Todd Shipyards Corporation History
Seattle, Washington 98134
Telephone: (206) 623-1635
Fax: (206) 233-0219
Incorporated: 1916 as William H. Todd Corporation
Sales: $69.09 million
Stock Exchanges: New York
SICs: 3731 Ship Building & Repair
Once the largest independent ship building company in the United States, Todd Shipyards Corporation operates one shipyard in Seattle, Washington, through its subsidiary, Todd Pacific Shipyards Corporation, which repairs, overhauls, converts, and constructs commercial and military vessels. During the early 1980s, Todd Shipyards, then based in New York, operated seven shipyards and collected nearly $800 million in annual sales, but by the end of the decade the company was in bankruptcy, hobbled by a dwindling number of U.S. defense-related contracts. Todd Shipyards came out of Chapter 11 protection in 1991, emerging as a considerably smaller company trying to rebuild its lost commercial business.
The history of Todd Shipyards nearly encompasses the breadth of ship building in the United States, beginning with one of the most memorable events in the country's Civil War. The superiority of iron over wood was first demonstrated in a duel that pitted what observers at the time described as "a terrapin with a chimney on its back" against "a tin can on a shingle." The two awkward-looking vessels that elicited such disparaging comments were about to reshape ship building history. When the S.S. Virginia, the former S.S. Merrimac refitted by the Confederates with overlapping plates of two-inch armor, set out on her trial run in March 1862 and promptly sank two Union ships and ran aground three others, the navies of the world just as quickly were made obsolete. The Confederates' advantage over the rest of the world, however, lasted less than 24 hours, for the Union's iron-clad riposte was already on its way: the S.S. Monitor, an armor-hulled warship outfitted with the first revolving gun turret. When the two iron vessels faced off against each other the morning after the Virginia's rout of the Union blockade at the mouth of the St. James River, the contest ended inconclusively in a draw, but the effect on military ship building in the United States and throughout the world was definite. A new era of ship building had been inaugurated.
For their ability to respond to the Virginia's awesome and novel power, the Union forces were indebted to John Ericsson, a Swedish naval architect who designed the Monitor and its singular revolving gun turret, and Cornelius DeLameter, whose company, DeLameter Iron Works, built the Monitor's engines and propeller. Founded by William DeLameter in 1835, DeLameter Iron Works represented the earliest ancestral link to Todd Shipyards, the original corporate entity that after several name changes and exchanges in ownership became the William H. Todd Corporation, the direct descendent of Todd Shipyards.
The rapid changes that preceded the formal organization of the William H. Todd Corporation began when DeLameter Iron Works moved from its original location in Manhattan to Erie Basin in Brooklyn 1889. By the time of its relocation, DeLameter Iron Works was led by DeLameter's son-in-law, John N. Robins, who negotiated several acquisitions, revamped the company's corporate structure, then renamed the concern Erie Basin Dry Dock Company. Shortly after the name change, Robins hired William H. Todd to help manage the company's ship repair and ship building operations, conferring upon in his youthful manager a responsibility Todd was well-equipped to handle.
Todd had cut his teeth in the ship building business working as an apprentice boilermaker for Pusey & Jones Shipyard in Wilmington, Delaware, spending much of life learning the nuances of the ship building trade. At Erie Basin Dry Dock Co. he put his practical experience to work in a managerial capacity, achieving enough success to be named vice-president of the company in 1904, by which time the ship building and repair firm had been renamed again, becoming Robins Dry Dock and Repair Company. When Robins retired in 1909, Todd ascended to the top slot at the company, president. In 1915, Todd and several associates purchased Robins Dry Dock and Repair Co., the Tietjen & Lang Dry Dock Company of Hoboken, New Jersey, and Seattle Construction and Dry Dock Company, located in Seattle, Washington. With these companies, Todd formed the William H. Todd Corporation a year later, marking the formal beginning of Todd Shipyards' rise to the top of the ship building industry in the United States.
