Nassco to Cut Pay, Benefits for 800 Salaried Employees

One day after winning a life-saving, $290.9-million Navy contract, National Steel & Shipbuilding Co. on Friday told its 800 salaried employees that their pay would be cut by 10% and their fringe benefits reduced by 8%.

In addition, the company said it will seek to renegotiate wages paid to its 1,500 unionized workers when their three-year contracts expire in September.

The cuts, effective Feb. 1, are part of a permanent salary restructuring designed to make Nassco more competitive with shipyards on the East and Gulf coasts, according to Fred Hallet, company vice president of finance and corporate relations.

Management decided on the salary and fringe benefit cuts when Nassco submitted its bid to build a high-speed combat Navy support ship.

However, the company did not inform its salaried workers of the cuts until Friday because “if we told (them) before our bid, it would have been public knowledge and our competitors would have reduced their bids . . . ,” said Hallet.

Small-Group Meetings

The salaried workers--who include management, engineers and planners--were informed of the cuts during a series of small-group meetings Friday with President Richard Vortmann.

Hallet would not disclose how much Nassco would save from the cuts.

Nassco management stopped short of saying outright that they would seek wage and benefit cuts. “We’ll discuss with the unions the appropriate salaries at the appropriate times,” Hallet said.

Negotiations will begin this summer with the seven unions that represent 1,500 blue-collar workers, whose three-year contracts expire Sept. 30.

Union officials reacted swiftly and critically to the prospects of wage cuts.

“If the company is going to come after us for concessions, we’ll want to make some advances in other areas to enhance our job security,” said Peter Zschiesche, business representative for the International Assn. of Machinists District 50, the largest of Nassco’s seven unions with 500 shipyard workers.

Although Zschiesche said his union will take a “wait-and-see attitude in terms of negotiations,” he claimed that “there are a lot of ways to save money” at Nassco “without cutting into our wages and benefits.”

The unions, he said, “have fought long and hard to get up to the standard of living we’re at now, and people aren’t just going to . . . give that up easily.”

“We know they bid the AOE contract awfully tight,” said Keith Widdop, business representative for the International Brotherhood of Electrical Workers, Local 569. “Realistically, they are probably betting that there’ll be a wage decrease.”

Work on New Ship

The salaried workers’ cuts will parallel Nassco’s work on the new Navy ship, called the AOE, which receives fuel, ammunition, refrigerated and general cargo.

In 1987, only about 500 salaried engineers and planners will work on the contract; blue-collar workers don’t begin production until next year--after a new contract is negotiated.

Nassco also won options to build three additional AOE ships, which could bring the contract’s ultimate value to about $1 billion.

Nassco, once far and away the West Coast’s largest shipyard, had lost out on four major contracts in the last three years until the AOE contract.

Had it not received the AOE work, Nassco’s ability to remain in the new-construction business would have been “very remote,” Hallet conceded.

“At best, we would have become a small repair yard, with about 500 people,” he said.