VSRA News

Click here to see SCA News

Will Shipyards be left High and Dry as the Navy shrinks in size?

The Virginian-Pilot
© April 1, 2007

NORFOLK - Since the Cold War ended, the Navy's fleet has dwindled by more than half, with 276 ships now prowling the world's oceans.

In Hampton Roads, the homeport fleet hovers around 90, down by nearly half since the 1989 fall of the Berlin Wall.

Yet, as the fleet declined, one thing hasn't: The number of private repair yards with piers, dry docks and other maintenance facilities clustered along the Elizabeth River has remained steady. Shipyards in major ports north of here, including in Baltimore and Philadelphia, have been shuttered and vacated.

Now, industry insiders wonder whether the local market could be headed for a shakeout.

"I can't imagine people not expecting that, actually," said Tom Godfrey Jr., president and chief executive officer of Colonna's Shipyard Inc. in Berkley.

With the Navy's downsizing in the 1990s, the port's five largest repair yards now employ around 2,700 workers, far fewer than their former labor forces.

Most have tried to buffer themselves by sharing work on Navy contracts and finding ways to diversify. But the industry still relies on the Navy as its No. 1 customer.

"Some of the guys I've talked to have said there are some lean times ahead, and they're not sure how they're going to fill all the holes they have out there," said Joe Carnevale, senior defense adviser for the Washington-based Shipbuilders Council of America. "It wouldn't surprise me if an adjustment was necessary."

Some point to a February episode at Metro Machine Corp., a Berkley yard, as a warning sign. The company was in a dispute with the Navy over costs to dry-dock the guided missile destroyer McFaul. After it appeared the work would be canceled, Metro issued notices to the city and state outlining plans to idle two-thirds of its 450-member work force.

Eventually, an agreement was reached for a lower price, averting the layoffs. But the situation underscored the industry's vulnerability.

"It's an illustration of a market that has shrunk to the point that a break in the stream of maintenance from a single job could interrupt a company," Godfrey said. "It's very troublesome."

Other threats loom. Among them:

 

  • Difficulties recruiting skilled workers, who worry about job security.

     

     

  • A shortage of government money to pay for maintenance work and to reach the Navy's current goal of a 313-ship fleet.

     

     

  • The possibility that the Navy will send Norfolk-based ships to Mayport, Fla., including large amphibious surface ships - the bread-and-butter vessels for local repair yards.

     

     

  • Concern that the Navy will divert surface combatant ships, long the mainstay work for private yards, to Norfolk Naval Shipyard in Portsmouth to fill expected work gaps in that public yard.

     

    "It'll take some time before things play out," said Jerry Miller, president of Earl Industries LLC, a Portsmouth yard. "There's some surprises yet to come maybe. But right now, it's pretty stable."

     

    To ensure that combat ships are ready for far-flung missions, the Navy recognizes that keeping the repair industry healthy is in its best interest.

    Still, under pressure from the Pentagon to control costs, it has pushed local shipyard executives to become more efficient.

    Rear Adm. Jeffrey Brooks, director of fleet maintenance for the Navy's Norfolk-based Fleet Forces Command, said he thinks "too many companies out there have duplicative capabilities." That's a concern because it adds to overhead costs passed on to the Navy.

    "The industrial base infrastructure has not gone down to the same degree that the number of ships has gone down," Brooks said, without citing local examples. "I don't believe it's the Navy's responsibility to have too much infrastructure out there - more than we need to be efficient. The Navy pays for that."

    Even if the Navy reaches its 313-ship goal, "that's not going to be a significant change" in terms of work for local repair yards, Brooks said.

    Shipyards that hope to remain competitive will have to change their practices, he said, including diversifying beyond Navy ships and teaming with rival yards. Otherwise, "there's going to be folks out there who probably won't have enough work to stay in business."

     

    The ship repair business has never been easy, and the challenges these days make it tougher than ever.

    That's why Wayne Thomas got out. In early 2004, his family sold Moon Engineering to Earl Industries, giving Earl a waterfront presence. Before that, in 1995, Jonathan Corp. went bankrupt and closed its Norfolk yard for lack of Navy work, the first shakeout of the post-Cold War decline.

    "We were just totally burned out with worrying about defense funding and not knowing what tomorrow was going to bring," said Thomas, now a commercial business investor. "It's just a rough way to live."

    Thomas called Navy ship maintenance the "stepchild" of defense spending - and an easy target for cuts.

    "You're sitting there with a work force thinking you've got all this work to do, but they may not have the funding for it," Thomas said. "So let's see: Are we going to try to carry the work force for another 30 days and hope it's going to come through, or are we going to let them go?"

    Money shortages and labor issues remain top concerns.

    "It all starts with money," said Richard Goldbach, chairman and CEO of Metro Machine. "There's not enough of it, in our opinion, no matter how it's spread out."

