Leadership1 publisher3 min readPublished
NASSCO workers ratify 10% raise after similar wage deals at Bath and Ingalls
General Dynamics NASSCO workers ratified a three-year deal giving more than 800 of them a 10% first-year raise, then 5% and 4%. It starts below the Bath Iron Works and Ingalls raises but compounds to nearly Bath's yearly pace, the rate yards now match to keep skilled workers.
The Board Room · Leadership desk
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What happened
- The NASSCO agreement, ratified last week by IAM members in San Diego, also improves retirement benefits and adds floating time off and worker protections.
- Last month more than 4,500 Bath Iron Works workers in Maine ratified a contract with a 17% first-year raise, a 4% bump in the following four years and stronger retirement benefits.
- In March, union workers at HII's Ingalls Shipbuilding won an immediate base-wage rise of 18% or more and total wage growth of 35% to 47% through 2031.
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Why it matters
- precedent Yards that bargain next will be measured against a yearly pace near 6.5% and first-year raises of 10% to 18% or more, the band these three contracts have now set.
- decision NASSCO's shorter term returns it to bargaining about two years before Bath's raises finish, so its next offer has to be priced against schedules still paying out at rival yards.
- cost NASSCO is committed to about 20% higher pay for more than 800 workers by the third year, a cost it carries whether or not turnover to other yards falls.
- constraint Higher pay can slow early-career exits, but supervisor tenure that fell by more than three-quarters at HII comes back only as retained workers accumulate years on the job.
Compounded, NASSCO's three steps come to about 20.1% over the contract [1], or roughly 6.3% a year [3]. Bath's schedule, if the 4% applies in each of the four later years, compounds to about 36.9% over five years [2], close to 6.5% a year [3]. On a yearly basis the two deals are nearly level. They differ on timing: NASSCO's first-year raise is 7 points below Bath's and at least 8 below Ingalls' [4].
Timing matters because of who leaves. Business Insider reports that attrition has been highest among early-career workers, who go to competitors inside and outside shipbuilding offering better pay, better benefits or less demanding work [9]. Those workers compare the first-year number. Robert Martinez, the IAM's Western Territory general vice president, said the NASSCO deal is "also helping the company minimize the turnover," by reducing "losses of skilled workers to other shipyards because they weren't paying as competitively" [6]. NASSCO's workers live in San Diego, where living costs run nearly 50% above the national average [8].
The union expects other yards to follow. George Edwards, the IAM's Eastern Territory coordinator, said the contracts have "set the trend for where you're going to see things going in the next couple years in shipbuilding" [7]. The Navy has argued for higher pay from the buyer's side. "I think this is really an issue of wages, to be honest," John Phelan, Navy secretary until late April, said last year [10]. He said that when a welder earns what Buc-ee's or Amazon would pay but spends the day in tight, uncomfortable spaces, "it's hard to get that person to want to do that job" [11]. Hung Cao, the acting secretary, told a May congressional hearing that "we need to build ships, and we need to do it yesterday, so we will make sure that we protect our workers" [12].
A skeptic would say a raise buys headcount and cannot buy experience. The tenure figures support the worry. At HII's shipbuilding division, average tenure among electrical supervisors fell by more than three-quarters between the mid-1990s and February last year [5]. "That's a lot of lost experience," Tom Moore, HII's senior vice president of government relations, said at the time [15]. At Bath, "maybe three-quarters of the shipyard has got about six years or less of experience," an IAM District 4 assistant directing business representative said [16]. HII's answer is that heavier wage spending brought "an increase in experienced hires," as it said last fall [13]. It is the company's own account, and the only evidence in this record that pay moves the experience figure.
I'd expect the retirement terms in the NASSCO and Bath deals [2][4] to do more for that gap than the headline raises. Union members told Business Insider that yards have to show the job can be a long-term career, with benefits, healthcare, flexibility and retirement [18].
The contracts also bring "more structured approaches to the introduction of new technologies into shipyards," according to Business Insider [17]. The report does not describe what those terms require. For a yard counting on new equipment to make up for a young workforce, they may matter as much as the wage table.
NASSCO will be first back at the table. Its deal runs three years and Bath's schedule five, so it bargains again roughly two years before Bath's raises finish [6]. Ingalls' wage growth runs through 2031 [5].
What to watch
- Whether NASSCO, Bath or HII report lower attrition or rising average experience once the new raises take effect.
- Publication of the technology-introduction terms in the NASSCO and Bath contracts, and whether they slow or speed new equipment.
- Whether the next shipyard contracts land near a 6.5% yearly pace or push first-year raises above Ingalls' 18%.