New Hawaii cruise
ships may face
building snags

Sen. John McCain says that
Ingalls is as much as 18
months behind schedule

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By John Porretto
Associated Press

JACKSON, Miss. >> Sen. Trent Lott, R-Miss., says he's hopeful that Ingalls Shipbuilding in his hometown of Pascagoula will be able to deliver on a billion-dollar contract to build a pair of 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., which plans to use the ships in the Hawaii market, 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 Navy.

Asked three weeks ago about any delays in the cruise ship project, an Ingalls spokesman said he knew of nothing out of the ordinary. Ingalls spokesman Den Knecht declined yesterday to discuss the status of the ship construction. He referred to an earlier statement by Northrop Grumman spokes- man 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 yesterday, 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 yesterday 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.

American Classic CEO Philip C. Calian said 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." Ingalls has said it expects to finish the first ship for American Classic Voyages in 2003, and the second a year later.