VSRA News

OSHA Training Standards Policy Statement

The following Policy Statement concerning OSHA Training Standards was issued by OSHA's Edwin Foulke on April 17, 2007 to all OSHA Regional Administrators.  It is quoted here for your information:

"The purposes of this memorandum are to reiterate OSHA's policy that employee training required by OSHA standards must be presented in a manner that employees can understand, and to provide enforcement guidance to the area and regional offices relative to the Agency's training standards. This position applies to all of the Agency's agriculture, construction, general industry, and maritime training requirements.

Many OSHA standards require that employees receive training so that work will be performed in a safe and healthful manner. Some of these standards require "training" or "instruction," others require "adequate" or "effective" training or instruction, and still others require training "in a manner" or "in language" that is understandable to employees. It is the Agency's position that, regardless of the precise regulatory language, the terms "train" and "instruct," as well as other synonyms, mean to present information in a manner that employees receiving it are capable of understanding. This follows from both the purpose of the standards - providing employees with information that will allow work to be performed in a safe and healthful manner that complies with OSHA requirements - and the basic definitions of training and instruction. Training and instruction mean imparting information, a definition that implies the information is presented in a manner the recipient is capable of understanding.

OSHA has a long and consistent history of interpreting its standards and other requirements to require employers to present information in a manner that their employees can understand. See, e.g., CPL 2-2.38(D)(1998) ("[i]f the employees receive job instructions in a language other than English, then training and information to be conveyed under the [hazard communication standard] will also need to be conducted in a foreign language"); letter from Russell B. Swanson to Chip MacDonald (1999) ("instruction that employers must provide under §1926.21 must be tailored to the employees' language and education...."). And courts and the Commission have agreed with OSHA that an employer may not take advantage of "an adequately communicated work rule" when it did not communicate that rules to a non-English speaking employee in a language that employee could understand. See, e.g., Modern Continental Construction Company, Inc. v. OSHRC, 305 F.3d 43, 52 (1^st Cir. 2002); . Star Brite Construction Co., 19 (BNA) OSHC 1687, 1695 n.12 (N. 95-0343, 2001).

In practical terms, this means that an employer must instruct its employees using both a language and vocabulary that the employees can understand. For example, if an employee does not speak or comprehend English, instruction must be provided in a language the employee can understand. Similarly, if the employee's vocabulary is limited, the training must account for that limitation. By the same token, if employees are not literate, telling them to read training materials will not satisfy the employer's training obligation. As a general matter, employers are expected to realize that if they customarily need to communicate work instructions or other workplace information to employees at a certain vocabulary level or in a language other than English, they will also need to provide safety and health training to employees in the same manner. Of course, employers may also provide instruction in learning the English language to non-English speaking employees. Over time, this may lessen the need to provide OSH Act training in other languages.

Additionally, OSHA's training provisions contain a variety of specific requirements related to employee comprehension. For example, §1910.147(c)(7)(i) (Lockout/Tagout) requires the employer to verify that the employees have "acquired" the knowledge and skills which they have been trained; §1910.134(k)(5)(ii) (Respiratory Protection) requires retraining when "inadequacies in the employee's knowledge or use of the respirator indicate that the employee has not retained the requisite understanding or skill;" §1910.1030(g)(2)(vii)(N) (Bloodborne Pathogens) requires "[a]n opportunity for interactive questions and answers with the person conducting the training session;" and many other standards have analogous requirements. Employers need to examine the standards applicable to their workplaces to be familiar with these specific requirements.

In order to assist employers in meeting their training obligations, OSHA has created a web-based assistance tool. The tool is intended to help employers with a Spanish-speaking workforce identify the Spanish-language outreach resources on OSHA's website. While the site includes links to Spanish-language resources, it is intended primarily for English-speaking and bilingual users. The site is located on OSHA's public website at the following address:
www.osha.gov/dcsp/compliance_assistance/quickstarts/hispanic/index_hispanic.html.

OSHA compliance officers are responsible for ascertaining whether employees have been training effectively. CSHOs should determine whether the training provided by the employer meets the requirements and intent of the specific standard, considering the language of the standard and all of the facts and circumstances of the particular workplace. For example, CSHOs should look to whether workplace instructions regarding job duties are given in a language other than English and determine whether the employer already is transmitting information with comprehensibility in mind. CSHOs should also look beyond any basic paper documentation; i.e., an employer may have training records but employees many not have been able to understand the elements included in the training.

