Bollinger Shipyards, Inc. - Company Profile, Information, Business Description, History, Background Information on Bollinger Shipyards, Inc.

8365 Highway 308 South
Lockport, Louisiana 70374

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Quality is long remembered after the price is forgotten.

History of Bollinger Shipyards, Inc.

Based in the small town of Lockport, Louisiana, Bollinger Shipyards, Inc. is a leading builder of small and medium-sized offshore and inland vessels, serving the energy, commercial, and government marine markets. The privately owned company also provides repair and conversion services, operating out of 14 shipyards located along the Gulf of Mexico in southern Louisiana and Texas. All told, Bollinger has 42 dry docks at its disposal. Originally a repair shop, Bollinger has become a major player in the construction of certain specialized ships. The company supplies patrol craft to the U.S. Coast Guard and the U.S. Navy. These boats range in size from 87 feet to 170 feet and boast a range of specialized electronics and armament. Bollinger serves the energy industry by building supply vessels, tugboats, dredges, and lift boats to assist offshore drilling operations. In addition, the company builds a variety of barges and specialty vessels, including floating casinos.

Founding the Company in 1946

Bollinger Shipyards was founded by Donald G. Bollinger in 1946 in Lockport along the banks of the Bayou Lafourche, part of the complex of waterways that permeate southern Louisiana. As a result, boatbuilding was a natural occupation for the people of this region. Bollinger, a trained machinist, struck out on his own, with an investment of $17,353, much of which was drawn from a $10,000 inheritance he received from a former barge-building employer. He established a marine machine shop on 80 acres of land bordering Bayou Lafourche. He brought in his brothers, Ralph, a mechanic, and George, a welder, and Richard, an LSU graduate who became president. They also were joined by their father and a brother-in-law. Taking advantage of the oilfield boom in southern Louisiana, Bollinger began constructing barges and work boats. The company also built fishing vessels. During its first 25 years of existence, however, the company remained very much a small, local business. It was not until 1971, in fact, that Bollinger expanded beyond its original Lockport operation. Not until 1978 did the company open a second shipyard, located in nearby Larose, Louisiana.

Donald Bollinger's son, Donald Y. "Boysie" Bollinger, also joined the family business, after earning an undergraduate degree in business administration from the University of Southwestern Louisiana in 1971. He would prove instrumental in a deal in the later 1970s that marked a turning point in the fortunes of Bollinger Shipyards. Boysie was sent to Panama to negotiate a contract to build three tugboats for the Panama Canal Co., which he assumed was owned by the Panamanian government. Instead, he learned that the company was controlled by the U.S. government. Recounting the story to a group of business students at Louisiana State University, Boysie later recalled thinking, "My father's gonna kill me. He told me never to work for the Government." But the elder Bollinger did not object to the contract, which was successfully completed. At the time, the company thrived on business with offshore oil and gas explorers, who were enjoying high times, but it would be government work that would save the company during the oil bust of 1984 and the resulting slump that proved to be the ruin of so many firms associated with the oil and gas industry. Bollinger took stock of the situation and elected to downplay its commercial work and to target government contracts.

In 1984 the company won its first U.S. government shipbuilding contract--but not until it overcame a legal challenge from a Seattle firm that submitted a lower bid. The $86 million deal called for Bollinger to deliver 13 110-foot-long Island Class cutters to the U.S. Coast Guard. The contract was subsequently increased to 16 vessels at a price of $99 million. The Coast Guard was so pleased with Bollinger's workmanship and its ability to deliver on time and under budget that it ultimately purchased 49 of these vessels by the early 1990s. Prior to this contract, Bollinger posted annual revenues in the $30 million range, but now sales grew to as much as $90 million a year. Moreover, because of the downturn in the oil and gas industry, there was little shipbuilding work to be found. Other Gulf Coast shipbuilders, totally dependent on the energy industry, were going under, leaving Bollinger in a highly advantageous position. The company began to expand externally, picking up the operations of distressed shipyards in southern Louisiana and southeastern Texas, in the process expanding its repair franchise to new industry segments and markets. Bollinger added a deepwater location on the Mississippi River in 1990, and in 1993 it acquired a major inland river business.

