Interview: Steinar Nerbøvik, President & CEO, Philly Shipyard
(Article originally published in July/Aug 2023 edition.)
Under Steinar Nerbøvik’s leadership, Philly Shipyard has never been busier. The Maritime Executive's publisher and editor-in-chief, Tony Munoz, sat down to speak with Nerbøvik for the latest edition of the magazine.
Tell us about yourself – your background and education.
I grew up in Norway and love to share that I’m a proud second-generation shipbuilder. My father was a career shipbuilder and I worked alongside him early on. I later went to University and earned a Master of Science degree in Ship Naval Engineering from the Norwegian Institute of Technology in Trondheim, Norway.
When did you join Philly Shipyard?
Well, I technically joined Philly Shipyard twice. The first time was in 2003 as Vice President, Engineering & Projects, before moving to SVP Yard Director for Norwegian Shipyard Vard Langsten (former Aker Yards and STX OSV Langsten). I returned to Philadelphia in 2013 as Senior Vice President of Operations and ultimately began serving as President & CEO in 2014.
Can you give our readers an overview of Philly Shipyard – how it started and where it is today?
Sure. It was founded in 1997 as a public-private partnership among the City of Philadelphia, the Commonwealth of Pennsylvania and Kvaerner ASA on the site of the former Philadelphia Naval Shipyard to bring shipbuilding back to Philly. The shipyard was reconstructed from the ground up, and 26 years later we’ve become a leading U.S. shipbuilder and Philly Shipyard ASA is listed on the Oslo Stock Exchange with Aker Capital AS as majority owner.
Today, Philly Shipyard is a state-of-the-art facility with more than $650 million invested since 1997 in infrastructure and training and a track record of more than 30 successful ocean-going commercial vessel deliveries valued at approximately $3.7 billion. Among those deliveries were container vessels for Matson, product tankers for OSG, Crowley and Kinder Morgan, and Aframax tankers for Exxon.
We are recognized for our quality work, and our wonderful repeat customers like Matson and Crowley are a testament to the quality of our ships.
What is the yard's current strategy? What is the mix between newbuilds and repair work, commercial and government contracts?
We’re committed to seeking commercial and government newbuild projects while offering repairs and conversions on an opportunistic basis. The five National Security Multi-Mission Vessels (NSMVs) are a government project, the first for Philly Shipyard and the first government newbuildings in Philadelphia in almost fifty years. Great Lakes Dredge & Dock’s SRIV (Subsea Rock Installation Vessel), along with the three Matson container ships, are commercial newbuilds. No repair projects are underway at the present time.
Philly has built a number of container ships – the largest in the Jones Act market – for Matson. Tell us more about the most recent order of three new LNG-ready vessels.
The three new Aloha Class ships for Matson – a contract valued at approximately $1 billion – will be capable of running on either conventional marine fuels or LNG and will incorporate other “green ship technology” in support of Matson’s goal to reduce its greenhouse gas emissions. They’re contracted for delivery in 2026 and 2027 and will join two other Philly-built Aloha Class vessels currently in the Matson fleet, which are the largest Jones Act container vessels ever constructed, and four other Philly-built container ships delivered between 2003 and 2006.
The Matson award, coupled with the five NSMVs and the SRIV, brings our orderbook to over $2 billion, the largest in the yard’s 26-year history.
Cool. Fill us in on the SRIV, Philly’s first venture into the fast-growing U.S. offshore wind market.
Awarded two years ago, the contract from Great Lakes Dredge & Dock, the nation’s leading dredging company, calls for construction of one Jones Act-compliant Subsea Rock Installation Vessel (SRIV) – the first such ship to enter the U.S. market. Delivery is scheduled for H1 2025. This is the largest vessel built to support the wind energy industry and a design that has never been built in the U.S. We’re honored that Great Lakes chose Philly Shipyard to build the vessel and we’re definitely up to the challenge!