If the compliance officer determines that a deficiency exists in the employer's training program, he/she must document evidence of any barriers or impediments to understanding, as well as any other facts that would demonstrate that employees were unable to understand the training and apply it to their specific workplace conditions. If a reasonable person would conclude that the employer had not conveyed the training to its employees in a manner they were capable of understanding, then the violation may be cited as serious if it is within the guidelines set out in the FIRM."

Dr. Stephen Jones to Speak to VSRA Members

Dr. Steve Jones, Superintendent, Norfolk Public Schools, will speak to the VSRA members at the General Membership Luncheon on Tuesday, May 15th.  As the leader of the winner of the Broad Award, given to the top urban school system in the United States, Dr. Jones is focused on the goal of reaching World Class status by the year 2010.

VSRA has a close working relationship with the Norfolk Public Schools, as well as other city school systems in Hampton Roads.  Our ship repair industry needs a steady flow of qualified graduates to renew our workforces for the future.  To that end, we are working with the schools to increase student understanding of the great career opportunities available in ship repair.

VSRA members volunteer to represent our industry at career fairs at elementary, middle and high schools.  To date, we have touched over 2000 students in 2007.  We have also just completed a pilot LEGO competition with Blair Middle School.  Dr. Jones has been very supportive and encouraging in both efforts.

Come and hear his plans for the future of Norfolk Public Schools and his vision of preparing his students for careers in ship repair.

ROBOTICS Team Beats TECHNO GEEKS

The first annual VSRA LEGO Competition concluded Tuesday (4/24) morning at Nauticus with two teams from Blair Middle School in Norfolk facing off.  Each team had been preparing for this day since October.  Over the interim period, they research ship designs and the occupations in the ship repair industry necessary to maintain ships.

With the research, the teams utilized LEGO freeware to design a ship or ship component.  The rules of the competition required an innovation be included in the design that was not found in the research.  Written reports were prepared, as well a PowerPoint presentations.  On Tuesday morning, each team presented their designs to a team of four expert judges.

The TECHNO GEEKS were first to present.  The team consisted of 6th and 7th graders, led by Mr. Paul Abramson, a Blair teacher.  Their design was of a ship's Captain's Quarters.   Using the LEGO design software, the team chose the specific LEGO pieces to develop their model of the cabin.  The innovation in their design was a "touch panel" that could be used by the Captain to control all the systems on his ship from his quarters. 

The ROBOTICS TEAM was next to make their presentation.  The team was led by Nanette Dean, the robotics teacher from Blair.  Their design was of a cargo ship.  As with their sister team, the LEGO software was used to create their ship.  In addition, the team constructed LEGO models of container cranes and a truck to move the containers that were used in their presentation.  The ROBOTICS innovation was"Spi-pod", a robot that would roam the ship with sensors to detect explosives or other hazardous cargo.  "Spi-pod" was constructed from LEGO pieces and fitted with a functioning robotics devise, which was demonstrated as part of the presentation.

The judges had a very difficult time choosing a winner.  But in the end using objective numerical scoring mechanisms, the ROBOTICS Team "eeked" out a win.  In fact, both teams were WINNERS!  The energy, imagination, and unbridled enthusiasm was extraordinary.  The success of this first competition is a testament to the team members, their teacher leaders, and Principal Sarah McKown. 

In recognition for the win, the ROBOTICS Team design will be sent to LEGO, where it will be kitted and returned to the team to build - creating thier own trophy for display at Blair.  In addition, each team member will receive a ticket to Nauticus.  Blair Middle School also recieved at $500 winning check from the Virginia Ship Repair Foundation. 

In closing the event today, it was announced that next year's competition would involved at least four middle schools in Norfolk, with the goal of including all middle schools in Hampton Roads in the future.

SECNAV on Shipbuilding Problems and Cures

The following is the text of the remarks made by Dr. Donald Winter, Secretary of the Navy, to the Sea Air Space Exposition in Washington, DC on Tuesday, April 3rd.  Today's shipbuilding is tomorrow's ship repair.   These remarks should be read by all VSRA members.

