THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, April 27, 1995 TAG: 9504270341
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY ROBERT A. HAMILTON, THE NEW LONDON DAY
LENGTH: Medium: 63 lines
General Dynamics is negotiating to purchase the Bath Iron Works in Maine, which would give it a surface-shipbuilding capability in addition to its Electric Boat submarine division, according to sources.
Combined with the nuclear functions at Electric Boat's Groton, Conn., shipyard, the Bath purchase would give General Dynamics a better capability to compete against Newport News Shipbuilding, which builds both submarines and surface ships.
Electric Boat officials have been saying that a logical move for the company could be the acquisition of a surface-ship builder. And with $1 billion in available cash, General Dynamics is in a strong position to buy the Maine shipyard.
Congressional and company sources confirmed that acquisition talks are taking place. No purchase price has been disclosed, although last year the yard was valued at about $270 million.
Electric Boat spokesman Neil Ruenzel referred calls to General Dynamics spokeswoman Norine Lyons, who refused comment.
Officials at Gibbens, Green & Van Amerongen, which purchased Bath in 1986, were unavailable for comment late Wednesday. Spokesmen for Prudential Securities, which financed the Gibbens buyout and is said to be negotiating the purchase, also were unavailable.
One shipyard industry analyst noted that Bath could use a makeover similar to what is taking place at Electric Boat.
The Electric Boat division continues to downsize its operations because far fewer submarines are being built. It has trimmed its employment from 23,000 in the 1980s to fewer than 15,000 today, and expects to have a work force of between 6,000 to 7,000 in two years.
Not everyone thinks a Bath acquisition makes sense.
``I'm sure Prudential would love to unload them,'' said one shipyard industry source. ``But (General Dynamics Chairman) Jim Mellor's been around the industry long enough to know better than this.''
The Navy plans to build, at most, four ships a year for the next six years, he said, so Bath's backlog of about a dozen Navy destroyers will probably dwindle to six by the turn of the century.
``Four ships a year is just not enough to keep the six major shipbuilding yards going efficiently,'' the source said.
He predicted a competition for destroyer work between Bath and its rival, the Ingalls Shipyard in Mississippi, will mirror the bitter dispute between Electric Boat and the much larger Newport News yard.
But a congressional source said Electric Boat might be positioning itself to overcome Newport News by putting together a shipyard division ``that could do it all.''
With the Bath purchase, Electric Boat could not be so easily dismissed if the Navy determined it could only afford to retain one nuclear-capable yard.
While EB has trimmed its operations to adjust to low-rate Navy production, Newport News has been courting commercial contracts and foreign military sales. by CNB