Business, Economics, Featured, Maritime

Vigor at SMIC: “Here for the Long Haul”

The Intangible, a fishing boat based out of Petersburg, AK, undergoes repairs at the Seward Vigor site on Tuesday, October 3rd. Photo: Kelley Lane.
by Kelley Lane for Seward City News-

Vigor, a marine services operation located at Seward’s Marine Industrial Center (SMIC), is “here to stay,” according to Adam Beck. Beck is in charge of Alaska Operations for Vigor, and is based out of Portland, Oregon. He plans to spend a few days in Seward in early October to visit their 11 acre shipyard located in the industrial area on the east side of Resurrection Bay. Vigor is one of a handful of marine service operations who hold leases with the City of Seward. According to Beck, they have recently made changes to their business plan. These changes will allow third party contractors to complete work using their yard. Vigor will continue to operate their syncrolift, and is in the process of updating their lease with the City of Seward to reflect these changes in operating procedures. Beck was adamant that Vigor is very much still in operation, stating that “if you went to the shipyard today, you’d see work being done.”

His comments were in response to questions about the continued operation of Vigor in light of recent rumors around Seward that they were closing, or perhaps had already left the area. One rumor even went so far as to claim that the City of Seward was left holding the keys to their buildings, after Vigor had departed during a weekend closure. Seward City News decided to look into these rumors, and find where the truth lies, and why these rumors came to be.

Last week the City of Seward held a work session on the electric utility rate structure. The cost of electricity has been a contentious issue this fall, as users’ bills have continued to climb. Seward’s City Council is in the midst of creating a budget that will serve the Seward municipality for the next two years: 2018 & 2019. Part of crafting that budget is deciding how to bill electric users. The work session held last Monday was open to the public and invited public commentary. During that meeting, a City official mentioned that the City had lost a few of its largest customers, including the coal loading facility and Vigor. This was a misleading statement, as Vigor is still in operation, but has been using less electricity this past year. This decline in overall usage by industry in Seward has resulted in higher rates for everyone, including residential and small business users. This rise in rates is essentially because Seward has lost some of its bulk-buying capacity by not demanding as much electricity from Chugach electric, our local source of electricity. When Vigor does power up their syncrolift to raise a boat out of the water, they draw electricity to power 40 high powered electric motors. Just one such boat lift is costly in terms of electricity and dollars, all of which helps pay Seward’s collective electric bill.


View inside the “Tent,” where work is being completed by a crew of skilled workers. Photo: Kelley Lane.

All of this is to explain why the city official’s comment was both true, and misleading at the same time. The reality is that Vigor is still in business and they have been lifting boats out of the water. And at the same time, the frequency of lifting boats has diminished over the last year and a half. The business has suffered a “perfect storm of all that’s happening,” according to Beck. First, there has been a generalized economic slowdown due to oil and gas exports decreasing. Second, the Alaska state budget cuts have affected the marine highway. Fewer ferries running means less necessary maintenance and repairs on these ships.  Third, when Crowley lost the contract to provide vessel assists in Prince William Sound to oil tankers, they lost their biggest customer. Edison Chouest won the new contract to do vessel assists. As part of their contract, they built a new fleet of tugs. Edison Chouest plans to service these tugs in-house, as they own and operate their own shipyards. These slowdowns have challenged Vigor to create a new business model for their Seward operation.

According to Ron Long, Assistant City Manager, Vigor has spent “4-5 times their lease agreement amount” to keep their plot of land in good condition. These expenditures include things like replacing cables, keeping things “in class,” and being in compliance with environmental regulations. Additionally, they have kept up with their rent of 8 percent of appraised market value, or $64,000 per year. Long explained that Vigor has created a new business model that will allow third party contractors to do work on their land. Vigor will still be the sole operator of their syncrolift. The City has crafted a new lease with Vigor to allow for contractors like Catalyst Marine and Alaska Coatings to work on the Vigor site, while Vigor continues to hold sole responsibility for operations and compliance. Vigor’s Adam Beck explained that he hopes “opening up to vessel owners and contractors to do their own repairs” will create more business at their Seward location. Doug Ward, of Vigor’s Ketchikan location and Director of shipyard development for 25 years, noted that Seward Vigor is “changing their business model to be more like Kodiak.” He continued “I see this as an opportunity to work with local contractors.”

Vigor’s operation at SMIC did suffer layoffs of about 10-12 people, more than a year ago. “We are a contract-based business,” said Beck, “if there are no active projects, we can’t afford to employ people.” Vigor’s two Alaska locations are in Ketchikan and Seward. They both experience seasonal slow downs during the summer months, when boats are out working. The fall and spring are their busiest times, with a slight slowdown in the dead of winter. As of this fall, Vigor was in operation, under their new business model. According to Long, who operates a marine survey business, in addition to serving as Seward’s Assistant City Manager, “I saw work being done by Catalyst Marine at Vigor recently.” Beck is optimistic about the future of marine services in Alaska. “This is a temporary thing. I see things rebounding,” he said.