Much of the talk here these days centers on Newport News Shipbuilding and Dry Dock Co., struck by the United Steelworkers of America last week. People wonder how many of the mammoth shipyard's 17,000 blue-collar workers will honor the picket lines in the long run and what the ramifications of a lengthy strike could be.
But there are other, potentially more serious economic problems plaguing the Tenneco Inc. subsidiary. And although they haven't been in the limelight as much, these problems will continue to bedevil the yard regardless of the strike.
Newport News won't have as many ships to build in coming years as it would like, and it is busily seeking other types of work to try to cushion the effect. But shipyard officials readily concede that tough times are ahead, and the number of shipyard workers -- already down about 3,000 since last June -- will continue to shrink.
Construction of naval and commercial ships accounts for most shipyard employment, and both markets are depressed. The only work on the horizon that could have changed the shipyard's forecast of work force cuts was the overhaul of the aircraft carrier Saratoga, scheduled to begin in October 1980. But despite studies by the General Accounting Office, the Navy, and the University of Pennsylvania showing that the work could be done more cheaply in Newport News, the Defense Department last week reaffirmed its decision to overhaul the carrier in Philadelphia.
Loss of the Saratoga job cost Newport News $500 million, and perhaps as much as $2 billion because the Philadelphia yard is now considered likely to get three similar jobs in later years. In all, Newport News estimates it has probably lost 2,500 jobs over the next 10 years.
Meanwhile, industry officials say there is a glut of big tankers because of the quadrupling of the price of oil in 1974 and a sharp cutback in energy demand. The situation isn't expected to improve significantly until the middle-to-late 1980s, when officials predict that the scrapping of older ships and a stronger worldwide economy will lift the industry out of the doldrums.
Newport News Shipbuilding says it hasn't signed a new commercial shipbuilding contract since 1974, and its workload is wearing thin.
It will deliver a third liquid natural gas (LNG) carrier to the Houstonbased El Paso Co. in the spring, and two ultra-large crude carriers -- each capable of carrying more than 3 million barrels of crude oil -- to a subsidiary of the Shell Oil Co. by the end of the year.
When these projects are completed, the shipyard will have no major commercial work. The yard had a solid prospect in letters of intent from the Tennessee Gas Pipeline Co., another Tenneco subsidiary, for the construction of up to four LNGs. But in December, the U.S. Department of Energy denied the company's application to transport natural gas from Algeria to a Canadian terminal for eventual U.S. distribution, scuttling the venture.
Prospects for naval construction also are bad. Although President Carter's 1980 budget calls for $6.1 billion for shipbuilding, shipyard officials condemn the president's emphasis on smaller, non-nuclear vessels. Carter, for example, swept aside the Navy's plea for another 90,000-ton supercarrier, instead deciding to seek a conventionally powered 60,000-ton carrier.
Meanwhile, the President's five-year naval shipbuilding program has been shrinking. In 1977, Carter called for the construction of 156 ships. Later, the number was reduced to 100, then 89, and then 85. Now the construction of 67 warships is planned.
"Washington is constantly looking for a free lunch," Ralph W. Cousins, chairman of the board of Newport News Shipbuilding, complained in a recent interview. "The government wants defense, but it doesn't want to pay for it. It's a terminal case of wanting it both ways."
Still, the company faces some lean times, and it doesn't intend to carry as big a workforce as it has. It laid off 1,000 workers last June, and another 2,500 have since left the yard through attirition, reducing the workforce to 22,000. Cousins doesn't foresee drastic layoffs, but said there will continue to be a "gradual decline" of the workforce into the next decade.
Cutbacks in Navy spending are a special irritant to a former Navy man, especially in light of the Soviet naval buildup of recent years. "The cutbacks are a disturbing trend in the face of a growing Soviet navy," Cousins said. "When you face a first-class operation, you have to have a first-class operation, too."
Neither is Cousins happy about the fact that a federal grand jury in Richmond is hearing evidence on Justice Department charges that the shipyard has defrauded the government. The justice department says that Newport News illegally inflated cost overrun claims against the Navy by padding the bills on 14 Navy ships it built during a span of 11 years.
Ironically, the jury was empaneled Oct. 18 -- exactly two weeks after the Navy announced it would pay the shipyard $189 million in settlement of cost-overrun claims for 12 of those ships, totaling $742 million. The Navy paid the shipyard $44 million on cost overrun claims involving two other ships in February 1977. Newport News has blamed the Navy for the overruns and denies that fraud was committed.
The shipyard's current contracts with the Navy include construction of the Carl Vinson, 190,000-ton, nuclear-powered aircraft carrier, and the Arkansas, a 10,000-ton nuclear cruiser. In addition, it has contracts for the construction of eight nuclear submarines of the Los Angeles class, with delivery schedules running into the latter part of 1984.
Cousins said he intends to explore the market for whatever work the yard can get. One avenue might be the construction of multi-purpose liquid bulk carriers.
Newport News will counter some of the slump in Navy shipbuilding by concentrating more on the overhaul, repair and refuelling of nuclear-powered submarines. It signed a $15 million contract last month for the construction of a new drydock for this type of work, doubling the shipyard's submarine overhauling and refuelling capacity.