Decades of tide changes: Investments help Bath Iron Works maintain its shipbuilding prowess

201409_CURRENTEDITION_309049994_AR_0_0 — A Zumwalt deckhouse is lifted into place at **Bath Iron Works**. BIW is under contract to bulid all three of the Zumwalt-class of Navy destroyers. PHOTO / COURTESY BATH IRON WORKS

Shipbuilders at Bath Iron Works began the new year of 1994 with 12 reasons for optimism. That’s the number of Arleigh Burke-class destroyers awarded to the shipyard but not yet delivered to the U.S. Navy at that time. A backlog of ships equals job security.But there were reasons to temper that optimism. The shipyard had […]

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Shipbuilders at Bath Iron Works began the new year of 1994 with 12 reasons for optimism. That's the number of Arleigh Burke-class destroyers awarded to the shipyard but not yet delivered to the U.S. Navy at that time. A backlog of ships equals job security.

But there were reasons to temper that optimism. The shipyard had delivered its final Aegis cruiser, the USS Lake Erie, in 1993 — with no more in that pipeline. The workforce was 9,300, down about one-third from the peak of 12,000 in 1990. And newly elected President Bill Clinton's first military spending plan, starting in 1994, slashed defense spending by $88 billion over four years.

Dirk Lesko, BIW's vice president of surface combatants, who'd been hired at BIW in 1990, says defense cuts spurred BIW's president at the time, the late Duane “Buzz” Fitzgerald, to make changes.

“The potential implications of major defense spending cuts made it clear that we needed to be affordable,” Lesko says. “Conceptually, if we were affordable enough to build commercial ships then at a minimum we would be competitive enough to win U.S. Navy work. And potentially we could also expand our business base, which would also make us more affordable.”

BIW explored what it would take to be competitive in the commercial shipbuilding market, Lesko says, and to understand what differences existed in shipbuilding processes between BIW and international designers and builders. It brought two U.S. commercial ship owner/operators and two accomplished foreign shipyards, in Finland and Japan, together with BIW in a comprehensive technology transfer program.

It ended in the spring of 1996 with the realization that there was a glut of commercial shipbuilding capacity worldwide, making it unlikely that the shipyard could effectively compete in that market.

A committed buyer

But Lesko says it was not a wasted effort. “Lessons learned from this project became the stepping stones to numerous design and process improvements, as well as facility enhancements implemented since then,” he says.

While that effort was under way, the shipyard's owners — Prudential Insurance Company of America and Gibbons, Green, van Amerongen Ltd., a private equity firm (now part of Leonard Green & Partners), which had purchased the shipyard for $500 million in 1986 — had been quietly seeking a buyer.

On Aug. 17, 1995, in a press conference held in a boardroom of BIW's executive office wing, Fitzgerald announced that the shipyard had become a wholly owned subsidiary of General Dynamics. An Associated Press article, reporting the sale price as $300 million, quoted General Dynamics' then-President and CEO James R. Mellor as saying the Bath shipyard would come out of the acquisition debt-free.

“Overall, there was a sense of optimism,” Lesko says, recalling the mood of the shipyard at that time. “General Dynamics' reputation as a highly successful defense contractor was well established. The acquisition meant that BIW could work with Electric Boat in Groton, Conn., to share lessons learned and best practices, which was very helpful. It was clear from the beginning that General Dynamics was interested in the long-term success of the company.”

Tangible evidence of that intent came in 1998 with the groundbreaking for the new Land Level Transfer Facility, a 15-acre high-performance concrete platform from which ships can be moved to a 750-foot, 28,000-ton dry dock for launching. A key component of the $500 million in modernization investments General Dynamics has made at BIW since its purchase, it would dramatically change shipyard construction processes that had remained in place since the late 1800s.

“The constraints imposed by constructing ships on inclined shipways and the lack of any way for the main shipyard in Bath to retrieve ships from the river represented significant cost and schedule disadvantages,” Lesko recalls. “The knowledge gained from shipyard benchmarking trips under the Commercial Shipbuilding Focused Development Project, coupled with the Navy's plan in the late 1990s to design and build a robust new class of surface combatants, known then as DD 21, made it clear that significant changes in our construction processes were needed if BIW was to successfully compete for current and future U.S. Navy shipbuilding programs in an increasingly tight market.”

By 2001, the LLTF was christened and ready to take on the job of being the way Bath-built ships would enter the Kennebec River going forward. DDG 87, which would become the USS Mason at its Navy christening, has the honor of being the last ship to slide down the inclined ways at the shipyard for its launching on June 23, 2001.

As the Arleigh Burke-class of destroyers entered its second decade of construction at BIW and the Ingalls shipyard in Pascagoula, Miss., (now called Huntington Ingalls Industries), a proposed new class of destroyers began to make the headlines. The ship class eventually became known as DDG 1000 and through the early part of the 2000s the construction plans shifted multiple times as Navy shipbuilding plans evolved.

