moment came when President Ronald Reagan removed a decades-old program of direct construction subsidies in 1981. Reagan didn’t demand that Asia and Europe drop their extensive shipbuilding subsidies.
As a result, tens of thousands of good American jobs were lost. U.S. commercial shipbuilders, once the world’s leaders, now account for only 1 percent of the global market. Meanwhile, new mergers in South Korea and China will create two giantsthat control 46 percent of the global market.
Private equity can’t fix this. At its worst, the business model is rip, strip and flip. At best, it patiently invests and adds executive and operational expertise to improve the company. We can only hope the latter happens to Vigor until a more constructive national policy comes along.
Yeah, “hope” in one hand and …