400 Workers Laid Off : Todd Shipyards Loses Bid for Navy Contract
Todd Shipyards, which needs more work to keep its struggling San Pedro yard in operation, lost a bid for an $11-million Navy contract last week and has laid off about 400 workers in the past few weeks.
The layoffs cut back an already pared-down work force, which since 1982 has been reduced by 80%--from a peak of more than 5,000 to about 1,000 production workers, according to company officials.
(Union officials say the number of production workers is down to 800; both sides agree that 400 have been laid off in recent weeks.)
Down to One Job
The ailing shipyard, which also has lost several smaller contracts recently, now has just one job: construction of a Navy frigate, the FFG 61. That ship is scheduled to be delivered by mid-1989. If Todd is to stay in business in San Pedro, it will need more work before then.
“It’s a tough situation,” said John B. O’Hara, vice president and assistant general manager of the shipyard. “The thing we really need is to go out and get a couple of ships in and get some people back. . . . We’re kind of in the doldrums now, waiting for the outcome of some of these bids.”
Meanwhile, about 50 of the laid-off Todd workers and their union officials last week picketed the Los Angeles office of U.S. Sen. Pete Wilson (R-Calif.) in an effort to persuade him to sign a letter urging President Reagan to direct the Navy to award work to Todd.
The letter, which was drafted by the union, already bears the signature of California’s other senator, Democrat Alan Cranston, as well as those of 38 of the state’s 45 congressmen.
The letter complained that East Coast shipyards, which have prospered from Navy work in recent years while West Coast shipyards have suffered, are being awarded contracts based on bids that are “low-balled”--that is, submitted at an unrealistically low price that is later raised through cost overruns. According to the union’s letter, the Navy will pay about $1.4 billion in such overruns on 19 contracts awarded since 1981.
No Support
A Wilson aide, Michael Wootton, said the senator, who is running for reelection in November, is sympathetic but could not support asking the President or the Navy to direct work to Todd because it would curb “free and open competition.”
But Cranston spokesman Murray Lander disagreed, citing the cost overruns. “These are non-competitive bids to begin with,” he said. “That’s what we’re objecting to.”
Wootton said Wilson also opposes the union demand because other California shipyards often bid for the same work that Todd is seeking.
One California shipyard, Southwest Marine in San Diego, was awarded the bid that Todd lost last week: an $11-million contract for repair and overhaul of the guided missile frigate, the George Phillip.
Wootton, Southern California director of operations for Wilson, said the senator does “do not like the idea of favoring one California shipyard over another California shipyard.”
But George Samanc, executive secretary of Local 9 of the Industrial Union of Marine Ship Building Workers of America, said: “The fact is that none of the yards are in the same situation that Todd is, namely, they are not faced with closure.”
Four Shipyards Closed
Todd, which is based in New Jersey, last year filed for protection from its creditors under Chapter 11 of the federal Bankruptcy Code and has shut down four of its seven U.S. shipyards in the last several years. Operations remain in Seattle, Galveston, Tex., and San Pedro.
Whether Todd’s San Pedro operation actually is faced with closure is a matter of dispute. Although it is clear that without any new contracts, the yard will run out of work when the frigate is completed next year, Todd officials insist that the yard will stay open.
“I don’t think there’s any great chance that this yard is going to close down,” O’Hara said. “There’s an awful lot of potential work out there, and we should be able to get our share of it.”
Todd is currently bidding on two Navy contracts that are expected to be awarded in the next month and also intends to bid on a major contract--the so-called “AO 177 conversion”--that calls for cutting five fleet oilers in half and adding mid-section to them. Work on that job would run into 1993, and Todd officials are eager to have that type of long-term contract.
Todd is also pursuing work overseas. O’Hara said the company has been in contact with officials from the Greek and Israeli governments about shipbuilding projects. However, he acknowledged, those projects are not likely to produce work in the short term.
Disagreement on Tactics
Company and union officials disagree about how best to obtain work for Todd.
Samanc and the union are trying to use political pressure, such as the letter signed by the congressional delegation, to force the Navy into awarding contracts to Todd.
In February, at the union’s request, the Los Angeles County Board of Supervisors voted to ask the Navy to award Todd four contracts on which it was bidding and also asked that the Navy revise its criteria for awarding contracts to include geographic distribution.
The union argues that such a move would not only help West Coast yards like Todd, but would bolster the nation’s defense by ensuring healthy shipbuilding industries on both coasts.
Last month, Los Angeles Councilwoman Joan Milke Flores, who represents the harbor area, introduced a similar motion, which was adopted by the City Council.
Constituents’ Support
Asked if such measures do any good, Flores said they “tell the Los Angeles (congressional) delegation that their constituency supports this.” She said they also alert Los Angeles lobbyists who deal with federal officials that the issue is “part of the city’s legislation program.”
Todd officials, however, contend that union members must accept a lower rate of pay if the company is to compete successfully against East Coast shipbuilders, who can bid less because their employees earn less. Todd employees earn a maximum of $13.48 an hour. Union officials say that the pay is about $12 an hour at some non-union yards on both coasts. The company says that some yards pay even less and also offer fewer fringe benefits than the San Pedro yard.
Samanc replied that if the union accepts a lower rate of pay, non-union yards will simply reduce their wages and “now everybody’s earning less.” Further, he said, the union has already made wage concessions, including a drop in the starting wage to $9.50 an hour.
But O’Hara said that most of the remaining Todd employees earn top-scale wages, and, because there have been so many layoffs, Todd is not hiring new workers but is recalling former employees who also have seniority and are paid higher rates.
“Somewhere along the way, the company and the union must sit down and examine the problems,” O’Hara said. “There’s no question that if we sit on our hands and do absolutely nothing, nobody is going to walk in and hand us work. There’s no Santa Claus out there with a bag full of ships that is going to give three or four of those to Todd.”
