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A Houston fabrication company with a local branch has expanded its operation by acquiring a Louisiana shipyard business.
Gulf Island Fabrications announced on Dec. 23 that it was acquiring LEEVAC Shipyards in a $20 million deal. The deal formally went through on Jan. 1.
Gulf Island purchased all of LEEVAC’s assets, including employees, equipment and its leases at facilities in Jennings and Lake Charles. LEEVAC also had a shipyard in Houma, but Gulf Island President and CEO Kirk Meche said his company is not taking that location over. Meche said this purchase gives Gulf Island more versatility and a larger reach.
“It’s going to give us a little bit more diversification in the marketplace. It’s going to strengthen our position as it relates to shipyard repair and new construction, with a heavy emphasis on the repair side,” he said.
According to Meche, the addition of the Jennings and Lake Charles locations were critical to the sale. He intends to ramp up shipyard repair in the Lake Charles shipyard, as its location near liquefied natural gas plants makes it primed for growth.
“When we look at strategic locations from Jennings to Lake Charles, we know that there’s going to be some bigger ships coming in, really associated with the LNG plants that has construction taking place in Lake Charles. That facility’s right at the turning basin right where the ships are coming in,” Meche said.
Chris Vaccari, president and CEO of LEEVAC, is not getting out of the business, however. Gulf Island Chief Financial Officer Jeffery Favret said that Vaccari is joining Gulf Island and bringing his own experience on board.
“He’s going to be part of the management team. We’re not just buying all of his assets; he’s coming along with us. And he’s bringing his experience and his wealth of knowledge about the industry and his team,” Favret said.
Vaccari said in a release announcing the sale that he thinks adding LEEVAC to Gulf Island will create a stronger company.
“To compete in today’s marine fabrication market place and serve an increasingly more sophisticated customer you must have access to the best talent, tools, and facilities, and I believe this transaction creates a group of shipyards that will better meet the demands of the market,” he said.
In addition to acquiring LEEVAC’s employees, Gulf Island also absorbed $112 million in work on two projects in the purchase. According to Meche, those two projects will continue through 2017 and will be done in the Jennings and Houma locations. Meche said the backlog of contracts and his desire to expand mean that his company is not looking at any layoffs related to this purchase.
“What we’re going to do, with $112 million in backlog, we’re actually going to utilize some of our current Houma employees to help with this backlog that we have. We’re not talking about any layoffs,” Meche said. “Actually, we’re looking at trying to ramp up, in some respect, to meet the deadlines for this $112 million in work.”
Gulf Island officials have begun to help LEEVAC employees transition into the company. According to Meche, Gulf Island has experience bringing in employees under the umbrella from the 2006 purchase of Gulf Marine Fabricators.
Gulf Island officials went to each LEEVAC location to explain the transition to their newest employees and assure them that job cuts were not imminent.
Meche said LEEVAC’s 50 years of experience would help both companies expand more than either ever could have on their own. He said that even as the market has cooled down in relation to dropping oil prices, he still sees opportunities for work and expansion in the market, particularly on the repair side. Meche said pushing forward while the market slows sends a strong message about his company’s intentions.
“We think it’s the right time to do this, even though the marketplace is down somewhat. We want to give folks the assurance that we’re going to be around for a very long period of time, that we’re looking to continue to expand our business and have a footprint within Louisiana especially,” he said. •
