Steel shortage causes port delay

MAT-SU -- Two national issues have resulted in what could be a month delay in construction of the deep water dock at Port MacKenzie.

Mat-Su Borough Manager John Duffy, in a June 4 manager's report, said he's reached an agreement with LB Foster, the company the borough contracted with to provide steel for the pipe pilings that will support the dock.

As a result of a high demand for steel -- a demand that increased after tariffs on foreign steel were recently removed -- finding steel to fulfill the borough's contract has been difficult, Duffy said. Although the borough's cost for the steel is locked in by contract, the steel shortage means it will take longer for the purchased steel to get from steel mills in Texas to Portland, Ore., where it will be shaped into pipe and galvanized.

That's where the second problem comes in, Duffy said. Union Pacific Railroad, which was going to be used for shipping the material from Texas to Oregon, is experiencing a worker shortage.

According to an April 15 letter from UP Vice-president Jack Koraleski, railroad officials, in 2003, kept their manpower levels low in keeping with the slowed economy. In the final quarter of 2003, however, Koraleski wrote, the company experienced a dramatic uptick in demand. Because of the necessary 14-week training period for new hires, and because demand has continued to spike upward, Koraleski wrote in the letter, it has taken the railroad longer than expected to recover.

That all adds up to a three- to three-and-a-half week delay, Duffy said. Through the agreement with LB Foster, he said, which will mean, in part, trucking the metal to the Portland fabrication facility, the initial delay period has been reduced. All pipe pilings are expected to arrive by July 12. The original date of receipt was scheduled to be June 11. The additional costs for trucking the steel to Portland, Duffy said, will be paid by LB Foster. And although the collection of wharfage and docking fees from NPI will be delayed because the construction schedule has been slowed, it doesn't appear the borough will have lost any of those fees.

It also doesn't appear as though the borough will have to pay out additional costs to the construction contractor, MKB Constructors, due to the delay. At present, all of the structural steel -- the components wood-chipping company NPI LLC paid $3 million upfront to help guarantee would be in place for expedient construction -- has been delivered, inspected and, where possible, installed. The galvanized pipe is needed before the next phase of work can move forward, but what work that can be done without the pilings is being done.

"What's happened is, the contractor has worked on rescheduling the sequence of work," Duffy said. "They want to get done before winter -- they've been working very hard and rereading the charts to restructure the construction process."

As part of the arrangement as a result of the delay, Duffy said, the pilings will be shipped in three batches, with the first set scheduled to arrive on July 8.

"It has been delayed," Duffy said, "and everyone is disappointed."

Duffy said the deep-draft dock should be complete in September, although running construction later in the season could bring the project in conflict with the beluga whales, who travel up the inlet in the fall. If the belugas show up, Duffy said, construction must be put on hold, so as not to interfere with their migration patterns.

"We'll all feel a lot better when all the steel has arrived," said Terry Nininger of NPI LLC.

Nininger said the delay has moved back the date of NPI's first scheduled shipment, possibly to Nov. 15 from the original ship date of Sept. 10. His crew is currently working on the final site preparations needed before putting in an asphalt pad on which the chips will rest, and the initial portion of NPI's conveyor system should be in place by mid-July, ready to deliver gravel to the face of the existing barge dock. The delay has meant stepped-up activity at NPI's Valdez dock, where he said construction, chipping and logging crews are working seven days a week to get ready for shipping. That facility, he said, is nearly halfway completed, and the fast pace there is taking some of the stress off delays at the Mat-Su facility. He said he's still looking forward to getting NPI's Port MacKenzie facility up and running as quickly as possible.

"This is going to be a world-class facility -- our Asian consumers love the fact that it's going to be five days closer [than other suppliers]," Nininger said. He said the delay has not cost him contracts, but he's concerned about pushing the envelope further than necessary. "Our customers have been extremely patient, but they'd like to see the facility up and running."

Contact Rindi White at rindi.white@frontiersman.com.