Analysts say looming Pentagon budget cuts raise questions about future Navy funding for new warships such as those built by Bath Iron Works.
Still, most experts expect that continued demand for new destroyers will ensure the long-term stability of the company, which is one of the state’s largest manufacturing employers.
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“With missile threats growing from China, Iran and other countries, it’s likely the Navy will continue buying Arleigh Burke destroyers, which carry the best missile-defense system in the world,” said Loren Thompson, a defense analyst at Lexington Institute, a think tank based in Arlington, Va.
BIW, owned by General Dynamics, is one of two manufacturers of DDG-51 Arleigh Burke-class destroyers. The company competes with the Pascagoula, Miss., shipyard of Huntington Ingalls Industries.
BIW, which has 5,400 employees, has built 33 Arleigh Burkes since the 1990s. Ingalls has built 28, according to the Navy.
The initial production run of 63 Arleigh Burkes is nearly complete, and the last one built at BIW, the USS Michael Murphy, is scheduled to be delivered in 2012.
The Navy planned to build more than 50 additional Arleigh Burkes in the next three decades, but Pentagon budget cuts put that in doubt.
“In the current budget environment, nothing is certain. Everything is subject to revision in the coming years,” said Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments, a think tank in Washington, D.C.
An August deal between the White House and Congress calls for budget reductions of $992 billion over 10 years, including $350 billion in defense spending cuts.
The Pentagon’s budget could be trimmed by $500 billion more if a special committee cannot agree on additional cuts.
“These are uncharted waters. Around this time next year, BIW’s future will become much clearer,” said Charles Colgan, a professor of public policy at the University of Southern Maine’s Muskie School of Public Service.
Also under construction at BIW is the first DDG-1000 Zumwalt-class destroyer, a type that is larger and more expensive than the Arleigh Burkes.
Previously, the DDG-1000 program was cut to no more than three ships and there were concerns the program might even be scrapped after the first ship.
But earlier this month, General Dynamics and the Navy formally signed contracts valued at $1.8 billion to $2 billion for the work BIW will do on the second and third Zumwalts.
The work will run through 2018.
Already this year, BIW has cut more than 600 jobs because of slowing Arleigh Burke production and the transition from designing to building the Zumwalt.
Beverly Harris, president of the Bath Marine Draftsmen’s Association union, said 247 union members lost their jobs in June and 15 more will be unemployed at the end of the month.
“It’s always been a teeter-totter,” she said. “Design comes first and production comes later.”
The company also hired about 250 production employees this year, said BIW spokesman Jim DeMartini. He noted that work force requirements change as ships move through phases of development.
BIW declined to speculate on the impact of federal budget cuts.
“We don’t control the budget process or outcome,” BIW said in a statement. “Our focus is on affordability.”
But the company said it expects to be chosen later this month to build one of two new Arleigh Burkes. BIW expects the other ship will go to Ingalls.
DeMartini said the Navy plans to build more ships at a rate of about one-and-a-half annually. In the past, he said, the Navy ordered about three a year.
Most experts agree that the Navy will continue ordering Arleigh Burkes. The ships have the sophisticated Aegis Combat System, which they say can protect the United States and its allies from ballistic missile attack.
“It’s the right time and the right mission for that ship,” said Jay Korman, a defense industry analyst with The Avascent Group, based in Washington, D.C. “As long as DDG-51s continue to be procured, my sense is that BIW will come out OK.”
Members of Maine’s congressional delegation say several factors work in BIW’s favor.
For one, the United States will need ships to counter China’s growing navy. Officials are also aware that resources dedicated to the Navy lagged behind allotments for other services during a decade of war in Iraq and Afghanistan, and policymakers recognize that a minimum level of shipbuilding capacity is crucial to defense, Maine’s members of Congress said.
“You can’t just suddenly have a war at sea and then say, ‘Oh darn, we’ve got to put together a shipyard so we can build some boats,’” said Rep. Chellie Pingree, D-1st District, a member of the House Armed Services Committee.
Sen. Olympia Snowe, R-Maine, a former Senate Armed Services Committee member and currently serving on the intelligence committee, agreed.
“I do believe that Bath will have a very strong future based on the predicate that we have to increase the size of our Navy,” she said.
Colgan, at the Muskie School, said the Pentagon could save money by stretching Arleigh Burke orders over a longer period. If that happens, the Navy might shift all the work to one of the two shipbuilders.
“I could see BIW coming out the really big winner or really big loser,” he said.
If BIW loses, so does Maine, said Colgan. The company is one of the state’s last big manufacturers and employs workers who live throughout the state.
“The labor force comes from all over central and southern Maine,” he said. “It’s a story about a lot more than Bath and Brunswick.”
Thompson, the defense analyst, doubts the Navy will dump BIW. He said the company’s reputation is unmatched among warship builders.
“BIW outperforms its Gulf Coast competitors. It operates at a higher level of quality, consistently,” Thompson said. “The Navy believes that among all shipyards, Bath is by far the best.”
Staff Writer Jonathan Hemmerdinger can be contacted at 791-6316 or at:
jhemmerdinger@mainetoday.com
MaineToday Media Washington Bureau Chief Jonathan Riskind can be contacted at 791-6280 or at:
jriskind@centralmaine.com
Twitter: Twitter.com/MaineTodayDC
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