Nassco May Lay Off 3,600 Shipyard Workers : Company Pins Hope on New Navy Jobs as Work Declines

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San Diego County Business Editor

Facing a declining workload, National Steel & Shipbuilding Co., the West Coast’s largest shipyard with 4,600 workers, could trim its labor force to as low as 1,000 by year’s end.

Six hundred workers have been laid off since November, and more layoffs are scheduled as the big bayfront shipyard finishes work on four ships, according to Fred Hallett, Nassco’s vice president of finance and corporate relations.

Completion of work on two Navy hospital ships, worth $400 million, and two oil tankers for Exxon Shipping, worth $250 million, is scheduled to end sometime between the fourth quarter of this year and the second quarter of next year.


Until then, much of the labor force will be phased out as work nears completion, Hallett said.

Seeking New Navy Contract

Nassco officials are bidding on a $2-billion LHD, or landing ship helicopter dock ship, contract for the Navy to be completed in 1993.

The contract--which calls for three ships, called “baby flattops” because they resemble aircraft carriers--would be the largest in company history and could easily boost employment beyond current levels.

Nassco executives would not disclose how many jobs would be created if the company won the contract. Employment reached a peak of 7,600 workers in 1980.

The company already has submitted its technical proposal for the LHD; if the Navy approves the proposal, Nassco will join several other potential bidders in the “pricing” phase of the contract proposal.

If Nassco fails to win the contract, the work force will continue to be cut, perhaps to as low as 1,000, said Hallett.


Among the other bidders is Todd Shipyards in San Pedro, which currently has about 2,300 workers, according to Chief Financial Officer Rudy Castelli.

The declining labor force could be slightly offset by smaller repair contracts that Nassco is attempting to win from the Navy. Costs of the job would vary from $5 million to $20 million, company officials said.

Meanwhile, Nassco and other government-contracting shipyards have been asked by the Navy to identify their non-U.S. citizen employees, the first step in a plan to allow only U.S. citizens into certain areas of both the shipyard and the vessels under construction. The move, sparked by an increased number of spy cases and concerns over terrorism, is the formalization of a longstanding government policy, according to Ron Simon, administrative officer in the supervisor of shipbuilding office at the 32nd Street Naval Station.

The new regulations require contractors to have a written plan to identify non-U.S. citizens so that “they will be restricted from certain areas of U.S. Navy ships,” Simon said.

In the past, Nassco has received variances from the policy, according to Hallett.

About 900 of Nassco’s 4,600-member work force are not U.S. citizens. Of those, said Hallett, 700 have qualified to become citizens “if they choose to.” The non-citizens include workers from England, West Germany and Mexico, he said.

The deadline for submitting the written plan is June 30, although Navy officials said that the date probably will be pushed back several months.


Hallett insisted that the pending layoffs will be based solely on seniority and not on citizenship.

Nassco, a subsidiary of Boise, Idaho-based Morrison Knudsen Co., reported revenue last year of $470.5 million, up nearly 7%. Operating profits--pre-tax and not including general and administrative expenses--were $56.7 million, down 15%.

Nassco revenues and earnings, as a percentage of Morrison Knudsen’s, were 24% and 42%, respectively, last year. That compares to 22% and 46% in 1984.

Nassco competes with other West Coast shipyards for repair work and with large East Coast yards for new construction. Repair jobs are increasing because the government is now contracting out for jobs previously allocated only to official naval shipyards.