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Schnoor, Ron
Schnoor transcript, 1 of 1
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UH - Houston History Project. Schnoor, Ron - Schnoor transcript, 1 of 1. May 30, 2008. Special Collections, University of Houston Libraries. University of Houston Digital Library. Web. April 20, 2014. http://digital.lib.uh.edu/collection/houhistory/item/85/show/84.

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UH - Houston History Project. (May 30, 2008). Schnoor, Ron - Schnoor transcript, 1 of 1. Oral Histories from the Houston History Project. Special Collections, University of Houston Libraries. Retrieved from http://digital.lib.uh.edu/collection/houhistory/item/85/show/84

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

UH - Houston History Project, Schnoor, Ron - Schnoor transcript, 1 of 1, May 30, 2008, Oral Histories from the Houston History Project, Special Collections, University of Houston Libraries, accessed April 20, 2014, http://digital.lib.uh.edu/collection/houhistory/item/85/show/84.

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

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Title Schnoor, Ron
Creator (LCNAF)
  • UH - Houston History Project
Interviewer (LCNAF)
  • Phaneuf, Victoria
Date May 30, 2008
Description An individual in my yoga class knows Ron Schnoor and said he would tell him about our study. He did, and Mr. Schnoor said I could contact him. I was able to arrange to meet him and conducted this interview. Mr. Schnoor is the chief operating officer of Signal International in Mississippi and Texas. He began his career with Brown & Root, and went to work for Ham Marine in 1984 as a project manager. He progressed through the company and watched it grow and merge with other companies (e.g., Friede Goldman) to become more vertically integrated. In 1995 he was named president. When the company was bought out of Chapter 11 bankruptcy by investors to form Signal International, he was named senior vice-president of operations, the position he holds today. In this interview, he describes the evolution of his company, particularly their strengths and the ways they have diversified over the years. He discusses with some detail the labor issues the company has recently faced and their use of H2B visa workers through contract companies and their own recent troubles with sponsoring H2B visa workers. He sees the future of offshore oil and gas work in the Gulf of Mexico in the deepwater.
Subject.Topical (LCSH)
  • Energy development
Subject.Name (LCNAF)
  • Schnoor, Ron
Subject.Geographic (TGN)
  • Pascagoula, Mississippi
Genre (AAT)
  • interviews
Language English
Format (IMT)
  • audio/mp3
  • application/pdf
Original Item Location ID 2006-005, Box 12, HHA 00707
Original Collection Oral Histories - Houston History Project
Original Collection URL http://archon.lib.uh.edu/index.php?p=collections/controlcard&id=231
Digital Collection Oral Histories from the Houston History Project
Digital Collection URL http://digital.lib.uh.edu/collection/houhistory
Repository Special Collections, University of Houston Libraries
Repository URL http://info.lib.uh.edu/about/campus-libraries-collections/special-collections
Use and Reproduction Educational use only, no other permissions given. Copyright to this resource is held by the content creator, author, artist or other entity, and is provided here for educational purposes only. It may not be reproduced or distributed in any format without written permission of the copyright owner. For more information please see the UH Digital Library Fair Use policy on the "About" page of this website.
File name index.cpd
Item Description
Title Schnoor transcript, 1 of 1
Date May 30, 2008
Original Collection Oral Histories – Houston History Project http://archon.lib.uh.edu/index.php?p=collections/controlcard&id=231
Repository Special Collections, University of Houston Libraries
Use and Reproduction Educational use only, no other permissions given. Copyright to this resource is held by the content creator, author, artist or other entity, and is provided here for educational purposes only. It may not be reproduced or distributed in any format without written permission of the copyright owner. For more information please see the UH Digital Library Fair Use policy on the "About" page of this website.
File name hhaoh_201207_327b.pdf
Transcript HHA# 00707 Page 1 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 1 Houston History Archives VP083 Ron Schnoor May 30, 2008 Pascagoula, MS Type: mp3 Interviewer: Victoria Phaneuf Transcriber: Doug Welch Editor: Lauren Penney Ethnographic Preface: An individual in my yoga class knows Ron Schnoor and said he would tell him about our study. He did, and Mr. Schnoor said I could contact him. I was able to arrange to meet him and conducted this interview. Mr. Schnoor is the chief operating officer of Signal International in Mississippi and Texas. He began his career with Brown & Root, and went to work for Ham Marine in 1984 as a project manager. He progressed through the company and watched it grow and merge with other companies (e.g., Friede Goldman) to become more vertically integrated. In 1995 he was named president. When the company was bought out of Chapter 11 bankruptcy by investors to form Signal International, he was named senior vice-president of operations, the position he holds today. In this interview, he describes the evolution of his company, particularly their strengths and the ways they have diversified over the years. He discusses with some detail the labor issues the company has recently faced and their use of H2B visa workers through contract companies and their own recent troubles with sponsoring H2B visa workers. He sees the future of offshore oil and gas work in the Gulf of Mexico in the deepwater. TRANSCRIPTION Interviewer Initials: [VP] Interviewee Initials [RS] RS: My name is Ron Schnoor, I’m the Chief Operating Officer of Signal International Marine Fabrication and Construction Company, that has operations in Pascagoula, Mississippi and Orange, Texas. Mississippi and Texas area, we’ve got [Inaudible] facilities there and in Pascagoula we have two facilities in which we perform marine fabrication work for a variety of clients and our core business is to repair, retrofit, and new construction of offshore drilling rigs, as part of the US Gulf of Mexico offshore oil and gas development. VP: Okay.HHA# 00707 Page 2 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 2 Houston History Archives RS: Is that okay? VP: That’s good. RS: Okay good. VP: Now how did you first become involved with the industry? RS: I was contacted by a gentleman that I worked with in a construction company, when I started my career. I was working for Brown and Root. And Brown and Root, back in the ‘70s was the largest general construction company in the world, building a variety of projects all over the world. I happened to be in the fossil power plant construction division of Brown and Root. And in any event, I was contacted by someone I had worked with in the company who had been from Pascagoula, Mississippi and was working for a relatively small company at the time, who was trying to develop management and the organization to service the repair of offshore oil and gas drilling units that operated in the Gulf of Mexico. And this was in early 1984. At that time, there were very few businesses that supported and had shipyards, if you will, or rig yards, in our terms, who-, and where offshore drilling companies could bring in their rigs to be serviced. So Pascagoula’s a deepwater port and rigs draw significant water, in other words, that’s the part of the rig that’s beneath the top of the surface and it requires relatively deep water to float them in and out of a facility. And so Pascagoula was an ideal location to develop a business like that. And also Pascagoula, Mississippi has a very long and rich history of shipbuilding and is the location where still today one of the largest shipbuilding companies in the world, or in the US certainly, Northrop Grumman Ship Systems still employs in excess of 10,000, in fact they may be closer to twelve or fourteen thousand people today. In the same area, there’s also a number of other shipbuilding industries that are located along the Gulf Coast from Mobile, Alabama to New Orleans, Louisiana, where a significant pool of workers reside and who we can draw from as the source of our skilled workforce. VP: Now how were you involved with that company when you came down to Pascagoula? RS: I came down as a project manager. I was a project engineer for Brown and Root and at that time in my career I did more