"John, thank you for that kind introduction. Once again, congratulations to all the award winners, and thank you for all your important contributions to our national security.  This annual event is an impressive gathering of leaders from every key sector of our maritime forces, and I am honored to be here.

We are gathered at a time of war, and at a time when we must prepare today for the wars of the future.  In the face of these dual challenges, the Department of the Navy’s top three priorities should be self-evident.  One, support combat operations in Iraq and Afghanistan.  Two, take care of our wounded heroes.  And three, transform the fleet for the future.

Given the audience in this symposium, today I would like take this opportunity to share my thoughts with you, after a year into my service as Secretary, on that third priority, particularly as it relates to shipbuilding.  Shipbuilding is a matter of personal focus for me, and I am encouraged to see that Dr. Etter and her team in RDA are showing admirable energy and enthusiasm in addressing shipbuilding issues. 

There are two basic reasons why shipbuilding commands so much of our attention.  First, our Navy and Marine Corps necessarily revolves around our fleet—300 or so capital assets that define the global reach and awesome striking power that define the United States Navy-Marine Corps team.  Second, our current shipbuilding program is simply not meeting our expectations.  We must do better.  The need to do better is especially urgent, for today’s security environment requires that we modernize and re-capitalize the fleet across the full range of our capabilities.

Although we have the best Navy in the world today, no one in this room can deny that, without improvements, we will not be able to evolve, build, and sustain the fleet we need for the future.  By evolve, I mean that we must transform; by build I mean that we must have an adequate fleet size; and by sustain, I mean that we must maintain a high state of readiness at all times.

These imperatives add up to a point that is worth emphasizing:  the national security of the United States depends on our ability to meet our presence and surge requirements.  So we must build and maintain a fleet that meets these objectives.   

But acquisition challenges continue to hamper our efforts.  In many aspects, the problems we are experiencing with shipbuilding mirror the challenges seen elsewhere in the

Department of Defense.  These problems are longstanding, evident to all who study them, and seemingly resistant to the many efforts that have been made to overcome them.  This must change.  And for my remaining time as Secretary, I will be intensely focused on fixing the problems and improving our acquisition processes.

The first step is a clear and candid analysis of the problems that ail us.  Here are five of the Department of the Navy’s most critical challenges in the shipbuilding program, as I see them:

First, there has been a steady erosion in domain knowledge within the Department of the Navy over the past several decades, resulting in an over-reliance on contractors in the performance of core in-house functions.  From the Navy’s point of view, that over-reliance has not been beneficial.  I would also argue that, in the long run, this situation is not beneficial to the shipbuilding industry either.

While the Department’s level of technical expertise associated with naval architecture and design is relatively high, our knowledge of the shipbuilding process is short of what it has been in the past, and what it needs to be in the future.  Our challenge is to understand how to integrate design and production technology into an acquisition process that industry can execute.

This requires a deep knowledge of systems engineering and a profound understanding of the acquisition process.  Systems engineering is key to ensuring that each ship is configured to optimize the fleet.  The Navy does not fight a ship by itself.  It wages war as part of an Expeditionary Strike Group or a Carrier Strike Group.  And those strike group formations are part of even larger Joint operations.  All this implies a need for integration of elements and capabilities.

The decisions regarding what we really need in a ship—a ship that fights alongside many other platforms—are inherently decisions that properly belong to the Navy.  Only when we improve domain knowledge and re-assert greater control over the acquisition process will we be in a position to make better overall program decisions.

Second, there is a limited understanding within the Department of Defense of how business operates, how it responds to competition, and how it is affected by Wall Street’s expectations.  The reasons for this limited understanding are not difficult to discover. 

Interestingly, industry does understand the Department of the Navy.  Industry hires our alumni, and runs an extensive and effective intelligence collection effort targeting us.  But the Department’s acquisition program managers do not have an in-depth understanding of how industry operates, and the Department as a whole does not act strategically in dealing with industry.  It is very difficult for government to hire from industry, particularly at the more senior levels.  Furthermore, we do not provide the experiences or training to our uniformed acquisition professionals that would enable them to fully understand or anticipate industry.  Neither government nor business can effectively operate with this gap in the government’s ability to understand business.