Change in Leadership in 1985

By now, Boysie Bollinger had taken over as chief executive, succeeding his father in 1985. The elder Bollinger had developed into a well-known man in the state, mostly due to his political activities. A Republican, he played a major role in the party's growth in the 1970s, which led to the 1979 election of Dave Treen, the first Republican governor in Louisiana since the Reconstruction era following the Civil War. Treen tabbed Bollinger to become the Secretary of the Louisiana Department of Public Safety and Corrections, a post he held during the early 1980s. Bollinger then served as chairman of the Louisiana Republican Party from 1984 to 1986. After giving up the CEO's role to his son, he retained the chairmanship of the company until his retirement in 1989.

When its Coast Guard work ran out in 1991, Bollinger was able to land a contract with the U.S. Navy to build 13 fast, shallow-water patrol boats. This business tied over the company until the oilfield business once again enjoyed an upturn. Now a much larger operation, Bollinger was again in a position to take advantage of economic conditions and began to build vessels needed to support the oilfield, such as supply boats, lift boats, tugboats, and dredges. These new commercial contracts overtaxed the company's five repair yards (located in Algiers, Harvey Canal, Fourchon, and Larose) and its main yard in Lockport. To bolster its operations, Bollinger in 1995 bought part of the McDermott Shipyard in Morgan City, Louisiana, taking over 20 of the facility's 100 acres, plus three floating dry docks, a machine shop, and other facilities. The reported price was in the $5 million to $6 million range, the same amount of business that Boysie Bollinger hoped to generate repairing oilfield vessels during the first year at the new operation. Older oilfield vessels were now prime candidates for refurbishment because few new boats had been built during the lean years endured by the oil and gas industry, and shipyards were not able to build enough new vessels to meet the current demand. In addition to buying facilities, Bollinger expanded its existing yards, such as the $3.5 million the company invested in its repair yard located at Algiers on the Mississippi River. A second dry dock was added and the wharf was extended from 165 feet to 465, thus allowing the yard to accommodate larger vessels. Before the extension, the yard was limited to work on tugboats, but it could now handle both the tugboats and the oceangoing barges they normally towed.

Not only did it desperately need these new facilities, Bollinger and other shipbuilders also had to contend with a severe shortage in skilled labor such as machinists, welders, and pipefitters. According to a 1995 New Orleans Times-Picayune article, "Once it was true in Louisiana shipbuilding that 'when the daddy was a welder, the kid was a welder.' 'On the bayou (Lafourche), that quit happening 10 years ago,' said Marc Stanley, executive vice-president of Bollinger Shipyards Inc., of Lockport. 'This generation wound up playing Nintendo. We're the victim of blue-collar affluence.'" Bollinger was in such need of workers that it offered cash bounties to employees who brought in successful job candidates. It even hired an employment agency, L'Homme Inc., in order to contract foreign workers from countries like Mexico, England, and India. To satisfy requirements of the U.S. Immigration & Naturalization Service, the company had to prove that there were not enough qualified U.S. citizens available to fill the job openings. Further, the foreign workers had to be paid at the same level as their American counterparts. Successful candidates were then able to work under a nine-month visa, which could then be renewed for a total of three years. To address its labor shortage, Bollinger also instituted an apprentice program for high school students, who received $8 an hour after school and during the summer while training under master craftsmen to become certified welders or pipefitters.

Considering an IPO in 1997

With the stock market soaring in late 1997 and Bollinger looking to fund further expansion, company officials explored the possibility of going public and making an initial public offering (IPO) of stock. Other firms, such as Bollinger's chief rival, Halter Marine Group Inc., and Friede Goldman, a rig platform builder, had completed successful offerings earlier in the year, and there was a consensus that Bollinger would be greeted with equal enthusiasm. But when drilling activity in the Gulf of Mexico began to dry up, Bollinger decided to scrap its plans to go public. In light of subsequent events the company's caution proved wise. Over the next two years, oil services companies saw their stock lose a considerable amount of value, forcing some, such as Friede Goldman, to lapse into bankruptcy. Bollinger, in the meantime, was able to respond to a drop in Gulf of Mexico exploration, quickly shift its business focus, and maintain its profit levels. The company also experienced no difficulty in securing the capital it needed from lenders to acquire a repair yard in Amelia, Louisiana. Moreover, management viewed the slowdown in building as a chance to repair and enhance its facilities in preparation for a resurgence in the market for offshore service vessels. In 1999 the company also introduced an integrated software package that was able to bring all of its facilities under a single business system, which could be shared by all locations via the Internet.

