Posted on March 6, 2017
By Sara Gaiser, SFBay
A San Francisco shipyard faced with potential closure due to a legal dispute between its former and current operators will remain open for the next 90 days while a longer term plan is worked out, city and port officials said Wednesday.
The Port Commission on Tuesday approved an interim operating agreement with Puglia Engineering, Inc. to keep the shipyard at Pier 70 operational for the next 90 days while they develop a plan to pay for dry dock maintenance and repair and dredging needed at the site.
Puglia gave notice last week that it planned to close the facility, which can employ as many as 240 people.
Puglia took over the shipyard from BAE Systems in January, but filed suit on Feb. 15 in San Francisco Superior Court alleging BAE had badly misled it about the shipyard’s condition. Puglia officials are now seeking to rescind the purchase.
In particular, the lawsuit alleges that the site requires around $12 million in dredging and that the smaller of two drydocks, which Puglia was counting on for revenue, needs extensive repairs before it can be used.
City and port officials have been working to keep the shipyard, which employs an average of 240 people, operational.
Port director Elaine Forbes said in a statement Wednesday:
“We are very pleased that the shipyard will remain open for business during this 90-day period while the parties work toward a positive future for ship repair in San Francisco. … The Port and Puglia will collaborate to save good union jobs and keep this important maritime facility working.”
The shipyard, the oldest continuously operating private facility of its kind in the United States, includes two dry docks, one with a 54,600 ton capacity that can handle cruise ships and larger vessels, and one with a 14,500 ton lift for smaller vessels. The site also includes 14 acres of land, 17 acres of water, pier space and cranes.
BAE arranged to sell the property to Puglia last year because it was struggling to make a profit at the facility, where it was not eligible for some contracts reserved for smaller companies, and it held $38 million in pension liability.
A BAE spokesman last week said the company denies misleading Puglia and acted in good faith during the sale.
BAE has filed its own lawsuit against Puglia in U.S. District Court in New York, alleging that Puglia conducted its own due diligence prior to the purchase and signed documents stating it was aware of the condition of the facility.