    The resulting feast-and-famine cycles have contributed to what some view as one of the industry's most serious challenges - r ecruiting skilled trades workers.

    Shipyard workers can earn more than $40,000 a year, not counting overtime, but it's difficult to retain them "if they don't know they'll have work week to week," said Gary Brandt, president and CEO of Marine Hydraulics International Inc. "You lay a person off a second time and there's a 50-50 chance they'll be back. Lay them off a third time and they're not coming back."

    Other troubles lurk. If Florida succeeds in sniping large-deck amphibious or other ships to replace the retiring aircraft carrier John Kennedy, it could be a big financial hit. Norfolk yards now hold maintenance contracts worth an estimated $900 million over five years on the amphibious ships alone.

    "I'm sure they're looking for any option they can to fill the void left by the Kennedy," said Mal Branch, president of the Virginia Ship Repair Association. He is working on a report to assess potential effects.

    Another worry is losing surface ships to Norfolk Naval Shipyard. The Navy is expected to juggle work to keep its four public yards busy now that the 2005 Defense Base Realignment and Closure Commission has rejected the Defense Department's recommendation to close the Portsmouth Naval Shipyard in Kittery, Maine. That foiled the Navy's plan to send submarine work from there to the public yard in Hampton Roads.

    "There is clearly going to be a dip in the workload for Norfolk Naval Shipyard, and the Navy is trying to sort out how they're going to accommodate that," said Carnevale of the shipbuilders council.

    For now, the Navy will uphold a pledge to keep surface ships in private yards, Brooks said. T hat could change if the Navy can't meet a federal requirement that at least 50 percent of military maintenance be done in government depots.

    "I don't see any situation, at least out over the next three to five years, that we would not be able to meet the 50-50 requirement," Brooks said.

     

    In Brooks' view, the Navy is helping to stabilize the industry with its new multi ship, multi option maintenance contracts.

    The approach focuses on predictability and spreading work across the waterfront through partnering. Shipyards compete to become the prime contractor for a class of ships over several years, but the winner must farm out at least 40 percent of the work to at least two others.

    All four of the largest local yards have won at least one of the prime awards, and several are flush with work right now. BAE Systems Norfolk Ship Repair, for example, is the prime on three contracts to maintain destroyers, cruisers and amphibious warships - with an estimated value of slightly more than $1 billion over five years, the Navy says.

    "With the MSMOs, you can keep a core work force and your skilled workers employed," said Bill Clifford, president and general manager of BAE Systems Norfolk. "It brings volume and stability that we didn't have."

    In the decade since the Navy began awarding multi ship awards on the West Coast, the four repair yards on San Diego's waterfront have carved out special ty areas, becoming the "go-to" yards for those jobs.

    A focus for BAE Systems' San Diego shipyard, for example, has been main pump overhauls on amphibious ships, said Robert Kilpatrick, president and general manager of the yard.

    "We've probably done 40 to 50 over five or six years, and that learning curve has been really good for reducing costs for the Navy," Kilpatrick said.

    Specializing also allowed the yards to target capital improvements to control overhead. "We'll buy a lot of new equipment to make our machine shop better," Kilpatrick said, "knowing that we've got the principal work for all the machinery on the waterfront."

    Such teaming is occurring in Hampton Roads and could lead to more cooperation among rival yards as the process matures.

    "It's some form of an informal consolidation because we are recognizing each other's strengths and using it to the advantage of the Navy," said Ron Ritter, senior vice president of Earl Industries.

    Even so, the yards remain fierce competitors. MHI last month protested for the second time the Navy's award of a frigate multi ship contract to Metro Machine. After a Metro protest, the Navy re bid a contract now held by Earl Industries to maintain LSD and LPD amphibious ships.

    "We're in this competition to see who can give the Navy the best bang for their buck," MHI's Brandt said. "I think that's healthy."

     

    While the Navy's presence in Hampton Roads will continue to bring work, industry officials recognize the need to branch out.

    For those that have done so, the jobs represent a sliver of revenue. But they have helped keep employment steady when there are no Navy ships. In today's economic climate, diversifying is critical, said Allen Walker, president of the shipbuilders council.

    "The only way these yards are going to sustain their current capacity is through a combination of commercial and Navy work," Walker said. "That's how we keep these businesses intact; that's how we keep the industrial base intact."

    Some of the yards are transferring shipyard expertise to other markets. Earl Industries, for example, has taken its specialty in hull and tank coatings and landed work blasting and painting power plants.

    BAE Systems Norfolk has tapped the highly competitive cruise ship market. Clifford sees promise for more with the opening of a cruise terminal in downtown Norfolk.

