BATH, Maine — Bath Iron Works shipbuilders spent Friday absorbing the news that the company lost an $11 billion U.S. Coast Guard contract to the smaller, family-owned Eastern Shipbuilding of Florida, where the congressional delegation announced that the contract would create 2,000 jobs and bring potentially billions of dollars of investment to Florida’s economy.
On Thursday, the U.S. Coast Guard announced it had selected Eastern Shipbuilding Co. of Panama City, Florida, over BIW and Bollinger Shipyards to finalize a design and build the first of nine offshore patrol cutters, with eight more to follow and possibly an additional two.
The initial contract award is $110.29 million, according to the announcement, with construction of the first vessel to begin in 2018 and delivery in 2021. If all nine are built, the initial contract is worth $2.38 billion, and the overall program of 25 cutters is expected to cost $11 billion.
On Thursday, U.S. Sens Susan Collins and Angus King and U.S. Rep. Bruce Poliquin vowed to “investigate” the Coast Guard’s decision.
Eastern Shipbuilding President Joey D’Isernia on Thursday attributed the win to his company’s “reputation as an industry leader in the construction of mid-range tonnage commercial ships” and record of delivering 149 of 150 ships on time and on budget since 2002. Unlike BIW, Eastern Shipbuilding is not unionized.
The company invested more than $75 million in upgrades and expansion as part of its effort to land the contract, according to a release from Eastern Shipbuilding.
In a release Friday, U.S. Sen. Bill Nelson, D-Florida, the top Democrat on the Senate’s Commerce Committee, which oversees the Coast Guard, said the contract would create 2,000 jobs in northwest Florida.
U.S. Rep. Gwen Graham, D-Florida, told the Northwest Florida Daily News that it could prompt “billions of dollars” of investment in the state.
In Bath, BIW President Fred Harris said Thursday he would meet with the Coast Guard to understand its decision. Harris also sent a memo Thursday evening to his 6,100 employees, hinting that the loss might prompt even more changes at the yard in order to make it more competitive for future work.
The company was disappointed that its “aggressive bid” wasn’t successful, Harris wrote, adding that lessons learned must inform a competitive bid for the next multi-year contract to build the next round of Arleigh Burke-class Navy destroyers. BIW will begin next year to craft a bid for those vessels.
“In preparation for the bid, we invested heavily in workforce training, facilities and process improvements,” he wrote. “We worked with IAMAW Local S6 on a new [collective bargaining agreement] to become more flexible and efficient in the shipyard. Our bid included subcontracting some units to a Gulf Coast shipyard to lower our overall construction costs. Even with that innovative approach, we were still too costly.”
But Rich Nolon, president of Local S6 of the machinists union, said Thursday that BIW management and labor disagree on a number of strategies to make the company competitive.
Losing the contract “makes it all that more important that we work together to fix the things that are screwed up and move forward,” Nolon said. “Some things we have the same opinion on how to get there, others we have a difference of opinion. That’s the nature of the beast.”