Navy analysts agreed it’s in the best interest of BIW and the union to resolve the strike, which is approaching its fourth week. Kathleen O’Brien / The Times Record

BATH — As the largest union at Bath Iron Works nears the end of its third week on strike and the shipyard battles mounting production delays, Navy analysts say the BIW’s future hinges on union and management cooperation.

Local S6 Machinists Union, which represents 4,300 of the company’s 6,700 employees, rejected a three-year contract proposal and voted to strike on June 22. The shipyard’s demand to continue subcontracting and change seniority privileges remain the major points of contention between the company and the union.

In the proposed contract, BIW said it wants the right to hire subcontractors “to overcome manning shortages, lack of equipment, or facilities,” but agreed it will not use subcontractors “to avoid hiring employees … or to overcome a manning shortage if there are involuntary layoffs in the relevant trade.” Despite the promise, union members have said they don’t trust the company not to replace workers with cheaper, out-of-state subcontractors.

Tim Suitter, Local S6 spokesman, said the company wants to be able to hire subcontractors “without justifying its reasons to the union,” as it does now, giving union officials little ability to monitor the use of subcontractors.

Loren Thompson, chief operating officer of the Virginia-based Lexington Institute, said when tension between a company and its unions becomes a chronic issue, it can slow production and increase costs for the shipyard’s customer, the Navy, making it less likely to win future contracts.

“When you’re trying to compete in a price-based competition [for contracts], you need everyone in your yard to be on the same wavelength, and that’s not the case at Bath Iron Works,” he said. “There are always ways to improve the workflow and be more efficient, but if the people on the deckplate aren’t communicating with higher management, many of those issues may never get resolved.”

The Navy awards contracts on the basis of design, price and past performance, according to Thompson.

BIW, a subsidiary of global aerospace and defense company General Dynamics, consistently submits excellent designs when vying for contracts, but its higher cost and delayed schedule are its weak points, he said.

In May, Dirk Lesko, BIW president, said the company was at least six months behind schedule. The pandemic and strike likely have delayed work further.

“There are going to be other Navy awards,” said Thompson. “It’s in the interest of everybody to get this strike resolved. … I’ve watched industries disappear because of bad labor relations.”

Bryan Clark, a naval operations and military competitions expert at the Hudson Institute, said the Navy will continue to call on BIW to build Arleigh Burke-class destroyers, the main type of ship built at the Bath shipyard. But, the shipyard’s recent delays have a direct impact on how much work they’re given compared to their main competitor, Mississippi-based Huntington Ingalls, the only other shipyard that builds Arleigh Burkes.

“BIW will always garner a portion of future builds as well as any future large surface combatant designs that replace the Arleigh Burkes because the Navy is committed to having multiple shipyards produce them,” said Jay Korman, a Navy analyst with Avascent Group in Washington. “The question will be whether they get more than their fair share of future awards, and that has everything to do with cost, quality and risk. And that’s what the management team and the labor unions have to work out now.”

Analysts said one of the most expensive things involved in shipbuilding is labor. Additionally, BIW must compete against shipyards that may have a cheaper, non-unionized workforce.

“BIW’s leadership seems focused on improving performance and maturing the workforce, which could put them in a better position for the next multi-year award, but its ability to compete on cost will still be a challenge – with the unknown outcome of the strike still a major potential factor in BIW’s future cost positioning,” said Matthew Caris, a Navy analyst with Avascent Group in Washington.

Local S6 union officials met with a federal mediator Monday in the hopes of restarting negotiations soon, but negotiations cannot resume until the company meets with the mediator.

David Hench, BIW spokesman, declined to comment Thursday on if or when the company plans to speak with the mediator.

Some good news for BIW 

While the shipyard works to get back on schedule amid a strike, analysts agreed BIW’s performance with its Zumwalt destroyer contract most likely didn’t damage the Navy’s perceptions of the shipyard’s capabilities, though it lost out on several subsequent contract opportunities.

In the early 2000s, the Navy ordered 32 highly advanced Zumwalt stealth destroyers, all to be built at BIW, but the number of ships ordered was slashed repeatedly as the years wore on. Ultimately, the Navy ordered just three Zumwalt-class destroyers, the last of which, the future USS Lyndon B. Johnson, is under construction at the Bath shipyard.

“The Navy understands a lot of the problems with the Zumwalt program stem from Navy decisions, and it is unlikely that BIW’s past performance on Zumwalt has significantly contributed to their losses on [Coast Guard cutter contract] or [the Frigate contract],” said Caris.

The Zumwalts feature a sleek, wave-piercing tumblehome design, making the 610-foot destroyer appear much smaller on radar than it actually is, as well as an electric propulsion system and new weaponry. Each ship cost over $4 billion, far pricier than the $1.8 billion Areligh Burkes.

“The Navy set everyone up for failure with the Zumwalts,” said Clark. “They tried to go after too many new technologies at once.”

Clark added that once BIW completes the last Zumwalt, it will give the shipyard more space to work solely on Arleigh Burkes, which could speed up production.

The Bath shipyard has contracts to build 11 Arleigh Burke-class destroyers for the Navy over the next decade.

Hench declined to comment Thursday on when the company expects to finish the final Zumwalt.

Earlier this month BIW lost out on a $936 million contract to build an Arleigh Burke-class destroyer. The Navy awarded the project to Huntington Ingalls.

In April the shipyard lost a $5.58 billion contract to build up to 10 guided-missile frigates for the Navy. The Navy announced Italian shipbuilding company Fincantieri was chosen to build the ships.

In a May 27 letter to employees, Lesko said BIW’s production delays were the reason the Bath shipyard lost the contract.

In 2015, BIW was focused on winning a $10.5 billion contract to build Coast Guard cutters. The shipyard warned losing out on the contract could lead to the elimination of 1,000 jobs, so Local S6 allowed the company to begin hiring subcontractors to remain competitive. Despite the concession, BIW ultimately lost the cutter contract.

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