USA: GDBIW Completes Negotiations for Construction of Two Ships

U.S. Sen. Susan Collins and about 100 workers on Wednesday celebrated the completion of negotiations for construction of two ships that should keep Bath Iron Works’( GDBIW-Part of General Dynamics Marine Systems) employment relatively stable over the next few years. But a huge question mark hangs over the shipyard’s future because of a debt reduction deal passed this week that could cut hundreds of billions of dollars from the Pentagon’s budget.

Collins, the Maine Republican who serves on the Senate’s Armed Services and Appropriations committees, said the Navy and General Dynamics — BIW’s parent company — agreed last week to a memorandum of understanding that calls for two more DDG-1000 destroyers to be built in Maine, after she urged both sides to break a months-long stalemate. A contract is expected to be signed next month. Collins told the workers she is worried that much of the $3 billion allocated — for the lead ship in the Zumwalt class of destroyers plus the two approved last week — might have been lost as Congress scrambled to make huge cuts in spending as part of this week’s debt ceiling agreement.

“This money was in serious jeopardy of being swept up,” Collins told workers on their lunch break outside the headquarters of the shipbuilder’s main union, across Washington Street from the yard. “Any money that wasn’t obligated, under contract or otherwise nailed down was in great jeopardy.” Collins said a primary concern of the Navy was that the price per ship had risen as the number of ships scheduled to be built was cut from the original 12 to seven and then three. “The Navy was trying to drive an extremely hard bargain” because of that, Collins said, while General Dynamics wanted the price to reflect that it’s more costly, per ship, to build fewer vessels.

Collins and the head of the shipbuilders union said the Zumwalts would keep the shipyard busy until work on the Arleigh Burke-class of destroyers, the DDG-51, resumes in a few years. “Optimistically, this will keep the work force stable and possibly (it could) grow,” said Dan Dowling, president of union Local S6. “There’s a sense of relief that, for the most part, we don’t have to worry about massive layoffs which we would have faced.”

Dowling said those layoffs, which might have occurred without the work on the two DDG-1000 destroyers, could have been nearly half of BIW’s work force of about 5,300. BIW spokesman Jim DeMartini declined to speculate on how large the layoffs could have been.

The White House said this week’s debt deal called for $350 billion in defense cuts over a decade. The specific cuts are expected to be decided by budget and appropriations lawmakers after Congress returns from its one-month summer recess.

Collins said she’s especially worried about the additional, automatic cuts that would kick in under the debt deal if Congress doesn’t agree to another round of cuts to be developed by a special congressional committee. If the committee doesn’t agree on a deficit-reduction plan by year’s end or if Congress rejects its proposal, it would trigger some $500 billion in additional Pentagon reductions over the next 10 years.

“The potential cuts — in the neighborhood of $850 billion (in total) — that is enormous,” Collins said. She noted that the Defense Department’s two biggest weapons programs are Navy shipbuilding and development of the next generation of fighter jets, suggesting those programs could face reductions if the larger budget cuts occur.

DeMartini said that, as it stands now, the Navy is expected to order two new DDG-51s in the current budget year, which ends Sept. 30, one next year and then two each in 2013-15. BIW generally competes with Ingalls shipyard in Pascagoula, Miss., for Navy contracts, and often the work is split between the two yards. DeMartini said employment at the yard has been shrinking in recent months, largely because much of the design work for the DDG-1000s is done. The yard laid off 250 workers in June as that work wound down. DeMartini also said that General Dynamics planned to follow up on Collins’ suggestion that the company pursue work building Coast Guard cutters. Although those ships are considerably smaller — and cheaper — than Navy ships, she said it could offer good “fill-in” work in between larger Navy contracts. DeMartini said the company is expected to try to land a contract for construction of offshore cutters that the Coast Guard is expected to seek bids on this fall.

(pressherald)