Third, the shipbuilding market is such that the Navy has little ability to reap the benefits of competition.  In many cases, the competition consists of only two companies, and sometimes even then there are limits on the degree of competition between them.  The consolidation of the shipbuilding industry has reduced competition even further, to the point that there is no competition for many major systems that we purchase.

Under normal market conditions, competition drives innovation and investment, and without intense competitive pressures, both will inevitably suffer.  As a result of the lack of competition in shipbuilding, competitive factors rarely drive us towards optimal solutions, or adequate investment levels.

Fourth, there have been unrealistic expectations of the potential for commercial solutions to our often complex and unique Naval requirements.  By commercial solutions I mean, primarily, the use of commercial design and production techniques in building warships.  Clearly, there is much to be learned from commercial production activities.  That is evident in overseas yards that build commercial and military ships, as well as in yards solely dedicated to military production.   

However, the advantages of commercial cross-pollination do not equally apply to warship designs.  We may find good ideas that can be adapted to our needs, but the conversion of a commercial design to one that that can be applied to warships is most often a non-trivial exercise.  This is probably a good thing, because if it were a simple matter, many countries could build the most advanced warships by converting their commercial capabilities into military systems.  The fact is, commercial solutions cannot satisfy the majority of our requirements, and the majority of our warships will necessarily be produced in shipyards dedicated to Navy programs.

Our fifth and final challenge is our fear of recognizing the true expected costs of acquisition programs upfront.  The government and contractors routinely under-estimate costs, often due to over-optimism in the early stages of program conceptualization.  I share Congress’ frustration with DoD’s poor record with respect to cost estimates and budgeting.

There is a fear that a given program will not be approved if realistic cost assumptions are made during the program approval and contract negotiation phases.  While setting reasonably aggressive cost targets may be a standard management technique, setting targets that are unachievable harms our credibility, creates distrust between Congress and the Navy, and destabilizes future budgets as cost overruns come home to roost.

Optimism is part of the American military ethos.  It is also characteristic of visionary business leaders.  But over-optimism does not serve us well.  The pressure to get the camel’s nose under the tent, so to speak, sometimes leads to shortcuts in design, resulting in cost problems down the road.  But if the thinking is that we simply must get the program started and we will deal with cost growth later, then the Department will continue to suffer from a chronic case of over-optimism.  The end result is a tendency to allow over-optimistic cost projections at the beginning, leading to excessive cost growth over the long term.

What then, must we do to begin to address these issues?  Here are six steps that must be taken.

First, the Navy must re-assert its control over the entire shipbuilding acquisition process.  The Navy owns the fleet, and the Navy is the customer.  Sometimes one has the impression that this tiny distinction has been forgotten.

Control over the process means that the Navy must make the selections of key trade-offs—performance, crew size, logistics support, cost, and schedule.  Ships do not have much value without the crews that operate them, and if our decisions are not driven by taking into account how each parameter fits into the big picture, we will make unwise decisions. 

Added to that consideration is the fact that ships do not operate in isolation -- they operate with shore and air components. These other factors are highly relevant, so it is very important that the Navy take all factors into consideration and exercise control over the decision process.

Control over acquisitions also means that we need to “decouple” decision points.  The limited nature of the competition that exists in shipbuilding often produces only two alternatives to choose between—a package A and a package B.  But within each package is a massive set of options—options that entail many trade-offs.  We might benefit from some elements of package A, and some elements of package B.  We need to decide which trade-offs make the most sense from the Navy’s point of view. 

It is essential that we be able to separate out these three elements:

-what we want to buy,

-how we want to buy it,

-and who we want to buy it from.

Second step - the Navy must define the design constraints to optimize the overall capability of the Fleet.  The lead systems integrator should be the Navy—not the contractor.

When the Navy is relegated to the role of advisor on technical and systems integration matters, the responsibility for the decision-making process is, in effect, contracted out to others. But it is the Navy’s responsibility to optimize the fleet’s capabilities.  Such optimization might include common standards; preferred components and subsystems; mission modularity; and open architecture.  It all depends on what would be most advantageous to the Navy.  This cannot be left to individual system contractors because only the Navy is in a position to assess a program’s impact on overall fleet optimization.

