JHSV Hawaii Superferry Predecessor Design Falling Apart for the Navy/DOD

http://www.bloomberg.com/news/articles/2016-01-14/navy-s-fast-sealift-ships-can-t-stand-buffeting-from-high-seas

New Navy Ships Have Trouble Surviving the High Seas

 by Anthony Capaccio  January 14, 2016

• - Austal's Expeditionary Fast Transport ships need bow repairs
• - U.S. Navy adopted a flawed design to save weight, report finds

The U.S. Navy is spending millions of dollars to repair new high-speed transport ships built by Austal Ltd. because their weak bows can’t stand buffeting from high seas, according to the Pentagon’s chief weapons tester.

“The entire ship class requires reinforcing structure” to bridge the twin hulls of the all-aluminum catamarans because of a design change that the Navy adopted at Austal’s recommendation for the $2.1 billion fleet of Expeditionary Fast Transports, Michael Gilmore, the Defense Department’s director of operational test and evaluation, said in a report to Congress.

USNS Spearhead

 

Source: Austal Ltd.

“The Navy accepted compromises in the bow structure, presumably to save weight, during the building of these ships,” Gilmore wrote lawmakers, including Senate Armed Services Committee Chairman John McCain, in a September letter that wasn’t previously disclosed. “Multiple ships of the class have suffered damage to the bow structure.”

The speedy catamarans are designed to transport 600 short tons of military cargo and as many as 312 troops for 1,200 nautical miles at an average speed of 35 knots. They’ve been deployed to Africa and the Middle East as well as to Singapore as part of the U.S.’s Pacific rebalance and are being considered by military officials for expanded use there by the Marines. The vessels fill a transport gap between larger, slower vessels and cargo aircraft.

Meets Criteria

Michelle Bowden, a spokeswoman for Henderson, Australia-based Austal, deferred comment to the Navy. Captain Thurraya Kent, a Navy spokeswoman, said the service accepted Austal’s recommendation because the company’s analysis showed the lighter-weight bow met criteria of the American Bureau of Shipping and Pentagon requirements. She said in an e-mail that Gilmore’s report confirms that the vessel “meets and in certain area exceeds” key performance parameters.

The Navy bought 10 of the shallow-draft vessels, at about $217 million each. Five have been delivered and are in operation, while the other five are under construction at Austal’s Mobile, Alabama, shipyard. Senator Richard Shelby, Republican of Alabama, is a member of the Senate Appropriations Committee, which added $225 million for an 11th vessel to the fiscal 2016 defense spending bill last month.

So far, the Navy has spent almost $2.4 million strengthening the bow of the first four vessels delivered since late 2012.

Repair costs include $511,000 on the initial vessel, the USNS Spearhead, which was damaged during deployment by waves slamming into the superstructure, according to test data cited by Gilmore and the Military Sealift Command.

The second, third and fourth vessels cost as much as $1.2 million each to repair and a fifth vessel, the USNS Trenton, awaits its bow reinforcement during its next scheduled shipyard visit, Tom Van Leunen, a spokesman for the Military Sealift Command, which owns the vessels, said in an e-mail.

Added Weight

The retrofits have added 1,736 pounds to the ship’s weight, displacing 250 gallons of fuel but having a minimal impact on the vessel’s range when fully loaded, Gilmore said. His concern about the vessel is likely to be highlighted in his annual report on weapons testing that’s scheduled to be released by Feb. 1.

“Since the repairs are still in progress, there has been no heavy weather testing yet to verify if the fixes are sufficient,” Marine Corps Major Adrian Rankine-Galloway, a spokesman for Gilmore, said in an e-mail.

Even with reinforced structures, the fast transport ships operate under sailing restrictions because “encountering a rogue wave” can “result in sea-slam events that causes structural damage to the bow structure,” Gilmore wrote. The operating restrictions include requiring vessels to wait out the highest seas or travel at speeds much lower than their maximum, according to Gilmore’s report.

Van Leunen, the Military Sealift Command spokesman, said that “the Navy routinely diverts ships during transits to avoid heavy weather” and this ship is no exception. Its primary missions will often be in coastal waters that offer “some protection from weather and sea state when compared to open ocean transits,” he said.

Generator Reliability

The vessel’s latest sea tests also were marred by the poor reliability of generators made by Fincantieri SpA that supply electrical power, according to Gilmore. The generators failed “at a much greater rate than predicted.”

Required to operate 8,369 hours between major failures, the generators failed as soon as 208 hours at some points, improving to 1,563 hours in the most recent tests.

Fincantieri spokesman Antonio Autorino said in an e-mail that “the concerns described in the report have been resolved and this information was provided to the Navy, yet was not included in the report.”

Superferry Recap 2012

Mr. Axe does a good job explaining the Superferry venture and how John Lehman made use of it with Austal, Atlantic Marine, and BAE Systems in the years since the Superferry's failure.  Lehman only ended up doing well with it because of his perseverance.  If it had been just the Superferry, it would have been a miserable failure.  In comments below, Mr. Lehman is too hard on the Hawaii Supreme Court, the problem was in the construction of Act. 2 by the Hawaii Legislature.  Maybe he has some purpose in blaming the Court rather than a Legislature he might need to deal with again in the future.  Agree with Mr. Axe's closing point that "campaign talk of a massive naval buildup may fade as budget realities set in."  Lastly, it's a little off topic for the article, but Lehman's position on the 9/11 Commission was a noteworthy responsibility that went unfinished and determining details unattended to as with the Superferry's business plan...

Source:  http://www.wired.com/dangerroom/2012/10/big-business-romneys-navy/all/

Romney’s Big Navy Guru Made Millions From Building Ships
By David Axe October 23, 2012

...one of Romney’s most important advisers on Navy issues, a man who oversaw a massive naval expansion for Pres. Ronald Reagan, there’s more at stake than U.S. national security. John Lehman, an investment banker and former secretary of the Navy, has strong and complex personal financial ties to the naval shipbuilding industry...

Lehman invested in a government-backed “Superferry” in Hawaii — a business that ultimately failed, but not before boosting the standing of Austal USA, an Alabama shipbuilder that constructed the ferry service’s ships. Austal USA’s rising fortunes in turn benefited international defense giant BAE Systems, which then bought up shipyards owned by Lehman in order to work more closely with Austal USA.

...But Ryan Sibley — an editor at the Washington, D.C.-based watchdog Sunlight Foundation who has closely tracked the former Navy Secretary’s investments — says that ”Lehman’s involvement with the Superferry shows that he is no stranger to using personal connections to influence costly decisions.”

...Lehman was the chairman of Hawaii Superferry, a transportation startup based in Honolulu that briefly provided passenger service between the Hawaiian islands of Oahu and Maui. It relied on a new type of fast catamaran ferry built by Austal USA, a shipbuilder in Alabama specializing in speedy aluminum vessels.

