BATH, Maine — As management and Maine’s congressional delegation on Thursday congratulated Bath Iron Works for landing a $3.9 billion contract to build four new destroyers, the leader of the largest union at the shipyard sounded an alarm.
Mike Keenan, president of Local S-6 of the Machinists union, said the four ships, compared to six awarded to the shipyard’s only competitor, Huntington Ingalls Industries, left his members with little to celebrate.
While the contract will see BIW build one destroyer each in fiscal years 2019 through 2022 — with the possibility of three options ships to be awarded — workers had hoped this multiyear procurement might garner the yard five, or even six, destroyers.
That would have provided, if nothing else, a morale boost coming so soon after the 2016 announcement that BIW had been unsuccessful in its bid for a $11 billion contract to build a new class of 25 or more Coast Guard cutters, the 2013 multiyear procurement that initially awarded five ships to Ingalls and four to BIW, and the 2017 decision by the U.S. Navy to have the USS Fitzgerald, the Bath-built destroyer that collided with a container ship off the coast of Japan, repaired at Ingalls.
With the Zumwalt class of stealth destroyers drawing to a close and the Navy not due to award a new class of frigates until 2019, Keenan said the four ships felt like a loss.
“This is three in a row,” Keenan said Thursday. He added that the company must act quickly to address specific problems if it is to remain competitive.
Although Ingalls’ price per ship was less than BIW’s, Keenan said problems inside the yard are preventing BIW from being competitive. While the company is beginning to address some of them, he said, others remain a frustration.
“We were a million man hours in the plus,” Keenan said. “How did we go from being in the black to these problems?”
To address the problems, Keenan said the company needs to tap the expertise of master shipbuilders rather than pay outside consultants.
“If you listen to them, nobody will touch us,” he said of the competition. “If you let the master shipbuilders who are left be the voice of the shipyard, we will run the show.”
Among the chief concerns for Keenan and his 3,400 union members is a “retirement bubble” about to take place as employees hired during a surge in work in the 1980s begin to retire.
Already, he said, 75 percent of the shipyard workers have been there five years or less.
“The new generation coming in are going to be incredible shipbuilders, but it takes time,” he said.
While he lauded BIW for partnering with Southern Maine Community College in Brunswick and opening its own training center, he said more is needed — and pointed to vocational schools and area high schools where “feeder programs” were operated in the 1980s. In those days, he said, “You’d have kids coming in with a little something already under their belt.”
When recent awards have not favored Bath Iron Works, analysts have pointed to the advantages of Ingalls in Pascagoula, Mississippi — a “right to work” state with a lower cost of living and more favorable weather.
They’ve rightly pointed out that with 40,000 employees between its Pascagoula and its Newport News, Virginia, facilities, Ingalls is dramatically larger than BIW, can spread overhead among more classes of ships and faces fewer regulatory hurdles than BIW.
Loren Thompson of the nonprofit Lexington Institute has said the Navy’s decision likely had more to do with maintaining two highly capable builders of surface combatants.
“The division of work in the most recent awards was designed to assure that both Bath and Ingalls would be able to preserve all their critical skills while sustaining a reasonable rate of return,” Thompson said in an email Friday. “Bath Iron Works has a better work culture and management team than Ingalls, but the Mississippi yard has more favorable labor conditions and weather.”
And Jay Korman, senior Navy analyst with the Washington, D.C.-based consulting firm The Avascent Group, said he wouldn’t be surprised to see the option ships awarded, as they were following the last multiyear procurement, “to even it out. Again.”
But Keenan maintains that much remains to be accomplished to make BIW competitive again.
Management shuffling in recent years led the company to lose “some of our key leaders,” Keenan said. And many opportunities to fill those spots aren’t going to the master shipbuilders, who “know the product from the keel up,” he said.
One of the more significant problems, he said, is that BIW president Dirk Lesko doesn’t hear of many issues.
“Things aren’t trickling up to him,” he said. “If you want to lead the shipyard, be out there and talk to the shipbuilders.”
Representatives for Bath Iron Works had no comment Monday.
With the announcement of the multiyear procurement out of the way, eyes at BIW now turn to 2020, when the Navy will award a $15 billion contract for design and construction of a new class of frigates known as the FFG(X). BIW and four other shipbuilders landed $15 million contracts to create conceptual designs, with the design due to be completed in June 2019.
BIW will likely be a strong contender, according to Korman.
“The ship is closer to a ‘tried and true’ acquisition for the Navy with requirements that BIW should be very comfortable with,” Korman said in January. “On top of that, BIW has been involved with the design of both older legacy frigates as well as the more recent Littoral Combat Ship and its derivative, and by modifying an existing design, BIW will be able to retire some cost and risk for the Navy. Combined, all this should make BIW competitive for the program.”
Maine’s congressional delegation is committed to landing as many “option” ships as it can over the next five years.
“The four ships awarded to BIW over the next five years will help provide predictable workload and stable employment for the yard’s hardworking and highly skilled men and women, and ensure that our military has the tools it needs to respond to serious national security threats across the globe,” Sens. Susan Collins and Angus King said in a joint statement Monday. “We will continue to advocate for additional option ships during this period, which would further boost our military readiness and create opportunities for BIW to receive additional destroyer contracts.”
But “option” destroyers are not the foundation upon which long-term stability can ride, so Keenan will keep pushing to work with management to diversify Bath Iron Works’ shipbuilding in ways that will enhance the shipyard’s viability.
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