The basic design is by Ulstein, a leading Norwegian/Dutch designer of offshore wind vessels. The SRIV is designed to carry up to 20,000 metric tons of rock and transport and deposit the rocks to the ocean floor, laying a foundation for the monopiles that serve as the prevailing support structure for offshore wind turbines.
The contract is further evidence that our strategy of pivoting toward diversifying our markets with a mix of government and commercial contracts is working. We have a longstanding position as the leading U.S. commercial shipyard for tankers and container ships. This contract positions us to become a leader in the new expanding offshore wind market – proof that we are executing on our vision, diversifying our market opportunities and being recognized as a shipyard that can successfully complete these projects..
In February you announced ratification of a four-year collective bargaining agreement with the Philadelphia Metal Trades Council, which also includes an apprenticeship program. Congratulations! How many apprentices are participating?
Yes, we are fortunate to have a very cooperative relationship with the PMTC. As for the apprenticeship program, there are currently 105 apprentices building meaningful careers in welding, shipbuilding, outfitting and machine operating. These apprentices are the future of our workforce and the sky is the limit for them. Former apprentices have become supervisors, foremen and have even worked outside of production in our Planning, Engineering and Training departments. They have much to be proud of.
Our goal is to hire an additional 200-250 in the next three years, and we are actively out in the community at high schools, trade schools and job fairs working to attract the next generation of talent. We see them as the future “homegrown” leaders in our shipyard and are so fortunate to have them as part of our workforce.
How many employees are there currently? Is attracting new workers a challenge as it is for much of the industry?
We currently have 1,500+ workers in the yard, but yes, attracting new workers has been a challenge. COVID-driven labor shortages have adversely impacted the shipyard and could continue to adversely impact the company’s ability to attract and retain skilled workers, along with the systemic changes in the workforce generally that all industries are experiencing. That’s why the apprenticeship program and our very cooperative relationship with the PMTC are so important.
What are some of the challenges for a Jones Act builder like Philly?
The main challenge is to attract and retain skilled workers and increase our apprenticeship program.
Safety is one of the yard’s trademarks, and last year you received the Shipbuilders Council of America’s “Excellence in Safety” Award. Congratulations again! How do you ingrain safety in the minds of employees?
We continuously stress that safety is personal, and our credo is clear: We fundamentally believe that all incidents are preventable, and safety is everyone’s responsibility. This credo has been the backbone to our safety culture for many years and is as true today as when it was first adopted.
We empower our employees to keep this shipyard safe for themselves and for their co-workers, and that applies to management as well. If something doesn’t seem safe, every one of them is permitted to stop work before moving forward. It’s something I care deeply about, and we constantly strive to be better.
What distinguishes Philly Shipyard? What makes it different?
What makes us different is our CORE values (Caring, One Shipyard, Responsible and Evolving). They are more than words on a page. If you’ve ever been to the yard, you’ll see them posted on highly visible, large-scale banners throughout the yard as well as in every conference room. We use them as a backbone for the work we do and the decisions we make, and we aren’t afraid to revisit them when needed.
For example, when we made it a strategic objective to diversify our orderbook, we switched out the “E” from efficient to evolving. We needed to focus on the future and unite everyone around the journey, and it just felt right to start by changing out the value. I believe operating within our CORE values has helped us develop an excellent reputation for delivering quality ships as reflected in our repeat customers.
Our goal has always been to be the first shipyard owners call when they’re thinking about buying a ship, and so far that is what’s happening.
What is your vision for the company? Where would you like to see it in, say, five years?
As noted earlier, we are committed to seeking a mix of commercial and government newbuild projects, repairs and conversions on an opportunistic basis. We invest every year in maintenance, training and CAPEX to enhance our operations.
Thank you very much for your time. Any final thoughts for our readers?
On the business side, we are in the process of implementing a Sustainability/ESG program, which we are very excited about, and I can’t wait to share more as it develops. On the more personal side, every day I am honored and proud to lead this yard. I tell everyone that the sun is shining in Philly and every day is a great day to be a shipbuilder at Philly Shipyard…and I mean it!
Tony Munoz is publisher and editor-in-chief of The Maritime Executive Magazine.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.