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w w w. m a i n e b i z . b i z 17 Ja n ua r y 2 6 , 2 0 1 5 opted not to continue the DDG 1000 program beyond the first three ships built in Bath. e ship- yard will be competing once again against archrival Ingalls in a multi-year DDG 51 bid later this year. Harris says in the last competition with Ingalls — a multi-year award in 2013 for nine ships, with the possibility of a tenth ship being added later — BIW came out on the short end of a 4-5 split. Although the Navy later added a fifth ship to BIW, Harris says the inescapable fact is that the shipyard's costs were higher than its Gulf Coast competitor. "It's a very, very major wake-up call for this shipyard," he says. is past year, Harris says, BIW has benchmarked with the General Dynamics Electric Boat shipyard in Groton and the Nassco shipyard in San Diego (where Harris also is president), as well a shipyard in South Korea. ose comparisons, as well as a 2005 benchmarking study involving 11 Navy shipyards and suppliers, he says, identified another cost-cutting opportunity: "regionalized outsourcing" of work that could be done more cheaply outside the shipyard. "BIW is the exception," Harris says. "What we've proposed to our bargaining unit, in accordance with the union contracts, is just catching up with everyone else: Every other shipyard in the United States, and in the world, basically buys those things they can buy outside at a cheaper price than they can make them themselves." Jay Wadleigh, president of Local S6 of the Machinists union, which represents more than 3,300 shipyard workers, says his members fully support the company's overarching goal of becom- ing "as cost-efficient as possible in order to be competitive." But after spending upwards of 1,000 hours collectively reviewing the company's 1,250- page proposal to outsource as many as 11 ship components to subcontractors outside the shipyard, he says Local S6 leaders "can see no tangible proof " that outsourcing would reduce the shipyard's costs. Wadleigh says the company's proposal for out- sourcing would send out work on electrical panels, lockers, bunks and dressers, sinks and kitchen items, doors and hatches, as well as industrial diving to check on hulls once the ships are in the water. "e numbers they gave us, in some instances, we found were inaccurate," he says. "In other instances we found the cost savings were inflated. In some cases, we determined outsourcing the work might cost the shipyard more … We've determined that the savings are really de minimis." Wadleigh says the original Jan. 8 deadline has been extended to Jan. 30, when the union will either accept or reject the company's outsourcing proposal, or make a counter-proposal of its own. If, at that point, the company and union can't reach an agree- ment, he says the contract spells out a process for resolving differences. If there's still no resolution, he says, it would go to fast-track arbitration. "ere are lots of process improvements we should be doing — things that, if fixed, will create some significant savings," he says. "at's how we're going to get there … You need to tap the members, incorporate their ideas on how we can be more effi- cient and make that work." Across the street, Harris keeps an open door at his office, where he generally arrives by 5:15 a.m. In those shipyard meetings, he says, his basic message has been, 'I need your help. How can we get bet- ter?'" He's pleased that more than one mechanic has shown up at his office with a cost-saving idea. He recognizes the outsourcing proposal is controver- sial, but believes it's an essential step in ensuring the shipyard's future viability. "If I took all those jobs [on the company's out- sourcing proposal] and moved them out the door, I would still need to hire more people," he says. "is is not a question of people losing their jobs. It's a question of being able to get the work done afford- ably in order to win more work." J a m e s M c C a r t h y , M a i n e b i z s e n i o r w r i t e r , c a n b e r e a c h e d a t J m c c a r t h y @ m a i n e B i z . B i z Augusta | Bangor | Brunswick | Ellsworth | Portland 1-800-564-0111 | eatonpeabody.com Seth Brewster - Litigation Edward Feibel - Employment / ERISA Alfred Frawley - Intellectual Property Michael Hahn - Commercial Banking Bruce Hochman - Commercial Banking Erica Johanson - Litigation John Moran - Business / Corporate David Pierson - Construction Neal Pratt - Litigation Meet Our Portland Attorneys Biw's economic impact In 2014, BIW did business with 345 companies in 12 of Maine's 16 counties, with a total value of roughly $64 million. Of those companies, 294 were small businesses, with more than $40 million of revenue going to them. The shipyard's 2014 payroll is roughly $360 million, with employees living in 15 counties, though a majority of the company's employees come from Sagadahoc, Androscoggin, Cumberland, Kennebec and Lincoln counties. S o u r C e : Bath Iron Works

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