New BIW president faces potential challenges, steep learning curve

Courtesy / General Dynamics Bath Iron Works The USS Daniel Inouye, a Burke-class destroyer, was behind schedule when it was delivered to the Navy.

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By Jessica Hall

Bath Iron Works’ new president, Charles Krugh, may face big challenges taking control over the shipyard, including learning the shipbuilding industry, handling staffing issues and keeping the construction schedule on track.

BIW on Thursday named Gulfstream Aerospace executive Krugh as its new president following the sudden departure of former president Dirk Lesko last month.

Courtesy / Bath Iron Works

Charles Krugh, a Gulfstream Aerospace executive, was named the new president of Bath Iron Works.

A U.S. Army veteran, Krugh served in a variety of aerospace manufacturing roles before joining General Dynamics in 2011 as a senior vice president and general manager for jet aviation. He was appointed as Gulfstream’s vice president for supplier operational support in 2018.

General Dynamics (NYSE: GD), which owns BIW, also owns Gulfstream Aerospace.

“The shipbuilding industry is very different from the aerospace industry. There’s going to be a very steep learning curve before he understands the intricacies of BIW,” said Loren Thompson, industry analyst and chief operating officer with the Lexington Institute in Arlington, Va.

Thompson also speculated that Lesko left BIW because he “violated a company policy on ‘delegation of authority.’”

But there have been other challenges. BIW has struggled to meet deadlines, experienced a union strike and lost key contracts to rival shipyards. BIW has committed to increasing its shipbuilding rate to two ships a year by the end of 2022.

“BIW’s problems are a microcosm of Maine’s problems. The policies and politics are not favorable to heavy industry. BIW is not near any Naval yard. BIW is having to go far afield to find workers. I’m not sure BIW can overcome the handicaps of doing what it does where it does,” Thompson said.

“BIW is not making a good return for General Dynamics. The problems could be fixed but I’m not sure there’s the will to do what must be done,” he added. “It’s not that Ingalls Shipyards doesn’t have unions. It does. It has several. They just work well with management and that is not the sense I get at BIW.”

Tim Suitter, spokesman for Bath Iron Works’ largest union, the International Association of Machinists & Aerospace Workers Local S6, declined to comment on Krugh’s appointment. The union represents about two-thirds of BIW’s 7,400 employees.

In announcing Krugh’s appointment, Robert Smith, executive vice president for General Dynamics Marine Systems said, “Chuck’s leadership, proven track record in manufacturing and expertise in managing complex supply chains will be an enabler to Bath Iron Works as it expands and increases the pace of shipbuilding for the U.S. Navy.”

Krugh went to the Robert Morris University and the George Herbert Walker School of Business & Technology at Webster University. He has worked at several aviation companies since 1992, including Bombardier, Dassault Falcon Jet, and Corporate Jets Inc., according to his LinkedIn profile.

Krugh's appointment follows the sudden departure of Lesko in April. BIW said Lesko, who had helmed the company since November 2016 and began work there in 1990, resigned but did not elaborate.

The shake-up was preceded by a change of command by the Navy, which on March 25 installed Capt. David Hart as its supervisor of shipbuilding at BIW.

Hart is part of a Naval Sea Systems Command branch that oversees design and construction of Navy ships at commercial yards in Bath, San Diego and Marinette, Wis.

A federal watchdog report recently criticized the Navy’s oversight of shipbuilders including BIW.

In March 2020, BIW delivered the destroyer Daniel Inouye to the Navy. It was about 10 months late on a revised schedule, and about three years late from the original schedule.

BIW also paired with Spanish shipbuilder Navantia to pursue the U.S. Navy’s guided-missile frigate program, but lost to Italian builder Fincantieri Shipbuilding in Wisconsin in April 2020.

Industry trade publication Defense News, citing Navy sources, also said BIW lost out on a contract option for a destroyer to Huntington Ingalls Industries in June 2020 because of Ingalls’ ability to deliver on a more reliable schedule.

The leadership transition also comes as a new round of contract negotiations loom.

Local S6 recently told its members in a letter that “to reach a midterm wage adjustment of this magnitude is something that all parties should be proud of.”

“We are at a critical juncture with BIW. We need to prove we are the best shipbuilders in the world by delivering ships on time and on budget. That will greatly improve our negotiations strength headed into contract negotiations in August 2023."