U.S. Shipbuilders Seek State Assistance

The USS Zumwalt under construction at Bath (USN file image)

By The Maritime Executive 02-20-2018 02:02:00

Bath Iron Works, one of America's biggest defense shipbuilders, is asking Maine for an extension of the state's Shipbuilders Tax Credit. The 20-year-old program gives Bath a credit of up to $3.5 million per year on its employee taxes, so long as the yard employs over 3,500 people full-time with full benefits. The law will phase out in December if the state legislature does not renew it. 

The law is coming up for reconsideration while Bath is looking for new funding streams. The yard is fully dependent upon naval and government shipbuilding, and it recently lost out in bidding for the Coast Guard's new Offshore Patrol Cutter, a contract that Bath's leadership described as a "must-win" deal. In addition, its work on the costly Zumwalt-class destroyers will come to an end early, as the Navy has abbreviated the series to three vessels instead of 24. 

To keep its production lines hot, Bath hopes to secure work on the FFG(X) class of "future frigates," which will displace the two Littoral Combat Ship designs in future production of small surface combatants. After the problems encountered in the LCS procurement process, the Navy wants a proven warship, and Bath has submitted a variant of its design for the Spanish F100 Aegis frigate for consideration. The design serves as the basis for vessels currently in service with the Royal Australian Navy and the Norwegian Navy. If Bath beats out the other four competitors in the bidding process, it will begin detailed design work in 2020. 

Bath isn't the only yard seeking state assistance as it competes for top federal contracts. The Ingalls Shipbuilding yard in Pascagoula, Mississippi benefits not just from lower average state wages and living costs, but also from a long-running series of public bonds. Mississippi's House of Representatives has provided Ingalls with $110 million in matching funds for infrastructure investment - not repayable loans, but taxpayer-backed appropriations - since 2015. Huntington Ingalls is the largest private employer of any kind in the state.