Tuesday, July 13, 2010
NASSCO, the last major shipbuilder on the West Coast, has announced the layoff of about 300 workers and 270 subcontractors. It's bad news for the San Diego economy, but not as bad as the 11-hundred workers NASSCO said it might layoff last Spring. We'll hear the reasons for the layoffs and how the rank and file is taking the news.
MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. On Monday, hundreds of shipbuilders at NASSCO got the bad news they'd been waiting for. Workers had been put on notice from unions and company officials to expect layoffs. This spring, NASSCO said it might lay off more than a thousand workers. As it turns out, the news wasn't quite that bad. About 560 workers and subcontractors were let go. But losing that many jobs at a time of 12% unemployment in California is a very big deal. We have two guests joining us to talk about the layoffs at NASSCO. First, I’d like to introduce Karl Johnson, he’s shipyard spokesman and director of Communications for General Dynamics, the parent company of NASSCO. And, Karl, good morning. Thank you for being here.
KARL JOHNSON (Communications Director, General Dynamics): Good morning, Maureen.
CAVANAUGH: Why is NASSCO laying off workers at this time?
JOHNSON: Well, as you alluded to, yesterday was a bittersweet day for the NASSCO team. We had to lay off 290 of our fellow co-workers and along with that we’ve eliminated 270 subcontractor positions. But the silver lining is that we were able to preserve 600 jobs that we thought, back in May, we may have had to eliminate. So what has led us to this point, real succinctly, is the shipbuilding markets that NASSCO addresses—we build cargo ships—those markets for the government and for commercial shipping have been in a downturn and so we are just feeling the economic effects of that today that’s been hitting other industries for quite some time.
CAVANAUGH: As you say, Karl, that NASSCO estimated it might have to layoff as many as 1150 employees when that notice went out earlier this year. What happened to reduce that number? What did the company do to bring that number down?
JOHNSON: Well, as you might expect, the rules of when you conduct layoffs and how you conduct them led us in May to take a very cautious view. And we thought it the best thing to do was to give notice to 900 of our employees that they could lose their jobs, plus alert our subcontractors that we were eliminating positions. It wasn’t until about two weeks ago that given the rules for conducting layoffs in our own collective bargaining agreements with our unions that we were able to settle upon the final number. And, again, we were able to preserve about two-thirds of the jobs that we thought we were going to lose in May and, unfortunately, we lost a few more subcontractor positions. But this really puts us in a good position for continuing shipbuilding and ship repair work in the future.
CAVANAUGH: Right, now NASSCO, anyone who’s lived in San Diego for a while knows that, you know, there are these cyclical layoffs. Is there anything different about this particular layoff?
JOHNSON: Well, there wasn’t anything in particular other than what I described before, the downturn in the commercial, particularly for NASSCO, and some delays in government shipbuilding, plus we had seen some fluctuations in ship repair work that we, frankly, did not anticipate would happen. And so all of those things all combined led us to, unfortunately, make the very tough decision to let some of our highly-skilled, highly-trained shipbuilders go.
CAVANAUGH: Karl, you’ve been quoted as saying that shipbuilding is a lagging indicator of the economy. Why is that?
JOHNSON: Well, as you might expect, when the economy turns down, orders for goods from our global trading partners go down. And so the need for ships goes down, and the ships that are currently in the fleet are put into inactive status. Well, a couple of years ago NASSCO had shipbuilding contracts to build a lot of ships. It takes time to build ships. And so just as those orders are starting to dry up, we are still building ships. And, unfortunately, right now, it looks as though, knock on wood for everyone, that the economy’s starting to turn and maybe going into positive territory and we’re just kind of caught in that last car of the train here.
CAVANAUGH: Now, obviously if there are layoffs as you’re describing here, it means that business is not booming. But I’m wondering, how is NASSCO doing financially? Is the company itself struggling?
JOHNSON: Well, I would tell you that we still have ships to build here at NASSCO. We still have a commercial tanker to build and deliver this year. We have four Navy ships that we will build through the end of 2012. And, plus, the Navy has given the shipyard a design contract for the – for a new class of Navy ships, a ship that they’ve never had before. And so we look forward to building those types of ships in the future. So right now, things are a little tough, and especially tough for the workers that had to leave our team but there is some hope on the horizon for the NASSCO team.
CAVANAUGH: And is there any project on the horizon that could bring the shipbuilders back to work at NASSCO? I’m thinking I read something about a bid that NASSCO is putting in for a new project.
JOHNSON: Sure, that’s the new Navy ship that we have in the design phase. That ship program could bring construction of three ships, the first of which could start next summer. There are certainly opportunities for NASSCO to address modernizing the commercial fleet, that there are several laws on the books that require double-hulled ships that carry petroleum products, ships that reduce their emissions for environmental controls, and those are markets that NASSCO can address. But right now, we’re just waiting for those ship owners and ship buyers to come and place those orders.
CAVANAUGH: And do you hold out some hope that the workers who were laid off will return to NASSCO? Is that the company’s hope?
JOHNSON: Well, certainly these are very highly-skilled, highly-trained ship builders and our hope is, is that the – our outlook turns and we can regain some of those team members that we lost.
CAVANAUGH: Well, I want to thank you so much for speaking with us today, Karl. Thank you.
