BY GORDON R. FRIEDMAN AND MIKE ROGOWAY

Shipbuilding giant Vigor Industrial is choosing between Portland and Seattle for a significant expansion that could create up to 300 jobs building landing craft under a $1 billion contract with the U.S. Army.

Portland-based Vigor will build a prototype of its new Army landing craft in Seattle. But it is still weighing its options for where the company will put its full production line.

Vigor told The Oregonian/OregonLive on Wednesday it plans to decide within the next 60 days and start production within three years. The winning city is expected to get 200 to 300 good-paying jobs that are slated to last a decade.

"Both locations have good workforce-related incentives. The differentiating factor for us will likely be the economic incentives each city and state has to offer," Vigor said in a written statement.

Portland Mayor Ted Wheeler wrote in a

to Frank Foti, the company's chief executive, that the city would provide valuable perks if Vigor carries out the expansion in Portland.

Up for grabs, according to the letter: Design and funding of a custom training program for aluminum welders, help with regulations and permits, and a partnership with the city and state economic development agencies to "provide meaningful incentives" that "offset your cost of expansion."

"It is my intent that you feel fully confident that choosing Portland is the correct decision for Vigor, its employees and our city," Wheeler wrote in the letter, obtained by a public records request.

Gov. Kate Brown also

congratulating his company on the Army contract and declaring that she has directed officials to "ensure seamless coordination between the state, county, city and others when it comes to permits, land use, transportation or anything else."

Vigor is known for building and retrofitting ships of many sizes. The privately held company has 2,300 employees scattered across several locations, including its headquarters and 60-acre shipyard on Swan Island and additional facilities stretching from Clackamas up to Ketchikan, Alaska.

Earlier this summer, Vigor put thousands to work overhauling a 963-foot Carnival Legend cruise ship on a floating drydock in the Willamette River.

Vigor won its Army contract last fall to build a new landing craft with a "tribow monohull," which the Army claims improves maneuverability and stability in high seas. The 10-year deal, worth up to $979 million, is the largest contract in Vigor's history. It calls for as many as 36 of the new vessels, in addition to the prototype.

Portland and Oregon offer a range of tax breaks, working training programs and other incentives to encourage economic development. In 2013, for example, the city and state awarded $20 million in subsidies and other incentives to secure a new headquarters for Daimler Trucks North America on Swan Island.

The most valuable incentives for Daimler were grants from the city's urban renewal programs and property tax exemptions under Oregon's "enterprise zone" program.

Vigor won't qualify for similar grants because its operations are outside the urban renewal boundary, according to Troels Adrian, manager of the business and industry group at Portland's economic development agency.

Vigor's operations are within an enterprise zone, though, and Adrian said those property tax breaks are the most valuable incentives under discussion. The size of the savings will depend on the scale of the project.

While Portland is taking the lead on Vigor's recruitment, Business Oregon, the state's economic development agency, is offering additional incentives.

The agency said those includes Oregon's "Business Expansion Program," which provides grants based on additional income taxes generated by qualifying projects. Companies must hire at least 50 new employees and pay 150 percent of average state or local wages.

Like most large American cities, Seattle has its own menu of incentives to offer. Adrian said he does not know what specific incentives Portland's rival has proposed.

Peter McGraw, a public affairs manager at the Port of Seattle, did not respond to an inquiry about the nature of Seattle's incentives. In an email, though, he wrote, "Vigor provides essential maritime services to the Puget Sound region and beyond. We would be thrilled if Vigor chose Seattle for their expansion plans."

Oregon is enjoying historically low unemployment, triggering worker shortages in welding and other job categories Vigor says it requires for its new facility. The situation may be no better in Seattle, where Amazon's expansion has triggered a long building boom and similarly low joblessness.

While the Portland area has a long heritage in shipbuilding and an unusually large manufacturing sector, Adrian said it doesn't have a ready pool of skilled aluminum welders that Vigor will need for its project. He said the city is working with Portland Community College on a proposal to train welders to have them ready if Vigor chooses Oregon.

"For us an expansion like this would be a natural fit," Adrian said. "This is really the heart of what Portland is, is a shipbuilding town. It's one of the things that built the economy here."

-- Gordon R. Friedman

GFriedman@Oregonian.com

-- Mike Rogoway

MRogoway@Oregonian.com