Bath Iron Works’ history (going back to 1884) is rooted in Maine; for a long time the yard was engaged in both commercial and military shipbuilding; a reputation for quality was established. The last commercial vessel was built in the early 1980s. The scales began to tip toward military shipbuilding during the World War II era. Since the ’80s military shipbuilding has been a stable and profitable business model.
In 1995 BIW became a wholly owned subsidiary of General Dynamics Corp., headquartered in Falls Church, Virginia. General Dynamics is one of the nation’s foremost national defense contractors, providing a wide range of military equipment. Its location, close to the Pentagon, the source of an endless stream of equipment orders, is no accident. General Dynamics is good at what it does; from the early 2000s it has been near the top of Fortune Magazine’s ranking of 500 highly profitable corporations. Recently it climbed from 99th in 2018, to 92nd in 2019, to 83rd in 2020.
In 2018, Fortune noted: “General Dynamics raked in $36 billion in revenue … an increase of 16.9 percent, and annual profits of $3.3 billion, up 14.9 percent.” In the company’s 2020 ranking, Fortune stated that “revenues were up 8.7 percent, year over year, to $39.4 billion”; profits were $3.5 billion.
In sum, General Dynamics is a successful, profit-driven corporate entity. Stockholders, high-level executives and skilled personnel all benefit. From three consecutive years, General Dynamics’ CEO averaged $20 million a year in compensation. Its next four executive officers each average between $4 million and $5 million a year. The BIW yard has a 10-year backlog of work; it has had this backlog, this profitable cushion of work, for over 20 years. The needs of the Pentagon never end.
That brings us to the present strike of BIW’s rank and file workers. It’s been 20 years since the last strike at the yard – but the two walkouts are eerily similar. In 2000 and in 2020, the workers were and are concerned with job security (the company’s use of cross-training and/or sub-contractors); work and seniority rules, and pay. In 2000 and 2020 the walkouts came shortly after BIW had successfully squeezed state and local governments for tax subsidies ($197 million in 1998; $45 million in 2018) – subsidies the unions vocally supported on behalf of BIW thinking that would sweeten the next round of contract talks.
But in 2000, and one suspects in 2020, union naivete and weakness were and are painfully apparent. The idea that workers should share in the profitability they have helped create is not an idea widely held by Fortune 500 companies. It’s certainly not General Dynamics’ approach to “corporate responsibility.”
In 2000 BIW thanked the workers for their support for tax subsidies by squeezing the wage package down; in 2020 the wage offer on the table is far less generous, and BIW with its deep pockets seems prepared not to reward but to wait out striking workers, who have more modest financial resources, and the added costs the current pandemic imposes.
The 2000 strike lasted 55 days before the union caved; the 2020 strike has now run 43 days.
The talking heads and voices from both sides of the political aisle, while ignoring the high level of corporate salaries, General Dynamics’ long history of high profitability and ongoing taxpayer subsidies, have begun nudging union leaders about the importance of BIW to Maine’s economy and the need for a settlement. No one is nudging General Dynamics for a more equitable sharing of corporate profits.
General Dynamics/BIW leaders are content to note that they are behind schedule with some job commitments; that they haven’t been as successful as they had hoped in recent Pentagon bid allocations. They make no loud threats, but they ruminate about the future of the yard, subtly suggesting that it might move or be downsized. Such talk is rubbish; no one walks away from BIW’s long record of success.
This General Dynamics /BIW chatter should make us angry – it’s a not-so-veiled threat. But sadly it will almost certainly have the desired effect. I look for the strike to end shortly with few of the union’s demands met. A more equitable sharing of General Dynamics/BIW profits takes political courage – unions alone can’t do it. We need to find the courage.
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