engineering work than I did project management work, but they were looking for technical people, management people to manage projects. And so I came in 1984 as a relatively young fellow, 30 year old fellow and began a career with a company that probably employed several hundred at the time. And we grew the business significantly over the years, but in the ‘80s it was also a very difficult market for offshore oil and gas. And the business is very cyclical in nature. We’d have a job that might last three months and then we’d have another two months where we didn’t have a job, so we were constantly growing and laying off our workforce for a significant period of time because the business during the ‘80s was relatively uh, in its lull or in a low cycle. In fact before I came into the industry in the early ‘80s, the business was booming and like so often happens in the oil and gas related service industries, the business goes through cycles. And after I came, it was a relatively low cycle until probably the early ‘90s. And so it was a challenge for us, but we successfully managed our way through those HHA# 00707 Page 3 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 3 Houston History Archives periods and we continue to develop our niche in a market and the company I was employed with is a company called Ham Marine. And that company was founded in 1983. And it survived as a very important part of a company that grew from Ham Marine called Friede Goldman International until…actually 2001. In 2001, Friede Goldman International, who had bought the assets of, well actually, that’s a long story, I’ll [Slight pause] if you wanna ask more about that, I’ll talk about the development and the history of that whole company, but nonetheless, the company went into bankruptcy in 2001. And our company today, Signal International, was formed in 2003 and the assets of Friede Goldman International were bought out of the bankruptcy and Signal was founded and we’ve done exceptionally well since 2003 and through today, and of course the future looks very, very good for the organization as well goin’ forward given today’s commodity prices and price of a barrel of oil and the cubic foot of gas, and the demand on offshore drilling rigs, which is very, very high today, in fact the day rates for rigs are higher today than they ever been in the history of our industry. And of course I think we all realize that uh, US citizens are paying more for a gallon of gas today than they ever have. And depending on how you categorize that, um, is, I guess can vary, but frankly the Europeans and other people around the world pay significantly more for gas than we have in the US and I think relatively speaking, the price adjustments are uh…let’s just say it was low for awhile and now it’s certainly not low anymore, it’s high by any standard including our own. But in any event, I think we were spoiled for a long time paying what we did for gas and now the adjustments are obviously taking significant effect on the economy and other things, but uh, we’ve got a strong market and the economy’s strong, and people keep driving even though the gas price has increased by double over the last, relatively short number of years, so. You want to know more about the company and the history of-? VP: The history of the company. RS: Yeah, Ham Marine, I started as project manager in 1984 and then I progressed through the company. In the early ‘90s became vice-president of operations and in 1995 was president, became president of Ham Marine. In 1997, Ham Marine began a plan, a very good plan actually, to grow its business. We acquired an engineering company called Friede and Goldman Limited. We also acquired the name, it’s a very respected name, in fact it is today in the industry, of a design company that designed drilling rigs, jack-ups and semi-submersible drilling rigs. And we also did some other things, we developed the facility we’re sitting in today in 1997 as a new built state-of-the-art operation. And we also began growing the business. We acquired a shipyard in Newfoundland, Canada as part of this business, it was Friede and Goldman Newfoundland was the name of the operation, but it became another subsidiary of our company, which at the time was called Friede and Goldman International. And of course the company’s mission was to acquire additional assets and form a fully integrated business that can design, build, and service offshore drilling rigs. And the company went public in 1997, July of 1997 and grew tremendously. In fact, in 1998 or ‘99 the company was one of the best and fastest growing businesses in the US. And our chairman at the time, a gentleman by the name of J. L. Holloway, was on the cover of one of the financial magazines. You know, so the very, it started off very, very successfully. An-, however, in ’99, signed up some very, very [Slight pause] let’s just say a very bad contract in one of its business units. And the company continued, however, to grow and further merged with a company who was literally on a parallel track, the company was called HHA# 00707 Page 4 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 4 Houston History Archives Halter Marine. That company was also very successful company whose core business was the construction of medium sized boats and vessels. And they had delivered more vessels in their history than any other shipbuilding company in this country. Some twenty-seven or twenty-eight hundred vessels were built by Halter Marine at this time. And Halter had also, while they were growing, wanted to get into the drilling rig business, like us, and they were also doing similar things to the Friede Goldman organization by adding other businesses to it that would allow it to vertically integrate itself and also build offshore drilling rigs and provide equipment as well, certain equipment on those rigs in a similar fashion to what Friede was doing. And those two companies merged in…late ’99 or early 2000, somewhere in that timeframe. They too had signed a very, very bad contract to build some new drilling rigs. And when I say bad contracts, contracts that ultimately cost them more to build than the value of the contract. Which means they were very, very significant losers. And without saying who had the worst contract, ultimately those two contracts forced the company into Chapter 11, and the combined company, Friede Goldman Halter went into bankruptcy in early 2001, actually April of 2001. All the while, this offshore business, the Friede Ham side, continued to work and support the offshore drilling in the Gulf of Mexico. And this particular business continued to operate profitably and successfully through that period of time. AND, like I said a minute ago, was ultimately purchased out of the bankruptcy by some independent investors and Signal International was formed. And my position in the Friede side was president of the offshore side of the business, and I became, with Signal, senior vice-president of operations and I manage this operation today, and then was recently given our Texas division, Signal has two divisions, one here in Pascagoula, and the other division in Texas, given responsibility for the Texas division and became chief operating officer the last 30 days. Our Texas operation is actually offshore business side of the Halter organization that I described earlier. Halter Marine had the company that is now Signal Texas, and this operation was in the Friede side of the business, and it’s now Signal Mississippi. So on a combined basis, we have six yards, six different facilities, four of which are in Texas and two of which are located here in Pascagoula. And this unit here in Pascagoula primarily today services the offshore drilling rigs, you can see those big units outside, those are big semi-submersible drilling rigs. And we work for virtually all of the offshore drilling contractors that operate in the Gulf of Mexico and they’re all domestic businesses, most of which are located and headquartered in Houston, Texas. And we’re also doing some new building construction for Northrop Grumman Ship Systems, we’re doin’ a little bit of that work, I say a little bit, relatively significant amount of that work here, but in our Texas operation we’re doin’ three times that much work. And we’re building what are referred to as blocks, the very large portions of ships and we fully outfit them with equipment, and piping, and ventilation, and electrical for Northrop Grumman. And then we load out those units in Texas and put them on barges and they return back to Pascagoula to Northrop Grumman and to Avondale, which is a shipyard in New Orleans, who do mostly US government work for the