Founded in 2003, Hawaii Superferry secured a $136-million loan from the Maritime Administration, a federal agency that oversees sea transportation. Lehman’s own equity firm, the controlling private investor, put $85 million into company. Hawaii Superferry also benefited from $40 million in port enhancements paid for by the state of Hawaii.

The ferry company bought two ships from Austal USA, each more than 300 feet in length and capable of carrying hundreds of passengers plus their cars at speeds in excess of 30 knots. The vessels cost $105 million apiece.

The first ferry entered service in mid-2007. But with low ticket prices and soft demand, the service was a money-loser. The company was also mired in controversy over the environmental impact of its facilities. In 2009 Hawaii Superferry declared bankruptcy. Lehman reportedly lost his entire $85 million investment, and says his total losses were much, much greater than that.

“The two Hawaii Superferrys that we built — on time, and on budget — were operated in commercial service, with no government customers,” Lehman tells Danger Room. “We were put out of service by the chicanery of the State Supreme Court and we lost over $300 million.”

But in another regard, the ferry was a smashing success. Austal USA, which builds aluminum warships for the Navy, was angling to build military versions of the Hawaii ferries to meet a new Pentagon requirement for fast transports called Joint High-Speed Vessels, or JHSVs. “Building the Superferry was very helpful in demonstrating that we can build these ships,” said Bill Pfister, Austal USA’s vice president for external affairs.

Out of direct public view, Superferry officials touted their ship’s military potential. Superferry’s pitch to the Hawaiian Public Utilities Commission included a slide claiming the ferry could haul the Stryker vehicles belonging to a Hawaii-based brigade. The company paid a lobbying firm $70,000 to try to convince the Navy to add the ferry to a program that assigns military transportation jobs to civilian vessels.

In late 2008, the Navy tapped Austal USA to build 10 military versions of the Hawaii ferry for $1.6 billion. Some critics have questioned whether Superferry was intended all along to serve as a proof-of-concept — admittedly, a money-losing one — for a much more valuable military program. “The fact that the Superferry was already in the water, proving its seaworthiness while the JHSV contract was being considered, suggests that it may have always been intended as a prototype or demo model for the larger deal,” Koohan Paik and Jerry Mander, who penned a book about the ferry controversy, wrote in The Nation.

Superferry president Thomas Fargo, also a J.F. Lehman & Co. board member, denied the claim. “We always get the question, ‘Was this designed as a military operation?’” he told The New York Times. “That’s absolutely not true.”

Regardless, the Hawaii ferries themselves did become military assets. In 2010 the Maritime Administration sued to take over the two ships in order to recoup some of its $150 million investment. The administration later sold both ferries to the U.S. Navy for a total of $70 million.

At first glance it’s not clear how Lehman could have benefited from his money-losing investment in Hawaii Superferry. The answer lies in another of the former Navy secretary’s investments: the Atlantic Marine family of shipyards.  In 2006, Lehman purchased the shipyards in Alabama, Mississippi, Florida, Boston and Philadelphia for a reported $170 million. In 2009, the federal government awarded three of the yards $2.7 million in stimulus grants for improvements.

In 2010 international defense giant BAE Systems, which handles ship repairs among other specialties, acquired the Florida, Mississippi and Alabama yards for $352 million — ringing up an estimated $180 million profit for Lehman that more than makes up for his “failed” investment in Hawaii Superferry. Lehman held onto the remaining two yards in Philadelphia and Boston. Recently both have received lucrative ship-repair contracts from the Navy. They could receive even more such contracts if the sailing branch were to grow at a faster pace, as Lehman intends.

Today the Alabama yard, which is adjacent to Austal USA’s own facilities, plays a critical role in military programs on which Austal USA and BAE Systems collaborate. “We launch both their JHSV and [Littoral Combat Ship] vessels with our dry docks; we also support Austal with warranty repairs, if requested,” BAE Systems spokesperson Stephanie Moncada tells Danger Room. Austal USA did not respond to an e-mail requesting comment on the company’s relationship with BAE.

In addition, Austal USA does work on aluminum structures as part of BAE Systems’ ship-repair contracts with the Navy. Being in such close proximity to each other makes BAE Systems and Austal USA’s collaboration possible, or at least more efficient.

Even before the acquisition of the Alabama yard, BAE Systems enjoyed close ties with Austal USA, namely in providing guns and radios for the Littoral Combat Ships Austal USA builds for the Navy. That made BAE Systems an obvious prospective buyer for Lehman’s yards — the Alabama one in particular.

But Lehman’s investments in the partially taxpayer-funded Hawaii Superferry reportedly helped Austal score the military transport deal, thus improving the business case for a closer partnership between Austal USA and BAE Systems. That partnership is being facilitated by BAE Systems’ Alabama shipyard, purchased at a 100-percent markup from Lehman.

To put it plainly, Lehman’s investment in the failed, government-backed Superferry boosted Austal USA, whose rising fortunes also benefited BAE Systems, which in turn bought up Lehman’s shipyards — improved by stimulus funds — in order to work more closely with Austal USA. That roundtrip deal helped earn Lehman’s firm a reported $180 million profit. In that sense, Lehman in fact more than doubled his $85 million investment in Hawaii Superferry, with a big assist from the taxpayers.

“While I don’t know how typical Lehman’s conduct is, his involvement with the Hawaii Superferry suggests his expertise lays in the strategic deployment of taxpayer resources for personal gain,” Sibley, the watchdog, tells Danger Room.

Lehman calls the allegation “kind of amusing. We have never owned a shipyard that builds Navy ships. We have owned four shipyards that repair, not build commercial ships and Navy ships. The Navy business made up about 15 to 20% of the repairs. We still own two of those four, having sold the other two to BAE.”

Ultimately BAE Systems, whose shipyard purchases added significantly to Lehman’s already substantial personal worth, stands to earn potentially tens if not hundreds of millions from the ships specified in Lehman’s naval buildup scheme. Each LCS costs around $500 million; the Navy plans to acquire at least 55 of the ships. As Romney’s naval adviser, Lehman specifically promised to continue the program, and mentioned possibly adding more combat gear to the vessels — gear that could be built by BAE Systems.

...Perhaps none of this will have an influence on a Romney Pentagon. Perhaps the campaign’s talk of a massive naval buildup will fade as budget realities set in. But if a Romney administration does embark in such an enormous increase in military shipbuilding, it’s worth noting that one of the brains behind the expansion has profited rather handsomely by encouraging the Navy to build.

Radioactive

Source: http://www.maritime-executive.com/article/seaward-services-to-operate-hsvs-alakai-huakai-for-us-navy

Seaward Services to Operate HSVs Alakai & Huakai for US Navy
Monday, March 19, 2012

Seaward Services (SSI), a HMS Global Maritime (HMSGM) company based in New Albany, Indiana, is pleased to announce that it has been awarded a contract through Military Sealift Command (MSC) to operate and convert the former Hawaii Superferry vessels HSV Alakai and Huakai for MSC...