    "I look at that as a perfect opportunity," he said. "When I do a cruise ship in our dry dock, my package is blasting, painting and propulsion work. But think of all the materials and supplies and other people that are working inside the ship for the owner. It benefits the whole community."

    Companies such as Colonna's are going after "brown fleet" boats, such as barges, tugs and dredging vessels.

    MHI is targeting commercial cargo ships that bring goods into Hampton Roads - a potentially lucrative market, said Mike Gardner, an attorney with Troutman Sanders and a consultant for local shipyards.

    It's still cheaper for the international vessels to do major overhauls in foreign ports, where government subsidies and lower wages keep costs down. But Gardner has helped local yards to bring in ships needing emergency repairs.

    "Over the next 15 years, with the volume of ships, the quality of work here and efforts by the industry to reach out to these international operators, I think we'll see more of the routine maintenance, including dry docking, occurring here," Gardner said.

    MHI is bullish enough on the future that it added a yard in Lamberts Point and spent $21 million to build a pier there in 2004. The company plans to install a dry dock, competing with three other local yards having a total of four dry docks.

    "Our goal is to be the most competitive yard in the region," Brandt said.

    In 2002, Metro Machine spent about $60 million on a 40,000-ton dry dock and other upgrades to accommodate the biggest ships of the Navy, its sole customer.

    The Navy will remain Metro's top customer, Goldbach said, while the company looks to diversify.

    "I think we're all at risk," he said. "You have to position for the long term as you survive the near term. There's no question in my mind that we're going to do that."

  • Reach Jon W. Glass at (757) 446-2318 or jon.glass@pilotonline.com.

    • OSHA Identifies 14,000 Workplaces with High Injury and Illness Rates

    WASHINGTON, March 14 /PRNewswire/ -- The Department of Labor's 
Occupational Safety and Health Administration (OSHA) announced today that
approximately 14,000 employers have been notified that injury and illness
rates at their worksites are higher than average and assistance is
available to help them better protect their employees.
    In a letter sent this month to those employers, OSHA explained the
notification was a proactive step to motivate employers to take steps now
to reduce those rates and improve the safety and health environment in
their workplaces.
    "This identification process is meant to raise awareness that injuries
and illnesses are high at these facilities," said Assistant Secretary of
Labor for OSHA Edwin G. Foulke, Jr. "Injuries and illnesses are costly to
employers in both personal and financial terms. Our goal is to identify
workplaces where injury and illness rates are high and to persuade
employers to use resources at their disposal to address these hazards and
reduce occupational injuries and illnesses."
    Establishments with the nation's high workplace injury and illness
rates were identified by OSHA through employer-reported data from a 2006
survey of 80,000 worksites (the survey collected data from calendar year
2005). The workplaces identified had 5.3 or more injuries or illnesses
resulting in days away from work, restricted work activity, or job transfer
(DART) for every 100 full-time workers. The national average during 2006
was 2.4 DART instances for every 100 workers.
    Employers receiving the letters were also provided copies of their
injury and illness data, along with a list of the most frequently violated
OSHA standards for their specific industry. The letter also offered
assistance in helping turn the numbers around by suggesting, among other
things, the use of free OSHA safety and health consultation services
provided through the states, state workers' compensation agencies,
insurance carriers, or outside safety and health consultants.
    The 14,000 sites are listed alphabetically, by state, on OSHA's Web
site at: http://www.osha.gov/as/opa/foia/hot_12.html.
    The list does not designate those earmarked for any future inspections.
An announcement of targeted inspections will be made later this year. Also,
the worksites listed are establishments in states covered by federal OSHA;
the list does not include employers in the 21 states, and Puerto Rico, who
operate OSHA-approved state plans covering the private sector.
    OSHA's data collection initiative is conducted each year to provide the
agency with a clearer picture of those establishments with higher than
average injury and illness rates. Information obtained from the survey
gives OSHA the opportunity to place inspection resources where they're
needed most and also helps the agency plan outreach and compliance
assistance programs where they will be most beneficial.
    Under the Occupational Safety and Health Act of 1970, employers are
responsible for providing a safe and healthful workplace for their
employees. OSHA's role is to assure the safety and health of America's
working men and women by setting and enforcing standards; providing
training, outreach, and education; establishing partnerships; and
encouraging continual process improvement in workplace safety and health.
For more information, visit http://www.osha.gov.
    U.S. Labor Department news releases are accessible on the Internet at
http://www.dol.gov. The information in this release will be made available in
alternative format upon request (large print, Braille, audio tape or disc)
from the COAST office. Please specify which news release when placing your
request. Call 202-693-7773 or TTY 202-693-7755.

SOURCE U.S. Department of Labor

    VSRA Member Jo-Kell Is Prepared for Disaster - Are You?