Navy. And then those two companies, or those two facilities take those big blocks and form and build US warships for the US Navy. We currently employ approximately 4,000 people. Twenty-two hundred here in Pascagoula, about eighteen hundred in our Texas operation. VP: What would you say the biggest changes in the industry have been over the time you’ve been involved with it?HHA# 00707 Page 5 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 5 Houston History Archives RS: That’s an interesting question. Obviously the technology has increased and continues to increase. Today the oil rigs that we work on can drill in water depth up to 10,000 feet, which is amazing, that’s nearly two miles of water depth. And they can drill in some cases up to 30,000 feet into the earth’s core. And that’s another six miles to explore and ultimately find oil and or gas, which is produced by the oil companies and ultimately provide fuels for literally the entire world. I’d have to say the biggest change that has affected our business came in late August and actually early September of 2005, and that was Hurricanes Katrina and Rita. And those two storms changed the availability of skilled workers along virtually the entire northern coast of the Gulf of Mexico. And in times prior to 2005, in Pascagoula in these operations and even Orange and the Sabine area of Texas, skilled labor was not a problem. We were able to hire all the workers we needed to service all of the jobs that we had. And in this operation, in 1998, and probably late 1998, this operation alone that employs twenty-two hundred today peaked at forty-eight hundred workers. Forty-eight hundred workers. And we probably had thirty-five hundred at the same time in our business in Texas. And today, we cannot hire sufficient numbers of skilled workers directly from the direct workforce. Now that’s for quite a few reasons, but the primary reason was the fact that many workers were ultimately displaced from along the Gulf. Lost their homes, lost their work, and they went elsewhere in the country and haven’t come back, because of the infrastructure damage. And additionally, the construction or the new construction to repair the coast, has a tremendous demand on the available population of skilled workers in construction. And so the fact that many workers were displaced, and all of the infrastructure that was required as a result of the devastation that these two storms left, has created HUGE demand on the workforce. So that has to be the single greatest challenge we face. Plus, the work we do and the work our employees do is not, it’s difficult and it’s hard, and today’s youth have other aspirations and many of them really don’t care to sit and weld and paint, and do what we do. So that’s a future challenge, a long-term challenge. So facing the issues in our industry of having adequate skills to do what we do is a big challenge. Now, we have managed that in this company very, very well. We got very creative, and I say creative, we associated ourselves with other companies who have had the ability along with our own ability to hire directly, to bring in sufficient labor for us to grow the business and to support the customer base that we have, and to produce the work on time for our customers. And today, that’s very, very, very important, because if they’re in a shipyard and their schedule is longer than it should’ve been, they’re losing huge income that could otherwise be earned if they were producing and drilling for the oil companies. The day rates that these rig owners receive today are significantly higher than at any other time in our history by a huge margin. And I don’t know exactly what that is, but it’s in the two and three hundred percent higher per day. And that’s of previous market peaks, when things were going well and demand was high. So these are huge, huge rates, and these rigs are worth many hundreds of millions and they receive anywhere from several hundred thousand dollars a day, to some of ‘em in excess of 600,000 dollars a DAY. For one day of service. And they’re makin’ these huge profits, because their operating cost is significantly less than that, but that’s the level of demand for these rigs, to produce and to drill offshore for the oil companies. And that’s affected in large part by the demand for fuel and oil and gas, and that’s affected by the world economy and the development of places like China and India, and our own needs, Europe, and US, and Far East, and the Middle East, for energy. So it’s a huge demand, it’s a world demand and most experts don’t see it going down significantly for a long time, which in and of itself is not a bad thing to the extent that doesn’t continue the price of gas, the price of oil doesn’t HHA# 00707 Page 6 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 6 Houston History Archives continue to go too high, because it could reach a point where that would affect demand and the ability of people to afford, you know, four or five dollar per gallon gas prices. I’m not sure where the limit is, but feels like it’s getting there. If that were to happen then demand obviously for those commodities would go down and uh, ultimately create some problems for the entire industry, so. VP: In the ‘80s, when you first started working with Ham Marine, how were the business relationships with the rig owners, was there the same pressure to get them back out as quickly as there is today, or how has that changed? RS: You know the rig industry has always been a pressure cooker, frankly, with respect to time and I think that’s part of the, just the nature of the work and the nature of the demand for these units in our industry, but I’d have to say today it is higher, significantly higher because of the value. And there’s a much greater focus today on a company’s ability to plan and schedule a huge amount of work in a very short period of time. And back in the old days, back in the ‘80s, we had, we didn’t do a lot of planning and scheduling to the extent we do today, formal planning and scheduling. And nor did the rig owners do a lot of forward thinking and planning, they would come in and usually they wouldn’t come in unless they had a contract. And if they had a contract, that meant they had to go drill somewhere and so there was a very short period of time to do the work, including the engineering that usually has to be done before the work can be defined and before the work can be performed and the materials procured. So in the ‘80s, the work was still under a lot of pressure to finish, but it was it was much more unplanned, much more chaotic and um…very, very challenging. A lot of point and shoot sort of things that we would do with our workforce. And today it’s much more planned and it’s all about before the rigs come in, and our company has done well, very well, in its ability to manage, plan, execute, schedule, these jobs, very large jobs for a very short period of time. Most of our jobs last 90 to, and even some I’d say 50 to 120 days. Today, in and out. And most of them require us to work seven days a week, day and night shift, we work a 20 hour day, two 10 hour shifts and occasionally, two 12 hour shifts. So we literally take the entire calendar, days and nights, clock and work to get these rigs out. But today planning, and the management, and the tracking of our progress along a planned or a scheduled timeline is very, very precise. And it’s still challenged by the fact these jobs always grow, there’s always an element of change in them that has to be digested as well, and digested within that same time frame. So, anyway, it’s still pressure, but it’s planned better today that it was in the past. VP: Now when did that start to change? RS: I’d say more recently, really more recently, let’s say the last five years, you know since Signal’s development. And for a lot of reasons our own success if you will or the problem jobs that I very briefly described that caused the bankruptcy of the prior company, really forced us to do a much, much, much better job developing our planning and management systems than we had in the past. And the other huge change is too, our focus on safety, just for the record, Signal is the safest shipyard in this country by a long, long, long, long way. We are, and I’m talking by a factor of 10 times, 10 times the average of our industry, safer, 1000 percent safer. And we, through this period have developed a very, very strong and very solid safety management system, HHA# 00707 Page 7 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 7 Houston History Archives which in addition to the planning, and the project management, the execution of the work, has allowed us