Third step - contractors must design for production and sustainment.  Every time the Navy decides to build a new platform, it should be viewed as an opportunity to re-evaluate our production processes.

Instead, we typically acquiesce to the natural desire of industry to use existing approaches, and leverage as many existing facilities as possible.  Significant improvements in technology and efficiency can be achieved if industry is willing to re-think its production processes when new platforms are being brought online. 

The government has a strong interest in getting industry to take advantage of those opportunities to re-redesign their production lines.  The Navy, therefore, must structure its contracts so that industry is motivated to do that.  Without the right incentives, the investments in production facilities the Navy needs will not take place, and we will be left with outmoded and inefficient production lines.

Four, the Navy needs to use independent cost estimates for the trade-offs and decisions that we make.  Restoring credibility requires that we do a far better job of projecting costs.  Under the conventional bidding process, the lowest credible cost estimate often wins the contract.  The result may be far different from selecting the most probable cost estimate.  We must move away from the culture of over-optimism in our estimates, and more towards more independent, accurate cost projections at every step of the way.

Five, detail design and construction contracts must be supported by mature specifications.

We should understand what we are building in enough detail to use fixed price incentive contracts for all but lead ships.  Yes, there are programs with high development content, with new technologies and significant design uncertainties.  In such cases, it is difficult to project costs and manage the inherent difficulties associated with such programs using fixed price approaches.  Such programs require more flexible contracting alternatives.  And yet, even then we should look to how we can transition to a fixed price structure as soon as the design matures.

Finally, the Navy needs to provide knowledgeable program oversight.  Hiring top quality people who have experience with large shipbuilding programs is essential.  The ability to assign an experienced and capable team must be a pre-condition to a program’s initiation.  Finding and developing the people we need is easier said than done, and it will take time to rectify this problem, but we can not ignore the leverage that can be obtained by putting the right, experienced and prepared people, in the right positions.

This leads me to a final question regarding what needs to be done to fix the problems we are now experiencing:  What do I expect from the contractors?

If a company chooses to participate in the shipbuilding industry that supports our Navy, corporate leaders need to approach shipbuilding as an integral part of their business.  The shipbuilding market is a long-term, dependable opportunity that merits a long-term business perspective. 

Consider the degree of predictability that is characteristic of the shipbuilding industry—how often does a customer lay out his entire acquisition structure for the next 30 years?  Furthermore, there are huge barriers to entry, and once a firm has entered the market, it benefits from those advantages.   Contrast these conditions with those that exist in the IT or service industry, where start-ups take away business from established companies every day. The shipbuilding industry is a potentially rewarding environment for those who have made the appropriate investments.

That said, significant new investments are needed in capital plants, people, and processes.  The current level of investment in our shipyards is nowhere near adequate to meet our needs today, nor is it sufficient to bring American facilities up to the world class standards that are evident in a number of European and Asian shipyards.  But we believe that a valid business case can and must be made for investment in this sector of the economy, and we have seen examples of its viability abroad.

The Navy can and will provide adequate profitability to performing contractors.  We are now negotiating contracts with greater than 15 percent target profits.  I have no hesitation in saying that substantially higher profitability rates are perfectly acceptable, and I am not opposed to them, especially if accompanied by greater investments in facility modernization, and workforce training and development.

In laying out my assessment of the situation in the Navy’s shipbuilding program, and what will be required to improve it, it is not my intention to be unduly harsh.  I realize that some in industry and in the Navy may find my message to be disturbing, and may even take umbrage at my candor.  But I hope that you will recognize this as a genuine case of tough love.

I really do believe that we—in government and industry—must make some fundamental changes in the way we do business in the shipbuilding domain.  If we do not figure out how to establish credibility in our shipbuilding programs and plans, and restore confidence in our ability to deliver on our commitments, we cannot expect Congress or the nation to provide us with the resources we so urgently need.

Thank you."

Captain Berkey to Address the VSRA Members

On June 30, 2006, Captain Richard Berkey relieved Captain Joe Campbell as the Commander, Norfolk Naval Shipyard.  On April 17th, VSRA members will have the opportunity to hear Captain Berkey as he addresses the members at VSRA's monthly general membership luncheon.

