Employees proceed strike at key Navy shipbuilding yard amid missed deadlines and struggle over contractors

Shipbuilders picket outside an entrance to Bath Iron Works, Monday, June 22, 2020, in Bath, Maine.

Robert F. Bukaty | AP

WASHINGTON — For the past month, thousands of production workers at a key U.S. Navy shipbuilding facility have been on strike as federal mediators and union leaders struggle to settle a contracting dispute.

Nearly 4,300 workers at Bath Iron Works in Maine went on strike on June 22 following a decision by the company to expand its use of low-wage and out-of-state contractors. Bath Iron Works, a subsidiary of defense giant General Dynamics, contends its aim is to streamline the hiring of subcontractors.

The shipyard, which has delivered more than 425 vessels, builds the U.S. Navy’s Arleigh Burke-class guided-missile destroyers, which are considered the workhorse of America’s fleet. And while the shipyard represents a vital component of U.S. defense manufacturing, the production site has recently missed out on lucrative Department of Defense and Department of Homeland Security contracts.

The worker standoff comes as Bath Iron Works struggles to meet Pentagon contract delivery deadlines. The company is currently operating on a year-long delay with the worker strike as well as the coronavirus further complicating logistics and production timetables.

Earlier this year, the Pentagon awarded Italian shipbuilder Fincantieri Marine $5.5 billion to develop the U.S. Navy’s newest class of warships. According to the U.S. Navy contract, the Italian Fregata Europea Multi-Missione, or FREMM, multi-mission warship will be built at Fincantieri’s shipyard in Marinette, Wisconsin.

“This is one example of why the company wants to supplement the work at the yard by bringing in more contractors,” a person familiar with the company’s plan matter told CNBC. “This is an effort to get the yard back to being competitive and to catch up on its delivery schedule,” said the person, who spoke on the condition of anonymity.

As union workers take to the sidelines, forfeiting pay and health care coverage, the company’s production line has hummed along.

The Arleigh Burke-class guided-missile destroyer USS Kidd performs a sea-power demo alongside the aircraft carrier USS Nimitz in the Pacific Ocean.

Mass Communication Specialist 3rd Class Cole Schroeder | U.S. Navy

“We have redeployed hundreds of salaried employees into the shipyard, and existing contractors have continued their work. The company also has begun the process of engaging with contractors to provide additional workers to supplement those already working here who will further support shipyard production during the strike,” Bath Iron Works wrote in a July 21 statement on its website.

Machinists’ Union Local S6 president Chris Wiers raised concerns that the company was hiring out-of-state contractors from states experiencing an uptick in Covid-19 cases.

“Many of these subcontractors are coming from southern states, such as Mississippi and Alabama. Covid-19 has a high saturation level in these states,” Wiers wrote in a July 21 letter. The union is the largest one at Bath Iron Works.

“These out of state subcontractors will be shopping at local gas stations, eateries, grocery stores, farmers’ markets, and alike, potentially spreading this disease,” he wrote, adding that the local community “should demand Bath Iron Works provide proof of testing with negative results for all out of state subcontractors immediately.”

The company said in its statement online that it was working closely with Maine’s CDC in regards to the out-of-state contractors. 

Bath Iron Works and General Dynamics did not immediately respond to CNBC’s request for comment.

The last strike at Bath Iron Works shipyard was in 2000 and lasted for nearly two months. 

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