Newport News Offers Buyout to 2,500 Salaried Employees

The next-generation carrier USS Gerald R. Ford at Newport News (file image)

By The Maritime Executive 12-18-2018 05:34:53

On Monday, Huntington Ingalls Industries' Newport News shipyard offered a buyout package to 2,500 employees and announced that it has plans to restructure. The offer covers about 10 percent of its total workforce, but only non-unionized, salaried employees are eligible.

According to a letter circulated by shipyard president Jennifer Boykin and first reported by the Virginia Pilot, the buyouts are entirely voluntary, and the firm does not plan any layoffs. It is, however, planning to restructure in order to meet the federal government's "increasingly complex defense priorities." Among other elements, this restructuring plan will include "centering like-functions into single homerooms," according to Boykin. 

The measure is primarily aimed at reducing management-level personnel costs for overhead functions, and staff assigned to specific projects are not eligible. It offers severance pay of up to six months' salary, depending upon seniority. Eligible employees have until March 1 to take advantage of the buyout.

Newport News builds the U.S. Navy's most complex and costly vessels, including all of its nuclear-powered carriers. Given the Navy's intentions to grow the fleet and address its long vessel maintenance backlog, Newport News' financial future is secure. Boykin emphasized that the firm's "business outlook is strong," and said that the firm will still be hiring throughout 2019. "There is no better opportunity than now to improve our company structure and how we operate," she said. 

Newport News is presently working on its second Ford-class nuclear powered carrier, and the yard is under pressure from the Navy and from Congress to reduce the vessel's costs. The first in the class, the USS Gerald R. Ford, cost $13 billion to build, not including $5 billion in development and R&D expenses. She is the most expensive warship ever built, and she may be the most expensive vessel of any kind, depending upon the substantial but undisclosed cost of the nearest competitor. The Navy has promised to reduce labor hours and total costs on the two follow-on Ford-class carriers.