Gulf Island’s marine group ready for more Gulf work

Gulf Island Marine Fabricators was born in 2008 from its parent company’s desire to diversify amid daunting economic times.

Four years and more than $20 million in investments later, the company is positioned to figure in the projected Gulf of Mexico energy development boon in the coming decade, said President and CEO Kirk Meche.

“There’s no doubt there’s a very large uptick in terms of new vessel construction, as well as repair,” Meche said. “As the marine segment continues to grow, especially here in the Gulf of Mexico, we think we’ve got another 5 to 10 year run on this, where activity in the Gulf will be high and utilization of the vessels will be high, as well.”

A subsidiary of the publicly traded Gulf Island Fabrication, the company oversees construction and repair of marine vessels. It is located along the Houma Navigation Canal – with direct access to the Gulf of Mexico – and among its boasted offerings is a 9,000-ton, 140-foot-wide dry dock constructed in 2009.

The dry dock has a 90 percent utilization rate, with most of its usage related to vessel repairs. Gulf Island Marine also launches some of its manufactured vessels from the dry dock, which makes use of automated technology for some cutting, painting and welding services.

Right now, GIMF is constructing a dry dock for the Port of Terrebonne, which will ultimately be provided to Chouest La Ship. The company is also manufacturing lift boats, offshore supply vessels and a floating dry dock for Dow Chemical that will eventually be utilized along the Mississippi River, Meche said.

Among its high-profile constructions have been two 335-class lift boats for Galliano-based Montco. The second contract was announced in September, 2012, and at the time, “we think it was the world’s largest lift boat,” Meche said. “It may have (since) been surpassed by someone else.”

Meche said Montco may commission more lift boats in the same class, but no contracts have been finalized and its not a guarantee Gulf Island would land the work.

“It’s always a clear indication, to me, that we’re doing things right when a customer comes back and wants to take delivery of another vessel,” said Meche, who praised the marine division’s roughly 265 employees and touted quality as its hallmark. “We’re looking at a multitude of projects that may or may not be related directly to the marine world but kind of fit our needs for the marine side of our business.”

The company is keeping a close eye on – and advocating on behalf of – dredging the HNC so that it can hold larger vessels, which would help local industry remain competitive in the worldwide Gulf of Mexico market.

“We are somewhat limited by water depth, but we’re looking for opportunities to hopefully one day get the Houma Navigation Canal dredged or look for other facilities that may have some deep-water access, which may include our Texas facilities,” Meche said.

The CEO declined to give dollar and cents as it pertains to volume objectives, saying the company’s main goal is to maximize its potential.

“I think the goal is 100 percent utilization of our employees, and our goal is to continue to grow that division. One day I hope to be in the 350-400 (employee) range in that division, so our goals are always to make sure we’ve got work to keep everyone busy. It’s not measured in terms of dollars; it’s measured more in terms of man-hours.”

As Terrebonne Parish’s only public company, Gulf Island faces pressure of extending its 1.85 percent net profit margin logged in this year’s first quarter while not sacrificing the quality for which the company is known.

Gulf Island, the corporation, reported gross profits totaling $6.7 million in the first quarter of this year, down from $12.6 million year-to-date from 2012. The company’s board approved a 10-cent cash dividend per its roughly 14.5 million shares, which were selling at $20.36 on Monday, about $6 less than this time last year. Stock prices peaked at nearly $50 a share in June 2008.

“The first thing is always return on investment for our shareholders,” Meche said. “We definitely need to get our margins up in terms of our gross margins. The profit margins have been a little weak the last couple of years for various reasons. … (At the same time), we’ve got to maintain our quality for our customers. Repeat customers are the reason we’re still in business.”