The contract is anticipated to extend to last for one year and will end with the delivery of the vessel to Naha, Okinawa, Japan, where it will provide services to the 3rd Marine Expeditionary Force...

[Ed. Note - Report does not say where the Alakai and Huakai will be in the year before delivery to Okinawa...]

4 Cheap Offers, No Deal, MARAD ain't Desperate

Best review of the news we have seen from Kyle at DMZ Hawai'i:

Source: http://www.dmzhawaii.org/?p=9268

Taxpayers Stuck With Unsold Ferries in Default

August 10, 2011 by kyle

Bloomberg published an article about the wasteful Maritime Administration (MARAD) loan guarantee program, which became the reluctant owner of two high-speed ferry ships after the Hawaii Superferry went bankrupt in 2009:

Two passenger ferries sit at a dock in Norfolk, Virginia, waiting for someone to take them off the government’s hands.

The U.S. Maritime Administration has taken bids for them in an attempt to recover some of the $138 million in taxpayer money paid to cover defaults on loans it guaranteed for the owners, Hawaii Superferry Inc. The company sought bankruptcy protection and defaulted in 2009.

The unwanted ferries are reminders of the defaults and oversight problems reported as recently as December in the so- called Title XI program as vessel owners have won $798 million in new loan guarantees this year, the most since 2001. As it considers two applications for an additional $712 million in guarantees, the maritime agency is trying to recover what it can on $311 million paid out to cover six defaults since 2008.

After protests and legal challenges disrupted Hawaii Superferry operations, the Hawai’i Supreme Court finally ruled that the special legislation retroactively exempting the Superferry from the state’s environmental review laws was illegal. However, it was the company’s arrogance and collusion with state officials to circumvent the environmental review process that doomed the venture from the start. As the article points out, even down to the rationale for the MARAD loan guarantee program, the Superferry project was driven by politics and special interests:

The program’s bipartisan supporters, such as former Senator Trent Lott, a MississippiRepublican, and Democratic Senator Daniel Inouye of Hawaii, credit Title XI with creating jobs and supporting national defense and the U.S. commercial fleet. The U.S. fleet shrank from 17 percent of the world’s oceangoing merchant ships in 1960 to less than 1 percent in 2008, according to the Bureau of Transportation Statistics.

Five guarantees approved since President Barack Obama took office in 2009 will create 8,000 jobs, maritime agency Administrator David Matsuda said in an e-mail.

The program has survived elimination attempts because supporters in Congress “logroll” to keep funding it, said Chris Edwards, director of tax policy studies at theCato Institute. “Some of these ships are built in their districts, and they’ll fight to the death for it,” Edwards said in an interview. His Washington-based group advocates reducing government spending and lower taxes.

[...]

Politics drove decisions to give guarantees to some companies that eventually defaulted, Clayton Cook, the maritime agency’s general counsel from 1970 through 1973, said in an interview.

He cited American Classic Voyages Co., chaired by billionaire real-estate investor Sam Zell, which received a $1.1 billion guarantee for two cruise ships under the banner of Project America. Five subsidiaries of the company accounted for $330 million of the $490 million that defaults cost the government from 1993 through 2002.

Inouye sponsored a provision in a defense bill called the U.S. Flag Cruise Ship Pilot Project, he said at a hearing in 1999. The project gave American Classic Voyages exclusive rights to operate cruise ships in Hawaii, the company said in a Securities and Exchange Commission filing in 2000. The ships were to be built at Ingalls Shipbuilding in Pascagoula, Mississippi, Lott’s hometown. Lott declined to be interviewed.

American Classic Voyages filed for Chapter 11 bankruptcy in October 2001. The default cost taxpayers $187 million, according to the maritime agency.

Hawaii Connections

“The project, while proceeding with considerable difficulty, including delays and increased costs in construction, ultimately became a victim, like many other industries, of the September 11 attack on our nation,” Inouye said in a floor speech in 2003.

Inouye didn’t respond to a question about the default, saying in an e-mail that “loan-guarantee programs are one of the many ways that government can partner with the private sector to create jobs and expand the economy.”

Hawaii Superferry, chaired by former Navy Secretary John Lehman, spent up to $20,000 a year lobbying Congress, the maritime agency, the Environmental Protection Agency and other agencies on Title XI and “vessel financing issues” between 2004 and 2006, according to federal lobbying disclosures. The loan guarantees helped the firm finance the ferry purchases from shipbuilder Austal USA, based in Mobile, Alabama.

The Superferry’s default occurred because a Hawaii court ruled the state shouldn’t have let the company skip an environmental impact study, said William Schubert, maritime administrator from December 2001 to February 2005. “The people of Hawaii wanted the service, and when it went to the state Supreme Court it pretty much put an end to the program,” Schubert said in a phone interview.

The quote from Schubert is incorrect on a few ponts. Activists figured out early on that the Superferry business model was unprofitable. As Austal USA, the shipbuilder, pointed out to the Hawaii Superferry executives in the beginning, the ships on order were too large for the Hawai’i market. But they did meet military specifications, which in the end, paid off for Austal, who leveraged the Hawaii Superferry as a proof of concept to win a contract to supply Joint High Speed Vessels to the military. Some people from some islands may have wanted the Superferry. But many strongly opposed the project as another threat to the environment and sustainability. And Hawaii taxpayers were left holding the bag for $40 million in state harbor improvements that were never recovered from the company.

Dicus: Superferry - The "Non-issue" of Campaign, etc.

Source: http://blogs.hawaiinewsnow.com/howard/2010/08/two-non-issues-of-the-gubernatorial-campaign.html

08/31/2010
"Two non-issues of the gubernatorial campaign"
by Howard Dicus (Superferry supporter)

It was a little weird to hear two perfectly intelligent men of substantial achievements who care deeply about Hawaii arguing over two complete non-issues in the debate Monday night.

Former Honolulu Mayor Mufi Hannemann and former Rep. Neil Abercrombie, in this and other debates, have discussed Hawaii Superferry and timeshare tourism. They might as well leave these topics on the table. I almost hate to bring this up because I enjoy amiable relations with both guys. And I hear their aides, spokeshumans and other impediments are increasingly temperamental as the campaign wears on. But I'm going to proceed anyhow. Vote against them if they can't take a joke.

Hawaii Superferry went broke, not merely because of the court challenges against it, but because its basic economic model was flawed. It would have required way more usage by the average resident than it could ever have reasonably counted on. I speak as a Superferry supporter who felt much of the opposition to it was invalid. I rode it once and really enjoyed it. I said at the time that the criticisms of it were more properly directed to other boats in the water that the same people have simply allowed to sail and proliferate. Yet it needed more revenue than it was ever going to get.

The ships are gone, sold off, and the company has died. Not only that, but both Hawaiian Airlines passenger service and Aloha Air Cargo service between the islands have improved a lot since Superferry "sank the island," as they said in the Master & Commander novels. Superferry's not coming back, so talking about it is kind of a waste of time at this point...

