Senator Trent Lott Hopeful Ingalls Can Deliver On Ship Contract

Sen. Trent Lott, says he's hopeful that Ingalls Shipbuilding in Pascagoula will be able to deliver on a billion-dollar contract to build two, 1,900-passenger cruise ships. One of his Senate colleagues, however, is skeptical.

Ingalls, a subsidiary of Los Angeles-based defense contractor Northrop Grumman, began work in June 2000 on the largest cruise ship ever built in the United States, and the first such project in the country in more than 40 years. Ingalls' contract with Miami-based American Classic Voyages Co. started a new line of business for a company that has made its mark for more than 60 years building destroyers and other ships for the U.S. Navy.

Asked three weeks ago about any delays in the cruise ship project, an Ingalls spokesman told the Associated Press he knew of nothing out of the ordinary. Ingalls spokesman Den Knecht declined Monday to discuss the status of the cruise ship construction. He referred to an earlier statement by Northrop Grumman spokesman Randy Belote that the first ship is ''41 percent complete,'' if the total design and physical construction are taken into account.

According to a July 11 letter from Sen. John McCain, R-Ariz., to President Bush, Ingalls is as much as 18 months behind schedule, and ``the shipyard and American Classic Voyages are crying foul.''

Lott, who appeared at a luncheon in Pascagoula on Monday, said afterward that he had spoken to top executives with Northrop Grumman and Ingalls and ``they're working very hard to go forward with this program.'' The Senate minority leader said Northrop Grumman was working with American Classic Voyages and ``financial groups to get this ship built.'' ``I'm hopeful,'' Lott said.

Fran Sevcik, vice president of corporate communications for the cruise ship company, said Monday she could not discuss the timeframe or dollar amount involved in the delay. ``We're engaged in ongoing discussions to determine the status of the project,'' Sevcik said. ``We remain optimistic about the yard honoring the terms of the contract.'' The success or failure of the project could affect the livelihood of American Classic, the reputation of Ingalls as a commercial shipbuilder and future support for a major U.S. loan guarantee program for the domestic shipbuilding industry.

McCain's letter to the president was not about the cruise ship project in particular, but about his opposition to the federal Title XI Maritime Guaranteed Loan Program, which is administered by the U.S. Maritime Administration. McCain urged Bush to end federal assistance for the program, which he called an unnecessary corporate subsidy to the shipbuilding industry. ``Our nation has a strong and proud maritime history that I fear is all but lost due to a dependence on government programs that do not foster a progressive, competitive attitude in what has clearly become a global market,'' McCain said. ``This is especially true of our large shipyards.'' McCain said the Ingalls-ACV project, which is guaranteed through the Title XI program, could cost taxpayers more than $1 billion if it ``does not turn around very soon.''  Lott said he supports the guaranteed loan program and that funding was in place for it to continue. He added, ``Senator McCain has never been supportive of the maritime industry.''

Philip C. Calian, chief executive of American Classic Voyages, told the Associated Press in March that building cruise ships was new territory for the Mississippi shipyard, but ``we take Ingalls at their word that they're ready and willing and able to complete the job.'' With an option for a third vessel, the contract's potential value is $1.4 billion. American Classic Voyages plans to use the ships in the Hawaiian Islands.

Ingalls has said it expects to finish the first ship for American Classic Voyages in 2003, and the second a year later. Making cruise ships is not completely foreign to Ingalls, the state's largest private employer with some 10,000 workers. The company delivered the last two passenger cruise ships built in the United States, the SS Brasil and the SS Argentina, in 1958. Both are still in operation.

Cruise ship construction in the United States began fading after World War II because of cheaper foreign labor and European shipyard subsidies. By 1967, foreign-built ships dominated the cruise industry and American ports.