The eventual result is that three DDG 1000s would be built: Zumwalt (DDG 1000), Michael Monsoor (DDG 1001) and Lyndon Johnson (DDG 1002). BIW would build the main structure of the first two ships, while Huntington Ingalls would build the helicopter hangars and deckhouses using composite materials, and ship them up via barge for integration at the Bath shipyard. BIW would build the entire third ship — including the deckhouse and hangar — out of steel.

With the DDG 1000 class poised to be its next class of destroyers, the U.S. Navy took a break in building DDG 51 destroyers, which, at 34 ships built in Bath since the Arleigh Burke was delivered in 1991, had been the mainstay of BIW's production. The five-year break in production, Lesko says, was more of a challenge to the shipyard than building two different classes of ships at the same time.

In 2008 BIW opened the Ultra Hall, a huge new climate-controlled facility next to the LLTF, capable of handling ship sections the full girth of the Zumwalt-class hulls.

“The investment in the Ultra Hall was an important step in our ongoing effort to move more work to more efficient stages of construction,” Lesko says. “Any work we can do in buildings, rather than outside, provides numerous benefits to the process, including worker safety, efficiency and more. That investment allowed us to begin building larger, more complete modules in a controlled environment before bringing them out to the LLTF to be joined.”

Two years later, the U.S. Navy announced that the DDG 51-class hull form would be used for its destroyers through the following decade and beyond. It was good news for BIW and Ingalls. For Lesko, and the many BIW workers involved in designing and building that destroyer class for more than two decades, the Navy's decision represented a strong affirmation of BIW's original design for the destroyer class.

“The DDG 51 is a great ship,” he says. “The decision to continue construction and insert new technologies is an affirmation of the Navy's confidence in the overall capabilities of the platform and a reflection of the dynamic environment that influences their requirements.”

Even if DDG 1000 proves to be only a three-ship class of destroyers, Lesko says it is providing BIW with “a wealth of experience” directly applicable to the restarted DDG 51 program, the U.S. Coast Guard's offshore patrol cutter program and potentially other future surface-combatant programs.

“We're grateful for the opportunity and will make the most of the experience,” he says.

Looking ahead

With five destroyers in various stages of construction and another lined up to begin at year's end, BIW began a major hiring push at the start of 2014 that will add 500 new jobs this year and bring the shipyard's total workforce to 6,000, the highest it's been in a decade.

That brings new challenges for Fred Harris, BIW's 14th president, who took over the reins from Jeffrey Geiger in November 2013, with Geiger becoming president of General Dynamics' Electric Boat shipyard in Groton.

“First and foremost we must work safely,” he says. “Affordability is our next challenge. We face formidable competition for new work and our Navy customer needs us to meet our cost and schedule commitments so they can buy the services and ships they need. Finally, we need to hire and train the workforce of tomorrow. As our very experienced workforce approaches retirement we need to be sure those skills are passed along and there are people available to learn them.”

As it has since becoming BIW's owner in 1995, General Dynamics continues to make investments in the Bath shipyard, with $60 million now being spent to erect a 51,315-square-foot outfitting center and other upgrades to existing facilities.

“In general, the investments can be grouped into three categories,” Harris says. “First, we're making investments that improve our energy efficiency and reduce maintenance costs. Next we're improving our process and facilities for ship preservation, what we call 'blast and paint.' Finally, we're moving outfitting work done outside today into a dedicated new facility where the work can be done more safely, efficiently and in less time. These changes better support our downstream processes and leverage previous investments made in modular construction, ship integration, test and activation.”

Looking forward, Harris sees opportunities in the U.S. Coast Guard's Offshore Patrol Cutter program, in which BIW is competing against Bollinger Shipyards Inc. and Easter Shipbuilding Group Inc. in the design phase for a program worth an estimated $12 billion to build 25 cutters.

“To win, BIW will need to develop a design that best meets all of the U.S. Coast Guard's requirements, represents the best value for the Coast Guard's dollar and will have the overall lowest costs to build,” he says. “Bollinger and Eastern are capable, motivated competitors. We won't beat them without a world-class plan that delivers what we promise. We're working hard on that now.”

Comparing the shipyard's readiness in 2014 to meet future challenges to where it stood in 1994 and 2004, Harris says the challenges, both now and then, continue to be driven by a need to improve efficiency, reduce costs, improve safety and continue to be innovative.

“We need to be innovative in our design and planning processes as well in order to enable manufacturing innovation,” he says. “We are very focused on innovation in these areas and benefit from lessons learned within the General Dynamics Marine Systems Group. We constantly exchange lessons learned with General Dynamics Electric Boat in Groton and General Dynamics NASSCO in San Diego. It all really comes back to continuous improvement.”

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