Diversification Provides Insurance for Steiner

Friday, November 12, 1999
With origins as a family-owned repair yard tracing back to the 1920s, Steiner Shipyard has evolved into a present-day incorporated shipyard, with diversified interests. To be sure, fishing vessels - the company's bread and butter - still remain a priority for the Bayou la Batre, Ala.-based builder, but the company has found success in its diversification into workboats and passenger vessels, as well. In 1927, William Steiner (grandfather of present owner Russell Steiner), and his sons Joseph and Clarence (Russell's father) built six bay shrimpers. At the time, says Russell, they were considered big boats, measuring 46 ft. in length. The Steiner family owned and operated the vessels while continuing to run the repair yard. Two of the vessels, Sea Gull and Eagle, are still in use today. Sea Gull operates in Texas, while Eagle is still housed at Steiner Shipyard, in Alabama. "They're still operational," says Russell. "In fact, if you take a step back, they even look new." In 1954, Clarence Steiner, with young sons Gene, Roger, Russell and Ronny, and daughter Carolyn, operated the repair yard, and ultimately, made the move into boat building. The initial constructions were wood vessels - primarily custom-type pleasure boats. Eventually, in the late 1960s, the company began intermixing repair of steel trawlers with standard wooden vessels, and finally began building steel-hull shrimp boats. In 1969, Russell bought out his father and brothers and incorporated Steiner Shipyard. Immediately, he set to work marketing the company in search of "fleet work." "We were basically building one boat at a time," says Russell. "And, when we finished the boat, we'd think, 'boy, if we had the chance to build another like that, I know we could build it more efficiently and make some money.' I had read about people that would buy a lot of boats from one company, so I made that my goal." Steiner first approached Jack Sahlman, of Sahlman Seafoods, Inc., after seeing Sahlman place a large order for wooden boats. Russell approached him and inquired about the possibility of Steiner Shipyard furnishing vessels for his company. "He didn't think we could build him comparable boats for the price," Russell says, "so, I offered to build him two steel trawlers at the same price he paid for the wood boats he purchased at the meeting. I also told him, if he didn't want them, he didn't have to take them." In February, 1977, Steiner delivered Tradewinds to Sahlman Seafoods, Inc., which became the Steiner 75 ft. stock-hull, and was the first of the company's fleet work. Today, the trawler design, Steiner Shipyard and Sahlman Seafoods are all inextricably linked. "Once we completed the vessels, Jack walked out, looked at them, looked at the wood vessels, and gave me an order for 10 boats, at my price," Russell says. To date, Steiner Shipyard has delivered 168 trawlers to Sahlman Seafoods - by far the company's largest customer. They have also delivered 24 trawlers to Unifipeche S.A. and 25 trawlers to C.F.P.N. Diversification Due to the downturn in the commercial fishing industry, Steiner diversified - first into building workboats to service the marine oilfield industry (tug boats, tow boats, jack-up barges, OSVs) - and then, in the 1990s, as that same oilfield industry dried up, into aluminum and steel ferries. Around 1985-86, Russell gathered money, and bought 10 OSVs that had been repossessed in the early 1980s. Instead of laying off employees as the fishing market slowed up, I had them refurbish the OSVs, and later sold them." His ability to locate, and subsequently purchase unfinished vessels has also been a benefit. He purchased several vessels under construction from a Gulfport, Miss. shipyard. In all, Steiner purchased roughly six pieces, and brought them back to Bayou la Batre. Those pieces were subsequently combined to make three boats, which were sold. And in 1993, another conversion - this time of a former OSV into a 190-ft., 450-passenger excursion/casino cruise vessel - helped him diversify into the passenger vessel business. As the workboat/oilfield service market became scarce, Steiner began building ferries: First 99-ft. Arnold W. Oliver for the Texas Department of Transportation, and then four car ferries for the North Carolina Department of Transportation, including double-ended 180 x 44 ft. Southport and sister ferry Nuese. While Southport was the third car ferry built for the N.C. DOT by Steiner, it was the first to be equipped with cycloidal propulsion units, in this case, Voith Schneider 16-GII four-blade cycloidal propulsion units, driven by two Caterpillar 3412 diesel engines. And, as is the standard for a Steiner-built boat, the hull was constructed upside-down, even though there was no crane big enough to lift the boat. After the hull was completed, it was cut in half, turned over and welded back together. Present Performance Even with the diversification, Steiner's main business - still - is in the fishing vessel