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Shipyards Warned of Mass Layoffs

Monday, February 25, 2013

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Threatened cutbacks by the U.S. Navy could soon cost thousands of American shipyard workers their jobs, BAE Systems is warning its employees.

More than 5,000 BAE employees nationwide, including 3,500 shipyard workers, received a letter Feb. 19 from BAE Systems Ship Repair President Bill Clifford, warning of possible layoffs stemming from the current sequestration showdown in Washington, D.C.

The sequester is a $1.2 trillion package of decade-long mandated federal spending cuts set to take effect March 1 if President Obama and Congress cannot reach agreement on a budget plan. The Defense Department would see 13 percent cuts, with uniformed military personnel exempted.

Ripple Effects

Those cuts, if enacted, may well wound the ranks of thousands of workers who paint, blast, repair and maintain ships from coast to coast, Clifford wrote in his so-called WARN letter to employees.

BAE Systems

Workers at BAE Systems' San Diego, CA, shipyard have been notified of possible layoffs.

The Worker Adjustment and Retraining Notification (WARN) Act is designed to protect workers, their families, and communities by requiring most employers with 100 or more employees to provide 60 days' notice for plant closings and mass layoffs.

Clifford's letter said the Navy had informed him Feb. 8 of "the potential to cancel, defer, or de-scope 13 of our ship availabilities across four of our sites." The sites are Norfolk, VA; San Diego, CA; Mayport, FL; and Hawaii.

"Although the Navy advised that this is 'not a cancellation order' but 'an intent to cancel,' we need to act accordingly and issue 'conditional' Worker Adjustment and Retraining Notification (WARN) Act Notices to more than 3,500 production, management and administrative staff at Norfolk, Mayport, San Diego, and Hawaii," Clifford wrote.

'We Do Not Take These Decisions Lightly'

Clifford's letter said it was meant to inform workers "that they might be laid off due to a reduced workload and a loss of business revenue, if the Navy issues cancellation orders. In the unfortunate event that a reduction in force is necessary, we will update the WARN notices with specific layoff or furlough dates for affected employees."

He added: "We do not take these decisions lightly, and we regret the anxiety it causes our employees and their families. I also recognize this news is unsettling, but rest assured, we are working closely with our Navy customer and members of Congress to mitigate the impact of these proposed reductions."

UK-based BAE is a global defense contractor, with 100,000 employees worldwide.

Huntington Ingalls Industries

Flanked by Huntington Ingall Industries president and CEO Mike Petters (left) and Newport News Shipbuilding president Matt Mulherin, U.S. Sen. Tim Kaine called last week at the NNS shipyard for a federal compromise to avert a sequester. "It's not hard," Kaine said.

The WARN letters were to be mailed last week to employees' homes, said Clifford, adding: "We are also contacting our subcontractors and suppliers to assess how this decision affects their operations."

The company said it was not planning immediate layoffs, UTSanDiego.com reported.

'This is Reality'

Reaction to the news was predictably grim.

"This is not a theoretical problem like it is up in Washington," said Rep. Scott Rigell (R-VA). "This is reality."

U.S. Sen. Tim Kaine (D-VA), said in a statement, “I feel great sympathy for the 1,600 shipyard workers and their families receiving WARN notices today."

Last week, Kaine toured Newport News Shipbuilding (NNS), a division of Huntington Ingalls Industries, the largest U.S. military shipbuilder with 37,000 employees. During his visit, Kaine met with shipbuilders to discuss the potential defense budget cuts and their impact on the shipbuilder's maintenance and construction ranks.

"As I learned from my visit with workers in Newport News yesterday, delayed ship repairs over budget uncertainty will have a devastating ripple effect on the Hampton Roads economy and an immediate impact on our readiness," Kaine said in a statement later.

"As the Pentagon notifies DOD civilians about potential furloughs, I'm still not willing to accept that the sequester has to happen."

Notices Being Served

Contractors outside the Norfolk shipyard have already been served.

"I got one when I got off work [Feb. 19], and I got one this morning when I got to work," one worker told WAVY.com.

EPA (left); seaforces.org
Some 1,600 shipyard workers in Norfolk received WARN Act letters, required by law if an employer is considering mass layoffs.

Another worker, BAE Systems outside machinist Tyler Willis, told the news station that he "could see both sides of the coin" on the potential cutbacks.

"There's some guys here that are very skilled, and there's probably some excess in here that can go, too," Willis said. Although he is new, Willis expressed concern for senior employees.

"I hope they lay off according to seniority," Willis said. "The guys that put a lot of time in here, I hope they get laid off last."

Other Contractors

Other Navy contractors are also girding for the worst. Earlier last week, Huntington Ingalls CEO and President Mike Petters told WAVY.com that his company was preparing to reduce its workforce March 27.

At Newport News Shipbuilding, Kaine called last week for a federal agreement to resolve what he called "this self-inflicted crisis."

"Compared to the sophistication and the quality of the work that is being done here, the decisions that we have to make to get this budget in a better process and to avoid ugly and non-strategic cuts—it's not hard," Kaine said.

At the same press conference, Petters said that the current budget crisis has stalled the overhaul of the USS Theodore Roosevelt (CVN 71) and delayed the arrival of USS Abraham Lincoln (CVN 72), which was scheduled to arrive Feb. 14 for its refueling and complex overhaul (RCOH).

Warship repairs also are done at General Dynamics' NASSCO, which is next to BAE's San Diego operation.

NASSCO spokesman James Gill told UTSanDiego.com by email late Tuesday: “We are monitoring the situation and will notify our employees should it become necessary.”

Comment from Billy Russell, (2/25/2013, 9:33 AM)

Obviously if your gonna lay off the workers (first) then you didnt need the work done in the first place, " refueling and complex overhaul" needs to be done and will take the same number of workers wether the sequester goes into affect or not. Laying this on the working men and women is a clear example of exactly why we need the sequester to go into affect, these people in washington who are sending our Tax dollars to nations who really dont want us there need to be sequesterd along with our tax dollars being waisted on contracts being sent to china, Bridges as well as DOD contracts. we need working men and women in washington enough of all the layers.

Comment from Jerry Trevino, (2/25/2013, 10:48 AM)

Who Knew? Based on the Presidents State of the Union Address, we are doing great!!! Somehow reality is not allowed to enter Washington. They live in a different world than the rest of us.