    By TOM SHEAN, The Virginian-Pilot
    © March 11, 2007

    Almost a year ago, the CEO of Jo-Kell Inc. in Chesapeake began wrestling with an issue that many small businesses had ignored. Suzy Kelly wondered how many of the company's 57 employees would show up for work if a flu pandemic struck Hampton Roads. Public health agencies had predicted that a global outbreak of a new, highly contagious strain of flu virus eventually would hit the United States. In addition to inflicting widespread illness and death, the pandemic, they warned, would disrupt business activity. 

    As much as 40 percent of the nation's work force might be absent during a pandemic because employees would be sick, frightened or caring for family members, the Labor Department's Occupational Safety and Health Administration has cautioned.

    Kelly, whose company distributes electrical equipment for shipboard and industrial use, decided last spring that Jo-Kell employees had to take responsibility for their own welfare in that sort of crisis. She figured that they were more likely to come to work if their families weren't scrambling to find food, water and other necessities.

    In an e-mail to employees in April, she recommended that they store at least two weeks of drinking water at home in case of an emergency. In another e-mail, she suggested types of food that they should stockpile. She also recommended that employees set aside medications, first-aid supplies and copies of important personal documents.

    To date, the reaction from employees has been favorable, but Kelly wants to know whether they have acted on her advice. She said she plans to survey employees in April on the level of their participation in the preparedness effort.

    Rather than dwell on the threat that a pandemic poses per se, Jo-Kell's chief executive officer cast her recommendations as steps to take for a hurricane or other emergency. "The concept of a pandemic," she conceded, "doesn't resonate with people. The reality of what could happen is too abstract."

    Federal regulators have been monitoring industries considered essential to the economy and public safety, including banks, electric utilities and telecommunications providers, for their preparations.

    Karen L. Cole, co-president of a Mechanicsville consulting firm that provides business-continuity and disaster-recovery advice, said large corporations have their own teams of planners working full-time on possible disruptions, including the threat of a pandemic. "They already have their plans in place," she said.

    One of these is USAA, the financial services organization that has a call center and regional office in Norfolk. The organization, which provides auto and homeowners insurance to members of the military, their families and military retirees, started planning for a pandemic early last year, said Lynn McChristian, a spokeswoman. A team at USAA meets monthly to update the plan, she said.

    Many smaller companies, however, have yet to address the impact that a pandemic could have on their employees and operations. In Hampton Roads, small businesses "are starting to get engaged, but it's slow," said Erin Sutton, an emergency planner at the Virginia Beach Department of Public Health. In February, a health department workshop on planning for disruptions from a pandemic attracted about 60 representatives from local businesses and nonprofit organizations. The $3,000 cost of the event was financed with money from the federal Department of Health and Human Services.

    After several news reports in 2005 and 2006 about the threat of a flu pandemic, some business owners in the region expressed skepticism about the repeated warnings, Sutton said. They've insisted that "it's not going to happen this year."

    The level of preparation that Kelly conducted at Jo-Kell is unusual. Among small business owners and managers in the region, "she's definitely in the minority," Sutton noted.

    What prompted her to encourage preparations by employees, Kelly said, was concern about their welfare and a commitment to planning.

    "We don't like things to creep up on us," she said at Jo-Kell's main office and warehouse in Greenbrier Industrial Park. The company also has facilities in Richmond and Jacksonville, Fla.

    Kelly, who described her planning efforts at the Virginia Beach Department of Public Health workshop last month, urged business owners and managers to be financially prepared for a prolonged downturn in sales if a pandemic struck. But predicting the broad economic impact may be impossible, she said afterward.

    "You can only do so much," Kelly said. "I don't know how you can plan for not having any commerce."

    Because many companies could be hobbled by high rates of absenteeism, experts say managers must decide ahead of time which of their operations are essential and which can be shut down. Employers also must designate back up employees to make decisions in case managers are unavailable.

    Some businesses will be especially vulnerable to a drop in sales because consumers probably won't risk exposure to the flu by congregating in public spaces or shopping for items that they don't need immediately.

    "It's less likely that you'll buy that pair of jeans or get your hair done" during a pandemic, said consultant Cole, who previously worked on business continuity issues for the financial services company Capital One Financial Corp.

    For small companies, preparation for a pandemic is crucial, said Cole, because they will have to work harder than their larger rivals. "A customer of a small business is likely to switch to a large company because they think that a larger one is better prepared to keep its doors open," she said.

    Her message to business owners and managers is that they shouldn't concentrate on making money during a pandemic. Their focus, she said, has to be on keeping the doors open.

    That could be a challenge for companies that maintain lean inventories and depend on frequent deliveries of raw materials or finished goods. Manufacturers, trucking companies and contractors will likely have their own problems with absent workers and be forced to scale back operations.

