Shipbuilders Boost Workforce, But Prepare for Downturn After 2015

The builder of the U.S. military’s largest and most expensive ships, Huntington Ingalls Industries, is poised to hire nearly 9,000 employees in the next three years. But the company also is cautiously planning for a future where it may have to thin its workforce if Navy contracts slow down, executives said April 9 at the Navy League’s annual Sea Air Space exposition outside Washington, D.C.
HII’s Newport News Shipbuilding subsidiary plans to add 1,500 jobs to its 22,000-strong workforce, NNS president Mat Mulherin said.
“I would say that there is no doubt that in the 2015-2016 timeframe we need to be prepared for multiple outcomes,” said Irwin Edenzon, HII corporate vice president and president of Ingalls Shipbuilding. “But it does not relieve us of the requirement to build the ships we have in the yard today.”
The company's carrier business faces an uncertain future, analysts have said. HII officials said the company will adapt. “We can probably manage through any kind of fluctuations that we see,” Mulherin said, “and adjust our workforce as the work demands.”
“That’s why we’re looking at growth opportunities, [looking for] what is out there that’s right in the sweet spot of what we do that takes our particular skills.”
The company is diversifying for the off chance that carrier or submarine acquisition is derailed by deflated budgets. Newport News Shipbuilding has invested millions in energy ventures, particularly U.S. Department of Energy efforts to build nuclear power plants in South Carolina and Georgia, Mulherin said.
NNS currently has four nuclear carriers in various stages of their life cycles — some pre-natal, one on the way to the scrap yard.
HII is in the process of decommissioning the USS Enterprise, the first of the nuclear-powered carriers.
With the late-March docking of CVN 72, the USS Abraham Lincoln, the carrier fleet numbers 11, rather than the 12 Navy officials say are necessary to keep the force deployed globally. 
The Navy recently awarded $2.6 million for the RCOH of the Lincoln. Meanwhile, the USS Theodore Roosevelt is nearly ready to leave the dock after its own RCOH.
Capt. Doug Oglesby, program manager for CVN 79, the USS John F. Kennedy, said the cost of that carrier remains constant at an estimated $11.4 billion. No major changes are expected to the Navy funding request in future budgets, he said.
Newport News Shipbuilding is banking on the Navy’s commitment to a 12-carrier fleet and reaping the rewards of being the sole builder of the ships, holding multiple contracts for construction and maintenance.
The price of the newest aircraft carrier, CVN 78, named the USS Gerald R. Ford, continues to rise. The latest announcement of an $18.2 million increase in purchase price is the latest of dozens of requests by the Navy to increase the Ford’s procurement budget. A spokesman for the Navy admiral who oversees carrier procurement confirmed that the Ford had again exceeded its earlier cost estimates.
“The Navy identified a need for additional resources in [fiscal year] 2013 and [the] 2014 budget request will reflect that,” he told National Defense.
On April 1, HII was awarded an $18.2 million increase on their contract for construction of CVN 78. The work is expected to complete in September 2015.
A month earlier, the company was awarded a $2.6 billion contract to perform the refueling and complex overhaul of CVN 72. Work on that carrier is to be completed by November 2016.
On March 21, the Navy authorized $407.4 million for construction of CVN 79 “to procure additional long lead material and advance construction activities … if required,” according to the Defense Department's daily announcement of contract awards. The increase further alters a contract that has been in place since 2009 and “may help preserve the  construction schedule,” according to information provided by the Navy.
Mulherin contends that a long lead time associated with building carriers and the company’s 900-plus master shipbuilders will allow it to weather periodic budgetary downturns. Master shipbuilders have at least 40 years of continuous employment in the industry and mentor apprentice workers.
The company does not expect labor shortages. “We do not see that to be an issue,” Mulherin said regarding the recruitment of skilled labor such as welders and pipe fitters. “We live in an interesting field where the shipyard is part and parcel to a family.
“We have a great area to draw on. We have a lot of veterans coming out of the military, whether it be the Navy, the Army, or the Marine Corps. They matriculate well into the shipyard environment.”
Edenzon agreed, although he stressed the industry faces significant uncertainty. “There is certainly a nervousness in the business … in terms of the potential impacts of sequestration,” Edenzon said. “There are people out there who are concerned about where does this go in the 2015-2016 timeframe.”
“We are not having problems attracting folks,” Edenzon said. “We are the largest employer in Mississippi and critically important to the economy of the Gulf Coast.”
“This is a much more competitive marketplace because we’re not just competing with other shipbuilders, we’re competing with other programs.” Edenzon said.
Ingalls last year reduced salaried employees by 1,000 people, he said. Four of its executive vice presidents were shown the door.
“We are not only taking actions to invest in the capital projects we need to reduce cost, we’re also looking at how do we do things better, faster cheaper with our folks,” Edenzon said. 
“How do we make sure we’re retaining the A-players and when it’s time for us to make workforce reductions, we’re dealing with the C- and D-players?”
Photo Credit: Navy

Topics: Shipbuilding, Aircraft Carriers, Submarines