Construction of
Hawaii-bound cruise
liners canceled

Shipbuilder Northrop Grumman cites
need to use its space for active projects

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By John Porretto
Associated Press

JACKSON, Miss. >> Northrop Grumman canceled a project today to build two cruise ships bound for Hawaii waters, saying financial woes from the terrorist attacks had made it impossible to complete the billion- dollar effort.

The first vessel at the company's Ingalls shipyard in Pascagoula is about 40 percent complete.

"We're going to move the ship out of our production area because it's tying up space," said Northrop Grumman spokesman Randy Belote.

Construction on the ships being built for American Classic Voyages began last year with a glitzy ceremony that featured fireworks, red, white and blue confetti and dancing hula girls. A cruise ship has not been built in the United States in more than 40 years

The Los Angeles-based defense contractor suspended work last week on the two 1,900-passenger vessels after American Classic filed for bankruptcy protection Oct. 19, citing losses following the Sept. 11 attacks. American Classic Chief Executive Philip Calian said today he needed more time to study the development before commenting. Last month, he said he hoped the project would continue so the company could resume operations with those ships in Hawaii beginning in 2004.

Northrop said it canceled the Project America construction program because the U.S. Maritime Administration decided to end its guarantee of $1.1 billion in loans.

Belote said he wasn't certain what would become of the first ship. A spokesman for the Maritime Administration, which is stuck with $185 million in guaranteed debt on the vessel, did not immediately have a reply. The agency said last week that it would not back any further debt without a new financial arrangement to "provide greater protection for taxpayers."

The Maritime Administration said it made a proposal to Northrop Grumman that would have allowed continued funding but Northrop rejected the offer.

Ending construction affected 1,250 of the shipyard's 10,500 employees, but a union official said today nearly every one of the affected workers will end up with a job with Northrop.

Chico McGill, business manager of the International Brotherhood of Electrical Workers Local 733, said he was disappointed. "We have a big hunk of steel sitting in our yard, and the taxpayers are going to bear the burden," McGill said.