    As part of its emergency plan, 30-year-old Jo-Kell distributed employees' home phone numbers, cell phone numbers and e-mail addresses as a way for them to stay in touch. Several employees, according to the company's disaster plan, would work from home via the Internet during a pandemic.

    A surge in the number of people telecommuting during a pandemic, however, could strain parts of the nation's communications system. Schools, too, would turn to the Internet for instructing students at home, Sutton said. Whether the Internet would be overloaded by millions of additional people working from home "is an open, unanswered question," she said.

    Cole, the consultant, said she was more optimistic about the capacity of the Internet. Any strains on the system, she said, probably would show up in metropolitan areas that have large concentrations of white-collar workers, who would be more likely to use computers for working at home.

    However, businesses that expect their employees for the first time to work from home via the Internet can't assume that workers can learn to do it once an emergency strikes, Cole said. Employees, she said, have to be trained to do that well in advance.

    Before Kelly began working on her employees' preparation for a pandemic, she sought support from Jo-Kell's managers. Without that backing, "I would have been spinning my wheels," the CEO said. And rather than dropping an entire emergency plan onto employees, she broke it into pieces that were distributed to them every two weeks.

    Later this month the company will distribute to its workers a 14-page "Employee Disaster Preparedness Guide" that consolidates the advice in Kelly's messages.

    Cole acknowledged that many small companies can gather the needed information on their own from government agency Web sites and other sources. However, small business owners sometimes feel overwhelmed when trying to plan for an emergency such as a pandemic.

    "You've got to do it in manageable chunks," Cole suggested.

    •  Reach Tom Shean at (757) 446-2379 or tom.shean@pilotonline.com.

    Auxillary System Proposes Use of Navy Training Courses

    The following article was published in the latest Defense News.
    Ship Repair Yards Want U.S. Navy Training
     
    Civilian ship repair yards have traditionally hired a lot of former U.S. Navy sailors who worked in “the trades” — machinist’s mates, enginemen, hull maintenance technicians and others — while on active duty.
    But the crop is thinning. The Navy is a lot smaller than it was 10 or 20 years ago. Fewer trades-type sailors have been needed since the Navy began outsourcing more of its maintenance work to civilian yards following implementation of its Fleet Response Plan.
    It’s sort of a Catch-22: The hand that fed talent to the civilian yards has cut the flow — yet it’s asking more of those yards every day.
    A small Norfolk, Va., repair contractor that maintains Navy ships has a novel idea: Share the trades-training correspondence courses the Navy owns with the civilian firms that make the Navy go.
    Training isn’t a problem for the biggest repair firms. Giants like Northrop Grumman Newport News and BAE Systems have in-house or collaborative apprenticeship programs that generate highly skilled tradesmen, such as welders. BAE Norfolk Ship Repair has only recently done that, and that is because natural attrition is taking its toll.
    “We’ve started an apprentice program because we’re concerned,” said Bill Clifford, president of BAE Norfolk Ship Repair, whose 900 production workers perform hull, mechanical and electrical work on Navy ships. “We have an aging work force. And so we need to worry about filling the ranks as the older folks retire.”
    But firms with 50 workers can’t afford to take part in formal, scheduled training programs.
    “Most smaller companies can’t send three people to training next week because you don’t know what’s coming next week,” said Buck Hodges, a project manager for Auxiliary Systems of Norfolk. “We’re a subcontractor for the larger companies. When they call, you’re expected to be able to perform.”
    With access to Navy correspondence courses, “you have more flexibility” in training, he said.
    Nonresident, unclassified Navy correspondence courses are in the public domain and are available from a variety of sources, said Ed Barker, spokesman for Naval Education and Training Command. But testing and grading services are only available to the Navy’s active-duty sailors, reservists, retirees and certain contractors.
    Barker said it remains to be seen whether approval for testing and grading might be granted for civilians who work on Navy ships.
    Hodges, a retired Army colonel, employs former sailors at the company, which works on marine water treatment systems and heat exchangers and provides machining, welding and fabrication services.
    But the talent pool is shrinking. In the past five years alone, for example, the machinist’s mate rating has shrunk from 7,952 to 7,460. The Navy has about 300 fewer gas turbine system technician (mechanical) sailors, and 300 fewer electrical specialists in that rating.
    Those numbers will continue to shrink as the new Littoral Combat Ship comes on line; their crews will include only eight “hybrid” sailors in the engineering ratings.
    Those ratings continue to merge. Navy officials plan to merge the remaining nine ratings into three, diluting the amount of time sailors will spend on specific skills in those combined ratings.
    “They don’t receive the in-depth training that we used to have,” said George Murray, the senior engineering technical representative for Auxiliary Systems and a retired master chief machinist’s mate. “Twenty years ago, they operated the pumps and they repaired the pumps. Nowadays, they operate the pumps and when the pumps break, they ship ‘em downtown or to the shipyard to be overhauled, brought back and reinstalled. A lot of that work’s being farmed out to us. I mean, I’m not complaining.”
    Getting full access to Navy correspondence courses is not a be-all, end-all solution, but it will help, Hodges said.
    “I just see it as another piece of the puzzle,” he said. But by doing that, “you’re using what’s already been developed. And you’re doing it the Navy way.” •
     

