San Francisco port extends shipbuilding and repair for another 20 years

By ,   April 22, 2015 ,   Cruise Industry

San Francisco Port Commission executed a new lease agreement for 20 years with BAE Systems for maritime ship repair. The agreement will sustain the 150-year tradition of shipbuilding and repair in San Francisco and includes a provision that could extend operations through 2045.

The Port of San Francisco is an agency of the City and County of San Francisco that is revenue-generating. The port manages a wide range of commercial, maritime and publicly accessible facilities along 7,5 miles of the City’s waterfront, held in public trust for California's people.

Port’s Pier 70 shipyard and 2 floating drydocks are currently under a 30-year lease by BAE Systems San Francisco Ship Repair, set to expire December 2017. The shipyard has made a winning transition over the past twenty years, since Bay Area military base closures in 1990s, to being competitive in commercial ship repair markets.

The yard employs around 250 skilled craft workers on a year-round basis, representing ten local trade unions, and additional jobs during peak periods, when employment levels rise to over 1,000 people. The most marketable features of San Francisco in the ship repair business are its 2 floating drydocks and its central-coast location, making it ideal for northbound and southbound cruise and tanker fleets.

At their meeting on March 24, the San Francisco Port Commission unanimously approved the new long-term lease with BAE, establishing a 20-year lease term beginning April 1st, with two 5-year extension options. A system of rent credits will incentivize investments in port-owned buildings and equipment, revitalize assets and reduce or eliminate port liability.

The commission agreed to establish a shared dredging fund between BAE Systems, the Army Corps of Engineers and the port, that will deepen the channel at the shipyard's entrance and lead the way in the future for federal maintenance dredging.

It was also agreed that BAE Systems and the port will pursue funding opportunities for the replacement of Port’s post-Panamax Drydock 2.

Ship repair is of vital economic interest to San Francisco and the port, as this industry generates family-wage jobs and attracts maritime commerce to the city through increased cargo, military and cruise vessel activities.