Newport News Shipbuilding already feeling pinch of carrier non-decision
NEWPORT NEWS, Va. — The Pentagon hasn't yet decided whether to retire or refuel the aircraft carrier USS George Washington come 2016, but that indecision is already causing problems for Newport News Shipbuilding.
The bottom line: The refueling project, if it happens, will be behind schedule. In fact, it's already behind schedule because of the advance work required, said Ken Mahler, Newport News Shipbuilding vice president of Navy programs.
And if the refueling doesn't happen and the Washington is inactivated, the shipyard might consider cutting jobs as a last resort.
Navy leaders say they want keep the Washington in the fleet. Doing that would require a Refueling and Complex Overhaul, or RCOH in 2016. It is a top-down refurbishment that gives the ship another 25 years of service.
But if sequestration-level budget cuts return in 2016, the Navy says it will have to retire the ship. In the meantime, the shipyard is putting off advance work for the RCOH that would normally be happening right now, Mahler said.
About $243 million has been set aside for planning the RCOH. Between $43 and 48 million has been released to the shipyard — about one-third of what it should get. It covers planning for defueling the Washington's nuclear propulsion system, work that must take place regardless of whether the ship is retired or returned to service.
What the shipyard can't do, Mahler said, is additional advance planning and purchases to prepare for Washington's arrival in Newport News in 2016.
"Right now, we would have started the first year of 30 months of planning," he said.
A schedule to keep
The shipyard keeps a tight RCOH schedule to maintain the nation's fleet of 11 aircraft carriers, a number required by law. The fleet is temporarily at 10 because Enterprise has been inactivated and the Gerald R. Ford has not yet been delivered to the Navy.
A delay on the Washington RCOH could affect the overhaul on the USS John C. Stennis. If the Washington is retired, shipyard executives will be forced to consider less attractive options for its 23,500 workers, the largest industrial workforce in Virginia.
"At some point, if this indecision continues, or if an inactivation decision is made, we would reduce overtime, we would reduce our subcontracted and leased labor from outside to support us," Mahler said. "But ultimately, we could be faced with a decision about a reduction in force. That would be a last resort. It's something Newport News doesn't do unless there are no other options. But in this case, all those possibilities are on the table."
A delay also presents a problem for more than 680 companies in 39 states that provide parts and services for the overhaul, according to the president of the Aircraft Carrier Industrial Base Coalition, a group that includes companies in Hampton Roads.
"It gets tougher and tougher when you can't count on a schedule," said Rick Giannini, the president and CEO of Milwaukee Valve Company, who chairs the coalition.
The coalition has made the GW overhaul the main focus of its lobbying effort. How the delay affects each member depends on how much business is tied to defense work.
For example, two Hampton Roads companies told the Daily Press last month that canceling the GW overhaul would make a severe dent in their bottom line. Both Hampton Machine Shop and Mid-Atlantic Coatings in Chesapeake need the income that comes from an overhaul.
Milwaukee Valve employs skilled operators of computer-controlled equipment that cuts metal. They wouldn't be easily replaced in the event of a downturn in business, Giannini said.
Bright horizons, too
Mahler discussed the RCOH earlier this week at the Navy League's 2014 Sea-Air-Space Exposition, where the shipyard's parent, Huntington Ingalls Industries, also had plenty of positives to discuss.
The company recorded strong fourth-quarter earnings, prompting good reviews from Wall Street analysis. HII's divisions — Newport News Shipbuilding and Ingalls Shipbuilding in Pascagoula, Miss. — each had upsides..
Newport News christened the Ford and has already built 207 units for the next Ford-class carrier, the John F. Kennedy. Keel-laying for the Kennedy is scheduled for next year, with delivery to the Navy around 2021. The Virginia-class submarine USS Minnesota was delivered 11 months ahead of schedule and on budget. It was commissioned in September.
Later this year, Newport News will celebrate the christening of the submarine John Warner. It plans to invest more than $1.1 billion in capital projects in the yard over the next four years.
Ingalls Shipbuilding is the only U.S. shipyard that builds four classes of military ships. It is Mississippi's largest industrial employer, and a significant employer in Alabama. It plans to hire about 2,500 craft workers by the end of this year.
On Thursday in Pascagoula, Ingalls delivered the amphibious assault ship America to the Navy as more than 900 sailors marched through the shipyard for a ceremony on the ship's flight deck.
Commissioning is slated for later this year in San Francisco.