Formed midway through World War I, William H. Todd Corp. benefitted greatly from the pressing demand for ships, distinguishing itself as a prodigious shipbuilder and a company able to perform complicated ship conversions and major repair jobs. With its plants operating 24 hours a day, the company served as an integral producer of military vessels, supplying nearly 90 percent of the war's first convoy. By the end of the war, the rush of military orders had created a massive ship building company, employing 18,000 workers and supported by five plants on the Atlantic coast and two on the Pacific Coast. However, when the hostilities subsided, so did much of William H. Todd Corp.'s business. William Todd, however, had prepared for the postwar years of reduced ship building and repair by adding a products division to William H. Todd's corporate structure with the acquisition the White Fuel Oil Engineering Company in 1916. The company leaned heavily on the business generated by White Fuel Oil to carry it through the more prosaic years following the conclusion of World War I, as its payroll shrank to 2,000.
By foreseeing the transition from coal to oil-burning equipment before the conversion became a pervasive trend, Todd ensured his company's success during peacetime, and for the next two decades, William H. Todd Corp.'s business steadily grew, driven by contracts to build and repair ships for the U.S. Navy and civilian contractors. In 1934, the company opened a tanker repair yard in Galveston, Texas, at Pelican Island, which became a primary division for the company in the decades ahead, and re-opened its shipyard in Seattle two years later, demonstrating a peacetime vibrancy that gave it a solid foundation for the frenetic years ahead, as the United States prepared to enter World War II.
During the 20th century's second great international struggle, Todd Shipyards played as pivotal a role as it had during the first. The company's scope of operations and payroll once again swelled during World War II, with its manufacturing facilities churning out 60 large cargo vessels for the British Purchasing Commission, and completing contract work awarded by the U.S. Navy and U.S. Maritime Commission, including an order for 350 Landing Craft, Infantry (LCI) vessels. By the end of the war, with nearly 57,000 workers filling its employment ranks, Todd Shipyards had completed the herculean task of building more than 1,000 ships and repairing or converting another 23,000 ships, earning 33 U.S. military awards for its contributions to the war effort.
One year after the conclusion of World War II, Todd Shipyards acquired the title to a plant at San Pedro, California, that the U.S. Navy had asked the company to manage in 1943. The San Pedro plant would eventually constitute Todd Shipyards' Los Angeles division, one of the three pillars, along with its facilities in Galveston and Seattle, that would support the company as it grew to become the largest independent shipbuilder in the country. During the 1950s and 1960s, as Todd Shipyards climbed the industry's ranks, the company derived its business from both civilian and military contracts, building its annual revenue total to approximately $175 million by the beginning of the 1970s.
An overwhelming majority of the company's business by the early 1970s was derived from the private sector, with government-funded contracts accounting for a mere 15 percent of Todd Shipyards' revenue volume. Holding sway as the largest independent shipbuilder in the country, Todd Shipyards' revenue volume climbed to nearly $400 million by the end of the decade, lifted in large part by contracts awarded by the U.S. military. Though the company's defense-related work would provide an impressive surge to its sales volume, boosting it to nearly $800 by the early 1980s, the increase in military work at the expense of losing civilian business supplied the chief ingredient for Todd Shipyards' disastrous decade ahead. During the 1980s, Todd Shipyards' century-and-a-half of ship building experience would be put to its greatest test yet, as the venerable shipbuilder quickly found itself in the crucible of bankruptcy.
Todd Shipyards' peak year before its downfall was in 1983, when during the fiscal year sales approached $800 million and its backlog of contracts for frigates amounted to $759 million. By this time the company operated seven shipyards scattered across the country in Brooklyn, New Orleans, Houston, Galveston, Los Angeles, San Francisco, and Seattle, which were now geared for producing military vessels. Like other shipbuilders in the United States, Todd Shipyards had overhauled its production facilities so that it could capture the lion's share of the work generated by the Reagan Administration's defense buildup, which accounted for 80 percent of the company's annual sales. The country's naval fleet was expanding at a robust pace, propelling the growth of companies like Todd Shipyards, but when the government-funded orders for additional work began to wane, so did the fortunes of those companies that were over-reliant on an escalating defense budget. As the company whittled away at its nearly $800 million in backlogged contracts, counting the dwindling number of days it could look forward to sustaining its operations through government work, prognostications for the future grew increasingly bleak.
