Hampton Roads Ship-Repair Industry Is Bracing for 1,000 New Layoffs

An aerial view of Norfolk Naval Station (U.S. Navy photo/Petty Officer 2nd Class Christopher Stoltz)
An aerial view of Norfolk Naval Station (U.S. Navy photo/Petty Officer 2nd Class Christopher Stoltz)

NORFOLK -- "Mayday, mayday."

That's the message that Hampton Roads' ship-repair industry is sending to Congress as it gets back to work this week.

A minimum of 1,000 layoffs are projected in the region's ship-repair yards in the weeks and months ahead, some of which have already begun to unfold.

They're largely the result of a stopgap spending measure the government has been operating under for roughly seven months and the failure to approve a new national budget with adequate funding to maintain Navy ships, said Bill Crow, president of the Virginia Ship Repair Association, a regional trade group.

The meter on the stopgap measure runs out Friday, effectively shutting down the government.

While it's widely assumed that that won't happen, that the Band-Aid spending measure will be extended at the very least, if the money isn't found to pay for the relatively sparse Navy ship-repair work still available in the region's yards, job cuts on the order of those seen in late 2015 and into 2016 are all but certain.

"We're looking at significant layoffs," said Tom Epley, president and CEO of Norfolk-based Marine Hydraulics International Inc., known as MHI, which routinely works on destroyers and other Navy vessels. "I have no faith, right now, that sufficient action is going to be taken to prevent a disaster in Norfolk."

Epley is planning to let go about 125 of his 500 workers by early next week; more are likely to follow in May.

BAE Systems Norfolk Ship Repair has told its roughly 1,000 employees that a layoff of between 200 to 300 people is likely in early June.

"The reason for the layoffs is that there have been delays to contract awards for ships that our shipyard could repair, all because of budgetary reasons," said Karl Johnson, a BAE spokesman.

A General Dynamics-NASSCO spokesman declined to comment on how its operations would be affected.

Not every yard would be affected. Norfolk-based Colonna's Shipyard has no plan to lay off any workers, Richard Sobocinski, vice president for contracts, said in a text message.

"Our diversity of customer base (both military and commercial) will help us weather this downturn in U.S. Navy business," he wrote.

And while Newport News-based Huntington Ingalls, whose Newport News Shipbuilding is the largest industrial employer in the state, laid off hundreds of workers in 2015 and 2016, it's now hiring as it said it would after emerging from the earlier "valley" phase.

Because it's primarily focused on building and tending to nuclear-powered aircraft carriers and submarines, its funding channels differ from those of ship-repair yards like MHI, Crow said.

Some laid-off welders, for example, could move to Newport News Shipbuilding, but it wouldn't "help the repair side of the industry preserve its jobs," Crow said.

Assuming that any workers who landed at the Newport News yard stayed there, the odds are that those who might eventually replace them would need more training, requiring greater investment by the affected ship-repair yards.

The looming cuts affect not only the big players, but small companies that often work as subcontractors, providing welders, pipefitters and shipfitters.

Chesapeake-based Bay Metals & Fabrication LLC, formerly known as MF&B Marine, laid off 35 workers on April 14.

"We probably got another 35 more that are going to need to go," said Tom Taylor, the owner and president.

While, at times, he has employed more than 200 people since setting up the company in 2007, it now has just over 100 workers and he expects that number to drop to 25 or 30 by the middle of May.

Taylor said he views his employees, some of whom have been with him for years, as friends.

"I've been through their funerals, their weddings, their births, their divorces, their graduations," he said. "So it does tug at your heartstrings."

Crow said that even without the issues related to Congress' stopgap funding measure -- known as a continuing resolution, which locks spending at the previous fiscal year's level -- shipyard executives knew that the amount of work the Navy had planned to offer the Hampton Roads' facilities would drop below their total capacity.

While some layoffs would have occurred anyway, longer-term effects of budgetary inaction and deficiencies now loom. Part of what's now playing out is due to a funding shortfall for Navy maintenance in the White House budget for the current fiscal year, which began Oct. 1, Crow said.

While supplemental funds have been requested that would address the maintenance shortfall, the request may be short-circuited because of linkage to contentious political issues, Crow said.

If the supplemental funding doesn't come through, the region stands to lose about $180 million in ship-repair dollars, he added.

Epley said the shipyards' current dilemma is the result of a perfect storm of sorts, generated by the loss of nearly 30 percent of Navy ships homeported in Hampton Roads in recent years, a shift in the Navy's contracting model away from one that ensured some level of predictability and stability for work flows as well as access to work by smaller firms and, third, a funding deficiency.

He added that once layoffs get under way, a clock begins ticking on the industry's ability to retain talented workers.

If a yard lays off, for example, 100 workers, it can still get virtually all of them back if they're recalled within two to three weeks.

"Every week that goes by after the third week, you lose 5 percent," Epley said, citing workers' inability to survive on unemployment checks and their eventual migration to other industries.

In late March, a Pentagon "information paper" detailed how the Navy's near-term readiness would be affected if Congress were to extend the stopgap funding measure through the rest of the fiscal year, which ends Sept. 30, or if the Navy doesn't get additional appropriations by Friday.

For starters, it would mean the cancellation of three surface-ship deployments, resulting in gaps in commands affecting Europe and the Middle East.

It would also mean shutting down four of nine nondeployed carrier air wings, causing delayed deployments and gaps in carrier strike groups in fiscal year 2019.

For the nation's shipyards, it would mean the cancellation or deferral of 14 maintenance periods on Navy ships -- known as availabilities -- four of which had been planned in Hampton Roads.

One of the Norfolk-bound repair jobs -- for work on the destroyer Nitze -- has already been canceled.

Of the three remaining maintenance jobs, only one -- for the destroyer Mason -- has remained unchanged. Work on the other two -- the destroyer Stout and the dock landing ship Whidbey Island -- already has been pushed back.

Epley said that the call to grow the Navy fleet to 350-plus ships is all well and good: "We need more ships; that's been plain to everybody."

In the meantime, it's critical to keep the ships already in service prepared for the missions on which they're sent.

"They need to maintain the ones they have," he said. "I mean, they're running them into the ground."

Another issue that refuses to go away is the attraction and retention of talented workers.

"How do you convince young people to come into this industry?" Epley asked. "There's no continuity of work."

Show Full Article

Related Topics

Navy Ships Gear and Equipment