to become much more efficient than most US shipyards and certainly safer than any shipyard. In fact, I was recently told that our competitor, with the largest drilling contractor in the world, basically said, “Ron, you and your competitor,” and I won’t mention names, “used to be neck and neck with respect to your safety performance, in the world.” And he said, “Now Signal is better.” So that’s a pretty strong statement, especially in a business that’s inherently very, very dangerous. We do a lot of things, we work at heights, we do some things that are very, very risky and if it weren’t approached right, people could die. And we approach it right. So I don’t know if you noticed this, but when you came into our yard, did you see the sign? VP: [Unclear] RS: That’s our safety scorecard and we’ve got many of’em around here, we tell the world what our record is. And most companies hide those numbers, because they’re bad. But we don’t hide them, they’re posted on a website. Our people and the culture of the organization is very committed to safety. And they’ve just done an outstanding job of managing that aspect of our business, so, we’ve done very well. And oil companies like that, I mean that’s why they come. Oil companies have driven that culture over time and they’re probably, in fact, and there’s companies like Dupont, Dupont’s big, and other heavy industrial companies have been champions of safety management and the avoidance of risk. And you can manage yourself safely, and you can keep people from getting hurt, and you can take very dangerous things and work in a managed, organized way and do it safely, so that’s, we’ve learned those lessons in how to do that. I’ve actually been asked to speak, recently I spoke at the Shipbuilder’s Council of America session in, a number of months ago, about the evolution of our processes and our programs, and what and how we manage safety. And I’ve also been asked to speak in Virginia in October to the Virginia Shipbuilding Association, which is one of the largest in the country, about managing safety, so that’s a good thing. Signals being able to help our industry perhaps do something that it hasn’t done before. So we’re trying to promote that as well. VP: Great. RS: And that’s a big change from now to the ‘80s. We didn’t have very good safety back in the ‘80s. It was all about push, push, push and get the job done. So we fell right in there, even per-, we may not’ve been as bad as the shipbuilding industry is because we did work for the drillers, who work for the oil companies, who insisted that we perform better, but we’re much, much safer today than we ever were back in the ‘80s. VP: In terms of this increased planning, what would you say that the drivers for that have been? RS: The certainty of delivery. That’s the driver. You know the rig owners wanna be in the facility for a finite period of time, and only that amount of time required to do the work. And so that’s the driver. And for us to be able to reliably know how long it was gonna get there and not long to, but HOW we were gonna get there, and the sequence of the work, and how the work had to be executed to get us there in the shortest amount of time, it’s critical. So we had to have the tools, which we do, the planning tools, through our production and management and planning HHA# 00707 Page 8 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 8 Houston History Archives personnel, and the ability to build the schedule that was necessary before the work started and then secondly to follow that plan with the right resources, because the number of resources men, hours, etcetera, are all integrated and to track ourselves against that was all required to make sure that we could see if we’re gonna have a problem and we would know where those problems were within our schedule, so that we could focus on fixing those problems, so that ultimately the job would finish when it was planned to, or before. Or before. Before is good. If we can get there faster, that’s a good thing. We recently have done some jobs and we have beaten the schedules. And in this business, that’s very good too. So when that happens, our customers are very, very pleased, we get a lot of recognition for that, and sometimes we get bonuses for that. So to the extent we meet or beat those schedules, that also provides us future business opportunities. And doing the opposite provides just the opposite. You [Chuckles] if you can’t perform on time, or you can’t perform successfully and the customers lose, then you lose, and you lose business opportunities, so it goes hand in hand. VP: Starting in the ‘80s, how did the company grow its customer base? RS: Our customer base is relatively small. It’s even smaller today than it was in the ‘80s. And I’d have to say in the ‘80s, there were probably 15, and I’m just approximating some numbers for that without quantifying each one, but there were probably only 15 domestic offshore oil drilling companies, contractors, in the country at the time. And [Pause] during the ‘80s, we worked for a majority of those companies. And over the ‘80s through the ‘90s and certainly into the 2000s, there was a lot of consolidation. And today there are…you know, there’s probably 10, maybe even less, and for the most part, we work-, companies, we work for most of those, and now I’m talkin’ about domestic companies, there’s other foreign companies as well that do offshore drilling, but that’s a relatively small list as well. But there’s a lot of new speculators that are people who, investor types, who are starting some new drilling companies and that are just in the process of forming. Because right now, there’s quite a few rigs being built, new rigs being built, most of ‘em are built in China, and Singapore, and the Far East, maybe a few in Korea. There’s also a company in the US in Brownsville called AmFELS, A-M-F-E-L-S that’s buildin’ some rigs, but it’s parent company is a company out of Singapore called Keppel FELS. It’s abbreviated K-F-E-L-S. And they’re probably the largest new build rig builder in the world right now. They got a lotta rigs they’re building. But anyway, back to the customers, it’s a small list. Not many of’em. And so I’d have to say right now, we are the preferred um…the company to do upgrades and [Inaudible] on existing units in operation. Now we’re not doing any NEW building in this operation, we were doing and have done some new building in our Texas operation, but we do that as a smaller piece of our business, we work mainly on existing rigs. Somebody has to upgrade them, and keep them up, and repair them, because they age over time. The average fleet is over 20 years old and in this business, that’s pretty significant, they’re not getting younger, in fact, jack-ups, are the smaller rigs that jack-up off the ocean floor and they elevate the rigs, it’s like a barstool, three legs, and they elevate the platform and drill. But those total number of rigs are probably 24, 25 years old on the average. So they require a lot of repair work, and that’s what we’re doin’ to the rigs you see out here now, repairs and upgrades. VP: Do you foresee a point in the future when you’ll start having to retire these older rigs?HHA# 00707 Page 9 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 9 Houston History Archives RS: Yeah. Yeah, some will retire as they get to a point where it’s no longer viable to repair them. I’d say when they get north of 30, but I mean, it just depends on how well they’re maintained is what, you know we’ve worked on some rigs that are 20 plus years old, and we’ve done some major work and they should last certainly well into their 30s, but at some point in time, they will have to be replaced. VP: And do you foresee that happening sort of all at once or will it be- RS: No, it’s a gradual deal, I don’t think it’s all at once, but [Pause] so many rigs, and I’m not sure what the numbers are, but I’d have to say, yeah, I think there’s probably six or seven hundred between that number of units in the world’s fleet of offshore drilling rigs and the last number, I think there’s about 100 and some being built, so, over time, 10 or so, or maybe somewhere between six and a dozen rigs every year are retired. And that fleet has to be replaced by new units. And there wasn’t a lot of building between 19-, say ‘84 and…19 say ’96. There was a spurt in the very early ‘80s and even in the late ‘70s, a lot of rigs were built and so from ’84 to say ’96, there wasn’t many, there was a handful. And then from ’97 through let’s say 2000, there was a, I won’t say a bunch, but there was a small spike of new building. And that’s when we kinda got in trouble with those two contracts I was