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Owner hopes for energy construction at Avondale

Janet Mcconnaughey, Associated Press

NEW ORLEANS (AP) -- Huntington Ingalls Industries Inc. thinks the energy business might save the jobs of the 2,000 engineers and crafts people remaining at its Avondale shipyard — and even increase the workforce.

The company is bidding on oil and gas infrastructure projects and will open a Houston office on March 1 to be closer to potential customers and partners, Chris Kastner, the company's corporate vice president and general manager of corporate development, said Tuesday.

He says he cannot promise that Avondale will stay open after the end of this year, when it will end 75 years as a shipyard.

"I can make the commitment that we are speaking with potential customers and partners about new projects. If we are successful, then we're in business," he said.

Brian Ruttenbur, an analyst who follows Huntington Ingalls for CRT Capital Research, said, "I hope they're able to get it done. I'm a bit of a pessimist in this economy. That's a very big space that they're trying to fill. I'm hoping as a realistic scenario they are able to fill up some of those buildings, maybe with a variety of industries."

About 5,000 people worked at Avondale in 2010, when Northrop Grumman Corp. announced that it was spinning off Virginia-based Huntington Ingalls. About 2,600 worked there last July. Kastner said the current total is about 2,000, but the 268-acre facility on the Mississippi River near New Orleans has employed up to 10,000 and could do so again.

"We have a great workforce at Avondale with unique engineering and manufacturing capabilities that have been demonstrated for many decades," Mike Petters, HII's president and chief executive officer, said in a news release. "Additionally, these skilled men and women are located in the heart of a region where there is more manufacturing demand than the current suppliers can meet, particularly in the energy markets."

Huntington Ingalls has set aside $200 million for shutdown costs, Ruttenbur said. "The way I'm modeling it as an analyst is they're shutting it down and they've taken all the charges they need to. I hope, for the employees, they can find something good and high-paying there on the oustskirts of New Orleans."

The company has a website extolling Avondale as a place to make everything from pipes and pump stations to offshore platforms. Because it's on the Mississippi River, it could ship modular components weighing hundreds of tons by barge. Because it has been making huge ships, it has cranes and other equipment needed for large equipment.

"Our deepwater river access enables entrance to the Gulf of Mexico, deep water ports worldwide as well as 33 states through Mississippi River System," the website states.

Kastner said Huntington Ingalls has been evaluating the oil and gas construction market for six to eight months and is in discussions with potential partners.

"We are confident about the market and we're confident about our capabilities to compete in the market. ... The skills of both our engineers and our craft men and women are directly transferrable. And the facility and capability we have here is ideally suited for it," he said.

Kastner wouldn't say how many projects Huntington Ingalls has bid on.

"There are over $60 billion in announced projects in the market on the Gulf Coast that are going to be performed in the next two to five years," he said.