Full steam ahead for Nassco shipyard in San Diego
At the West Coast’s last major shipyard, the action never seems to stop.
In one part of the Nassco yard, on the shores of San Diego Bay, the U.S. naval ship Medgar Evers is nearing completion. The 690-foot vessel is the 13th in a line of T-AKE ammunition and dry cargo ships built by Nassco for the Navy and is scheduled to roll into the ocean Oct. 29 wearing bunting and steamers to the blare of “Anchors Aweigh.”
Next to it, No. 14 — this one called the Cesar Chavez — sits at a much earlier stage of construction. Nearby, the keel has been laid on a new Navy project called the Mobile Landing Platform, which can act as a wharf at sea or a floating dry dock.
Nassco, once known as National Steel & Shipbuilding Co., hasn’t survived by doing every new job as well as the last. The General Dynamics Corp. subsidiary has outlasted the competition by making sure that every new vessel has been built better, faster, more cheaply and with fewer injuries than the one that came before, said Nassco President Frederick J. Harris, a former merchant marine with an MBA and a no-nonsense style.
Failure on one or more of those points might have put Nassco on the same path as the many dozens of closed U.S. shipyards. Instead, Nassco’s performance helped it land a $744-million contract announced in May for a new kind of Navy support vessel, he said.
“In five years, we have reduced the amount of labor required to build these ships by more than 60%. We’ll complete construction on the last one in less than half the time it took to build the first,” Harris said. Among manufacturers, he added, “we have the best learning curve in the U.S.”
Repairs are an important part of the mix. To land a $1-million contract to repair the Navy frigates Vandegrift and Curts, shipyard officials had to figure out how to put them both in the same dry dock at once. They did, with just 10 feet to spare in separation. Then they found room to fulfill a $20-million repair contract for the amphibious warship Pearl Harbor.
Southern California has a rich shipbuilding heritage, from smaller vessels that once formed the world’s largest commercial fishing fleet — also locally based — to the construction of 467 of the so-called Liberty Ships for the Navy during World War II. At the height of that war, California Shipbuilding Corp. employed 40,000 workers on Terminal Island, according to American Merchant Marine at War, a website devoted to merchant marine history.
The American shipbuilding industry declined after the end of the Cold War, when it was surpassed by Japan. In a race to the lowest labor costs, Japan was overtaken by South Korea in 2005. China took the lead in 2009. The U.S. industry had some protection from the Jones Act and related laws that require U.S.-built, -flagged and -manned vessels for travel between U.S. ports, but the toll has been steep.
Across the U.S., 85,000 to 105,000 workers are still employed at more than 300 U.S. shipyards of all sizes, the numbers depending on the ebb and flow of government and commercial construction and repair contracts, according to the Shipbuilders Council of America.
Of 12 major U.S. shipyards operating in the 1980s, six remain. General Dynamics Marine Systems owns Nassco, Bath Ironworks in Maine and Electric Boat in Connecticut. Huntington Ingalls Industries Inc. owns the three other yards: Newport News in Virginia, Ingalls in Mississippi and Avondale in Louisiana. Avondale is scheduled to close in 2013.
In California, recent losses have included the old Southwest Marine shipyard in San Pedro, now a rusting relic that has served as a set for prime-time television dramas including “24” and “CSI,” and the Long Beach Naval Shipyard, which once employed 4,300 people.
There is nothing else on the West Coast on the scale of Nassco, which since it began building ships in 1959 has put together 63 auxiliary and support ships for the Navy and an additional 51 ships for commercial customers, including oil tankers, ferries, containerships and oceanographic research ships. The Navy also relies on Nassco as its primary repair facility for the Pacific Fleet.
Wall Street analysts said Nassco and the other General Dynamics shipyards thrived because of strong performance on contracts and by maintaining one of the industry’s best workforces.
“Among the best-performing major marine shipyards, General Dynamics is at the top of the leader board. They have had a more highly skilled labor force. It’s a veteran workforce. Ingalls by comparison has had a lot more turnover,” said Peter Arment, managing director of Gleacher & Co. Securities.