With its labor costs too high to recapture abandoned commercial work, Todd Shipyards was forced to scale down the range of its operations as the financial pressures bearing down on the company increased. A cost-reduction program was effected, part of which included the relocation of the company's corporate headquarters from New York to Jersey City, and the abandonment of its shipyards in New Orleans and Houston in 1985. As a hedge against its declining ship building business, the company purchased Aro Corp., an air-powered tool company, the same year it closed its New Orleans and Houston shipyards, but there was little the company could do to wrest free from mounting financial burdens. Repeatedly, the company was being underbid on major contracts with the U.S. Navy, while attempts to revive its floundering commercial business continued to meet with failure. At the end of March 1987, the company reported its financial figures for the previous year: sales were down to $417 million and, for the first time since William H. Todd took control of the company, it lost money, posting a $58 million loss for the year. Less than five months later, on August 17, 1987, Todd Shipyards filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
Todd Shipyards remained in bankruptcy for more than three years, during which time a drastic downsizing program was implemented, as the company struggled to reorganize and pare away the remaining components of its once-illustrious ship building empire. The Los Angeles shipyard was closed in July 1989, its Aro Corp. pneumatic tools subsidiary was sold to Ingersoll-Rand Co. for $132 million in February 1990, and the closure of the company's Galveston shipyard was announced in May 1990, leaving, by the end of that year, a one-shipyard operation in Seattle: Todd Pacific Shipyard Corp. Although severe, the changes made between 1987 and the end of 1990 enabled Todd Shipyards to emerge from Chapter 11 in January 1991, ending the most dismal chapter in the company's history.
Looking toward the future, there were some signs of promise to encourage hope in Seattle. Out of Chapter 11, Todd Shipyards was lean and in the black. Its reliance on government contracts, which as recently as 1989 had accounted for 89 percent of the company's annual sales, had been reduced substantially, and now, as the company prepared to move forward by focusing on small commercial contracts, accounted for only half of its $187 million in annual sales. Lack of profitability, however would continue to hound the company for several more years as a contentious battle among dissident shareholders for control of Todd Shipyards took place. By 1994, when the air had cleared, the company was still losing money, reporting a $2.7 million loss for the year, but this loss at least was considerably less than the nearly $12 million loss reported the year before. More encouraging was Todd Shipyards success at diversification away from government work. Commercial revenues increased 115 percent during fiscal 1994, swelling to $52.4 million, while government work decreased 45 percent, falling to $16.2 million.
As Todd Shipyards entered the mid-1990s, it recorded a profit for the first time in three years, buoying hope that a recovery was on its way. The company recorded $3.8 million in net income on $69 million in sales in fiscal 1995, the same year it formed a radio subsidiary, Elettra Broadcasting Corporation, for its three FM radio stations in the Carmel area south of San Francisco. With work about to start on a $182 million contract to build three Washington State ferries, there were many challenges ahead for Todd Shipyards, as the company endeavored to build a new future commensurate with its storied past.
Principal Subsidiaries: Todd Pacific Shipyards Corp.; Montana Valley Land Company; TSI Management, Inc.; Elettra Broadcasting, Inc.
- Baldo, Anthony, "Todd Shipyards' False Buoyancy," FW, October 30, 1990, p. 18.
- Chakravarty, Subrata N., "Aerospace and Defense," Forbes, January 2, 1984, p. 144.
- "Curing the Navy Blues," Financial World, June 1, 1980, p. 25.
- Hussey, Allan, F., "Full Ahead," Barron's, October 15, 1979, p. 48.
- Jones, Sam L., "Todd Shipyards and Pacific Subsidiary File for Protections Under Chapter 11," Metalworking News, August 24, 1987, p. 14.
- McDaniel, Linda, "Todd Shipyards: 140 Years of Shipbuilding," Sealift, August 1974, p. 14.
- Payne, Seth, "Why a Navy Job May Go to the High-Cost Bidder," Business Week, April 1, 1985, p. 96.
- Schifren, Matthew, "Mac Is Back," Forbes, September 14, 1992, p. 52.
- Thomas, Dana L., "Wave of Prosperity," Barron's, October 9, 1972, p. 3.
- "Todd Files in Bankruptcy," Seattle Post-Intelligencer, August 18, 1987, p. B3.
- Wilhelm, Steve, "Fight for Control Scuttles Todd's Shipyard Work," Puget Sound Business Journal, September 4, 1992, p. 1
- ------, "Todd's Odd Medley: Radio and Shipyards," Puget Sound Business Journal, June 16, 1995, p. 1.
Source: International Directory of Company Histories, Vol. 14. St. James Press, 1996.comments powered by Disqus