    Lyon Shipyard to Buy Norfolk Shiprepair & Dyrdock

    By JON W. GLASS, The Virginian-Pilot
    © March 7, 2007 | Last updated 8:50 PM Mar. 6

    NORFOLK - Looking for more space, Lyon Shipyard Inc. plans to buy out neighboring Norfolk Shiprepair & Drydock Co.

    The two repair yards, side by side on the Elizabeth River's Eastern Branch, have signed a sales contract but have not yet closed on the deal, said Tom Ackiss, Lyon's vice president, on Tuesday.

    The purchase, he said, is pending completion of a "due diligence" review of environmental, financial, legal and other aspects of the deal.

    "It appears we're going to be able to reach a mutually agreeable conclusion," Ackiss said.

    The deal involves Lyon buying out Norfolk Shiprepair's assets, he said, which include two marine railway docks, a pier, machinery and a cluster of buildings on the approximately 11-acre property. The two yards front the river near the foot of the Campostella Bridge on the northwest side.

    "It's a good fit for us, and a logical thing," Ackiss said. "It gives us a little more elbow room to work and more room dockside."

    Clay McNutt, a principal with Norfolk Shiprepair, was traveling Tuesday and could not be reached for comment. His father, Edmund "Buddy" McNutt, the company's founder, died in 2004.

    Lyon, with about 115 employees, works mainly on commercial tugs and barges but also handles smaller Navy vessels, such as berthing barges.

    Norfolk Shiprepair, which employs around 60 to 70, does similar work.

    Employees at both yards have been informed of the pending sale, Ackiss said. During the past two to three weeks, Lyon has hired a "handful" of Norfolk Shiprepair's workers, and would "take as many as we can" once the deal is closed, he said.

    Those workers include welders, machinists, painters and electricians.

    "It's just hard getting good workers in these trades anymore," he said.

    Ackiss declined to discuss the price of the deal. City real estate records assess the property at $3.74 million.

    Norfolk Shiprepair purchased the property in 2000 for $3.09 million, according to city records.

    The work load at Lyon has been "fairly stable," Ackiss said. The yard has two floating dry docks capable of lifting barges and oceangoing tugs.

    The two yards have informally discussed a sale for around two years and began serious talks last fall, he said.

     


  • Reach Jon W. Glass at (757) 446-2318 or jon.glass@pilotonline.com.

    • Navy Agreement should avert layoffs at Metro Machine

    By JON W. GLASS, The Virginian-Pilot
    © March 8, 2007 | Last updated 10:32 PM Mar. 7

    NORFOLK — A plan for mass layoffs announced three weeks ago by Metro Machine Corp. won’t happen after all, officials said Wednesday.

    The company told workers last month that a dispute with the Navy over ship maintenance costs was expected to idle about two-thirds of the shipyard’s 450 employees for up to 18 months.

    But on Wednesday, the Navy said a disagreement with Metro over the price of dry docking the guided-missile destroyer McFaul – the subject of the dispute – has been resolved. The Norfolk-based vessel will enter Metro’s yard for maintenance later this month.

    The agreement also ensures that the yard will continue to receive work as a subcontractor under a five-year contract the Navy has with BAE Systems Norfolk Ship Repair to maintain a group of Arleigh Burke-class destroyers.

    “From our perspective, this is a real win for everybody,” said Steve Hanson, deputy director of fleet maintenance for the Navy’s Fleet Forces Command in Norfolk. “We get the work we want done at a fair and reasonable price, and the company can stand tall to their employees and say they’ve been able to bring the work to them and keep them gainfully employed.”

    Metro’s original price estimate to dry dock the McFaul was “substantially higher” than historic costs, Hanson said. While he declined to disclose the dollars involved, he said the negotiated agreement includes near- and long-term incentives that reduced the Navy’s cost.

    “We can stand tall to the taxpayer and say it’s a good price,” Hanson said.

    At an all-hands meeting last month, Metro executives told workers that the dispute with the Navy could result in layoffs lasting six to 18 months. A few days later, Metro filed a notice with the Virginia Employment Commission stating that the company expected to lay off around 275 workers by the end of March.

    On Wednesday, John Strem Jr., Metro’s president and chief operating officer, said the resolution with the Navy would avert the large-scale layoffs.

    “We’re glad to be able to avoid them, obviously,” Strem said. “We’re very pleased.”

