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Merger strengthens Portland's manufacturing sector

The merger of Oregon Iron Works and Vigor Industrial promises big things for Portland's heavy industrial business


by: TRIBUNE PHOTO: JOHN VINCENT - Vigors director of manufacturing operations Kale Kramer looks forward to the synergies from the merger. Were using the goods of both companies to be a better one. Few Portlanders recognize the size of the region’s manufacturing segment and its influence on the economy. When they think of manufacturing, they only think of Intel.

But the Portland region is an important player in heavy industrial manufacturing — especially in the production and repair of transportation equipment including ships, barges, railcars, trucks and components for the aerospace industry. The Oregon Employment Department counted 88,900 durable goods manufacturing jobs in the Portland/Vancouver area in April, a figure that includes everything from Intel’s microchips to Leatherman Tools and Gunderson railcars.

Since reaching a low in 2010, employment in Portland’s metal manufacturing segments alone has increased by 3,400 jobs and is outpacing the growth of the general economy, according to the employment

department.

With the merger of two major players in the segment, heavy industry in experiencing a renaissance of sorts, and is positioning itself for significant growth, with greater product diversity and far more stability than it has seen in the past. That diversity will “smooth out a chunky business” says Brian Mannion, a spokesman for Vigor Industrial.

Announced in May, Oregon Iron Works of Clackamas will become a wholly-owned subsidiary of Portland’s Vigor Industrial, employing 2,300 employees across Oregon, Washington and Alaska. It’s not the first time that they’ve joined forces, creating a partnership in 2006 to produce barges. Vigor reported sales of $500 million in 2012, while Oregon Iron Works produces about $100 million in annual sales.

“We’re doing everything we can to build and sustain family-wage jobs,” says Vigor owner and CEO Frank Foti. The company plans to hire at least 100 and as many as 300 more workers as additional project contracts are signed, according to director of manufacturing operations Kale Kramer.

For Vigor, it means greatly expanding production capabilities and facilities, including OIW’s precision testing lab, with measurement capabilities down to 7 microns. OIWs Clackamas and Vancouver facilities produce a wide product portfolio that includes streetcars, vessels for America’s military Special Forces, and components for the mining, dam and the nuclear industries.

Nearing completion at their Clackamas facility are two of their most visible products. Final touches are

going on the last streetcars to fulfill an order for the District of Columbia. After experiencing significant growing pains in developing their all-new U.S. Streetcar subsidiary, they feel that their processes are mature, and they’re expecting a wave of additional orders.

Nearby, two fast-response fireboats are under construction for the city of Portland. The twin 55-foot vessels will have a top speed of 45 knots, can pump 8,000 gallons of water per minute and carry advanced communications equipment so that on-site commanders can work directly from the boats. The boats are equipped with hydrants to draw water from the river and supply land-based fire equipment if normal water mains have been compromised by a disaster. Both boats are scheduled for delivery later this year.

Out of public view is construction of the Combatant Craft Medium Mark One for the U.S. Special Operations Command. That’s a long name for a fast, agile boat that will take special operations forces into battle. The $400 million contract signed earlier this year is expected to run through 2021.

Vigor’s strengths have traditionally been in massive projects including ferry construction, barge building and ship repairs. Projects will get even bigger in late 2014 when the largest floating dry dock in the United States arrives at their Swan Island shipyard. The $40 million 960-foot dry dock will have the capacity to service the U.S. Navy’s largest supply ships as well as cruise ships and post-panamax cargo vessels.

The new dry-dock will be similar to the Port of Portland’s former dry dock #4, which was sold and towed to the Bahamas soon after the Portland Ship Repair Yard was sold in 2000. In the 14 years since the sale, the ship repair industry has shifted to the point that Vigor believes that a large, Portland-based dry dock is commercially viable. More than half a dozen large dry docks in the Pacific region have gone out of service in the past decade.

Since 1945, all of the vessels produced at what is now the 60-acre Vigor Industrial Portland Facility at the tip of Swan Island have been unpowered vessels, such as the 83,000-barrel tank barges currently under construction for Harley Marine Services. That’s set to change with the upcoming construction of a 102-foot tug boat for Tidewater Barge Lines.

The integration of the merged companies will allow more of the work to be done in-house, leveraging the experience of each team.

“We’re getting very good as a company at transferring knowledge where it needs to go,” says Vigor’s Mannion.

A top competency of the company stems from their in-depth project planning, according to Kramer.

“We know exactly what’s going to happen each day,” he says.

In an industry known for its ups and downs, that kind of certainty — and an 18-month backlog of work — is a boon for employee morale.