Shipbuilder Vanishes, And So Do Jobs -- Owner Of Port Townsend Firm Disappears, Leaving Dashed Hopes And Unfinished Vessel

PORT TOWNSEND - Huddled around a table at the Blue Moose Cafe, a half-dozen Falcon Marine shipyard workers described what it's like to lose your paycheck in a community where good-paying jobs are hard to come by.

There are angry calls about missed child-support payments and overdue rent checks. Phone bills go unpaid. After waiting more than a week for her Feb. 6 paycheck, Diane Bates, 42, began filling out job applications and trying to come up with some extra cash.

"I look in my shed and say, `What can I sell?' " said Bates, whose two sons and ex-husband also work at the shipyard.

Bates and about 80 other Falcon Marine employees were left with plenty of anxieties after their employer, Dan Johnston, suddenly disappeared, leaving behind an unfinished passenger ship, hundreds of thousands of dollars in debts and a mounting legal squabble.

On Tuesday, a Jefferson County judge extended a temporary restraining order keeping Johnston away from the shipyard.

The Anchorage-based company for which the ship was being built, Phillips' Cruises and Tours, wants to take over the project. Before the passenger-ship company can begin work, it must obtain the right to assume insurance policies and other paperwork.

Johnston didn't appear in court, and his attorney said he wasn't aware of Johnston's present whereabouts. While the restraining order is valid until March 6, a settlement transferring the shipyard to Phillips' Cruises and Tours is expected sooner, said attorney Craddock Verser.

"My guy will do everything in his power to see that the workers get paid," he said. "I think he wants to see this vessel finished."

Asked where Johnston might be located, Verser replied: "I assume he's out looking for work."

Johnston moved out of his home near Port Townsend, and his general manager, Terry Berg, said he doesn't know where Johnston is. Johnston stopped by the shipyard on Feb. 7 to talk to workers and assure them that their paychecks would be coming.

Port Townsend is known more for wooden-boat shops than large shipyards like Falcon Marine. The unemployment rate in Jefferson County is around 8 percent, roughly twice as high as in King County.

Besides the Port Townsend Paper mill, the major local employers are hospitals, schools, three grocery stores and a prison. Falcon Marine was the 10th-largest employer in Jefferson County.

When Dan Johnston came to town in 1996 with his plan to open Falcon Marine, he was welcomed as a man who could help transform the sleepy seaside town for the 21st century.

A Canadian citizen, Johnston had made a name for himself building fast aluminum boats in Fort Lauderdale, Fla. He wanted to move his family from the hustle of south Florida, and chose Port Townsend because it was near his mother-in-law's home in Victoria, B.C., said Berg.

But Johnston didn't move only for personal reasons. He wanted his company to start building larger vessels for the tourism industry. In a couple of years, Johnston told employees, Falcon Marine would be hiring up to 350 workers to build as many as seven aluminum vessels.

But something went terribly wrong, and work at the shipyard was halted before the first vessel was completed. Details of what caused the financial troubles remain unclear.

The unfinished ship, named the Klondike Express, sits in an enormous covered shipyard. Under the restraining order, Johnston and other Falcon Marine employees can't even enter the building.

The original contract promised the 400-passenger Klondike Express would be finished by June 15, 1997, at a cost of $4.25 million. Even after $5 million has been spent, the vessel is far from seaworthy. Faulty welds - because of poorly trained workers and cold temperatures in the covered shipyard - mean the boat will have to be almost entirely rebuilt, said Fred Rodolf, representative for Phillips' Cruises and Tours in Port Townsend.

"It's a massive re-work job. It will take tons of time and money," he said.

When he began searching through Falcon Marine's files last week, Rodolf came upon one unpaid bill after another. SeaFirst Bank was owed nearly $200,000, the water and telephone companies had threatened to shut off service, and power to the shipyard was cut. In addition, Falcon Marine did not meet its two-week payroll on Feb. 6.

"Dan overestimated his ability to get the job done," said Verser. "There were a lot of unforeseen things. The delivery of aluminum was late, and it went downhill from there."

In court documents, Brad Phillips, owner of the tour-ship company, said Johnston assured him last month that the project could be completed and that Arab investors were buying half of Falcon Marine for $15 million. The current status of that proposed investment is unclear. Johnston's general manager said negotiations with outside investors were continuing, but that he hadn't spoken to Johnston in more than a week.

Phillips now wants to sever all ties with Johnston and finish the Klondike Express himself.

While that would mean Falcon Marine employees would be called back, it would dash hopes for an established aluminum-boat industry in Port Townsend. Phillips does not intend to operate the shipyard after the Klondike Express is completed.

Many Falcon Marine workers feel betrayed. They portray Johnston as an imposing boss who often stormed around the shipyard with a pistol tucked into his waistband. But he promised long-term jobs, which now seem unlikely to materialize.

"This has devastated this community," said Randy Bishop, 37, who worked as a laborer for $7 an hour. "There's not 80 jobs around here for people to go to."

Alex Fryer's phone message number is 206-464-8124. His e-mail address is: afry-new@seatimes.com