“The other difference for General Dynamics is in better execution,” Arment said. “General Dynamics is a large, well-run defense company, and they tend to have a history of performing well on open contracts. They know how to take a program from its early development stages and move it into major production.”
As recently as 2005, the 86-acre Nassco facility, which had been acquired by General Dynamics in 1998, was having major quality and safety problems. About 21 workers out of every 100 were getting injured on the job. Moreover, for every 100 hours of work done at the yard, there were 20 to 30 hours of reworking to fix mistakes.
Harris took over at the beginning of 2006. He came from General Dynamics’ Electric Boat division, where he had worked for 22 years, eventually serving as senior vice president in charge of design, construction and fleet support programs for the Navy’s Seawolf- and Virginia-class submarines and other vessels.
Harris brought with him a new way of manufacturing. He implemented his own version of “The Breakfast Club,” which was no more fun for participants than for the fictional Brat Pack characters of the movie of the same name. (“The employees are the breakfast,” quipped one Nassco executive.)
The weekly meetings became the shipyard’s principal brainstorming session for improving safety and performance. Now there are about 3 injuries per 100 workers, and less than 1 hour of corrective efforts needed after every 100 hours of work, Harris said.
Harris’ desk is covered with thick PowerPoint presentations from those sessions; he calls up examples on specific pages, as if he has them all memorized. Among the many mantras one hears in these discussions is “moving things to the left,” which on a ship-delivery timeline means delivery ahead of schedule.
Among Harris’ many sayings: “Don’t hope you can have a safer shipyard. You can hope all you want. Unless you have structural programs in place, you can’t ensure that people who come to work in good shape are going home in good shape.”
Nassco, whose workforce numbers about 3,600, is a company where some workers can spend entire careers. Wages average around $55,000 a year, and there are 401(k) plans and other benefits.
The shipyard never sleeps. Three eight-hour shifts keep it running 24 hours a day.
Job classifications include several types of engineers, including industrial, mechanical, electrical and design. There are also welders, pipefitters, plumbers, electricians, outfitters and painters.
Out in the yard, there is a curious mixture of ancient practice and new strategies.
The ship’s keel, for instance, will still rest on seemingly precarious piles of scuffed and weathered oak blocks, which in turn rest on sand, said Graham Dodd, Nassco’s director of steel production, who has been in the business of building ships for 38 years.
“This part of it is more than 2,000-year-old technology. This is exactly the way the Greek and the Romans and the Egyptians built their ships,” Dodd said.
But other traditions have been discarded, perhaps forever, such as the old style of building ships in one piece, surrounded by scaffolding. Now, Nassco’s yard resembles a giant Lego construction project, with most of the work occurring on the ground and not on the ship.
To build a T-AKE ship, a few hundred parts are put together into sub-assemblies weighing up to 35 tons. Sub-assemblies are then combined into blocks of up to 150 tons. These are eventually pieced together into grand blocks that can weigh more than 600 tons, Dodd said.
On Navy T-AKE ship No. 14, the Cesar Chavez, work was proceeding on the biggest of the grand blocks, No. 519, which was the ship’s pump room. It weighs 612 tons. These blocks are hoisted and moved by one or more of the shipyard’s 300-ton Sumitomo gantry cranes, which travel around the yard on 2.6 miles of rail tracks. Grand block No. 519 was a three-crane lift.
Dodd said the differences in time savings in building ships in this fashion have been huge.
“If it took an hour to do on the ground, it took three times as long adding it onto the ship later and seven times as long adding it out on the water, so we have moved as much work as possible onto the ground,” Dodd said.
So far it seems to be paying off. In May, about five weeks after the Nassco shipyard announced that delays in reaching a federal budget agreement and a slowdown in the shipbuilding industry meant that it was going to have to lay off 350 employees on top of 290 in 2010, the yard landed the $744-million contract to build the first of the Navy’s new Mobile Landing Platform ships.
“This new contract will significantly reduce the number of employees affected by the previously announced potential layoffs at General Dynamics Nassco,” the company said in a news release when the contract was announced. “As ship construction gets underway in earnest, the total number of employees at the shipyard may increase by the end of 2011.”
For Harris, the contract means another round of Breakfast Club meetings.
“And we absolutely will do it better and faster,” he said.