industry. Of all deliveries through July, 1999, six were the 75 x 22 x 11 ft. shrimp trawler design for Sahlman Seafoods (vessels Caroline 99, Tropics 99, Liberty 99, Equator 99, Moonrise 99 and Hi-Tide 99), two more were the same design for Unifipeche S.A. (Mathieu and Florence) and two were 128 x 32 x 12 ft. utility vessels for Seacor Marine (Jim G and Lloyd G). And the company has nine more shrimp trawlers currently under construction, as well as two 85 x 24 x 12 ft. shrimp trawlers for an international customer. Steiner is also building a 110 x 30 x 9 ft. fire response vessel for the Port of Corpus Christi, scheduled to be delivered by December of this year, and a 60 x 30 x 9.5 ft. multi-purpose dredge tender, scheduled for delivery next February. As far as marketing and generating new business, Russell is a firm believer in association membership. "You should belong to the good associations of whatever industry you're working in," he says. "Membership helps you with marketing and financing; it also keeps you in touch with the industry." Steiner Shipyard belongs to several associations, including the National Waterways Conference (NWC) and the Passenger Vessel Association (PVA). Steiner Shipyard also exhibits as major trade shows, including the International Workboat Show in New Orleans. The company has also proved innovative through its solutions to obstacles - some of which might have been extremely detrimental to other companies. "When we had the labor shortage in 1998," Russell says, "in particular, a shortage of first class shipfitters and first class welders, we had to find an innovative way to secure the labor we needed to completed the contracts we'd committed to delivering. It seemed like everyone and their cousin was building new OSVs and utility vessels. "So when the workers from the North and East Coast came South to get in on the construction boom, a lot of them didn't have money to see them through their first few paychecks. We started advertising we'd pay them daily for the first few weeks, and sure enough, we got the 50-or-so people we needed to complete our contracts." The company reduced production costs for steel by purchasing a Plasma cutter, which works in conjunction with computer design software to do steel cutting in-house. The Plasma cutter reduces mistakes, thereby reducing cost for labor time and wasted materials, says Russell. Future Plans Russell believes the marine industry will continue altering and remaking itself, and perceives a shift toward more repair and conversion work. His S&S Marine Repair yard, located about five minutes away, is run by Russell's nephew. In just 20 months of operation, the yard has already lifted 220 vessels using a 20-ton Travelift, which Russell says is a more efficient way of hauling a boat out of the water. Additionally, Steiner has formed another subsidiary, called Enviro-Metals, Inc. Featuring a Wheelabrator metal processing unit, used to preblast millscale (the coating on metals that must be removed before the metal can be painted). The unit is housed in its own building, which is a great benefit toward complying with EPA guidelines. In fact, Russell says, the Alabama Conservation Department has even issued tickets if sand goes into the water during the blasting process - a far more likely result for yards still blasting in open air. The tighter regulations on blasting and coating mean small boatyards need to employ such a process; however, the prohibitive cost of the unit makes the prospect a bit unfeasible. Therefore, Steiner's hope is to offer the company's services to local, smaller shipyards. "We'll do it all," Russell says, "we'll cut, blast, prepare the metal. All the shipyard will have to do is assemble the hull." Steiner is no stranger to such an arrangement, as the company already subs out some expertise work of its own. With only 100 manufacturing employees, such tasks as electrical work, carpentry, refrigeration and electronics are among the jobs subbed out to local businesses. Market Trends For now, Steiner will continue to focus primarily on the fishing industry, with special attention paid to deepwater trawlers. Russell says deepwater fishing - in depths of 3,000 ft. - may be the next "big thing." Currently, most of the focus is overseas, but he says even in the Gulf Coast will have a lot to offer people in deepwater trawling. The expense is great, however, especially in the hydraulic winch package required for such depths. The company is also expanding its heavy duty workboat customer base. As far as the company's plant, most of the efforts are being made to get the work under cover. As Russell says, "a lot of times, if it's not raining, it's hot. And neither condition is great to work in." Also, beyond increasing the comfort factor of the employees' working conditions, such a change - to bring all work indoors - can also only help as a precaution to environmental regulations, something Russell believes strongly in complying with.-Chris Palermo
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