In a staggering blow to Baltimore's only major shipyard, the U.S. Navy has quietly ended a special status that brought in nearly $68 million of work to BethShip at Sparrows Point during the past nine years.
The move by Secretary of the Navy John H. Dalton reduced from 165 miles to 75 miles the radius from which companies can bid on repair work on ships based in other ports.
The step effectively blocks Bethlehem Steel Corp.'s shipyard -- BethShip -- from bidding on Navy repair work on ships docked in Norfolk, Va. Virtually every ship on which BethShip might seek a repair contract is based in that Hampton Roads area.
"Our survival as a viable shipyard may hang in the balance," Dave Watson, president of BethShip, warned last week in a letter to Rep. Robert L. Ehrlich Jr., the Republican who represents Maryland's 2nd Congressional District, the Baltimore County district where the shipyard is.
With little work left at the once-thriving shipyard, eliminating the opportunity to even bid on Navy repair work seriously hurts the Sparrows Point shipyard that has hung on precariously even as the area's other major shipyards shut down.
During its heyday in the mid-1970s, BethShip's Sparrows Point yard built five supertankers, employing 4,000 workers. As shipbuilding work vanished, the facility diversified into tunnel construction and ship repair work.
Currently, fewer than 500 people are working at BethShip, with an additional 600 shipbuilders waiting for work.
Although Navy work has represented only one-fifth of the yard's overall repair contracts in the past decade, its contribution has been critical with other business scarce.
"It's kept the shipyard going. It would be very touch-and-go without it," said former Rep. Helen Delich Bentley, who successfully lobbied the Navy Department to grant Baltimore the so-called homeport status in 1986.
BethShip has not received a Navy repair contract since 1992, when it worked on the USS Sustain. But that $35.4 million contract alone created work for hundreds of employees for eight months.
The shipyard also has won five other Navy contracts totaling $32.3 million since the homeport status was granted to Baltimore. Company officials say that they have spent $1.75 million to upgrade the shipyard's facilities and that the Navy contracts have helped subsidize operations at BethShip.
The move by the Navy brought strong reaction from Maryland's political and business community, just days after the state was blindsided by a proposal in Congress to close NASA's Goddard Space Flight Center in Greenbelt and move its 11,000 jobs to California.
While the Navy's homeport order was issued June 16, BethShip and Maryland political leaders learned of it only during the past two weeks.
"We were surprised, disappointed, but we are not finished," said Mr. Ehrlich.
He said the state's congressional delegation is mounting a campaign to pressure the Navy Department to reverse its decision. But just as the regulation giving Baltimore homeport status required no congressional approval, neither does the Navy's decision to abolish it.
According to Navy documents, the decision stemmed from the desire to reduce the time that sailors must spend away from home. Ships must be manned even while they are dry-docked for repair. Work done in Baltimore, for example, meant that sailors would be kept 140 miles from their homes, rather than at their base in Norfolk.
"We ask so much of sailors when they're deployed to sea for six months, we didn't want to burden them even more when they're home," said Capt. William Harlow, a spokesman for the secretary of the Navy in Arlington, Va.
Mr. Ehrlich rejected the Navy's explanation for the decision, saying:
"We're not buying into the Navy's rationalization here, particularly in an era when we're trying to promote more competitiveness. The more shipyards there are in the game, the better the competition and break for American taxpayers."
Navy repair work also has been dwindling because of a continuing fleet reduction that already has meant less work for Baltimore.
"We need homeport to survive in the ship repair industry," said Murphy Thornton, president of the local Industrial Union of Marine and Shipbuilding Workers of America/International Association of Machinists and Aerospace Workers, AFL-CIO, which has 1,200 active members.
"I don't think this will completely shut us down, but it certainly won't help," he said.
Despite the outcry in Maryland, the secretary of the Navy will likely be "reluctant to waive" the decision, Captain Harlow said. The secretary's directive also affects Philadelphia and Portland, Ore., which are within 165 miles of the ports of New York and Seattle.
The decision by the Navy comes with Baltimore having little clout maritime issues in Washington. Ms. Bentley, who last year left Congress to run for the Republican gubernatorial nomination, had been a widely acknowledged expert on maritime issues and a forceful advocate for Baltimore.
Further, one of two House subcommittees that deal with maritime issues is chaired by Rep. Herbert H. Bateman, who represents a district that includes Newport News, Va. With a huge naval presence, that area already generates a vast amount of work for the dozen major shipbuilding and repair facilities there.
The Navy's homeport directive for Baltimore is the latest in a series of blows that have led to the demise of its shipyard industry, which employed more than 30,000 people during World War II.
In the early 1980s, the United States eliminated a requirement that American ships be repaired in U.S. shipyards. Shipping companies shifted their work to cheaper overseas yards. Some major shipyards here, including Maryland Drydock and Shipbuilding Co. and Bethlehem Steel's Key Highway facility, shut down.
In recent years, the remaining BethShip yard at Sparrows Point has also suffered labor troubles, with the shipbuilders union going on strike several times. Company officials have complained that labor costs there are higher than at any of its major ship repair competitors.
Several other small shipyards still operate in Baltimore, but they handle smaller jobs and virtually no Navy work. BethShip, which operated a dozen shipyards throughout the country during the 1970s, today runs only the Sparrows Point facility and a small repair yard in Port Arthur, Texas.