Bath Iron Works and union officials are in the final weeks of contract talks, with a May 20 deadline to reach agreement.
Job security and pension benefits are the main issues for the International Association of Machinists and Aerospace Workers, said John Carr, a union spokesman.
The union, which represents about 3,200 mechanics, fitters, welders, painters and electricians, said issues such as wages and medical coverage also weigh on talks, but to a lesser degree. The union is seeking a three-to-five year contract, Carr said.
“Both sides are sitting at the table, building an agreement as they go,” Carr said.
The talks come at a crucial time for Bath Iron Works, which depends on defense contracts from the U.S. Navy and is in the process of bidding on a long-term contract.
The Navy is expected to decide later this year — after Bath Iron Work’s labor talks conclude — on contracts for nine destroyers. Bath Iron Works is competing against Huntington Ingalls Industries for the DDG 51 destroyers the Navy will buy through fiscal 2017.
“The importance of succeeding in this competition cannot be overstated; affordability to the Navy will be the principal factor in determining the ultimate outcome,” Jeff Geiger, president of Bath Iron Works, said in an April newsletter for employees. “We must continue to control and further reduce costs in all areas of the shipyard.”
The pressure to cut costs and the destroyer-contract uncertainty make the talks more difficult, analysts said. If negotiations fail, workers could strike for the first time since a 55-day walkout in 2000. Several steps must take place before a strike could happen.
The company, a unit of General Dynamics Corp., must make a final offer that workers would either accept or reject. If the contract offer is rejected, a strike-authorization vote would take place. A strike could begin at 12:01 a.m. on May 21 if the proposal fails, Carr said.
Four years ago, the union reached a contract that gave annual wage increases of 3.5 percent to 4 percent. “We expect nothing but a positive outcome from these negotiations,” Carr said.
Bath Iron Works, which employs 5,400 workers, declined to comment on the major issues under debate in talks. “Collective bargaining occurs across the table,” said Bath Iron Works spokesman Jim DeMartini. “We’re not going to negotiate in the public domain.”
Brian Ruttenbur, an analyst with CRT Capital, said it’s difficult to negotiate labor contracts when the U.S. defense budget faces multi-billion dollar cutbacks, the presidential elections loom in six months and the military is exiting Iraq and Afghanistan.
“From a management perspective, they need visibility to give a long-term contract and they just don’t have that,” Ruttenbur said.
Bath Iron Works specializes in building Navy destroyers. Its main line of ships has been the DDG 51, a guided missile destroyer. It just delivered its 34th ship in this class. The company also has a contract to build three larger DDG-1000 class vessels.
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