Captain Berkey is the first commander of the Norfolk shipyard in its new mission funding status.  Now all four of the public Naval shipyards are funded by the government for the entire year.  Come and hear his perspective on the change, as well as the effect of the BRAC process keeping Portsmouth Naval Shipyard open in spite of the Navy's recommendation to close it.  Will that affect the private sector work here in Virginia in the near future?  In the out years?

RADM Brooks Presented his Fleet Maintenance Brief to VSRA

On Thursday, February 15th, RADM Jeff Brooks addressed the Virginia Ship Repair Association with his Fleet Maintenance briefing.  This was his first opportunity to share the presentation with member company representatives.  The Fleet Maintenance brief was prepared by his Fleet Forces Command mainetenance staff over a period of several months and presented to Chief of Naval Operations, Admiral Mike Mullen, and senior Navy leadership in September.

The presentation was a very strategic look at the organization and functioning of Navy fleet maintenance, as well as the continuous improvement processes designed into the process.  He often emphasized the importance of the private sector ship repairers being an integral and vital part of the Navy maintenance strategy.  He reinforced the Multi-Ship/Multi-Option contracting, which he expects to continue to be the way ahead for surface ship maintenance.  He also said that the CNO was strongly committed to funding the annual requested ship repair requirements which are based on fine tuned data maintained by the Navy.

Admiral Brooks' presentation can be found by following Fleet Maintenance Briefing

Navy Resists Offers for More Ship, Subs in FY08

Will Shipyards be left High and Dry as the Navy shrinks in size?

NORFOLK - Since the Cold War ended, the Navy's fleet has dwindled by more than half, with 276 ships now prowling the world's oceans.

In Hampton Roads, the homeport fleet hovers around 90, down by nearly half since the 1989 fall of the Berlin Wall.

Yet, as the fleet declined, one thing hasn't: The number of private repair yards with piers, dry docks and other maintenance facilities clustered along the Elizabeth River has remained steady. Shipyards in major ports north of here, including in Baltimore and Philadelphia, have been shuttered and vacated.

Now, industry insiders wonder whether the local market could be headed for a shakeout.

"I can't imagine people not expecting that, actually," said Tom Godfrey Jr., president and chief executive officer of Colonna's Shipyard Inc. in Berkley.

With the Navy's downsizing in the 1990s, the port's five largest repair yards now employ around 2,700 workers, far fewer than their former labor forces.

Most have tried to buffer themselves by sharing work on Navy contracts and finding ways to diversify. But the industry still relies on the Navy as its No. 1 customer.

"Some of the guys I've talked to have said there are some lean times ahead, and they're not sure how they're going to fill all the holes they have out there," said Joe Carnevale, senior defense adviser for the Washington-based Shipbuilders Council of America. "It wouldn't surprise me if an adjustment was necessary."

Some point to a February episode at Metro Machine Corp., a Berkley yard, as a warning sign. The company was in a dispute with the Navy over costs to dry-dock the guided missile destroyer McFaul. After it appeared the work would be canceled, Metro issued notices to the city and state outlining plans to idle two-thirds of its 450-member work force.

Eventually, an agreement was reached for a lower price, averting the layoffs. But the situation underscored the industry's vulnerability.

"It's an illustration of a market that has shrunk to the point that a break in the stream of maintenance from a single job could interrupt a company," Godfrey said. "It's very troublesome."

Other threats loom. Among them:

 

Difficulties recruiting skilled workers, who worry about job security.

 

 

A shortage of government money to pay for maintenance work and to reach the Navy's current goal of a 313-ship fleet.

 

 

The possibility that the Navy will send Norfolk-based ships to Mayport, Fla., including large amphibious surface ships - the bread-and-butter vessels for local repair yards.

 

 

Concern that the Navy will divert surface combatant ships, long the mainstay work for private yards, to Norfolk Naval Shipyard in Portsmouth to fill expected work gaps in that public yard.

 

"It'll take some time before things play out," said Jerry Miller, president of Earl Industries LLC, a Portsmouth yard. "There's some surprises yet to come maybe. But right now, it's pretty stable."

 

To ensure that combat ships are ready for far-flung missions, the Navy recognizes that keeping the repair industry healthy is in its best interest.

Still, under pressure from the Pentagon to control costs, it has pushed local shipyard executives to become more efficient.