referring to. And then, since, um, I’d have to say 2005 going forward, maybe 2004 going forward, there’s been a huge increase of the amount of rigs that are being built and a lot of those rigs are just now starting to come out of construction and go into the fleet. So, depending on how long that pace continues, a lot of these older rigs will ultimately be phased out and new builds will be phased in, so that’s kind of what’s goin’ on today. VP: Now what was behind the company’s decision to get more into the refab and repair rather than new build? RS: Well, that’s where we started. Okay, in 1984, when Ham Marine started, that’s what we did. We weren’t a new build company, and we do that very well. And it takes repair and conversion and upgrade takes sort of a different approach, different mentality than new builds, different organization even, it’s a different business. New builds are long-term projects that require a lot of engineering and big facilities for manufacturing these huge rigs. And, anyway, we started out in the repair and conversion business, we did that very well, and we didn’t have a lot of success, frankly, when we tried to do some new builds because we were good at repair and conversion and, again, it’s much different. It takes a lot more technical expertise and engineering, and all sorts of things, now we can do that TODAY successfully, but we started in repair and conversion, we became very good at it, and that’s really what our core is. We’re still very good at repair and conversion work. We will however successfully do new builds in this organization in the future, there’s no doubt about it, I mean we’ll be positioned with all of the technical expertise that we need to manage that work successfully. So, we’ll just have to see when some of the shipyard capacity, and it’s pretty well at capacity in the Far East, is consumed, we’ll have some more opportunity. When there’s a lotta capacity, we don’t wanna do it, because there’s people who do that as their core who could probably-, and in parts of the world where labor’s cheap, China. So we wouldn’t begin to try and compete against those people for that type work. So when their capacity is consumed and when there’s a need for more new build development, and the market HHA# 00707 Page 10 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 10 Houston History Archives is already adjusted from a pricing standpoint, the prices we would need in the US to be able to build those units successfully. VP: Now have you ever had any foreign customers? RS: Yeah. Just recently had a foreign customer. We had a rig come from West Africa, that is owned by a company called CROSCO. CROSCO is a Croatian Oil Offshore, it’s actually not oil, but Croatian Offshore…Drilling Company. VP: Now are there advantages or disadvantages to having foreign versus domestic customers? RS: Um…you know, perhaps, I mean the job was successful, but you know [Slight pause] for the most part, we work with domestic customers. [Slight pause] You know you’re always at a disadvantage to a certain extent if you’re dealing with somebody and they’re headquartered some other part of the world, they have a different language, and, you know, different business philosophies, and so forth and so on, that’s a potential risk. But we haven’t had a real bad [Slight pause] at Signal, we haven’t had a real bad problem with foreign owned businesses. The previous jobs I talked about that were bad were both foreign contracts and they didn’t work out too well. We haven’t had any bad DOMESTIC contracts. So there is a risk with a foreign company. VP: And going back to Ham Marine, when did the first foreign contracts start showing up? RS: Ninety-seven? VP: Okay. So was it that they weren’t available before that or that the company wasn’t interested? RS: No, the company [Slight pause] before that there wasn’t a lot of new building, okay, from ’84 to ’96 I said. And then there was a spike in the demand for new builds, and there was also some reason to build rigs in the US, over building them elsewhere in the world. And Friede Goldman had developed and grown its business and developed this operation, and this particular facility was in existence and it was purposely built to do new build work. And so we won some contracts in either late ’96, no I guess early ’97…no, maybe late ’96, but anyway, we signed a number of new build contracts. And we did some successfully, by the way, we did several successfully, but we ended up with two, and they were both for two units, four rigs, two contracts, significant, hundreds of millions of dollars, and they were very bad contracts, they were one-sided in favor of the owner. And ultimately, the new building experience we had was limited and this was new technology too, 1997 there was new technology involved that hadn’t been built before. And so there wasn’t the historical costs and the historical information available to draw from to properly estimate the cost of doing the work. And so that coupled with the bad contracts, that being the fact that they were new technology, new builds, very, very complicated, very large, very, a lot of things, ultimately translated into some real financial challenges that forced our company into bankruptcy. VP: You mentioned at that time there were reasons for foreign companies to build in the US, HHA# 00707 Page 11 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 11 Houston History Archives what were- RS: There was some financing, MARAD financing and government financing advantages, that sort of thing. Equipment, a lot of equipment that goes on the rigs was built in the US, and it didn’t have to be shipped overseas. A lot of the expertise was US, plus there was financial advantages that made it good to do the work here. VP: Someone had mentioned that this facility was built in part with MARAD funding? RS: [Hesitates] Yes. VP: Can you tell a little bit more about what kind of funding that was? RS: Umm…let me think of the…I almost want to say, it’s not, it’s…yeah. MARAD [Slight pause] provided, and I don’t recall the details, honestly, but MARAD backed the development of this facility. And the MARAD financing was the finance mechanism that produced the, that and the fact that the company went public and raised its own capital, the company went public in 1997. But I’m trying to remember the amount of MARAD funding. It wasn’t tens of millions, but anyway, I can’t remember the numbers, but there was some, let’s just say significant amount of MARAD financing, essentially a US Government backed loan, low interest loan to develop infrastructure and create jobs. And that in part backed the construction of this facility. All that was repaid by Signal when it procured these assets out of Chapter 11 bankruptcy, so all the MARAD financing went away when Signal bought the assets. All that was paid off. VP: It was paid off at the time of purchase? RS: Mmhm. VP: Do you happen to remember what program that was under, by any chance? RS: Title 11, I think. Title 11, MARAD Title 11. I think that’s the right-, I think it’s Title 11, I was trying to think of the-, I know it was 11 something, but I think it’s called Title 11 MARAD finance. But anyway that was one of the, and I’d have to say that was one of the few successful MARAD, I don’t want to say that, “few successful,” that’s probably the wrong word to use. There had been a number of let’s just say not so good MARAD-backed financing deals that fell through. And certain ships were backed by MARAD financing and other deals were backed by MARAD, and some of’em weren’t very successful. And so I think it challenged that whole Title 11 MARAD funding effort. I’m not even sure where it is today, but there was a lot of folks, US Government folks against it because it hadn’t been very successful. VP: Now were any of the other ones in association with the string of companies, or was it more on the national level [Inaudible]? RS: I’m not sure I understand-HHA# 00707 Page 12 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 12 Houston History Archives VP: Oh, the ones that weren’t successful, I mean, speaking from personal experience, with this company or- RS: No, no, no no, unrelated to Signal, or Friede Goldman, unrelated to either of our businesses. Now there was some, a number of jobs, national jobs that were backed by MARAD financing, they weren’t successful. Some new ships and um, I think cruise ships, there was a cruise ship program that was MARAD financed and there were some other yards and facilities and things that MARAD had backed that didn’t succeed. VP: Now, getting back to the workforce questions and you said that it’s a much different [Pause] economic situation