Negotiations over a new three-year contract between the management at Bath Iron Works and its biggest union have reached an impasse. If the local votes to go out on strike, it could add to construction delays the yard is already facing on U.S. Navy destroyers. However, management has only limited room to maneuver, because despite the yard’s deeply-ingrained work culture, Bath faces significant competitive disadvantages. It is located up a river in a cold climate. It only makes one type of warship for one customer. It operates in a relatively high-cost area where unions have more leverage than in other states. And it is nowhere near a naval home port. Its chief competitor, Ingalls Shipbuilding, faces none of the burdens. I have written a commentary for Forbes here.
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