May 13, 2000 marked the passage of an era when Donald G. Bollinger succumbed to heart failure at the age of 85. The business he founded was still very much family run. In addition to Boysie Bollinger, other family members holding positions in the company included his brother Richard, Boysie's daughter Charlotte and son Chris, as well as Boysie's nephew Ben Bordelon. Several weeks after the death of his father, Boysie Bollinger engineered the most ambitious acquisition in the history of the company, paying $80 million in cash for five ship and offshore-platform repair yards from Friede Goldman. (Following its IPO, Friede Goldman merged with Halter Inc. in 1999, but the assumption of Halter's debt proved too onerous, forcing the company to file for bankruptcy in April 2000.) Previously, Bollinger had attempted to purchase the facilities on an additional basis. But now, in one stroke, the addition of the yards--Halter Gulf Repair, New Orleans; Gretna Machine & Iron Works, Gretna, Louisiana; Halter Calcasieu, Carlyss, Louisiana; Bludworth Bond-Houston, Houston, Texas; and Bludworth Bond-Texas City, Texas City, Texas--transformed Bollinger, with a total of 14 shipyards, into the largest vessel repair company in the Gulf of Mexico area, and one of the largest commercial ship repairers in the entire country. The acquisition doubled the number of dry docks Bollinger operated. Three of the new docks, in fact, were larger than any of the dry docks the company owned. As a result, Bollinger was now able to accommodate vessels up to 700 feet in length and could expand its customer base and move into bluewater ship repair. Despite the apparent advantages to the deal, it was a bold move for Bollinger, at a time when area shipyards struggled to find work during a slow period in the oil and gas industry. A number of people attempted to dissuade Boysie Bollinger from making the deal, but he believed it represented a ripe opportunity and carried it out. Although the new yards were in poorer shape than he had anticipated, and it required some time to integrate them into the Bollinger operation, the acquisition proved to be a success.

In 2002 Bollinger attempted to purchase additional assets from Friede Goldman Halter: the Halter Marine division and its seven southern Mississippi fabrication yards. After the rejection of an earlier offer, Bollinger appeared to submit a successful bid of $48 million, but another suitor, Singapore Technologies Engineering Ltd., stepped in. Its subsidiary Vision Technologies Kinetics became engaged in a fierce bidding war with Bollinger, and after 20 rounds succeeded in buying Halter Marine for $66.75 million. Despite losing out, Bollinger carried on as a thriving enterprise. In 2003 it delivered its 100th Coast Guard cutter, part of a lucrative contract that could be expanded from four to 13 cutters. The company looked to a new opportunity with the U.S. Navy, building "littoral combat ships," operating close to shore (an area known as the littoral zone), and featuring stealth technologies. Bollinger made the final cut among shipyards to land the Navy's business. Should Bollinger succeed, it had already lined up state money to build a new shipyard in Louisiana to handle the business. In addition to the Navy contract, Bollinger was also in the running to build a fleet of high-speed catamaran ferries for the Army and Navy, as well as to build tankers for private industry.

Principal Subsidiaries: Bollinger Shipyards Lockport, L.L.C.; Bollinger Algiers, L.L.C.; Bollinger Amelia Repair, L.L.C.; Bollinger Calcasieu, L.L.C.; Bollinger Fourchon, L.L.C.; Bollinger Gretna, L.L.C.; Bollinger Gulf Repair, L.L.C.; Bollinger Houston, L.L.C.; Bollinger Larose, L.L.C.; Bollinger Morgan City, L.L.C.; Bollinger Quick Repair, L.L.C.; Bollinger Texas City, L.L.C.

Principal Competitors: Vision Technologies Kinetics Inc.


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