today than it was back in the ‘80s. RS: Yes. VP: How have the company’s attitudes towards workforce [Inaudible, background talking] and um, not finding the word that I’m looking for right now. RS: How have they coped, and how have they managed, and what have they done to- VP: Maintain the- RS: Maintain the workforce? VP: Workforce over time? RS: Higher wages, better benefits, um…better safety, and I’m talkin’ really about Signal. I mean we pay very near the top in our business, in this region, and in Texas. But anyway, we pay good, we have good benefits, relatively speaking, good insurance, vacation, holiday pay, 401k matching contribution, we match half of, dollar for dollar up to three percent on 401ks, so there’s a match there by the company. I mentioned safety, but anyway, all of those things have helped us to retain our core employees and to grow our workforce. When we were hit by Katrina, I think we probably employed then around eleven hundred, and we’re twice that today. Now the other thing we’ve done is shortly after Hurricane Katrina, we had relationships with about nine various contract labor providers. And [Inaudible, sounds like distracted] not sure who, that our guys are, somebody’s leavin’ early, or it’s five o’clock, I’ll check, but anyway. Um, so that we could import workers and we refer to them as supplemental contract employee, who have the same skills, because we couldn’t hire them locally. A lot of the workers come from Mexico. Hispanics who are in the country legally, we don’t hire illegal alien. Under the government’s foreign worker program, it’s called H2B visa program. But anyway, we developed relationships with those and engaged those companies to help supplement our workforce post-Katrina. We also went overseas ourselves and into the government’s H2B visa program and we were approved to bring in approximately 590 Indian citizens from India. We were approached by a US agent and there was an Indian agent, and a lawyer. If you’ve read anything or done any checkin’ on Signal, there’s been some recently really negative press on this whole issue, but it’s all really unfounded. But ultimately what happened is, and we didn’t know this, it was part of our being a little naïve, HHA# 00707 Page 13 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 13 Houston History Archives frankly, but we relied on the agents to bring the Indian workers to us, which they did. And of course, we sponsored the visas through the US government, we sent some of our management people to India to interview and test the employees, like we would any employee, to make sure they had the right skills. And we did that, and then we started getting Indian workers here in November of…let me think about my timeline…2006, November of 2006. We invested about 7,000,000 dollars in two facilities, two camp facilities, and actually they’re homes, residences. We call them “man camps” but that’s probably not a very polite way to-, foreign worker resident housing, how’s that? That’s the politically correct word. But we really went out of our way to do this right. New facilities, new galley, mess area, lounges with pool tables and big screen TVs, and we gave them access to internet, and all sorts of things, satellite TV from Indian stations so that they would be connected to home. But anyway, to make a long story short, these agents had been working with some of these Indians for two or three or so years before Signal ever got involved with them. And these folks had paid a huge amount of money, we were advised two to three thousand dollars apiece would be paid by these workers to bring them to the country, and that sounded reasonable, airfare, and handling, and recruiting, and those costs, that sounded pretty reasonable. But after these people got here and we started working with them, we began learning that they paid these agents significantly more money than that, 10,000, 15,000 dollars a head. A huge amount of money. And these people came pretty well financially strapped if you will. ‘Course that wasn’t our doin’, we didn’t make the deal with the agents, didn’t know anything about it, but, as their sponsoring employer, we kinda got drugged in the mess at the end of the day. And also what happened is we got some workers over here who had no skills. They couldn’t fit or weld, so somebody tested for them, in India, and somebody else showed up. So we started training some of these people and to a certain degree, had some success, but we incurred extra costs training certain numbers of’em. And as it turned out, a fault, a few, six as a matter of fact, had no skills. Now we couldn’t train’em and we were gonna convert them into a fire watch position or a labor position, but we couldn’t do that because the visas they came into this country for were for fitters and welders who had to be paid a prevailing wage. And the skill level they had was below the prevailing wage. We weren’t gonna pay them the welding, fitting prevailing wage, because it would be fair to our other employees who weren’t getting that kind of money for the skills and the work they were doing. So, but the lawyer said we can’t keep’em, “you’ve gotta send’em back to India, give’em their plane tickets, send’em back.” So in that process, we were gonna terminate them and send’em back to India. Well one of’em goes crazy and goes into one of the bunk houses and he slashes his wrist. And he excites the rest of the crowd and, not a riot, but a mini disturbance develops within the camp, and then the news media shows up out front, and then the American Civil Liberties Union shows up out front. And it becomes a big deal that Signal is abusing and engaged in human trafficking, and ALL this really, really bad stuff which is totally untrue. And so as a result of that, we have backed off our foreign worker H2B visa program and right now we have 104 very happy, very well fed Indian workers still remaining. We’ve lost a significant amount of them, because frankly they want to get to this country through whatever mechanism they can, and then they just disappear into the night, and become illegal aliens and go with relatives or go wherever they go. We’re not sure half of’em are goin’. And they disappear. And so that program was, let’s just say, not a pretty good success for us. We spent a lot of money, we invested a lot of capital, time, and energy, and so we’ve backed out of all of that, plus, the negative press was just not very good. And today we’re paying lawyers to sue the heck out of a lot of people who are involved and who had produced, falsely, HHA# 00707 Page 14 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 14 Houston History Archives accusations against us for all this kind of stuff that’s absolutely ludicrous and unfounded. We’ve been inspected by half a dozen or more US Government departments, Department of Labor, Department of State, ICE, Immigration, you know, US Coast Guard, everybody and their brother. And clean as a whistle, no problem because of the camp, because of the facility, man, it’s like college dorm, you know. This is better than I had in the US Navy. And of course we hired an Indian caterer out of New Orleans to cook Indian cuisine and food, and like I said, we tried to handle it right, did handle it right, but nonetheless, got in the midst of some people, agents and others who were trying to take advantage of some people, and having them pay exorbitant amounts of money to receive a visa to come to this country and get a job. So it’s kind of a not a good deal, so, anyway. But that’s one of the initiatives we took to get more people in. Like I said, we still have 104 of’em, but we paid a big price for that. VP: Now you said that you had H2B visa workers from Mexico? RS: Mmhm. VP: And that was a different experience? RS: Oh yeah. Absolutely no trouble. And of course we’re not the sponsoring visa holders, there are other companies that do that that we employ that provide us fitters and welders and it just so happens that you know, they do SOME of that through the same H2B visa foreign worker program. And we’ve had zero problems with- [Slight pause] like the Indian situation here. VP: Now there are also Indian workers in Texas? RS: Yes. VP: H2B visa [Inaudible]. RS: Mmhm, mmhm. VP: Was there a similar situation there? RS: Pretty much. Similar situation, but most of the, let’s say the troublemakers, came out of the workers that came to Mississippi, and we got the first batch, and the first batch were some of these that had been paying these agents for two or three years before Signal ever got involved. But anyway, in our Texas operation, right now, we’re only doing US Government work and in US Government work for the Navy, you