November 7, 2013

Residents debate $6 million tax rebate for Bath Iron Works

Views differ on BIW’s budget constraints and need for ‘credit enhancement.’

By J. Craig Anderson canderson@pressherald.com
Staff Writer

Bath residents gathered Wednesday night to debate the merits of a proposed city tax rebate for Bath Iron Works valued at more than $6 million.

click image to enlarge

Bath residents gathered Wednesday night to debate the merits of a proposed city tax rebate for Bath Iron Works valued at more than $6 million.

Gabe Souza/2011 Staff File Photo

The discussion centered primarily on whether BIW should be considered a local company with its own budget constraints or a branch of the massive and hugely profitable General Dynamics.

Officials at BIW, a subsidiary of the Virginia-based defense and aerospace firm, said it’s possible that if the proposed tax break is denied, they might not be able to go forward with construction of a $32 million outfitting hall that they said is necessary to keep the company competitive.

Opponents said Bath needs the estimated property tax rebate of $250,000 a year for 25 years more than BIW does, since its parent company General Dynamics is making hundreds of millions of dollars in profits each quarter.

The Bath City Council is scheduled to vote Nov. 20 on the proposed subsidy, in the form of a “credit enhancement” amendment to the city’s Wing Farm tax increment financing district. The council held a public hearing Wednesday, and another is scheduled for right before the council vote.

The Wing Farm district is at the south end of the shipyard, where the proposed outfitting hall would be built.

The outfitting hall would allow many BIW employees who currently work outdoors to move their operations into a climate-controlled facility, company officials said. Such a move would be less hazardous, more comfortable for workers and greatly improve efficiency, they said.

Most importantly, it would allow BIW to be more competitive against its chief rival, Huntington Ingalls Industries in Mississippi, for U.S. Navy contracts, they said.

“If Bath Iron Works is not competitive, it will build fewer ships,” company Vice President and General Counsel Jon Fitzgerald said. “This is really not about General Dynamics. ... Bath Iron Works must stand on its own.”

Opposition group leader Jerry Provencher said he does not believe BIW would walk away from the proposed expansion if the town council denies the tax rebate. He said the company has a long backlog of contracts worth billions of dollars and appears to be competing just fine.

Provencher ended his argument by taking a swipe at previous characterizations of the proposed deal as a “win-win” situation for BIW and the residents of Bath.

“As a city, I’m not sure we can afford any more win-win situations,” he said.

Some residents spoke out in favor of the tax break, including several BIW employees.

Amy Lent, executive director of the Maine Maritime Museum in Bath, said she supports the proposed subsidy and warned her fellow residents that BIW’s continued presence in Bath should not be taken as a given.

“To think that it’s never going to go away is shortsighted, I think,” Lent said. “We know that, historically, things go away. There’s not a lot of shipbuilding going on in America anymore.”

BIW employee Jim Strickland said the shipyard has contributed a great deal to the Bath community and should receive the city’s support in its time of need.

“We’ve had some successes, but we’ve also missed a lot of opportunities because of our lack of competitiveness,” Strickland said. “Don’t fool yourself – General Dynamics won’t cover Bath Iron Works forever if it continues to operate in the red.”

Tax rebate opponent Howard Waxman said there is no denying that BIW is a subsidiary of General Dynamics, a company that generated $651 million in profit in the third quarter.

He questioned whether BIW threatening not to build the expansion without the tax break was equivalent to “holding a gun to our head.”

“Nothing has really been said as to why Bath Iron Works needs that credit enhancement,” Waxman said.

J. Craig Anderson can be contacted at 207-791-6390 or:canderson@pressherald.com@jcraiganderson

 

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