Rear Adm. Jeffrey Brooks, director of fleet maintenance for the Navy's Norfolk-based Fleet Forces Command, said he thinks "too many companies out there have duplicative capabilities." That's a concern because it adds to overhead costs passed on to the Navy.

"The industrial base infrastructure has not gone down to the same degree that the number of ships has gone down," Brooks said, without citing local examples. "I don't believe it's the Navy's responsibility to have too much infrastructure out there - more than we need to be efficient. The Navy pays for that."

Even if the Navy reaches its 313-ship goal, "that's not going to be a significant change" in terms of work for local repair yards, Brooks said.

Shipyards that hope to remain competitive will have to change their practices, he said, including diversifying beyond Navy ships and teaming with rival yards. Otherwise, "there's going to be folks out there who probably won't have enough work to stay in business."

 

The ship repair business has never been easy, and the challenges these days make it tougher than ever.

That's why Wayne Thomas got out. In early 2004, his family sold Moon Engineering to Earl Industries, giving Earl a waterfront presence. Before that, in 1995, Jonathan Corp. went bankrupt and closed its Norfolk yard for lack of Navy work, the first shakeout of the post-Cold War decline.

"We were just totally burned out with worrying about defense funding and not knowing what tomorrow was going to bring," said Thomas, now a commercial business investor. "It's just a rough way to live."

Thomas called Navy ship maintenance the "stepchild" of defense spending - and an easy target for cuts.

"You're sitting there with a work force thinking you've got all this work to do, but they may not have the funding for it," Thomas said. "So let's see: Are we going to try to carry the work force for another 30 days and hope it's going to come through, or are we going to let them go?"

Money shortages and labor issues remain top concerns.

"It all starts with money," said Richard Goldbach, chairman and CEO of Metro Machine. "There's not enough of it, in our opinion, no matter how it's spread out."

The resulting feast-and-famine cycles have contributed to what some view as one of the industry's most serious challenges - r ecruiting skilled trades workers.

Shipyard workers can earn more than $40,000 a year, not counting overtime, but it's difficult to retain them "if they don't know they'll have work week to week," said Gary Brandt, president and CEO of Marine Hydraulics International Inc. "You lay a person off a second time and there's a 50-50 chance they'll be back. Lay them off a third time and they're not coming back."

Other troubles lurk. If Florida succeeds in sniping large-deck amphibious or other ships to replace the retiring aircraft carrier John Kennedy, it could be a big financial hit. Norfolk yards now hold maintenance contracts worth an estimated $900 million over five years on the amphibious ships alone.

"I'm sure they're looking for any option they can to fill the void left by the Kennedy," said Mal Branch, president of the Virginia Ship Repair Association. He is working on a report to assess potential effects.

Another worry is losing surface ships to Norfolk Naval Shipyard. The Navy is expected to juggle work to keep its four public yards busy now that the 2005 Defense Base Realignment and Closure Commission has rejected the Defense Department's recommendation to close the Portsmouth Naval Shipyard in Kittery, Maine. That foiled the Navy's plan to send submarine work from there to the public yard in Hampton Roads.

"There is clearly going to be a dip in the workload for Norfolk Naval Shipyard, and the Navy is trying to sort out how they're going to accommodate that," said Carnevale of the shipbuilders council.

For now, the Navy will uphold a pledge to keep surface ships in private yards, Brooks said. T hat could change if the Navy can't meet a federal requirement that at least 50 percent of military maintenance be done in government depots.

"I don't see any situation, at least out over the next three to five years, that we would not be able to meet the 50-50 requirement," Brooks said.

 

In Brooks' view, the Navy is helping to stabilize the industry with its new multi ship, multi option maintenance contracts.

The approach focuses on predictability and spreading work across the waterfront through partnering. Shipyards compete to become the prime contractor for a class of ships over several years, but the winner must farm out at least 40 percent of the work to at least two others.

All four of the largest local yards have won at least one of the prime awards, and several are flush with work right now. BAE Systems Norfolk Ship Repair, for example, is the prime on three contracts to maintain destroyers, cruisers and amphibious warships - with an estimated value of slightly more than $1 billion over five years, the Navy says.

"With the MSMOs, you can keep a core work force and your skilled workers employed," said Bill Clifford, president and general manager of BAE Systems Norfolk. "It brings volume and stability that we didn't have."