There you have it. But, we imagine there are some out there who still don't get it.

Also received the following comment today:

Doctor on a bike said...

My office looks right out on the Hawaii Superferries in Norfolk. They've been moved this morning (Sept. 1) and look to be ready to go somewhere.

To which we said...

BTW, if you go to here: http://www.marinetraffic.com/ais/
Set it to "Satellite," zoom in, and you can look down on the Alakai and Huakai and see they have been moved to a pier right next to the one they have been at.

What are the Hawaii Superferries Worth?

There is a new KITV report on a MARAD official's statements yesterday in Honolulu on the expected auction of the two Hawaii Superferries here and here. In those reports the MARAD official is quoted as saying the lien that MARAD has on the vessels is a total of $150 million. The report further quotes,

"'I can tell you we already have a $150 million lien on both ships. So, you can of course, provide a cash bid higher than that amount and take ownership of both the Alakai and the Huakai,' said Matsuda. Matsuda was in Honolulu Friday for the groundbreaking ceremony for the renovation of the Pier 29 container yard at Honolulu Harbor. The project is funded with federal stimulus money. Matsuda said Maritime Administration wants the Superferry vessels for military and humanitarian projects."

Hold that thought.

You can look a number of places to try to find what the two Superferries actually cost to build including all the nice extras in the interiors and things added later like the Whale detection systems to the Alakai and the ramp, wastewater treatment, and desalination plants added to the Huakai. A simple place to look is Wikipedia which says each vessel's total costs were $88 million each, here and here. Of course that's just Wikipedia and the Huakai's costs were at least $5 million more than the Alakai. But a quick thumbnail estimate is that the combined cost for the two was at least $181 million new before depreciation. Hold that thought.

Now, it took a little bit of hunting but we went back and looked at some of the early Bankruptcy Court filings, and it looks like the outstanding senior lien that MARAD has on the two vessels is actually closer to $140 million, not $150 million. Additionally Guggenheim Corporate Funding, LLC has a lesser priority outstanding lien of about $48 million and Austal had an even lower priority lien of about $22 million. The State of Hawaii was junior to them. Austal wrote off their loan as a loss. Guggenheim's lien was "secured" in equity. It is understood that all equity holders would lose their money on this. So the key takeaway on the liens is that MARAD's is $140 million, not $150 million and that Guggenheim also has a lien and would be out $48 million. The total of those two adds up to $188 million, only slightly more than what the two vessels originally cost to build. Hold that thought.

Now, let's got back to that MARAD official's quote about $150 million. First of all, does MARAD determine and run the auction? NO, they do NOT. It is the Bankruptcy Court that does that. The MARAD official's comment, "So, you can of course, provide a cash bid higher than that amount ('$150 million') and take ownership of both the Alakai and the Huakai,' said Matsuda," is not something that MARAD will determine and is misleading. First of all, MARAD's outstanding lien is $140 million, and NOT $150 million and more importantly because these ships are possibly worth closer to $180 million than $150 million, but also because it is not for MARAD to say what exact dollar figure will be enough to take ownership of the two vessels, that's the purvue of the Bankruptcy Court.

So, what are these ships worth? Well, it's somewhere between $150 and $180. They have a tax depreciable life of at least 20 years, even though the Huakai is almost like brand new and should not be depreciated as much as the Alakai. The Alakai, if you will remember, had significant damage to the rudder, was run aground going into drydock, and fell off it's blocks in drydock. But, if they were both actually being used continuously over the past 2 to 3 years, then the total depreciation on $180 million would be about $4.5 million for the Huakai and about $13.5 million for the Alakai for a total of about $18 million off of $180 million equaling about $162 million, which is about what these two vessels are really worth, leaving $140 million for MARAD, not $150 million, and the other $22 million for Guggenheim, recovering almost half of their potential loss. Keep in mind, to build these brand new for commercial use would be at least $90 million each and also the builder Austal is being paid about $180 million to build just one of these very similar ships for the U.S. military as JHSV's.

Our conclusion is then that these two vessels together are worth no less than $160 million total. Their actual worth is probably a little more than that. We would expect Guggenheim to be a bidder on this in addition to MARAD. We believe MARAD will actually be satisfied to recover their $140 million, but we also believe MARAD when they say the, "Maritime Administration wants the Superferry vessels for military and humanitarian projects."

Now, let's see if somebody gets 'em for less than that?

By the way, Mufi, your cheap friends aren't in the running.

Goofy Hannemann's Super Fairy Dreamin'

Larry Geller called this spot on before and after Hannemann's press conference yesterday:

Sunday, July 25, 2010

"Will Mufi 'turn to desperate measures, like, say, reviving Hawaii’s Superferry' if he becomes governor?"

by Larry Geller

Internet find:

Will Birmingham-area politicians turn to desperate measures like, say, Hawaii's Superferry to solve the Grants Mill Road bridge problem? Never say never. [The Birmingham News, Chat live with Driving Miss Crazy on Monday at 1, 7/25/2010]

Before they do anything that desperate, I hope they check Google. They’ll learn of the extensive subsidies Hawaii bestowed upon the ferry business, that it was losing money, and that the state knew about it months before the ultimate bankruptcy filing.

Of course, as a government-owned operation, it would be reasonable for Birmingham to decide to invest in a ferry as a public service, just as government runs transportation systems anywhere. New York City provides the Staten Island Ferry for free, as an example of a subsidized ferry service.

It was interesting, though, just to see “Hawaii Superferry” and “desperate measures” in the same sentence. There really isn’t much in it.

This next, however, is much more serious. It’s a snip from an interview with gubernatorial candidate Mufi Hannemann, in which he seems unaware that Hawaii Superferry was not a viable business from day one:

My next question is one of my favorites because every politician loves the idea. So Mufi is elected and on the first day of session the legislative leadership says he can give them one bill and they will immediately pass it - what is the bill.

Mufi thought about this for a good 20 seconds. And then he said funding to restart the super-ferry and do the EIS. Mufi went into great detail about the great benefit that people in the state had when it was running. [David Thielen (Huffington Post), Mufi Hanneman Interview, 7/12/2010] [The PUC CPCN needs to be redone too.]

In the audio record of the interview, Mufi says “I saw enough of it that I knew it was going to be successful” (around 29:35 in the interview). Unfortunately, this is contrary to the facts as revealed by the Associated Press story of 7/21/2010 (after the interview date).

Again, a decision by government to create a Hawaii inter-island ferry service and pay the cost could be a rational decision (if they can also figure out how to do it without causing extensive seasickness). The Hawaii Superferry, however, was to be a private, profitable business, not a municipal- or state- run ferry. The taxpayer was subsidizing the potential profit of Hawaii Superferry’s owners.

