Alaska’s state development agency is ending a two-decade partnership with the operator of the Ketchikan Shipyard, throwing into question the future of the multimillion-dollar state facility.
The Alaska Industrial Development and Export Authority notified Vigor Alaska last week that it would not exercise the final ten-year extension to its public-private partnership with the company. AIDEA cited poor performance by the operator as its reason for ending the agreement in a four-page letter to Vigor dated February 28.
“After reviewing Vigor’s long-term economic performance, projections, extensive studies, repair budgets, and other documentation relating to the Shipyard, AIDEA has reasonably determined that Vigor has not demonstrated its ability to fully utilize all of the Shipyard’s economic capabilities,” AIDEA Executive Director Randy Ruaro wrote. He also cited “inadequate” contributions to a repairs and maintenance account.
Vigor’s agreement with AIDEA will expire at the end of November, though Ruaro said AIDEA was “willing to discuss” extending the end date to March 1, 2026.
Ruaro and AIDEA’s deputy director did not respond to interview requests. The Ketchkan Shipyard is one of six projects the agency owns outright. The federal and state governments have spent a combined $80.1 million on the facility, according to AIDEA.
Vigor took over operations when it acquired Alaska Ship & Drydock in 2012, later overseeing construction of the state’s two so-called Alaska Class ferries, the Hubbard and the Tazlina. The yard also maintained state, local and federal government vessels.
The news came as a surprise to Vigor, a spokesperson said in a statement.
“AIDEA's unexpected announcement impacts nearly 100 family-wage jobs in Ketchikan, with no clear understanding of who might take over or whether the facility will even continue to operate as a shipyard,” Vigor Public Affairs Director Benton Strong wrote.
Local officials in Ketchikan say the news took them by surprise, too — but they say tensions between AIDEA and Vigor have been simmering for some time.
“There's been a lot of conversation over the years about the performance from the yard,” Rep. Jeremy Bynum, R-Ketchikan, said in an interview.
The AIDEA letter cites declining employment at the shipyard as evidence the facility was operating below its full potential. Despite what the agency describes as an “uptick” in staffing last year, over the past decade, the number of full-time jobs at the yard dropped from more than 150 in the mid-2010s, while the Tazlina and Hubbard were under construction, to less than 80 in the early 2020s, according to the letter.
“Halving the number of jobs at the Shipyard over a decade is strong evidence that Vigor is not fully utilizing the Shipyard’s economic capabilities,” Ruaro wrote.
AIDEA also takes issue with the shipyard’s poor financial performance and large maintenance and rehabilitation backlog, according to the letter. The agency says it has seen a payment in only two of the nine years that a profit-sharing agreement has been in place, despite what Ruaro called “significant tax and utility subsidies, and a major advantage in the structure of the Agreement itself.”
Still, Vigor argues it did a better job running the yard than any operator before it.
“Vigor has been a strong operator of the Ketchikan Shipyard, investing millions in the facility, employing more people and generating more revenue than any previous operator, and triggering profit-sharing with AIDEA for the first time in the yard's history,” said Strong, the Vigor spokesperson.
What the future holds for the shipyard, a major employer in Ketchikan and the only facility of its kind in Southeast Alaska, is uncertain. Ketchikan Gateway Borough Mayor Rodney Dial said in a phone interview he hoped to “make the best of a bad situation.”
“We'll do everything we can to assure there's an orderly transition and that the jobs are protected,” Dial said. “We'll also push for whoever comes in behind Vigor to really have a plan to expand that facility and maximize its use and return on investment for the community.”
Whether nine months — or a year, if the agreement is extended — is enough time to find a new operator to take over the industrial facility is unclear. But Doug Ward, a former Vigor Alaska executive who worked to expand the facility and is the namesake of the shipyard’s assembly hall, said in a phone interview that he’s optimistic a new operator will be able to take over the facility without a significant interruption to the shipyard’s operations.
“We have some very capable operators in the state that are Alaska businesses and would make outstanding operators of the Ketchikan Shipyard,” he said.
