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Decreased Workload Prompts Downsizing

Tuesday, September 22, 2015

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Citing a drop in available work, Newport News Shipbuilding—the sole builder of U.S. Navy aircraft carriers and one of two builders constructing nuclear-powered submarines—laid off 480 salaried workers early last week (Sept. 15).

The company, a major employer in the area, indicated that this is only part of a larger downsizing plan which is expected to encompass 1,500 workers between this year and next, WTKR reported

Photos: Ricky Thompson/HII

Nearly 500 workers were laid off from Newport News Shipbuilding in mid-September; more layoffs are expected through 2016, the company announced.

The dismissals were not unexpected, as Matt Mulherin, the company’s president, had issued a statement in July indicating that layoffs would be implemented over that time period.

At that time, approximately 500 people were to be let go in the fall of 2015, with more than 1,000 to be dismissed in 2016.

Seventy-seven of those affected by this month’s layoffs have been targeted to be brought back on the job in hourly trade positions, 13 News Now indicated.

Shipyard Economics

According to the Daily Press, Huntington Ingalls Industries (HHI), Newport News’s parent company, reported a favorable second quarter. At $156 million, it showed a 56 percent year-over-year profit from the same period in 2014, and total revenue was up 1.5 percent, the paper reported.

However, Mulherin indicated that the company was facing a “workload valley” that is expected to extend into 2016, reports said. Work on three aircraft carriers will continue into next year, but their completion will leave a gap while new projects are brought in.

HHI President Mike Petters was reported to have told Wall Street analysts that the company’s current financial state was a result of delays caused by “congressional inaction and budget gridlock.”

In a Sept. 20 follow-up report, the Daily Press indicated that Mulherin specifically cited an aircraft carrier refueling project delayed by that congressional inaction as contributing to the situation.

Of the 480 workers let go earlier this month, 77 have been identified as able to be brought back in hourly trade positions, based on their past experience.
 

In that later piece, the Press also reported that HHI had begun diversifying into the energy and petroleum industries in 2014. However, that move was unlikely to help Newport News in its highly specialized niche, the paper said, as there was no way to match the money that comes in from the billion-dollar Navy contracts, although it may help to “smooth out the revenue picture.”

Weathering a ‘Workload Valley’

News channel 13 News Now released a portion of the letter Mulherin sent employees regarding the company’s actions. In it he said the move, though difficult,  "is a necessary step to effectively control our costs and successfully manage our business during a decline in work. It is something we take very seriously and is a last step after all other options have been exhausted."

The letter also indicated that in addition to benefits and severance, the company would provide transition assistance to help those affected find employment.

According to the Press, Norfolk Naval Shipyard may be a place to turn to for work, as it had announced a need to fill 1,500 posts earlier this year. Terri Davis, a spokesperson for the shipyard, told the paper that the companies are working together and there are still spots available to fill.

Mulherin doesn’t believe this bodes poorly for the company and that there will be a turnaround period ahead.

“This is truly a workload valley,” he was reported to say. “We're not going out of business. The workload valley has a defined beginning—unfortunately, that beginning is today—and it has a defined end, too. In the latter part of 2017, based on everything we know, we're going to be hiring people.”

   

Tagged categories: Business matters; Business operations; Layoffs; Newport News Shipbuilding; North America; Program/Project Management; Shipyards; Workers

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