A letter of intent was signed on Feb. 15 between German shipyard Meyer Werft and the city of Philadelphia to possibly convert part of the Philadelphia Naval Shipyard into a cruise ship building facility, confirmed the city's Deputy Director of Commerce Terry Gillem.

The agreement is contingent upon a 120-day exploratory period in which such issues as financing, employee training, ownership and other issues will be reviewed, said Gillem.

According to Gillem, Meyer Werft anticipates that an initial $400 miilion would have to be spent to bring the naval yard "up to snuff" to build cruise ships, with $50 million of that amount designated for employee training.

One of the physical improvements for start-up, Gillem said, would be the construction of a covered building dock.

Title XI Assistance?

One option being considered, said Gillem, is the U.S. Maritime Administration (MarAd) Title XI loan guarantees that could extend to shipyards looking to modernize. However, at press time no application has been filed for the naval yard, Gillem said.

The Lelakis Group reportedly has dropped its plans to lease and reopen the former General Dynamics Quincy Shipyard, in Massachusetts, in part because Title XI would not be forthcoming to the Group.

If Meyer Werft decides to forge ahead, this would pave the way for U.S. shipbuilders' entry into commercial ship buildings in which they have little or no experience. It would also signify economic rescue for the American shipbuilding industry which has suffered because of defense contract cutbacks.

The naval shipyard, which employs 4,000 people, is slated to close in September. The city estimates the project could mean jobs for up to 1,800 people, confmned Gillem.