But look, Mufi has a rather poor record at implementing water transportation so far, and a tolerance for high losses:

TheBoat, Honolulu's commuter ferry from Kalaeloa to Aloha Tower, gives West O'ahu residents an oceangoing alternative to increasingly clogged highways, for no more than $4 per round-trip ticket.

What makes the service so cheap is that Honolulu taxpayers pay an additional $120 per roundtrip rider to cover the actual costs of operating TheBoat, according to a city study.

The cost of carrying each passenger on TheBoat is about 62 times more than the cost of an average trip on TheBus. It is also significantly more expensive than comparable Mainland ferry services. [Honolulu Advertiser, High subsidies may scuttle Hawaii's ferry, 2/15/2009]

It was ok with Mayor Mufi to charge taxpayers $120 for each roundtrip rider on his boat service before it was finally terminated.

Hawaii Superferry certainly had an EIS problem, but even without that, the business appears to have been dead in the water from day one. The Superferry fiasco wasn’t Mufi’s responsibility, but his lack of understanding of what ultimately sank the business combined with willingness to tolerate losses incurred by TheBoat should be a concern, given the need to control costs for a possible rail transit system planned for Honolulu.

(Thanks to Kevin for pointer to the interview story)

Monday, July 26, 2010

"Mufi fiscally irresponsible to ignore Superferry losses"

by Larry Geller

Again, the news tells us that Mufi Hannemann is serious about trying to revive the Hawaii Superferry, with the same ships that couldn’t be economically successful the first time around.

Maybe, like Sarah Palin or George Bush, he just doesn’t read the newspapers. The Associated Press revealed on 7/21/2010 that the Superferry was unable to pay its fees to the State fully nine months before it ultimately went bankrupt. Analyst Brad Parsons had estimated the costs of running such a large, fuel-hungry ship much earlier and published the information on his popular blog.

Our press seems unwilling to ask the hardball questions. Won’t a reporter please confront him on this one day soon?

Perhaps hizzoner knows the economic facts but is playing to the Oahu voter’s dreams of the Superferry’s return, and their belief that it was viable business killed by a bunch of Kauai tree huggers and Maui whale worshippers.

All the more reason for some reporter to call him on it and set the record straight.

See also:

Hannemann Wants To Revive Hawaii Superferry: Opponent Abercrombie Called That A Fantasy (KITV, 7/26/2010)

Candidates for governor pitch economic plans (AP, 7/26/2010)

Will Mufi “turn to desperate measures, like, say, reviving Hawaii’s Superferry” if he becomes governor? (7/25/2010)

[Editor's note - We believe the only reason that Goofy Hannemann raises this issue now is because he believes it is a way to energize the Oahu vote, regardless of whether it is realistic or not. By raising the Super Fairy Dream, Hannemann shows what kind of a baseless Governor he would be.]

Surprise, Surprise, Superferry "shorted state" even in it's best month

From: http://www.staradvertiser.com/news/breaking/98869884.html

"Hawaii Superferry shorted state"
By Mark Niesse Associated Press July 20, 2010

The Hawaii Superferry was sailing under a facade of success in the summer of 2008 -- boasting of record ridership -- but it had already begun to shortchange the state on its monthly fees, according to an Associated Press review of Department of Transportation records.

The company's inability to pay fully in July indicates it was in troubled waters nine months before the Hawaii Supreme Court decision widely blamed for the ferry's closure came in March, 2009...

>>>Read rest of article>>>

All you had to do was count cars and you could see this comin' many months in advance...

US moves to arrest Hawaii Superferry vessels

Auction, huh? Silent or closed auction? This could answer a lot of questions about who finally gets the value out of these. If they sell for a low-ball price to certain individuals, then finally things could make sense that otherwise never did. The ships are worth no less than $160 million total, probably more with all of the internal additions. If not the DoD, look for the buyer to be in a company name controlled by a silent individual.

US moves to arrest Hawaii Superferry vessels

by Rajesh Joshi - Monday May 24, 2010

THE US government has taken the first step towards an eventual court-ordered auction of two catamarans formerly owned by the bankrupt Hawaii Superferry, by securing arrest warrants against the two ships in Virginia to recoup amounts due.

The move comes one year after Hawaii Superferry entered Chapter 11 protection. It was not immediately clear whether...

Hindsight

A little look back...

Something I noticed over the past year with the sitemonitor on this is that the following two posts have consistently gotten some of the most hits of any individual posts during the life of this blog:

Sunday, December 23, 2007 HI Superferry: The Goal...JHSV
Friday, January 4, 2008 More on the Goal...JHSV

Even more interesting is that the above two posts have attracted a lot of foreign attention over the past year and a half, esp. from locations in all of the countries of the world with significant navies.

Somebody else wrote about this too as early as these posts:

Thursday, January 3, 2008 Musings: Lifting the Veil (Mentioning X-Hull and Seafighter)
Friday, January 4, 2008 Musings: KKCR Snaps and Lifting the Veil: Part II (Seafighter and LCS)
Saturday, January 5, 2008 Musings: KKCR Outed and Lifting the Veil: Part III (Seafighter and LCS)
Sunday, January 6, 2008 Musings: Lifting the Veil: Part IV (Seafighter and X-Craft)
Wednesday, January 9, 2008 Musings: Lifting the Veil: Part V (LCS)
Tuesday, January 15, 2008 Musings: Lifting the Veil: Part VI (Seafighter, LCS, and JHSV)
Wednesday, January 16, 2008 Musings: Lifting the Veil: Part VII (All Pau) (JHSV and Seafighter LCS)
Wednesday, January 16, 2008 U.S.S. Superferry? (Article Summary)

The Seafighter ended up being a non-issue. That source from San Diego seemed to have been astray for one reason or another.

There have been other bloggers and bookwriters who have tried to assign credit for who wrote about this first. And who wrote about it most accurately. I think the record speaks for itself.

Oh, and by the way, no writer anywhere yet has shown how JFL benefits from Austal getting the JHSV or LCS contracts. There may be a way in which JFL benefits, but it has not been shown publicly by any writer. None, zero, zip, nada.

Now there's a real mystery for you...maybe the biggest mystery of all in this story, and none of the professionally trained journalists have figured it out.

Guggenheim Corp. Funding Seeks Dismissal of HSF Holding Bankruptcy

From: http://www.netdocketsblog.com/2009/07/guggenheim-corp-funding-seeks-dismissal.html

Thursday, July 9, 2009

Guggenheim Corp. Funding Seeks Dismissal of HSF Holding Bankruptcy

On Wednesday, Guggenheim Corporate Funding, LLC filed a motion seeking the dismissal of the chapter 11 bankruptcy case of HSF Holding, Inc. HSF Holding, Inc. is the parent holding company of Hawaii Superferry, Inc., which operated a high-speed ferry business between the Hawaiian Islands before filing for bankruptcy and abandoning its ferries. Guggenheim does not seek dismissal of Hawaii Superferry, Inc.'s bankruptcy case.

