PORTLAND – Experts say Bath Iron Works has faced massive reductions in military spending at least three times before.

Charles Colgan, professor of public policy at the University of Southern Maine’s Muskie School of Public Service, said the first major downturn came after World War I. In 1925, shipbuilding operations idled and Bath Iron Works was sold at auction.

Work also slowed after World War II, but boomed during the Cold War, when the Navy had 600 ships and BIW’s work force swelled to around 10,000, said Colgan.

Then the Cold War ended and the fleet shrank. Today, the Navy has 284 deployable battle force ships, according to the service’s website.

Loren Thompson, an analyst at Arlington, Va.-based think tank Lexington Institute, said that from 1989 to 1992, then-Secretary of Defense Dick Cheney slashed funding for more than 100 military programs.

“Demand for every type of military system collapsed,” said Thompson. “At BIW, the search was on for something that could fill the hole in revenue.”

Colgan said BIW briefly considered building cruise ships, but dumped the idea because they were too large to navigate the Kennebec River.

Thompson said the company’s circumstances in the 1990s looked poor.

But he said BIW still had valuable assets: Competitors couldn’t match the yard’s skilled work force, corporate culture or reputation for quality.

Also, backlogs at the time for Arleigh Burke-class destroyers were worth tens of billions of dollars in future revenue, Thompson said.

General Dynamics took notice and purchased BIW from a group of investors led by Prudential in 1995 for $300 million in cash.

“They were the only defense company that understood how much value there was at Bath,” said Thompson. “They bought the place for a song.”

Since the 1995 takeover, BIW has built 26 Arleigh Burke-class destroyers, including the USS Spruance, which left Bath for commissioning in early September. 

Staff Writer Jonathan Hemmerdinger can be contacted at 791-6316 or at:

jhemmerdinger@mainetoday.com