BATH, Maine — Bath Iron Works received word Thursday afternoon that it has lost a three-way competition for an $11 billion U.S. Coast Guard contract to a Florida company, dealing a crippling blow to the Maine shipyard and its 6,100 employees.
The shipbuilding contract — the largest ever to be awarded by the Coast Guard — was seen as critical by management and unionized shipbuilders as construction of the final of three Zumwalt-class “stealth” destroyers passes the halfway mark.
Although work continues on four DDG 51 destroyers, with another three in the pipeline, shipyard President Fred Harris said that without the Coast Guard contract, as many as 1,200 manufacturing employees, or 35 percent of the shipyard’s workforce, could be laid off.
Shipyard spokesman Matt Wickenheiser confirmed the announcement just before 5:45 p.m. Thursday.
In a statement, Harris said, “We plan to meet with the Coast Guard to understand their selection decision.”
Eastern Shipbuilding Group Inc. in Panama City, Florida, was awarded $2.4 billion for the first nine cutters, with the potential for two more, Defense Daily reported. The ships will be part of a new class of 25 offshore patrol cutters designed to replace a fleet of 29 medium-endurance cutters ranging from 25 to 50 years old. Altogether, the 25-ship class is expected to cost about $11 billion.
Rich Nolon, president of Local S6 of the machinists union, the largest at the Bath shipyard, said Thursday he was “very disappointed” at the decision.
“I’m sure with the different reports that are out there of possibly 800 to 1,200 layoffs, I’m sure particularly some of our newer guys are going to start [worrying],” Nolon said.
The union’s regular membership meeting is scheduled for Saturday, and Nolon said he’s sure the contract will be discussed.
He said the contract was important not only for the work on the cutters, but also to allow the company to spread overhead costs over two programs, “so their bid on the next round of [Navy destroyers] can be lower.”
“It makes it all that more important that we work together to fix the things that are screwed up and move forward,” he said. “Some things we have the same opinion on how to get there, others we have a difference of opinion. That’s the nature of the beast.”
Maine’s U.S. senators, who advocated aggressively on BIW’s behalf, expressed disappointment.
“We are deeply disappointed by the Coast Guard’s announcement and believe that Bath Iron Works, with its outstanding shipbuilding record, would have delivered nothing but the best, highest-quality cutters to the Coast Guard,” U.S. Sens. Susan Collins and Angus King said in a joint statement. “We intend to evaluate the details of the award to ensure that the Coast Guard properly met all of its decision criteria, and we will continue to do all that we can to support the highly skilled men and women at BIW who do so much to support our nation’s security.”
Although BIW hasn’t built ships for the Coast Guard since the early 1930s, defense industry analysts and Maine’s congressional delegation have for decades touted the slogan, “Bath built is best built.” In fact, BIW has continued to secure Navy contracts despite higher costs connected with the cold-weather, northeastern shipyard.
“BIW can deliver performance far superior to the competing yards, but the Coast Guard has to be willing to pay for that, and it may not have the money,” defense industry analyst Loren Thompson, chief operating officer at nonprofit Lexington Institute, said in August.
With an eye to the Coast Guard contract, soon after he arrived in 2015, Harris instituted a series of across-the-board changes he said were designed to make the shipyard more competitive. They also led to a turbulent year for the yard that included lawsuits and a heated labor contract dispute.
BIW was one of eight shipyards that initially expressed interest in building the cutters, and in February 2014, the U.S. Coast Guard awarded BIW, Bollinger and Eastern contracts worth a combined $65 million for preliminary design work on the vessels.
At about $421 million per ship, according to a May report by the Congressional Research Service, the cutters are smaller and less expensive than national security cutters, which patrol the open ocean, but larger than the fast response cutters, which patrol close to shore.
A January 2016 report by the Congressional Research Office said construction of the lead ship is expected to begin in fiscal year 2018, with delivery in 2022.
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