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March 8, 2007
NORFOLK — A plan for mass layoffs announced three weeks ago by Metro Machine Corp. won’t happen after all, officials said Wednesday.
The company told workers last month that a dispute with the Navy over ship maintenance costs was expected to idle about two-thirds of the shipyard’s 450 employees for up to 18 months.
But on Wednesday, the Navy said a disagreement with Metro over the price of dry docking the guided-missile destroyer McFaul – the subject of the dispute – has been resolved. The Norfolk-based vessel will enter Metro’s yard for maintenance later this month.
The agreement also ensures that the yard will continue to receive work as a subcontractor under a five-year contract the Navy has with BAE Systems Norfolk Ship Repair to maintain a group of Arleigh Burke-class destroyers.
“From our perspective, this is a real win for everybody,” said Steve Hanson, deputy director of fleet maintenance for the Navy’s Fleet Forces Command in Norfolk. “We get the work we want done at a fair and reasonable price, and the company can stand tall to their employees and say they’ve been able to bring the work to them and keep them gainfully employed.”
Metro’s original price estimate to dry dock the McFaul was “substantially higher” than historic costs, Hanson said. While he declined to disclose the dollars involved, he said the negotiated agreement includes near- and long-term incentives that reduced the Navy’s cost.
“We can stand tall to the taxpayer and say it’s a good price,” Hanson said.
At an all-hands meeting last month, Metro executives told workers that the dispute with the Navy could result in layoffs lasting six to 18 months. A few days later, Metro filed a notice with the Virginia Employment Commission stating that the company expected to lay off around 275 workers by the end of March.
On Wednesday, John Strem Jr., Metro’s president and chief operating officer, said the resolution with the Navy would avert the large-scale layoffs.
“We’re glad to be able to avoid them, obviously,” Strem said. “We’re very pleased.”
Doug Norris, president of the yard’s International Brotherhood of Boilermakers Local 1999, said late Wednesday afternoon that company officials had not officially notified the union that the dispute had been resolved.
“I’m all kinds of happy if that’s the case, but I really don’t want to say anything until I know for sure,” Norris said. “I’ve been told we’ve had stuff before, and it turned out not to be the case.”
So far, Norris said, no workers have been furloughed since the company gave legal notice to the union that it intended to begin laying people off over five Mondays starting Feb. 26.
The destroyer contract, held by BAE Systems, is one of the Navy’s new multi-ship, multi-option contracts, in which one yard oversees maintenance of a class of ships over five years. Metro teamed with BAE on the $458 million destroyer contract as a subcontractor.
In a statement Wednesday, Bill Clifford, president and general manager of BAE Systems Norfolk, said: “We are encouraged by the Navy’s decision to dock McFaul at Metro, so we can continue to support our No. 1 customer.”
The partnering called for under the multi-ship contracts gave the Navy flexibility to work with BAE Systems and Metro to resolve the pricing disagreement, Hanson said.
While the Navy’s bottom line was to push down its costs, a motivating factor in the negotiations was the hope of avoiding mass layoffs, Hanson said.
“We want to help the private sector maintain a stable work load and a stable work force, because it’s in our best long-term interest,” he said. “That being said, we still have a responsibility to make sure that we are good stewards of taxpayer dollars. We’re doing our best to get value for the dollar.”
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