can’t have foreign nationals working on a US project. So we couldn’t use the H2B visa workers, so we transferred some number, it was about 25 or so, out of Texas, and we were gonna do like 35, but only 25 showed up, the other ones disappeared between Texas and Mississippi, who knows where they are, they absconded. But we got 25 with our 104, 20 or 25 that were from Texas, we have zero in Texas today. VP: Now with the Mexican workers that are brought in by the other visa agents, do they live in camps here or do they live in-HHA# 00707 Page 15 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 15 Houston History Archives RS: No, they don’t live in camps here, they live [Slight pause] I do know some live in camps elsewhere, but some live on the local com-, I mean in apartment complexes or whatever. But there’s no restrictions on where they live and so I couldn’t really answer that. VP: Now that you’re backing off from the visas, where do you think the company will look for more workers in the future? RS: That’s a good question using supplemental labor that we’re using. Um, uh, developing and training, we’re working with, in both Texas and Mississippi, local state agencies to train, let’s just say lesser skilled and develop higher skilled workers from our workforce and from local community colleges in the region. There’s also a very active effort on the part of Gulf Coast shipyards to work with state agencies and together to train and develop the skilled workers that we ALL need to continue business. But right now we’re not looking for other foreign H2B visa-type deals for ourselves, but we will work with labor contractors, hire that labor if it’s got the right skill we need and if we can, to the extent we can’t hire them directly. And then we’ll work on longer term plans to train and develop our own skills. VP: In terms of supplies other than labor supplies, like steel and other materials, how do you find your suppliers? RS: Um, how do I find our suppliers? Well, for the most part, we’re reasonably well serviced, but the price of those materials are certainly more significantly higher than they used to be. Demands are greater, in large part due to demands in China and India for US steels and, in fact, steel in general around the world. And so it takes longer to get things than it used to. And it’s more expensive, so again you’ve gotta look ahead, plan ahead, manage that more carefully than we used to in the past. And used to have to in the past. But, you pay sometime and you pay some extra dollars today given the market, the demands on everything. VP: Now your relationships with your suppliers, are those mostly long-term relationships or? RS: Yeah, for the most part, mmhm. We’ve got a very strong vender base and we’re a reasonable sized employer here and also in Texas, so we have no problem with having sufficient vender bases to support all of our needs, from consumables through all the bulk permanent material we buy to do the work we do. VP: Now when Friede Goldman was looking to expand from the yard on the West Bank, what made this location here a good choice? Were other locations considered? RS: Well we looked, actually we looked all over the Gulf Coast, from…Mobile all the way to south Texas. And at the end of the day, this particular piece of property was on the south end of Bayou Casotte Channel, it’s a deepwater channel. And on the south end, meaning there’s no obstructions south of us, I mean you’ve got, there’s no bridges, there’s nothing between us and the Gulf. And these very large, very tall rigs can come and go as they please. But at the end of the day, this turned out to be the best piece of property, the best location primarily driven by the HHA# 00707 Page 16 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 16 Houston History Archives labor, workforce in this region and the fact that we were, I mean this was home to us anyway. But we did, before this facility was built, do a lotta research and visited a lot of places, and this turned out to be absolutely the best in terms of the quantity and the quality of skilled labor that we needed to have a successful business. VP: Now do you foresee the company moving at any point? RS: Uh uh. I’ll retire right here. We’re not moving. This operation and this company is necessary for supporting the offshore drillers in the Gulf of Mexico. And the Gulf of Mexico’s not moving and the oil in the Gulf is not going anywhere, it’s gonna be tapped and there’s a lot of opportunity. That opportunity lies in deep water. And I don’t know, you’ve probably have heard of the continental shelf and that’s primarily shallow water and that’s been developed over the past, you know, since the ‘50s, 40 years or so. And most of that’s been explored and most of that they know where the reserves are et cetera, et cetera. But the new frontier is deepwater Gulf of Mexico and that’s where the new finds are, and that’s where the development has been, and that’s where the technology has been employed to allow that to take place. And so most of our experience, even back in the mid ‘90s, has been on these large deepwater drilling rigs, in fact all three of’em you see here are deepwater drillers, relatively speaking. We do also service jack-ups, but most of the jack-up business are in recent times, a lot of jack-ups have left the US Gulf of Mexico and they’re working in various parts of the Middle East and other parts of the world where in shallow water there’s more exploration and more going on that hasn’t been done in the past, like it has been in the US Gulf. So the market for shallow water’s kinda weak. The deepwater’s gonna be very strong. So we’ll be here for long time to support and service that industry. We’re also looking to diversify the business further. Did I mention we’re building warship modules for Northrop Grumman? That’s one unrelated business, unrelated to oil and gas demand and supply, which does this sometimes, up [Inaudible], business cycle goes [Inaudible]. And then additionally, we’re gonna probably, not probably, we are gonna be pursuing large contracting companies who are working directly for the oil companies building refineries, building LNG facilities. And we’re gonna be positioning ourselves to supply modular components for companies, large construction companies that do the kinda work or need the kind of fabrication work that we do. And so that’s a different element of the business that we are starting to pursue now and see some future opportunity in as well. VP: And in the early ‘80s, and then up through the low period in the early ‘90s, were you primarily only working on rigs or was there attempt to diversify even back then? RS: A little attempt, I mean the company started actually as a small fabrication company that built pressure vessels and did piping for Chevron, the huge refinery that’s right across the river from us. And so back in the ‘80s, the company was still doing fabrication work, small fabrication work for the industrial companies that are around Pascagoula and even as far to the east as the refineries and plants around Mobile, Alabama, and even to the west of us, where Dupont has a facility in DeLisle, Mississippi, which is on the western coast, or the western side of Mississippi, near Louisiana, where Dupont has a facility. So it was servicing industrial plants and that sort of thing, on a small scale. We’re gonna be doing similar things but on a much larger scale to provide large components and modules for those developments. A lot of those things too, are HHA# 00707 Page 17 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 17 Houston History Archives going modular, that’s sort of the new construction technique that minimizes the amount of work that has to be done on site, so that you can build components and they’re put together, much like the ships I was talkin’ about, where we build all the little building blocks and it goes, and somebody joins those building blocks and builds a big ship. We’re gonna be doin’ a similar thing, but for industrial facilities, building modules with tanks, and pipe, and steel, and they string those together in the field and they don’t have to build everything from scratch, in other words. VP: Well I think those are all my questions. Anything else that you think I should know about the history of the company or your involvement with the company? RS: No. I don’t think so, I think we touched on the important issues, you pretty well know the developmental history, the big deal is the safety and planning, and the things the company’s doin’, which we’re very proud of. And you know, the things we’re doing in safety have never been done in the history of shipbuilding in