Problems at port

 Under a steely gray December sky, men outfitted in leather chaps and face shields sliced a 16,000-ton liquid-bulk tanker called the USS Adonis into 2-by-3-foot rectangular chunks.

Bronze sparks flew where liquid oxygen torches cut steel, blanketing the shipyard in the acrid odor of burnt metal.

The cutters tossed the rusted scrap into piles, which have grown ever larger in recent months as the market for metal has all but disappeared.

In June, when the price of scrap steel was fetching more than $500 per metric ton, Brownsville-based International Shipbreaking Ltd. paid the U.S. Maritime Administration an extraordinary $1.1 million for the ship. As a sea vessel, the Adonis was worthless, but broken down the company hoped it would fetch millions of dollars.

By October, though, the global economy was in a tailspin. Manufacturers had wound down production. And steel mills' voracious appetite for scrap had come to an abrupt end.

Record high steel prices took a dramatic tumble, plummeting below $100 per ton.

Suddenly, the shipbreaking industry at the Port of Brownsville was sitting on inventory in a market that disappeared overnight.

"We refer to it as the crash," said Bob Berry, chief operating officer of International Shipbreaking. "This thing is unprecedented both in the rise and the crash."

A DANGEROUS JOB

Ship disposal is a dirty and dangerous job, but necessary to ridding Navy ports of their aging sea vessels.

As the government retires ships from service, companies in Brownsville such as International Shipbreaking and ESCO Marine compete vigorously for the rotting vessels.

A single shipbreaking contract from the U.S. Maritime Administration could bring in more than $1 million and provide several months of work. Selling the scrap steel only supplements the companies' earnings.

At more than 150,000 tons of scrap in 2008, Brownsville's shipbreakers produced a mere fraction of the 80 million tons created in the United States. But the ship recycling operations are among the largest employers at the port with nearly 1,000 workers.

Four of the seven ship recycling facilities qualified to perform work for the Maritime Administration are based in the city, MARAD spokeswoman Susan Clark said.

And less than a year ago, they were all enjoying unparalleled growth.

ANATOMY OF AN INDUSTRY

Orders poured in, forcing companies to work at a dizzying clip to keep up with demand.

Abundant scrap steel from aging Navy ships helped fuel industry in Mexico, where the metal is widely used in automobile manufacturing, appliances and to make rebar for construction projects.

Chris Coello was hired as a cutter at ESCO in December 2006.

He regularly clocked 50 hours a week ago as new ships were towed into the yard. The company's payroll expanded to nearly 450 employees.

But by fall, economic conditions had soured substantially.

Stuck with five ships and no buyers, ESCO w as forced to lay off 200 workers including Coello.

"I don't know what happened," he said. "They just gave us our checks and the address to the unemployment office."

ESCO was not alone. International Shipbreaking cut staff from its peak at 350 to 130 workers. And Transforma Marine, the smallest operation at the port, has temporarily closed after wrapping up its last project.

DOWNTURN TAKES A TOLL

Should more shut down, MARAD could be forced to seek foreign shipbreakers to handle the load, Clark said.

"It obviously would greatly restrict the choices the agency has," she said.

But despite the absence of buyers, companies are eager for the government to release more ships. A project would keep companies afloat while helping to offset losses.

"If there was ever a time for MARAD to award contracts," ESCO Chief Operating Officer Richard Jaross said, "now is the time."

Peripheral businesses, meanwhile, have also suffered from the downturn.

A hundred meters down the road from the gates of the port, Blanco's bar is a popular after-work haunt for many port workers, including the shipbreakers.

Owned by a former longshoreman, the bar draws hundreds of workers, who stop by on payday to cash their checks and unwind after work.

"We used to get 300 people in here every Friday," owner Eduardo Blanco said. "We're lucky if we get 100 now."

------------------------

Aaron Nelsen is reporter for The Brownsville Herald.