SCIA message reveals work opportunities

Gulf Island Fabrication is the only publicly-held company in the nation that is based in Houma.

Having made $131 million in capital expenditures since 2007 and having $88 million in cash reserves at the first of this year GIF is debt free.

With that in mind, GIF CEO Kerry Chauvin said he and his management team intend to keep the corporate headquarters and home of its four subsidiary companies in Houma, a fifth subsidiary is in Texas, to advance the offshore structure and marine vessel construction industry, and do their part to bolster the domestic economy.

Corporate Perspective

Speaking before approximately 200 members and guests of the South Central Industrial Association, Chauvin not only explained the inner-workings of a firm that rose out of a failed operation in 1988. He told those in attendance about becoming one of the three largest U.S. fabricators with a diversified and international customer base and expressed his corporate philosophy that has kept the company profitable for 23 years.

GIF has focused on Louisiana and American industry and has found an increased demand for domestic manufacturing. “Although we compete on a worldwide basis, 20 percent of our revenues are from projects we bring in from overseas locations,” Chauvin said. “We are the kind of company that brings money in from outside. As we bring in money from overseas and the rest of the country, it helps all the companies of this area.”

GIF is a leader in small company capitalization and Chauvin said their secret to success stems from having a diversified operation that intentionally takes on projects that had not previously been actualized.

“We have a lot of firsts in our companies that no one else has,” Chauvin said. “When a lot of our clients have special or new type of projects they actually come to us to build the first one of its kind. We have been very fortunate to participate in that.”

Chauvin pointed to the current volatility of offshore oil and gas operations as being a factor that has hurt all support businesses. “We did not see an oil and gas bid for deepwater from the beginning of 2006,” he said. “When the Obama Administration was getting in there everything shut down as far as development. In mid-2010 there were bids that came out.”

Working on Jobs

Much of the work for GIF and its subsidiaries currently involves marine vessels, construction equipment and structures for client companies. This includes the newly awarded Chevron Bigfoot Project, which will be the largest platform in the Gulf of Mexico.

Chauvin announced during his presentation that a client he declined to name has awarded GIF a contract for the first spar hull ever to be built in the United States. “We are going to start construction on that very soon,” he said. “We are getting into the spar business as much as we can. We are also [building] the largest lift boat, a 335-foot lift boat, in our marine division.”

Chauvin revealed that GIF intends to add 300 new jobs to its workforce in Houma. “If you know anybody that needs a job please send them to us,” he said. “In Texas we need 500 new employees. So we a need to add about 800 total employees.”

Concerns and Challenge

Insuring the longevity of the Louisiana’s coastal heavy industry will depend on enhancing water transportation routes, according to Chauvin.

“SCIA was formed to help industry,” Chauvin said. “That’s what it’s all about. We look to help industry. You can’t look at every cause, but this group has to focus on what develops industry.”

Chauvin said that the lack of a suitable highway system or railroad in the Tri-parish region leaves the natural and manmade waterways of the area as a primary route for transporting goods.

“Our highways are our waterways [and] they need to be maintained,” Chauvin said. “The Houma Navigational Canal is a state project … that is on a federal maintenance program. The feds … only have to maintain is navigation. They don’t have to maintain bank stabilization or anything of that nature.”

Chauvin called on SCIA members to campaign for the depth increase of the HNC to 20 feet so it will become a federal project and force the federal government into maintaining it as a transportation route in addition to caring for embankments and access.

“We have lost business because the Houma Navigation Canal is not deep enough,” Chauvin said. “Our growth and that of a lot of other companies of this area are relying on this channel. A lot of vessels cannot come up this channel to be serviced. We need to get this channel deeper than 20-foot of water. [Doing so would bring] in $400 million in economic benefit to this area. Just think of what you are going to get. As long as you protect [it from] saltwater intrusion and storm surges there is not reason not to deepen that channel. That would be a great project for SCIA to undertake. It would bring more work and projects to this area.”

Reaction Remarks

Responding to Chauvin’s presentation, state Rep. Damon Baldone (D-Houma) said that Chauvin is recognized as being part of the pulse of the industrial community. Baldone said he supports Chauvin’s call to deepen the HNC, but added that it is a challenge to get through political channels.

“On a state level we have to have a balanced budget every year,” Baldone said in regard to GIF being debt free and what government could learn. “The federal government should look at private industry and have control of their budget.”

Bottom Line

Chauvin said that the state and federal government should look ahead to promote domestic industrial opportunity and prevent having American businesses outsource jobs.

“We are seeing more of our customers that want to build in the United States as long as the [Obama] administration doesn’t shut them down,” Chauvin said. “I’m not going to say much about the [offshore drilling] permit process. Oil companies are doing a lot to try and get that resolved. But there hasn’t been that many permits put out for exploratory drilling … for new finds. That is what we need for future projects. If we don’t get drilling going right now there is going to be another major lull in this industry.”

“I think [Chauvin] made a good point that SCIA was established to insure the industrial needs of the region,” SCIA Executive Director Jane Arnette said. “We will be working closely with business and industry [to meet his challenge].”

South Central Industrial Association President and Gulf Island Fabrication COO Kirk Meche (left), SCIA Vice President and Ted M. Falgout & Associates owner Ted Falgout, and Gulf Island Fabrication CEO Kerry Chauvin chat before last Tuesday’s meeting of SCIA members. MIKE NIXON