the country, never. So it’s really a big deal, it’s really a big deal. It’s really a big deal. VP: Could you give me a couple examples of part of your safety program or something that’s so revolutionary? RS: Well, I wouldn’t call it revolutionary in the sense that nobody’s done it, because we’re using a system that’s been developed by the oil companies in refinery settings and other settings that those-, DuPont’s, but it’s called job risk assessment, we call it a JRA, slash work permit program. And it’s revolutionary in the shipbuilding industry. And what a JRA is, is everything we do, and I mean everything, there’s lots of, literally hundreds of different tasks we perform with different tools. But literally everything we do, we complete and have completed a JRA, Job Risk Assessment. And what that does is define the task, define the tools that are to be used and how the’re to be used, define the safety RISKS involved, and then outline the steps taken to manage or mitigate that safety risk. And that’s the JRA. And our production people for every project and every area of our facility, must have a JRA, and they come together with our safety people, and our safety people are the check and the balance that make sure the JRA is in place that describes all these things. And if that’s the case, they authorize the work to be done with a work permit. And that work permit is good only for seven days. And in practice, those two, every day at about three or four o’clock, every foreman and every project come together, and they review all the work they’re gonna do for the next 24 hours. And they have their JRAs and their work permits and that authorizes them to do the work. And so those foremen leave and the night shift comes onboard and then the day shift, about 15 hours later will come and their permits and JRAs are available. They take those JRAs and work permits to their crew, to the location where they’re gonna do the work, and they have what we call a gang [Inaudible] safety meeting with their crew. And their crew is given the requirements of the JRA and they sign off on it basically saying, “I understand and I know what that means.” And then they conduct their work that day, or that shift, in accordance with that JRA. And also everyday, the safety inspector and the foreman validate the work permit and say, “Yes, we are working in accordance with the JRA and yes they are working safe.” The foreman does it who’s responsible and accountable, and so does the safety person to check to make sure those employees are actually DOING in practice what they say they should be doing or what the JRA says they should be doing. Okay? So all that HHA# 00707 Page 18 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 18 Houston History Archives happens and there’s accountability for both the production people and the safety people, and that process prevents accidents. Okay? Prevents accidents. And the few accidents that we have, we do a very thorough investigation, and we understand the root cause of the accident, why it happened, and if we find out there’s something that we didn’t manage well in our JRA, in other words, there was a deficiency where we could’ve prevented an accident if we said, “Don’t do this,” or “do this, this way,” better on the JRA, we change the JRAs and our policies, if that’s needed. Or if we’ve had the requirements adequately defined and had the employees taken those precautions, they would’ve otherwise remained uninjured, we take disciplinary actions. Okay? And we, after an accident we bring everybody together and I am in the room, and they have to explain to me why they got hurt. And we either change our policy, or we change our practice, or we take disciplinary action, and nobody likes those meetings. I don’t like them nor [Chuckling] does anybody else. And the whole chain of command is in that meeting. The person who was hurt and his witnesses, their foreman, their general foreman, their department head, the project manager, our vice-president of production, everybody. And sometimes it’s very unpleasant. So they don’t like unpleasant meetings, so they don’t get hurt. So all that together has allowed us to eliminate accidents. It saves a huge amount of money. Our insurance is the lowest cost of anybody’s in the shipbuilding industry in the country. We’re not paying workman’s comp lawyers, we’re not defending ourselves in court because somebody’s suing us because somebody got critically injured or hurt. We are producing the work and providing the service in an accident-free environment, and that gets us future business and wins us work we wouldn’t otherwise have the opportunity to get if we didn’t manage ourselves that way. So it’s a very critical and important business strategic approach, strategic advantage over our competition. And so when the market is weak and others aren’t doing a lot of work, we will be, because we’ll be well managed, well planned, deliver on time, accident free, high quality. We’re an ISO 2000 company too by the way, I didn’t mention that. We certified ourselves ISO 2000 in 2003 as one of Signal’s initiatives. VP: Now, what does that mean? RS: ISO is an international standard that basically outlines the generic requirements that a company should-, to manage itself to, and really it’s a system that says, “Here’s how I’m gonna manage myself. And this is the system I’m gonna use to manage my business, all aspects of it, in compliance of that program.” So we simply do what we say and there’s an ISO certification that says, and it’s an independent third party certification, so it tells other customer companies that this company’s well managed, and it has a management system, and it manages itself like it says it’s gonna manage itself, is ultimately what it means. VP: At one point you mentioned that you were taking part in a shipbuilding trade association? RS: Mmhm. VP: Are there others that you are involved with? RS: Yeah, there’s two primary, we’re a member of the International Association of Drilling Contractors, which is the group of primarily our customers and the service providers, many HHA# 00707 Page 19 of 19 Interviewee: Schnoor, Ron Interview Date: May 30, 2008 University of Houston 19 Houston History Archives service providers like us are members of, it’s called IADC. And we’re also a member of the Shipbuilders Council of America. And that’s a group of the medium size shipbuilders in the US. And the large companies, there’s about five of’em, have a different, they’re not part of the Shipbuilders Council, they’re, I don’t know what the’re, a different group. But anyway, it’s the medium sized companies like ourselves and others. And I don’t know what the membership is today, it’s in the hundreds of companies, West Coast to East Coast, South Coast. We had a meeting in March and there were companies from Oregon, Washington, and up the East Coast of the country and other Gulf Coast companies, Bollinger and Conrad, and just various other shipbuilding companies, Halter and others. VP: What sort or benefits does membership and that sort of association bring? RS: That’s probably a good question. You know, exposure to new ideas, new opportunities, but it’s limited, in all honesty. Gives you some [Slight pause] flavor for what else others are doing around the country in your industry, so it’s an industry forum to share experience. And, you know our, we’re sharing our safety successes is just one application of our business so there’s a benefit there for others and we in turn learn about what they’re doing, and it gives you some sort of knowledge of what your competitors are doing sometimes. So it’s just an [Slight pause] opportunity to learn more about what your industry’s doing, and what others are doing, problem solve and workforce development, all these kind of things. But we don’t get a lot of business from it, except in IADC we’re close to our customers, which is a good thing. VP: [Inaudible] I’m remembering a couple others, are you advertising for new customers or it’s mostly people who’ve been- RS: Mostly repeat business, but yeah, we have a website, we have a marketing office in Houston we call on, and we’ll be calling on new customers. You know I mentioned large contractors we recently met with, one in Houston and they’re-, they visited us recently and gonna visit more, they’re actually building a new LNG facility across the river from us, and I think we’ll have a big opportunity to provide modules for that development. But we’re gonna be calling on other potential customers in LNG plant development, and oil companies, and companies that work for oil companies. VP: You answered all my questions. RS: Good. Tory, thank you. [END OF RECORDING]