Sometime Sunday afternoon, two Navy warships representing both the capability of Maine’s fabled Bath Iron Works and the financial challenges facing the shipyard will float near each other in the Kennebec River for the first time.

One ship, the 600-foot USS Zumwalt, is the most technologically advanced warship built for the Navy and the first of a new class of “stealth” destroyers. The 510-foot USS Rafael Peralta, meanwhile, is the 65th version of the Arleigh Burke-class destroyers that have been the Navy’s workhorse warship for decades.

Building the two guided missile destroyer classes simultaneously is straining BIW’s workforce and work flow, however.

Delays in finalizing the first Zumwalt-class destroyer have rippled through the shipyard, pushing back work on its two sister ships and reportedly affecting the other Arleigh Burke destroyers being built there. The delays, while common for “lead” ships in a new class, come at a time of heightened tensions between management and BIW’s largest union as the shipyard tries to reduce costs in order to better compete – and survive – in the face of federal budget woes.

The stakes are high for BIW, which directly employs 5,700 people and spent $64 million with hundreds of other Maine companies in 2014.

A subsidiary of the defense giant General Dynamics, BIW is competing for a Coast Guard cutter contract that shipyard officials have described as a “must win” to avoid layoffs as Navy work ebbs. Navy officials are also emphasizing – both publicly and privately in meetings with shipyard representatives – the need to reduce costs.

Fred Harris, president of BIW, told the crowd attending the christening ceremony for the yard’s newest destroyer, USS Rafael Peralta, on Saturday, “We have no other option: We must change.”

“The Navy is buying fewer ships and is demanding that they be built more affordably,” Harris said. “The competition for these ships has never been more intense. We know that our processes and plans demand dramatic improvements and modernization.”

Delivery of the USS Zumwalt has been pushed back several times and is now more than a year behind schedule. Crews from the Navy, BIW and Raytheon are working to finalize construction and test the roughly $4 billion ship’s complex systems, which include a 78-megawatt powerhouse, an all-electric propulsion system, new weapons systems and millions of feet of cable.

“They have had to take people off of other ships in order to address the issues on the lead (Zumwalt) ship, and that has definitely disrupted the smooth flow of work in the yard,” said Loren Thompson, an analyst with deep knowledge of the naval shipbuilding industry and chief operating officer of The Lexington Institute.

The delays are not entirely unexpected, however.

“The Zumwalt is, by far, the most revolutionary ship that any nation in the world has built this century, so the fact that it is taking longer than expected is not surprising and is not a reflection on the shipyard,” Thompson said.

BIW officials declined to comment on the work-flow issues and referred questions to the Navy.

A Navy spokeswoman, Capt. Thurraya Kent, said in an interview that it was too early to say how the Zumwalt delays are affecting work on the Arleigh Burke destroyers, adding “we will continue to evaluate if there are any schedule impacts.”

“The Navy and BIW are continuing to work together to collectively deliver these ships – both the DDG-1000s and the DDG-51s – as efficiently as possible and to work together to minimize risk and control costs,” Kent said, using the Navy’s numerical designations for the Zumwalt and Arleigh Burke-class destroyers.

Meanwhile, the push to reduce costs at the shipyard, combined with uncertainty over future work, continues to cause friction and concern within the unionized employee ranks.

“There is a lot of frustration,” said Jay Wadleigh, president of the Local S6 chapter of the Industrial Union of Marine and Shipbuilding Workers of America. “Some think they are being made to pay the price for things beyond their control because the (company-driven) process doesn’t seem efficient. There is a fair amount of tension – not necessarily angst against the company, but more concern about what is going to happen.”

A CHRISTENING

On Saturday morning, BIW passed another milestone in its roughly 130-year history by christening the Rafael Peralta, named for a Marine Corps sergeant who was killed in action while “clearing” houses in Fallujah, Iraq, in 2004. Peralta was awarded the Navy Cross for heroic actions during his service in Fallujah.

The Rafael Peralta is the 35th Arleigh Burke-class destroyer built by BIW since 1989, with the Bath yard’s primary competitor, Huntington Ingalls in Mississippi, producing another 30 of the ships.

Often described as the “workhorse” of the Navy, Arleigh Burke destroyers are viewed as multi-mission ships able to use their numerous missile systems to fight other ships, submarines, aircraft or targets on land. BIW-built destroyers are deployed around the globe at any given time.

Yet the history of the Arleigh Burkes and the untested Zumwalt-class destroyers offers insight into the turbulent nature of modern shipbuilding amid uncertain budgets and changing global military dynamics.

During the Clinton administration, the Navy announced plans to replace the traditional Arleigh Burke-class destroyers with a new, ultra-high-tech ship “designed upon post-Cold War requirements and 21st century naval warfare concepts.”

Rather than fighting Russian ships on the open seas, the Zumwalt-class destroyer was designed as a “land-attack destroyer” capable of getting in closer to land than Arleigh Burke destroyers despite being 63 percent larger. But Zumwalts are also designed to fight foes on the water, below the surface or in the air, and their “stealth” design of sharp angles and smooth exterior surfaces will reportedly give the 600-foot-long behemoths the radar footprint of a small fishing vessel.

