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V o l . X X I N o. I I Ja N ua r y 2 6 , 2 0 1 5 14 S ince August, Bath Iron Works President Fred Harris has been hosting 90-minute meet- ings with small groups of shipyard workers to identify the challenges they face in an era of declining Navy spending on the Aegis destroyers, which have been the Bath shipyard's mainstay since the early 1990s. A mainstay of his presentation is a graph that looks like a steep slope on Sugarloaf Mountain. "I do not want Bath to look like this," he says, noting that the chart depicts the loss of 30,000 manufacturing jobs in Maine since 2000. But there's a very real possibility the employ- ment trend line for BIW could look that way, with roughly 1,200 of its 5,700 workers potentially facing layoffs when the last of three DDG 1000 destroyers is delivered to the Navy sometime in 2019. e end of that program coincides with a Navy procurement schedule that budgets fewer DDG 51 destroyers for the foreseeable future, which tightens the compe- tition between BIW and the Huntington Ingalls Industries shipyard in Pascagoula, Miss. An added layer of concern is the return in 2016, after a two- year pause, of the funding limits imposed by the 2011 Budget Control Act — which could set the stage for sequestration forcing mandatory cuts in the Defense budget and the possibility that the Navy will have to cut its 2017, 2018 and 2019 shipbuilding budgets even more if Congress doesn't raise the funding limit. All those uncertainties heighten the importance of the competitive bid against two southern ship- yards that BIW is preparing for up to 25 offshore patrol cutters for the U.S. Coast Guard. With an estimated total acquisition cost of $12.1 billion, or an average cost of roughly $484 million per ship, that program would help stabilize BIW's workforce in an era of tighter Navy budgets and essentially can- cel the layoffs resulting from the completion of the DDG 1000 program by the end of the decade. "It's a must-win for us," Harris says of the Coast Guard OPC bid the shipyard will submit later this year or in early 2016. "In the next year and a half to two years, we will set the table for Bath with work in front of us for many years to come — or not. ere's a greater sense of urgency today here than there has been in years … I think everyone who works here understands we, collectively, have to get more com- petitive. If we don't, the shipyard could go the way of other Maine industries, such as the paper mills." Coast Guard cutters Last February, the Coast Guard winnowed the field of eight bidders down to three, including BIW. Along with Bollinger Shipyards Inc. in Lockport, La., and Eastern Shipbuilding Group Inc. in Panama City, Fla., BIW was asked to come up with prelimi- nary designs and cost estimates to build up to 25 offshore patrol cutters. e initial work includes a $21 million contract to design patrol cutters capable of operating in high seas more than 50 miles offshore. e offshore patrol cutters would replace the Coast Guard's fleet of 210-foot and 270-foot cutters, some of which are more than 40 years old. Harris characterizes Bollinger and Eastern as "very effective, very flexible yards," which pay lower wages and generally have lower utility costs than BIW. "ey're very quick on their feet," he says. "ey turn work around quickly and they allow people to cross trades … for example, if a painter is not busy he can help pull cable and if a cabler is not busy he can help mask and paint." Pluses for BIW, he says, include its "extremely talented engineering force and planning people" and "extremely experienced mechanics" whose skills have been benchmarked as being "as good or better" than their counterparts at one of the world's leading shipyards in South Korea. He's confident BIW's final proposal "will be a very well-designed and very well-thought-out ship." But those strengths won't be enough to win the work, Harris says, if BIW doesn't find ways to "mitigate and eliminate" the southern yards' cost advantages. A Jan. 5 congressional briefing prepared by Ronald O'Rourke, a naval affairs specialist for the Congressional Research Service, leaves no doubt that the Coast Guard, no less than the Navy, is feeling budget pres- sures as it embarks on the most expensive acquisition program in its history. O'Rourke quotes an exchange between Coast Guard Adm. Robert J. Papp and the House Appropriations Committee during a hearing P h o t o / t i m G r e e n way thE FUTURE IS NOW BIW shipyard looks to cut costs to win major Coast Guard contract B y J a m e s m c c a r t h y Bath iron works 700 Washington St., Bath Founded: 1884 Owner: General Dynamics Corp. (NYSE: GD) President: Fred Harris Employees: 5,700, including 1,100 engineers Payroll: $360 million in 2014 Contact: 443-3311 www.gdbiw.com A new hire works on welding techniques in the training facility at Bath Iron Works.

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