Guggenheim holds a security interest in all of HSF Holding's assets, which consist solely of the stock of Hawaii Superferry, Inc., as a result of providing $47.75 million in senior secured funding in 2007. Guggenheim also holds $7.5 million in an escrow account, which is the subject of a joint stay relief motion of HSF and Guggenheim scheduled to be heard on July 20, 2009.

In support of its motion, Guggenheim argues that cause for dismissal exists because there is "a lack of good faith purpose" for HSF Holding's bankruptcy case. In furtherance of that argument, Guggenheim points to seven factors:

1. The only asset in HSF Holding's case is the Hawaii Superferry stock that is subject to Guggenheim's lien.
2. Guggenheim "appears to be the only creditor" of HSF Holding.
3. HSF Holding has no on-going business or employees.
4. HSF Holding's chapter 11 petition was filed "on eve of Guggenheim terminating the escrow account and retaining such funds."
5. The only parties-in-interest in HSF Holding's case are Guggenheim and HSF.
6. HSF Holding has no cash or income.
7. HSF Holding has no possibility of reorganization because it has no business to reorganize.

Download copies of every document filed in this case and the bankruptcy cases of over 600 other major corporations using netDockets. Sign up now for a free trial account and $100 of free research.

Posted by Randall Reese

Latest on the bankruptcy: Couple of good articles and one great blog post

Kaija Wilkinson in Alabama and Derrick DePledge in Honolulu put out a couple of good articles today:

Government to repossess Hawaii Superferry boats built at Austal
al.com - Birmingham, AL, USA
By KAIJA WILKINSON The US Maritime Administration says that it plans to repossess and sell a pair of fast ferries built at Austal USA for Hawaii Superferry ...

Hawaii Superferry wants to abandon both its catamarans
Honolulu Advertiser - Honolulu, HI, USA
By Derrick DePledge Hawaii Superferry has asked to abandon its two high-speed catamarans to creditors because of the significant cost of maintaining the ...

But, even better was the blog post by Ian Lind:

Tuesday…City rail symposium disappoints, and documents from furlough lawsuit and Superferry bankruptcy
By Ian Lind
... Then a few tidbits from the Hawaii Superferry bankruptcy case: The State of Hawaii’s motion to move the case back to the islands, a copy of the Superferry’s security agreement with the Federal Maritime Administration, and an affidavit by the corporate secretary filed for the opening bankruptcy hearing spelling out the company’s financial structure. ...

Ian provides the above links to three interesting documents.

Of note, in "the company’s financial structure" linked document, the chronology of events presented for August 2007 are materially incomplete: "...Thereafter, in August, 2007, the Alakai began transporting passengers and vehicles between the Islands. The special interest plaintiffs appealed the matter to the Hawaii Supreme Court, which, in its August 31, 2007 decision, held that DOT erred in holding that the DOT improvements were exempt from the requirements of Chapter 343."

The Supreme Court's oral opinion came down actually on August 23rd, 2007. The above linked filing makes it seem like the company started operations and then the Supreme Court ruled, when in fact, the Supreme Court decision came down first and the company ignored it and initiated expedited operations anyway on August 26th and only stopped a couple days later when a restraining order was issued by Circuit Court.

In the "motion to move the case back" linked document regarding the fact that HSF voluntarily ceased operations and that the complete Harbors Operating Agreement was not formally voided by a Court nor the State, here's the key quote from the State's Motion to move the case to Hawaii:

"Moreover, the validity of the Harbors Operating Agreement depends solely upon interpretation of relevant Hawaii state law.[3] -- [3] By way of further explanation, there are several complex issues surrounding the Harbors Operating Agreement that are relevant to the Debtors' bankruptcy, including: (1) whether the Hawaii Supreme Court's decision renders the Harbors Operating Agreement void ab initio in light of Superferry's performance pursuant to the terms of the agreement between the passage of Act 2 and the Hawaii Supreme Court's decision; (2) that the Hawaii Supreme Court had yet to enter any judgement with respect to its March 16, 2009 decision and that the prior injunction issued by the lower court with respect to the declaration that the Harbors Operating Agreement was void as to the Island of Maui was set aside, and therefore, in light of the automatic stay there is no current order on record which addresses the Harbors Operating Agreement, thus making Superferry's cessation of business operations on March 16, 2009 essentially voluntary in nature; and (3) the treatment of the State's claims under the Harbors Operating Agreement during those periods in which Superferry operated pursuant to the terms of the Agreement and was not otherwise prohibited by any court order or judgement."

Lastly, of lesser importance, on a side note, in "the company’s financial structure" it is interesting to note the detailed description of the company's Cash Management Accounts including with (no doubt former) account numbers and a good description of the "sweep" process. It is interesting to note that those type of "sweep" accounts were an innovation brought to Hawaii by Bank of America and apparently later adopted by Bank of Hawaii, the institution mentioned in the above linked document.

State of Hawaii seeks change of venue in Superferry bankruptcy

From: State wants Superferry bankruptcy case moved to Hawaii

The liquidation of Hawaii Superferry Inc., a former operator of high-speed ferry service between the islands of Oahu and Maui, should be transferred to Hawaii from Delaware, where the company filed under Chapter 11 on May 30, according to a so-called change-of-venue motion filed Saturday by the state of Hawaii. (8:11 a.m.) More »

Two good blog posts on Hawaii Superferry and Austal

I added my comments to their timely, good blog posts:

Springbored's Springboard: First Shipbuilding Contract Of The Mabus/Work Era?
By Springbored
The U.S. Navy awarded Austal a $99.5 million contract add-on Friday to order long lead-time materials for its third and fourth Joint High Speed Vessels, military transport ships that are part of a potential $1.6 billion, ... Springbored's Springboard - http://springboarder.blogspot.com/

Disappeared News: US Maritime Administration reported moving to seize two Hawaii Superferries
By Larry Geller
[Austal] chief executive Bob Browning said yesterday talks with the US Maritime Administration, which ranks above Austal as a secured creditor of Superferry, had “come unstuck” in the past 24 hours. It is understood the USMA, ... Disappeared News - http://disappearednews.com/

My Comment to Larry's blog:
If Austal bought them for the outstanding load value, it would be at a discount. They could resell them and recoup their losses, but it would tie up $135 million for as much as a year.

If Lehman were allowed to buy them and lease them to the military, he could get both of them at a discount of $135 million and begin to recoup some of the losses he had with HSF.

If the DoD bought them at $135 million, starts using the Huakai in the short-term and the Alakai by the end of the year after retrofit, they would be getting them at a steal, for $75 to 80 million each, considering they are prepared to shell out $185 million for just one JHSV from Austal.

I think the most likely buyer is the DoD, or MARAD just pays off the bonds and leases them to the military.

