Word: seatrain
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...Seatrain's problems began in 1969, when it started constructing large oil tankers at New York's old Brooklyn Navy Yard. Although the company had no shipbuilding experience, the U.S. Maritime Administration provided $100 million in construction subsidies for the shipbuilding, as well as loan guarantees for most of the remaining costs...
...shipbuilding effort very quickly became a disaster. The inexperienced workers pushed up labor costs at exactly the same time that the market for oil supertankers was dying, after the 1973 escalation of oil prices decreased the world's demand for crude, and thus for crude carriers. Seatrain was forced to sell two of its vessels in 1973 at sacrifice prices. The remaining two sat idle or were chartered for less profitable short hauls for three years before they were eventually used to carry crude from Alaska's North Slope...
...Seatrain decided to close the shipyard, but then another Government agency, the Economic Development Administration, stepped in with $50 million in loans to keep it operating...
Meanwhile, Seatrain's container freight operation was falling apart in a whirl of scandals and bad business. The firm had to pay the Government nearly $1 million in penalties for making kickbacks to shippers and about $500,000 for unpaid import duties...
During the fourth quarter of last year, Seatrain's losses totaled more than $150 million. When bankruptcy papers were filed in a New York court last week, the company, which had shrunk to just 550 employees, owed an estimated $200 million to some 3,500 creditors around the world, including $150 million to Chase Manhattan Bank. But the biggest potential loser, with another approximately $335 million in outstanding loans and loan guarantees, may be the Federal Government...