2016-11-04 / Front Page

What’s next for BI W?

Unable to secure Coast Guard deal, shipyard strives to find new work
BY NATHAN STROUT
Times Record Staff

BATH

With the loss of a Coast Guard contract to build up to 11 cutters, Bath Iron Works may soon be short of work.

The shipyard is currently building two types of ships, the highly advanced Zumwalt class destroyer and the Arleigh Burke-class destroyer, which has been a mainstay of BIW for decades. Over the years, however, the Zumwalt production line has been reduced from 32 to 24 to seven to just three destroyers. With the third and final Zumwaltclass destroyer already deep into construction, BIW officials had hoped that the Coast Guard cutter contract could fill the void left by the three highly complex guided-missile destroyers.

“Bath is in a tough spot,” said Craig Hooper, who studies national security challenges at Gryphon Scientific and writes about Navy shipbuilding on his blog, Next Navy.

“Shipyards are never at their best when they are introducing a new ship or building the last ship of a production run,” added Hooper. “With the high-tech DDG-1000, Bath is doing both.”

A familiar situation

With no work to replace the Zumwalt destroyers, BIW appears to be in a bind — although this wouldn’t be the first time.

“This has been, I wouldn’t say a frequently repeated situation, but it certainly has occurred a number of times over the years,” said Ralph Linwood Snow, a local historian and author of “Bath Iron Works: The first hundred years.”

In 1970, BIW lost out on a vital winner-take-all contract to build 31 Spruanceclass destroyers. To make matters worse, when BIW officials traveled to Washington, D.C. to be debriefed on the award, the Chief of the Bureau of Ships told them that the Navy had no future plans for BIW in its shipbuilding agenda.

“Well, this was a crushing blow to BIW,” said Snow. “They had big plans for expansion of the shipyard for one thing or another. And all of a sudden, there was this big job — 30 destroyers — removed from their to-do list. So Bath sort of descended into great grief and gloom and doom and so forth and so on.”

BIW officials responded proactively, according to Snow. While the shipyard had recently reentered commercial shipbuilding, it now doubled down, winning options on 12 commercial vessels within two years of losing the Spruance-class contract. James Goodrich, then the president and CEO of the shipyard, also pursued upgrades, capital improvements and the complete modernization of BIW.

Eventually, Navy construction would return to the shipyard in the form of the Oliver Hazard Perry-class frigates. The modernization of the production line under Goodrich helped the new destroyers come in early and under-budget, according to Snow.

Now with the loss of the Coast Guard contract less than two months ago, BIW seems to be facing another possible lapse in work.

“There’s really no question that they are basically short a vessel,” said Snow.

Return to commercial shipbuilding?

Could BIW return to the commercial shipbuilding that sustained the shipyard through the lean years following the loss of the Spruance class destroyers? The last commercial vessel build by BIW was completed in 1984, but NASSCO, another General Dynamics shipyard, continues to build both commercial and Navy vessels.

Loren Thompson, COO of the Virginia-based Lexington Institute, doesn’t think a return to commercial work is likely for the Bath-based shipyard.

“Bath Iron Works is configured to build high-end warships. It wouldn’t make a lot of sense for the yard to focus on projects that are low-end and consist mainly of metal bending,” he said.

Matt Paxton, president of the Shipbuilders Council of America, agreed that it would be difficult for BIW to reenter the commercial shipbuilding industry after three decades. Part of the problem is that Navy shipbuilding is a much more rigorous process than commercial work.

“Building Navy assets, and building them to the highest of standards in the world, which is our U.S. Navy military specifications, takes a very highly trained and highly motivated workforce,” said Paxton. “And so shipyards that build Navy assets really do have to have a singular focus on the Navy shipbuilder requirement, which is rigorous.”

Furthermore, BIW would have to compete with a number of commercial shipyards that don’t have to worry about the overhead costs that come with Navy shipbuilding. These commercial shipyards also draw from a richer assortment of suppliers and workforce that helps drive down costs.

“The commercial industrial base, they really do provide a broader base of suppliers, a broader base of engineers, a broader base of naval architects, a broader base of a workforce, welders, pipefitters, you name it,” said Paxton. “And if you don’t have that commercial base, it really would be harmful for shipyards like Bath Iron Works. If you’re just building Navy ships and you don’t have a commercial industrial base behind you, it would make things even tougher.”

“It would be a mistake for Bath to try and compete for tugs, auxiliaries or other simple, low-cost naval vessels,” added Hooper. “Many more yards compete for this work and can beat Bath on price.”

What now?

What should BIW do now? It’s important to note that while BIW may have less work in the coming years, it retains Navy work — unlike the situation in the early 1970s. For most of the experts contacted by The Times Record, the answer was to pursue the next round of Arleigh Burke destroyers aggressively and focus on making the ones currently in production as quickly and cheaply as possible.

“When it comes to serial production of advanced surface combatants, Bath probably is the best at what it does. So that’s where it needs to focus in terms of securing future work,” said Thompson.

While BIW officials did not wish to comment on this story, the shipyard has said that it plans to submit a bid for the next round of Arleigh Burke destroyers in early 2017, and BIW President Fred Harris has called that contract critical to the shipyard’s future.

“This is a contract we must win, as the work is urgently needed to sustain the great paying jobs and benefits we enjoy as employees of General Dynamics Bath Iron Works,” Harris said.

nstrout@timesrecord.com

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