    Doug Norris, president of the yard’s International Brotherhood of Boilermakers Local 1999, said late Wednesday afternoon that company officials had not officially notified the union that the dispute had been resolved.

    “I’m all kinds of happy if that’s the case, but I really don’t want to say anything until I know for sure,” Norris said. “I’ve been told we’ve had stuff before, and it turned out not to be the case.”

    So far, Norris said, no workers have been furloughed since the company gave legal notice to the union that it intended to begin laying people off over five Mondays starting Feb. 26.

    The destroyer contract, held by BAE Systems, is one of the Navy’s new multi-ship, multi-option contracts, in which one yard oversees maintenance of a class of ships over five years. Metro teamed with BAE on the $458 million destroyer contract as a subcontractor.

    In a statement Wednesday, Bill Clifford, president and general manager of BAE Systems Norfolk, said: “We are encouraged by the Navy’s decision to dock McFaul at Metro, so we can continue to support our No. 1 customer.”

    The partnering called for under the multi-ship contracts gave the Navy flexibility to work with BAE Systems and Metro to resolve the pricing disagreement, Hanson said.

    While the Navy’s bottom line was to push down its costs, a motivating factor in the negotiations was the hope of avoiding mass layoffs, Hanson said.

    “We want to help the private sector maintain a stable work load and a stable work force, because it’s in our best long-term interest,” he said. “That being said, we still have a responsibility to make sure that we are good stewards of taxpayer dollars. We’re doing our best to get value for the dollar.”

     

  • Reach Jon W. Glass at (757) 446-2318 or jon.glass@pilotonline.com.

    • Overtime May Not Incrase Risk

    Study finds stronger link to prior health problems
    A new study in the February issue of the Journal of Occupational and Environmental Medicine  found that while working very long hours is linked to an increased risk of certain types of health and safety problems for particular groups of industrial employees, other factors — such as previous health problems — have a much stronger effect on overall health, safety and productivity.
    Using a database of information on a sample of nearly 2,800 workers representing a heavy manufacturer, researchers analyzed the effects of work hours on a broad range of health, safety and productivity outcomes.
    No adverse effects were found until the 60-hour per week mark. And even then, the effects were limited to an increased risk of workers' compensation episodes for hourly female employees and to an increased risk of new musculoskeletal diagnoses for older workers.
    Moreover, working overtime did not increase the risk of physical or mental health problems. Overtime also was unrelated to "presenteeism" — days the employee was at work but performing at less than full capacity.
    What did matter were factors that preceded the number of hours worked: compensation type, demographics, and particularly prior diseases and health status.

    MHI plans more dredge work for expansion

    By JON W. GLASS, The Virginian-Pilot
    © February 24, 2007
    NORFOLK - Marine Hydraulics International Inc. plans more dredging to expand operations at its Lamberts Point shipyard.
    The company has applied to dredge 119,000 cubic yards of Elizabeth River bottom at its Midtown yard near the West Ghent neighborhood, so it can bring in large Navy berthing barges. The barges are used to house Navy crews when ships are in for repair.
    The work would be added to a dredging permit MHI received a year ago as part of plans to install a dry dock alongside a pier it built in 2004 to accommodate large-deck Navy ships and commercial vessels, said Gary Brandt, MHI's president and chief executive.
    The Virginia Marine Resources Commission is scheduled to vote Tuesday on authorizing the work.
    To date, the company has not purchased a dry dock and will not until all permits are in hand, Brandt said.
    "Eventually, we will have a dry dock," he said. "I can't give you anything firm. The permitting process takes a long time, and I don't want to spend $30 million on a dock and not be able to get a permit."
    The shipyard's move into West Ghent nearly three years ago generated complaints about noise and traffic. But no one has filed objections over MHI's latest dredging plans and the commission staff has recommended approval, said Wilford Kale, a spokesman for the Marine Resources Commission in Newport News.
    Last February, when the commission approved a dredging permit to remove around 500,000 cubic yards for the dry dock, the neighborhood civic league and the W.H. Taylor Elementary School PTA sent letters of protest.
    The company has not yet done that dredging, Brandt said.
    Norfolk City Councilman Barclay Winn, who represents West Ghent, said Friday that MHI has worked with the city to address parking problems, but cut-through traffic to the yard remains an issue. Any expansion plans are "potentially" a concern, he added.
    "It's a sensitive situation, and we're going to treat it as such," Winn said.
    MHI's other shipyard is on the Elizabeth River's Eastern Branch near the Campostella Bridge, and the company now has around 400 workers. The company lacks a dry dock, which limits ship repair contracts to topside work, Brandt said.
    Being able to lift vessels out of the water, Brandt said, would let the company work on ship hulls and further diversify its operations. In recent years, the company has expanded business beyond the Navy to include Military Sealift Command ships and commercial cargo vessels.
    The Lamberts Point yard this week completed repairs on a German bulk carrier, and two Chinese cargo ships are expected soon, he said.
    The proposal coming before the commission Tuesday calls for dredging a 633-foot by 140-foot basin to a depth 55 feet below mean low water. MHI would pay the state royalties of $60,460 for use of the state-owned bottom.
    · Reach Jon W. Glass at (757) 446-2318 or jon.glass@pilotonline.com.

