THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, November 17, 1995 TAG: 9511170244
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 92 lines
The Navy is unable to pay new bills from local shipyards because of the federal shutdown and, as a result, many yards may soon begin cutting back operations.
One small Norfolk yard has started laying off workers. Norshipco, the largest private shipyard in South Hampton Roads, may also have to furlough ``hundreds'' of workers soon if the shutdown isn't resolved, shipyard executives said Thursday.
``It could be a grim Christmas if this stuff keeps up,'' said Jerry Miller, president of Earl Industries Inc., a Portsmouth-based ship repair firm that employs about 400 people.
As Washington politicians hunker down for a drawn-out budget battle that some threaten could last 90 days, executives at local shipyards fret that the shutdown could sink their businesses.
``What we're talking about is something that could happen if the government doesn't get its act together,'' said Jack L. Roper IV, executive vice president of operations for Norshipco, which employs 2,200 full-time workers at its two yards in Norfolk and 600 people part-time. ``There's a lot of ifs here.''
The Navy is paying pending bills that have been processed by the Navy's local contracting office, the Supervisor of Shipbuilding, Repair and Conversion in Portsmouth. Officers running that office are looking for a way to resume processing new bills so payments to the yards won't be interrupted.
``Obviously there is national security that comes into play at some point . the Portsmouth office. ``It's not in the government's interest to see (the shipyards) get to the point where their cash flow is so impacted that they can't perform.''
Nearly 700 civilian workers were furloughed from the Navy's contracting offices in Portsmouth and Newport News. Without those workers, the Navy can't process bills from local shipyards.
``At some point I presume we'll have to bring some skeleton staff back in to work,'' Hattich said.
The contracts office also won't be awarding any new contracts for the duration of the shutdown.
The Norfolk Naval Shipyard in Portsmouth is not being affected by the shutdown.
Marine Hydraulics International Inc., which emerged from a bankruptcy reorganization in October, was determining Thursday how many of its 248 employees it would have to lay off immediately, said Vice President Gary Brandt.
The yard suspended activity on some recently negotiated, but not finalized, add-ons to its contract to repair the guided-missile frigate Clark at its Norfolk facility, Brandt said. MHI will continue already contracted work on the Clark as long as its financing holds out, Brandt said.
The extent of the impact depends a lot on how long government operations are suspended without some form of relief for the shipyards.
``If it's just a day or two, then it's no big deal,'' Hattich said. ``If it lasts 90 days like some people are saying, then we have a problem.''
``Thirty days is probably longer than we can stand,'' Norshipco's Roper said Thursday. ``I'm not sure I can guarantee my work force can continue beyond tomorrow.''
Norshipco does have some commercial jobs, but not nearly enough to sustain its work force, he said.
Moon Engineering Co. Inc. expects it could feel the pressure in two to four weeks, said James Thomas, the Portsmouth shipyard's executive vice president and general manager. ``I really can't say when right now,'' Thomas said.
``We have a lot of government receivables out now,'' he said. ``How soon (we're hurt) depends on whether they get paid.''
Moon started a contract on the destroyer Peterson three weeks ago. The cruiser Ticonderoga arrived at the yard Thursday for repairs and maintenance.
``We've got about 250 to 300 employees here now and we're still working, but if push really came to shove, we're going to have to send people home,'' Thomas said.
Metro Machine Corp. has the resources to keep operating for now, said its president, Richard Goldbach. ``I don't see it affecting us unless it lasts past a week or two,'' he said. ``We'll worry about it then, but I think we'll have the resources even then to keep operating.''
Other shipyards also could be unaffected by the shutdown. Newport News Shipbuilding doesn't expect any impact on its work force because of its financial condition, a spokeswoman said.
The giant Peninsula shipyard, which builds aircraft carriers for the Navy and employs nearly 19,000 people, is owned by a multi-billion dollar conglomerate that probably has the financial wherewithal to sustain the yard's operations.
Colonna's Shipyard Inc., a small Norfolk shipyard, expects to survive on its usual diet of commercial work, said Vice President Doug Forrest. ``We don't have any Navy work in the yard now,'' he said. by CNB