JOHNSON: You’re very welcome, Maureen.
CAVANAUGH: That’s Karl Johnson, shipyard spokesman and Director of Communications for General Dynamics, the parent company of NASSCO. And right now I’d like to welcome Robert Godinez. He’s president of the Shipyard Workers Union Local 1998, and international representative of the Boilermakers Union. Robert, welcome.
ROBERT GODINEZ (President, Shipyard Workers Union Local 1998): Good morning, Maureen.
CAVANAUGH: Now yesterday was a sad day but not really an unexpected day for workers at NASSCO. How did the union try to prepare workers for this layoff?
GODINEZ: What we did is we started to notify them almost a year in advance where we saw that the commercial market was drying up. We started to hand out literature at the shipyard periodically, monthly, weekly, just informing them that this was what we could see just by the workload. And then we also started to advise them that the union would be actively looking for work for them if they wanted to be placed somewhere else. And we would also prepare a team to help them with their financial situations, with their health insurance situation, with their changes in lifestyle.
CAVANAUGH: Right. What did you advise the workers themselves to do to try to get ready?
GODINEZ: The advice we gave them is to be conscious that this is going to happen and, you know, every employee has different needs and the best way is to let them know this is what’s going to happen. And then you leave it to them to make a decision as to how they prepare themselves. We look at the large group and we say, look, we know that their health insurance is going to end, we know that their 401(k) loans are going to be due, we know that – and so we’re going to prepare our team to make sure that we address those needs for those workers.
CAVANAUGH: Now about 290 actual workers at NASSCO were laid off in this round of layoffs. Did you think more workers would lose their jobs?
GODINEZ: Yes, and I believe it still can happen.
CAVANAUGH: Okay, so you don’t think this is the last we’re going to hear about layoffs at NASSCO?
GODINEZ: I believe it’s not the last.
CAVANAUGH: Well, why do you say that?
GODINEZ: Because the market in the commercial has – will dry up completely by the end of the year and all we’ll have is the repair work and the Navy work. And repair fluctuates, and when it fluctuates they have to lay people off and then when it comes back they recall them. And the company cannot sustain a workload consistently. It has to go up and down when a lot of the work they perform is repair work.
CAVANAUGH: I’m speaking with Robert Godinez. He’s president of the Shipyard Workers Union Local 1998. I wonder, Robert, what are the job prospects for the men and women who’ve been laid off who have these specific skills?
GODINEZ: Well, their best method to be reemployed is to seek work at other shipyards. We are part of the Boilermakers International Union and the Boilermakers represents the majority of the shipyards throughout the United States. So we’ve contacted the shipyards and we’re aware that there is work available in a few other shipyards, and by the end of the week we’ll be sending out letters to our members to – if they’re interested to be reemployed at other shipyards.
CAVANAUGH: So you expect some of – at least some of these workers to be moving away from San Diego?
GODINEZ: Yes. Unfortunately, you know, that’s where they can immediately, you know, put their life back together.
CAVANAUGH: Right. How do you think NASSCO handled the layoffs, Robert?
GODINEZ: Well, they did what they needed to do as far as the WARN Act, the requirement to notify the employees of a layoff 60 days in advance. And, you know, they complied with that. You know, it’s not NASSCO’s fault. You know, it’s – You know, I think the problem is the ship owners not able to obtain government-backed financing to build commercial ships is the problem when it comes to the commercial market. So I think NASSCO did pretty good. The only drawback that we get is the employees feel a little wronged when they see subcontractors still working. And, in fact, today there was 40 more subcontractors that came in. Yesterday they laid off 560 total employees and today they brought in 40 subcontractors. And, you know, that hurts. It hurts because the people that are there at NASSCO see what’s going on and the people that left also know what’s going on and, you know, we’re supposed to be a family there. You know, we’re supposed to work together.
GODINEZ: And those jobs should be permanent jobs and they should belong to the people that are NASSCO employees, not people that are coming from out of state or, you know, subcontracted out.
CAVANAUGH: Robert, my last question to you, it sounds since you are expecting a round of new layoffs that I wonder if you hold out a lot of hope for this mobile landing project that I was talking to – with Karl Johnson, this new project by the Navy, do you think that some of the NASSCO workers may be rehired because of that?
GODINEZ: Oh, absolutely. I strongly feel that the marine landing platform will bring back the majority of the employees that were laid off.
CAVANAUGH: Okay. But still you don’t see any pick up on the commercial side?
GODINEZ: Unfortunately, no. No, I – it could happen, you know, if we get, you know, our legislative people to help us out on this, it could happen. But, you know, we just have to keep trying.
CAVANAUGH: It sounds like your office is very busy so I’ll let you go. Robert, thank you for speaking with us today.
GODINEZ: Thank you, Maureen. I appreciate it.
CAVANAUGH: That’s Robert Godinez, president of the Shipyard Workers Union Local 1998 and International Representative of the Boilermakers Union. Earlier in the conversation, that is, I spoke with Karl Johnson, shipyard spokesman for NASSCO. If you’d like to comment, please go online, KPBS.org/thesedays. Coming up, when will we start seeing some healthcare reform? That’s as These Days continues here on KPBS.