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February 16, 2007
NORFOLK - Metro Machine Corp., one of the region's largest private ship repair yards, plans to file legal notice Monday that it may lay off more than a third of its work force, union officials who work for the Berkley shipyard said.
At an all-hands meeting Friday, Metro executives told employees that the decision stemmed from a dispute with the Navy over ship maintenance costs that is threatening to cut off future work, the union officials said.
"Everything's up in the air now," said Doug Norris, president of the International Brotherhood of Boilermakers Local 1999. "They could lay off all of our employees."
Since mid-January, the company has laid off about 70 of its approximately 450 employees, he said.
John Strem Jr., Metro's president and chief operating officer, confirmed Friday that the company is involved in a "disagreement" with the Navy that is "creating some degree of uncertainty with Metro's work force."
He declined to disclose details, calling it "a very, very complicated situation."
Strem would not discuss the possibilit y of layoffs or confirm that some employees previously had been furloughed. But he denied rumors swirling Friday that Metro, an employee-owned company with an Elizabeth River presence since 1963, was going out of business.
"I will confirm that Metro is not shutting down," Strem said.
According to union and Navy officials, the dispute involves work under a contract the Navy awarded BAE Systems Norfolk Ship Repair in late 2004 to maintain the Arleigh Burke class of destroyers.
Metro teamed with BAE Systems as a subcontractor under the five-year, $458 million contract - one of the first the Navy awarded locally under a new approach known as multiship-multioption, or MSMOs. Those two yards are the only ones in South Hampton Roads capable of dry docking the 504-foot-long ships.
The dispute arose sometime during the past few months, as the Navy prepared to bring in the guided missile destroyer McFaul for repairs. Under the partnering agreement with BAE Systems, Metro was to dry dock the destroyer.
However, the price estimate that Metro submitted for the job was "significantly more" than historical costs, said two Navy officials familiar with the situation. The officials requested anonymity because the dispute involves a potential legal issue.
Efforts to reach an agreeable price have been unsuccessful so far, the Navy officials said, and the McFaul could be dry docked at BAE Systems if the matter with Metro is not resolved.
Norris, the union president, said Metro executives told workers Friday that the Navy recently wrote a letter asking BAE Systems to stop sending work to Metro under the MSMO contract unless the cost dispute is settled.
"It looks like the Navy wants to put the death squeeze on us," Norris said.
Steve Hanson, deputy director of fleet maintenance for the Navy's Fleet Forces Command, declined to discuss details of the dispute.
"We're working very closely with BAE to identify a more cost-effective solution on how we get our maintenance done," Hanson said. "We're always looking for efficiencies."
Currently, about 150 Metro employees are working on ships undergoing maintenance in BAE Systems' yard under MSMO agreements, said John Kowalczyk, a BAE Systems spokesman.
Kowalczyk said his company had no comment on Metro's situation. He said BAE Systems would "continue to keep our customer fully satisfied and our work force fully employed."
The notice that union officials were told that Metro would file Monday falls under the federal W arn Act, which requires that employers with more than 100 workers file notice in writing at least 60 days before plant closings or major layoffs. It must be filed with the city, state employment commission and with the union.
Samuel Hill, vice president of the boilermakers union, which represents about 278 employees, said some of the workers laid off since January have found work at other local shipyards. But scenarios described by executives in the meeting sounded "drastic," he said, including the possibility of six-month to 18-month layoffs.
"It is disrupting a lot of families," he said. "A lot of people are going to lose their property."
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