If these vessels are attempted to be deployed commercially, it would need to be on routes of 30 to 75 miles to have a chance at viability. It is much more likely that they would be useful militarily rather than commercially... as was always the case. posted by MauiBrad : 4:43 PM HST

Recent Headlines on HSF's Bankruptcy and Austal

Creditors criticize Superferry plan Hawaii Business Starbulletin.com June 19, 2009
Hawaii Superferry filed a motion in federal Bankruptcy Court last week seeking approval ... The Superferry cited a lack of liquidity and costs for insurance ...

Austal awarded $99.5 million for LLTM for second and third JHSV's June 19, 2009
Marine Log - New York, NY, USA
The LLTM procured or manufactured for construction or installation in JHSV 2 and 3 will be subsumed with their associated costs into their respective ship ...

Austal cops US $11m Hawaii hit June 20, 2009
The West Australian - Perth, Australia
Listed shipbuilder Austal will take a $US11 million ($13.85 million) hit to its 2008-09 bottom line after rescue talks with the major secured creditor of collapsed customer Hawaii Superferry broke down at the last minute...

Business briefs June 20, 2009
Honolulu Star-Bulletin - Honolulu, HI, USA
"Superferry builder writes off loans"
Australia-based Austal Ltd., whose US subsidiary built the two Hawaii Superferry ships in Mobile, Ala., said yesterday it now will write off the entire $23 ...

Austal set to take $23 million hit on Hawaii Superferries June 21, 2009
Marine Log - New York, NY, USA
Hawaii Superferry is seeking to literally abandon ship (or in this case ships). As a result shipbuilder Austal is set to take a $23 million hit. ...

Couple more blog entries to be referenced in my next post.

Liquidation?

From: http://www.starbulletin.com/business/20090617_Abandon_ships.html

"Abandon ships"
Bankrupt Hawaii Superferry seeks court approval to abandon its two vessels
By David Segal Honolulu Star-Bulletin June 17, 2009

The Hawaii Superferry, anchored in bankruptcy in a Wilmington, Del., courtroom, is seeking to literally abandon ship about three months after legal and environmental obstacles forced it to cease operations in the islands...>>>Rest of Article>>>

[The previous Circuit Court ruling only voided the Kahului portion of the Harbors Operating Agreement.--Ed.]

JoAnn Yukimura: It's more than just the letter of the EIS law

From: http://the.honoluluadvertiser.com/article/2009/Mar/26/op/hawaii903260316.html

HAWAII SUPERFERRY

SHOULD HAVE HEEDED LAW FROM THE START

Following the law in the first place would have spared the Hawaii Superferry, government and the community all the expense and agony we have gone through. Yes, there would have still been conflict and differences of opinion, but they would have played out within the procedures set forth in the EIS law.

Those may seem onerous and expensive, but not half as expensive as Superferry's arrogant journey has caused to date for all involved. If the Superferry had followed the EIS law from the beginning, it would probably be operating free of any lawsuits today. Unfortunately, the EIS law requires only disclosure of impacts and mitigating measures. It should, but does not, require the decision-maker to stop the Superferry based on negative impacts.

The Superferry refused to follow even this weak law because it saw itself as "above the law." The governor and the majority of lawmakers who took oaths to uphold the constitution and state laws helped the Superferry avoid the law. Thank God the Hawai'i Supreme Court understands its role in the separation of powers and checks and balances set forth in our federal and state constitutions. When we do not follow the rule of law, we weaken ourselves. If we do not follow the law, what is there to keep order and credibility?

The Supreme Court has given us a chance to restore our confidence in the constitution and our system of government. Real credibility and trust (pono) will come when government, in resolving this issue, effectively addresses the negative impacts of the Superferry.

JoAnn Yukimura
Lihu'e, Kaua'i

"Hawaii Court Backs Protestors vs. Superferry" by Jerry Mander & Koohan Paik

Another good article, by Jerry this time. Nice not to have to expend any energy and see others pretty much get it all correct:

From: http://www.thenation.com/doc/20090406/mander_paik
Hawaii Court Backs Protestors vs. Superferry
(But the Sage Continues)
By Jerry Mander & Koohan Paik

March 24, 2009

In the latest turn of events in Hawaii's impressive grassroots uprising against a huge corporate-military boondoggle, the state's Supreme Court has ruled unanimously (5-0) that the Hawaii Superferry has no legal authority to continue its operations in the state, at least for the time being. But, hold the cheery encomiums and ginger-blossom bouquets; there are downsides to this story that, so far, most media have neglected. First, the good news.

The ruling struck down as "unconstitutional" a law instigated by right-wing Republican Governor Linda Lingle called Act Two, which was intended to circumvent an earlier unanimous Hawaii Supreme Court ruling (August 2007). That prior decision asserted that the giant high-speed catamaran--which races at 40 miles per hour through humpback whale calving grounds, uses 12,000 gallons of gas on a round trip between islands and may have other extremely serious environmental effects--could not begin operations without first completing a full Environmental Impact Statement (EIS) under the Hawaii Environmental Policy Act (HEPA). The Superferry company, however, owned by the infamous New York militarist financier John F. Lehman, former Secretary of the Navy under Ronald Reagan, advocate of a 600-ship Navy to dominate the world's oceans and member of the neocon Project for the New American Century, said it would not comply with the 2007 decision. Governor Lingle immediately backed Lehman via her (illegal) legislative foray, which exempted the Superferry from doing an EIS under HEPA and gave faux authority for the boat to keep operating. This was the biggest of many favors she did for Lehman and the company in a campaign many critics believe was designed as much for her own future in the Republican Party as for any concerns about Hawaii. Lehman was likely to be John McCain's chief of staff, had he won (according to a New York Times report before the election), a position that might have put Lingle in good position for national office, which she apparently craves.

And yet, after last week's court ruling, the Superferry company showed surprisingly little desire to fight, quickly announced it would suspend all Hawaii service within three days and did. This struck some observers as out of character for such an aggressive, self-important outfit, and raised new questions about the company's and Lehman's intentions: What's up now? Could it be the company actually wanted to get out? Does this confirm that the Hawaii adventure was really only a demo for bigger military options, as many suggest? We will come back to that below.

Anyway, the good news set off celebrations on the islands of Kauai and Maui, which have led the protests against the Superferry. Eighteen months earlier, on the occasion of the boat's maiden voyage, Kauai was the site of a landmark two-day uprising, where 1,500 protestors occupied the shoreline at Nawiliwili Harbor. They shouted their demands for an EIS, as dozens of surfers leaped into the water and paddled out dangerously close to the catamaran blades of the oncoming 350-foot colossus, stopping it cold in the water. It was a convincing display of determined resistance and daring from a laid-back community not usually known for political action. The boat never came back to Kauai.

Similar joy was displayed on Maui, which had suffered the only remaining Superferry run. After cancellation of service to Kauai, and then also to the Big Island, the Honolulu-Maui-Honolulu run, once daily, was the company's last hurrah. Three Maui groups--the Sierra Club, Maui Tomorrow and Kahului Harbor Coalition--were plaintiffs in both lawsuits that brought the Supreme Court victories. Irene Bowie of Maui Tomorrow said, "It's unfortunate all this had to take place; I wish the state and Superferry had taken the correct action in the beginning, and followed the law."

