Business, Featured, Maritime

Letter From Vigor to Seward City Manager Regarding Discontinuing Operations

 The following is the text of a letter from Adam Beck, Vigor Executive Vice President of Ship Repair, to Seward City Manager Jim Hunt.
January 25, 2018
Dear Mr. Hunt:
I am writing to provide notice that due to changes in the marine industry in Alaska and the effect on Vigor’s operations in Seward, we plan to discontinue our operation of the Seward shipyard. It is our intention to vacate the yard as soon as possible. Accordingly, Vigor seeks to negotiate a mutually acceptable termination of the lease of the Seward Shipyard. It is our desire to reach an acceptable termination agreement quickly so the City can move forward with finding another operator and return the shipyard to full operational status.
Business challenges in this location have been ongoing for some time and we had hoped our change to a self-service business model would have attracted more work to Seward but that has not been the case. Revenue was insufficient to continue and we see no recovery/change in circumstances in the foreseeable future.
There are a number of factors that contributed to our inability to successfully sustain business operations in Seward. These include:
  • Alaska’s struggling economy and downturn in offshore oil and gas exploration have had a ripple effect in the marine industry.
  • The cancellation of exploratory drilling in the Beaufort and Chukchi Seas means a lack of offshore vessels requiring maintenance and repair.
  • The City’s widening of its Travelift will move some work that has been done by Vigor to the City’s yard.
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  • Due to state budget constraints, fewer Alaska Marine Highway System vessels are now in operation which means less maintenance work for our Seward team.
  • Vigor’s largest client in Seward was lost when Alyeska’s contract award moved to another operator. It is unlikely this work will be recouped given the young age of the new fleet being brought in and much of the replacement vessels being too large to be serviced in the Seward yard.

Like all companies, Vigor has a responsibility to adapt to current market realities. Consolidating operations that are unable to sustain themselves is necessary for the overall health of the company and its employees.

We currently have nine employees working for us at the Seward yard. We are meeting with them today [January 25] to share this news. We deeply value the highly qualified people who work from Seward. We will make sure that affected employees know of opportunities throughout Vigor. To the extent possible, it is our goal to retain those who have contributed to our customers’ success. Affected employees will be offered severance for their service.

While an early termination of the lease is not what anyone wishes, I am hopeful we can find a mutually acceptable solution that allows the City the opportunity to put this asset to more productive use. I look forward to further conversation with you on this matter.


Adam Beck

Executive Vice President of Ship Repair


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