September 5, 2013 10:20:02 AM
JACKSON -- Huntington Ingalls Industries will close its Gulfport, Miss., composites facility by May 2014, laying off as many as 315 of its 427 employees.
In an announcement Wednesday morning, the Newport News, Va.-based company said the shutdown is necessary because of a reduction in work for the Navy's Zumwalt-class destroyers.
Huntington Ingalls said it would cost $59 million to close the shipyard, with most of that being a non-cash write-off of the value of the Gulfport assets. The company said it expects the write-off to be incurred over the next 18 months and to cut third-quarter profit by $15 million to $20 million. No profit reductions are expected after that.
At least 100 employees will transfer to the main Ingalls Shipbuilding yard in Pascagoula, Miss., said Huntington Ingalls spokeswoman Jerri Fuller Dickseski. She said that workers who are being laid off will be offered opportunities there.
"We're initiating what we call a pathway to Pascagoula," she said.
The company has 9,900 workers in Pascagoula right now, and spokeswoman Beci Brenton said the company is "aggressively hiring" there to handle an increasing workload. She said workers would be retrained to build traditional steel ships at the yard 30 miles to the east, and offered direct transfers.
The facility has been building deckhouses out of carbon fiber materials and balsa wood cores for the guided missile destroyers, which are being assembled at General Dynamics Corp.'s Bath Iron Works shipyard in Maine. Because of the multibillion-dollar cost of each ship, the Navy cut its order to three and restarted production on an older class of destroyer. Then, earlier this year, the Navy decided to put a steel deckhouse on the third Zumwalt-class ship, the future Lyndon B. Johnson. Bath Iron Works announced Aug. 5 that it had won a $212 million contract for steel deckhouse, hangar and launching-system modules.
"This is a difficult but necessary decision," Huntington Ingalls CEO Mike Petters said in a statement. "Due to the reduction in the Zumwalt-class (DDG 1000) ship construction and the recent U.S. Navy decision to use steel products on Lyndon B. Johnson (DDG 1002), there is both limited and declining Navy use for composite products from the Gulfport facility."
The Gulfport facility also builds composite masts for the San Antonio class of composite ships. The Gulfport unit is now building the mast for the future Portland, the last of the nine ships in that class. Irwin Edenzon, Huntington Ingalls corporate vice president and president of Ingalls Shipbuilding, said Gulfport is expected to complete ongoing work by March 2014.
Most workers in Gulfport are represented by unions that are part of the Pascagoula Metal Trades Council. Michael Crawley, president of that umbrella bargaining group, said he's supposed to meet Thursday with company officials to discuss the closure. Workers have known their jobs were in danger.
"It's been something that was coming, I think," Crawley said.
Dickseki said Huntington Ingalls owns the Gulfport facility and hasn't decided what to do with it. It opened in 1989 and was rebuilt after 2005's Hurricane Katrina using tens of millions of dollars from the Navy.
Ingalls also has a shipyard in the New Orleans suburb of Avondale, La., with more than 1,500 employees. The company has been trying to reposition the Avondale facility to do commercial work in energy industries, but says it will close Avondale when current Navy work runs out if it can't procure commercial contracts. Some workers from Avondale have already transferred to Pascagoula, Dickseski said.