    Coast Guard Chief Announces Plans to Overhaul the Service

    By Eric Lipton
    WASHINGTON, Feb. 13 — Acknowledging that the Coast Guard has failed to keep up with changing times, its commandant, Adm. Thad Allen, unveiled a plan Tuesday to restructure its management radically and expand its surveillance efforts along the nation’s coasts.
    The overhaul is intended to address mounting criticism of a $24 billion equipment program known as Deepwater, which is replacing or rebuilding most of the service’s large ships, planes and helicopters.
    But it is much broader, including revamping the way the Coast Guard manages its response to natural disasters and terrorist attacks, supervises its Atlantic and Pacific fleets, maintains its aircraft and ships and handles its payroll and financial systems.
    Some of Admiral Allen’s proposals could be felt by boat owners. He is advocating the mandatory use of devices like the automated identification beacons that are on large ships on smaller commercial fishing vessels and at least some pleasure boats.
    The plan reflects changes that have already taken place at the service since 2001 when it assumed a broader antiterrorism mission and has had its budget grow by 50 percent, to $8.6 billion this year.
    “We have been running some parts of the Coast Guard like a small business when we are a Fortune 500 company,” Admiral Allen said in a speech on Tuesday to several hundred Coast Guard officials. “We need to evolve with changing times.”
    Instead of operating separate Pacific and Atlantic fleets, Admiral Allen said, all 35,000 active duty Coast Guard personnel on the service’s nearly 250 large ships, 1,700 smaller boats, 200 aircraft and 750 shore-side units will now report to a single commander.
    A hundred-person operations group will coordinate how specially trained Coast Guard units respond to terror attacks, natural disasters, chemical or oil spills and its war-time assignments with the Department of Defense.
    A new deputy commandant for mission support will oversee the design, acquisition and construction of new ships and aircraft and the maintenance of the fleet once they are built, functions that are now managed separately.
    That will allow the Coast Guard to avoid giving so much authority for design and construction choices to contractors, like Lockheed Martin and Northrop Grumman, which renovated the first eight trouble-plagued ships in the Deepwater program.
    The speech by Admiral Allen was in advance of the release of another scathing report by the Department of Homeland Security’s inspector general on the Coast Guard’s management of its ship procurement program.
    The newest report, a copy of which was obtained by The New York Times, confirmed safety complaints that had been filed by a former Lockheed employee, who was so frustrated that his observations had gone unheeded that he posted a Web video to detail them.
    The report says that as the former employee, Michael DeKort, had asserted, Coast Guard contractors installed hundreds of cables on 123-foot patrol boats that could cause toxic smoke if they caught fire. The ships are now out of service because of hull breaches. The contractors also installed electronics equipment that was prone to failure in open-sea conditions.
    Since 2001, the Coast Guard has become much more of an extension of the military, instead of a service that primarily focuses on safety, with law enforcement playing a secondary role.
    “This is not my father’s Coast Guard,” Admiral Allen said. “And my father is in the room.” Admiral Allen’s father, Clyde Allen, served in the Coast Guard and was in the hotel ballroom to hear his son’s speech.
    It will be several years before all the changes are made, officials said, but the plan won early praise Tuesday. James L. Hested, the former commanding officer of the Coast Guard yard, said the service needed to go on a bureaucrat diet.
    “You will have fewer fiefdoms,” Mr. Hested said.
    Representative Elijah E. Cummings, Democrat of Maryland and chairman of the House panel that oversees Coast Guard operations, said he hoped that Admiral Allen had time to complete the work before his four-year tour of duty ended in 2010.
    “He has laid out for himself a very tall order,” said Mr. Cummings, who attended the speech. “But I think he can do it.”

    Earl Industries gets contract to decommission Kennedy

    By JON W. GLASS , The Virginian-Pilot
    © February 16, 2007

    Portsmouth-based Earl Industries LLC's shipyard in Jacksonville, Fla., has won a $15.3 million Navy contract for work to decommission the aircraft carrier John F. Kennedy, homeported in Mayport.

    The work, expected to start in late March and end in August, involves deactivating various installed machinery, cleaning tanks and draining fluids such as fuel oil and cooling water.

    "It's a nice one for us," said Jerry Miller, Earl's president. "It'll be a good part of our Florida revenue for the year." Three companies bid for the job.