The Navy initially planned 32 Zumwalt-class destroyers. Designing and building a brand-new class of warships is never cheap, however, especially when the vessels feature an entirely new hull design, power plant and new propulsion system. And as the cost of the Zumwalts grew, the Navy whittled down the number of ships it wanted from 32 to 24, then to 16, to seven and finally to the three now under construction at BIW. And even now, there’s talk the Navy could scrap the final ship – an unlikely prospect given the fact it could cost the Navy more to cancel the nearly half-built ship than to keep it.

MORE THAN JUST COST

To be sure, cost wasn’t the only factor in the Navy’s decision. China’s emergence as a major naval presence and potential threat, as well as growing tensions with Russia, prompted Navy officials to revive the Arleigh Burke-class design in 2008. BIW and Huntington Ingalls have since landed more than a dozen contracts for Arleigh Burke destroyers, with another multi-ship bidding war expected next year.

Five destroyers – three Zumwalts and two Arleigh Burkes – are now at various stages of construction in Bath.

Delivery of the first-of-its-class USS Zumwalt has been pushed back more than a year, however, as the Navy, BIW and Raytheon try to fine-tune the ship’s complicated electrical and weapons systems.

A March 2014 report by the Government Accountability Office, the federal government’s nonpartisan watchdog agency, cited the Navy as attributing the delay to “difficulties in completing the ship’s electrical systems, which is impacting test and activation events.” The GAO report said BIW negotiated five-month and 10-month delivery delays for the second and third ships.

But the GAO, citing Navy sources, also laid part of the blame on the so-called “sequestration” budget cuts that resulted from Congress’ failure to develop a more fine-tuned plan to reduce federal spending.

“Program officials also reported that the program absorbed sequestration reductions of $70 million in fiscal year 2013 by delaying testing and the award of contracts for mission-related equipment,” reads the GAO report.

“This is a very complex ship,” said Kent, spokeswoman for the assistant secretary of the Navy for Research, Development and Acquisitions. “And also, being a first-of-class ship … the most important thing is to ensure the quality and performance goals (are met) to join the fleet.”

Dockside testing of the USS Zumwalt is expected to begin in November, with at-sea trials set for December. Depending on how those tests go, the ship could gain “initial operational capability” sometime in 2017 – more than a decade behind the initial timeline outlined by the Clinton administration in the late 1990s.

“There are always challenges in building a first-of-its-class weapons system, whether it’s an aircraft, ship, or land combat vehicle, particularly one with the cutting-edge technologies of the Zumwalt,” Maine’s two U.S. senators, Republican Susan Collins and independent Angus King, said in a joint statement. “There is no workforce better positioned to build these ships than the talented, highly-skilled men and women of BIW who have designed, built, and supported the most advanced ships in the world for more than 130 years. The Navy has continually demonstrated their confidence in BIW for delivering the highest quality ships for our nation’s sailors and will continue to do so far into the future. Secretary of the Navy Ray Mabus has stated that the Navy is committed to all three ships because of the capabilities they will bring to the fleet, and we continue to take him at his word.”

The delays have received considerable attention from news organizations that closely track defense contracting on Capitol Hill. In August, Defense News published an analysis questioning whether a “polarity shift” was underway in which BIW and Huntington Ingalls were swapping places as the shipyards with the “highest dependability” and the “Navy’s chief shipbuilding problem child.”

Eric Wertheim, a defense analyst affiliated with the U.S. Naval Institute who compiles the nonprofit’s “Combat Fleets of the World,” said some problems are inevitable in a lead ship but “the measure of a successful shipyard is being able to overcome these in a timely fashion.” Oftentimes the key, he said, is having a solid workforce skilled at responding to challenges.

“They have a lot of history (at BIW) and the core of the story is: What kind of time frame are we looking at getting back on track?” said Wertheim. “These are two very complex (ship classes) and with complex ships comes complex problems.”

AWAITING THE DAY

BIW officials are already prepping for the day when the final Zumwalt floats down the Kennebec. Next year, BIW will submit a formal design proposal for a new class of Coast Guard Offshore Patrol Cutters potentially worth more than $10 billion. But Bath is competing against two Gulf Coast shipyards that produce commercial ships – a much more cost-conscious endeavor than complicated Navy ships – and one of which already builds vessels for the Coast Guard.

In an effort to cut costs, BIW management wants to outsource fabrication of some ship components – such as lockers, tables and electrical panels – to outside contractors rather than build them in-house. But the union has pushed back, arguing outsourcing will not save the money management envisions and could result in lower-quality parts. Last spring, members of the Local S6 union staged a walk-through march in a show of solidarity and protest.

In more recent months, the company has brought in negotiators with the firm The Gephardt Group to try to address some of the issues.

“Company and union leadership continue to meet, facilitated by the Gephardt Group,” BIW spokesman Matt Wickenheiser said. “The Gephardt Group has extensive experience helping labor and management work through challenging situations and identify potential solutions. We’re hopeful they will help us work together successfully to secure our collective future.”

Wadleigh, the Local S6 president, said the meetings have led to some “palatable” work-flow solutions that both sides can live with. But a recent meeting between Wadleigh, other members of the union’s leadership and the Navy’s top acquisitions officer, Assistant Secretary of the Navy Sean Stackley, confirmed for the union what the company has been warning about reducing costs.

“He helped confirm that the Navy is very concerned about costs,” Wadleigh said. “He had a lot of good things to say about the workers up here … but it’s all about cost.”