But wait! The battle may not be over. As David Brower, the celebrated leader of the Sierra Club during its heyday in the 1960s, often said, "there are no environmental victories, only holding actions; they always come back."

First there is the Cheneyesque Governor Lingle, who never admits mistakes, and never quits pushing. She said that ending Superferry service would be "devastating" to Hawaii--she may have meant devastating to herself--and arrogantly re-asserted that Act Two was entirely legal, whatever the unanimous court said.

Lingle revved up the conservative Honolulu broadcast media to blame environmentalists rather than herself for the loss of 236 Superferry jobs. But as one opponent responded, "If it's illegal jobs the Governor wants, then growing marijuana would be more profitable, better for the environment and doesn't need absentee owners."

Lingle announced that her Attorney General will ask the Court to "reconsider" its verdict, and that her Department of Transportation would do the EIS under HEPA that the company refused to do in 2007, hoping to someday lure it back. Lingle is also trying to again persuade the Democratic legislature to save the Superferry via some tricky legal interventions. Opposition leader, State Senate Majority Leader Gary Hooser, would have none of it, blaming the whole situation on Lingle for exempting the Superferry from an EIS in the first place. Senator J. Kalani English agreed: "It goes back to the beginning. We [opposition senators] told the Superferry, 'simply follow the EIS law.' If they had done that, none of this would have happened."

Then there's the Superferry company itself and its absentee owner, John F. Lehman. Most people assumed the court decision would also be "devastating" to the company. But now the sense is growing that it is secretly delighted, for two compelling reasons.

First, the operation has been a commercial flop and the company and its investors are losing money fast in hard times. According to the Honolulu Advertiser, during the past three months the Superferry has operated at below 25 percent of capacity for people, cars and trucks. And according to a citizens' watchdog commission set up by Act Two, the Oversight Task Force, overall performance figures since the project's inception are little better. The company itself always suggested 50 percent of capacity as its break-even point (at rates that included a gasoline surcharge), a mark it has only hit sporadically. It just looks like most people are not that into a three-hour boat ride through famously rough waters; the Superferry barely dented the far more popular, and far more fuel-efficient, airplane ridership. It would probably be less headache for Lehman to sell the two boats--each built for about $90 million (and one of which, because of all the cancelled routes, has never begun operating)--and transform a losing enterprise into, maybe, $200 million cash while also eliminating operating costs. Or to lease the boats at a profit to the military, or Singapore, or someplace without activist surfers. The Supreme Court served up the perfect escape route. (A strong rumor has the boats headed for a Guam-Saipan-Tinian career that, alas, would not avoid protestors. There are a lot of anti-military activists on Guam.)

Secondly, there's the military angle. As we reported on March 16 in The Nation and in our book, The Superferry Chronicles, during the last several years it became apparent that the Hawaii Superferry may have had more to do with military intentions than with its advertised role as friendly local transport for people and avocados between islands. The evidence is circumstantial but strong: Lehman's military advocacies, a board of directors that's like a shadow Pentagon and a CEO, Admiral Tom Fargo, who was commander of all US military operations in the Pacific under George W. Bush. What do all those military celebrities have to do with a neighborly ferry service? And why was the boat itself built completely out of scale for Hawaii--way too big, powerful and gas-guzzling, as the numbers are proving--but perfect for trans-Pacific purposes.

The company routinely denies this. At his shut-it-down press conference last Thursday, March 19, Admiral Fargo scoffed at the notion. "Not true," he said. "We certainly would not have gone to the trouble to paint the Alakai [Superferry] in the manner we did, to appoint her with first-class seats...if that [military use] was our goal." And yet, there have been innumerable contradictory published statements by other company executives (including Lehman) over the past eight years, that the Superferry might well be used for such military purposes as carrying Stryker tanks among the islands, among other uses. Why deny it? What can of worms does it open?

Most intriguing, for example, is the fact that in November 2008, the manufacturer and designer of the Superferry, Austal US, of Mobile, Alabama, a division of an Australian company, was awarded a huge US Navy contract to build ten new high-speed, light, high-capacity, aluminum-hulled, shallow water catamarans--which except for military accouterments (and that paint job!) are nearly identical to the Superferry design--for the Navy's Joint High Speed Vessel program. This is one of two Navy programs that contemplate some fifty-five aluminum-hulled boats in the Pacific in preparation for possible challenges from China. This first ten-boat contract with Austal is worth $1.6 billion.

According to the New York Times, Bill Pfister, vice president for external affairs of Austal, credited the Superferry project with helping Austal develop a credible US workforce and construction process. "Building the Superferry was very helpful in demonstrating we can build these ships in the United States" he said. Now they get to build ten more.

Even more important was getting the Superferry into the water in Hawaii and keeping it there to demonstrate its seaworthiness, making it a perfect demo model, a working prototype for the Austal-US contract. So was this a central goal of the Superferry project all along, to help Austal get the contract? Is this why it was so important to avoid an Environmental Impact study, which might have delayed the boat's deployment? Did Linda Lingle know this? And with the contract established, is this why the company can so willingly leave Hawaii? A lot of people believe that.

Whether, or how, John F. Lehman or any of his corporations, including the Superferry, actually achieves any financial benefit from Austal's bonanza, remains unknown. Two years ago, however, Lehman bought a shipbuilding company called Atlantic Marine, adjacent to Austal in Mobile, Alabama. So far, however, we have found no reports of further agreements between the two companies for collaborative work on the Navy contract.

So here's the wrap-up: Assuming Lingle can't overcome the court, the people of Hawaii are free of the Superferry, possibly forever, and have time to contemplate what kind of alternative ferry service might be desirable--smaller scale, slower, environmentally friendly, locally owned or better yet, publicly owned. And, a new diverse activist resistance coalition has been born. As for Governor Lingle, she has been embarrassed and exposed for her many disgraceful actions, and politically she may now be toast.

And John Lehman? Well, it appears his business acumen is confirmed. He will probably come out of his Hawaii adventure escaping financial harm, and maybe with considerable gain, depending on the sales and/or rental agreements he makes for his giant boats, increasingly admired by potential military clients. And if he does somehow get involved in the Austal production bonanza he helped support, that will bring him personally closer to fulfilling his grandest dreams of expanded US domination of Pacific waters.

Jerry Mander is director of the International Forum on Globalization and co-author, with Koohan Paik, of The Superferry Chronicles: Hawaii's Uprising Against Militarism, Commercialism and the Desecration of the Earth (Koa). more...

Koohan Paik is an Hawaii filmmaker and co-author, with Jerry Mander, of The Superferry Chronicles: Hawaii's Uprising Against Militarism, Commercialism and the Desecration of the Earth (Koa). more...