In the decade since the Navy began awarding multi ship awards on the West Coast, the four repair yards on San Diego's waterfront have carved out special ty areas, becoming the "go-to" yards for those jobs.

A focus for BAE Systems' San Diego shipyard, for example, has been main pump overhauls on amphibious ships, said Robert Kilpatrick, president and general manager of the yard.

"We've probably done 40 to 50 over five or six years, and that learning curve has been really good for reducing costs for the Navy," Kilpatrick said.

Specializing also allowed the yards to target capital improvements to control overhead. "We'll buy a lot of new equipment to make our machine shop better," Kilpatrick said, "knowing that we've got the principal work for all the machinery on the waterfront."

Such teaming is occurring in Hampton Roads and could lead to more cooperation among rival yards as the process matures.

"It's some form of an informal consolidation because we are recognizing each other's strengths and using it to the advantage of the Navy," said Ron Ritter, senior vice president of Earl Industries.

Even so, the yards remain fierce competitors. MHI last month protested for the second time the Navy's award of a frigate multi ship contract to Metro Machine. After a Metro protest, the Navy re bid a contract now held by Earl Industries to maintain LSD and LPD amphibious ships.

"We're in this competition to see who can give the Navy the best bang for their buck," MHI's Brandt said. "I think that's healthy."

 

While the Navy's presence in Hampton Roads will continue to bring work, industry officials recognize the need to branch out.

For those that have done so, the jobs represent a sliver of revenue. But they have helped keep employment steady when there are no Navy ships. In today's economic climate, diversifying is critical, said Allen Walker, president of the shipbuilders council.

"The only way these yards are going to sustain their current capacity is through a combination of commercial and Navy work," Walker said. "That's how we keep these businesses intact; that's how we keep the industrial base intact."

Some of the yards are transferring shipyard expertise to other markets. Earl Industries, for example, has taken its specialty in hull and tank coatings and landed work blasting and painting power plants.

BAE Systems Norfolk has tapped the highly competitive cruise ship market. Clifford sees promise for more with the opening of a cruise terminal in downtown Norfolk.

"I look at that as a perfect opportunity," he said. "When I do a cruise ship in our dry dock, my package is blasting, painting and propulsion work. But think of all the materials and supplies and other people that are working inside the ship for the owner. It benefits the whole community."

Companies such as Colonna's are going after "brown fleet" boats, such as barges, tugs and dredging vessels.

MHI is targeting commercial cargo ships that bring goods into Hampton Roads - a potentially lucrative market, said Mike Gardner, an attorney with Troutman Sanders and a consultant for local shipyards.

It's still cheaper for the international vessels to do major overhauls in foreign ports, where government subsidies and lower wages keep costs down. But Gardner has helped local yards to bring in ships needing emergency repairs.

"Over the next 15 years, with the volume of ships, the quality of work here and efforts by the industry to reach out to these international operators, I think we'll see more of the routine maintenance, including dry docking, occurring here," Gardner said.

MHI is bullish enough on the future that it added a yard in Lamberts Point and spent $21 million to build a pier there in 2004. The company plans to install a dry dock, competing with three other local yards having a total of four dry docks.

"Our goal is to be the most competitive yard in the region," Brandt said.

In 2002, Metro Machine spent about $60 million on a 40,000-ton dry dock and other upgrades to accommodate the biggest ships of the Navy, its sole customer.

The Navy will remain Metro's top customer, Goldbach said, while the company looks to diversify.

"I think we're all at risk," he said. "You have to position for the long term as you survive the near term. There's no question in my mind that we're going to do that."

Reach Jon W. Glass at (757) 446-2318 or jon.glass@pilotonline.com.

OSHA Identifies 14,000 Workplaces with High Injury and Illness Rates

WASHINGTON, March 14 /PRNewswire/ -- The Department of Labor's 
Occupational Safety and Health Administration (OSHA) announced today that
approximately 14,000 employers have been notified that injury and illness
rates at their worksites are higher than average and assistance is
available to help them better protect their employees.
    In a letter sent this month to those employers, OSHA explained the
notification was a proactive step to motivate employers to take steps now
to reduce those rates and improve the safety and health environment in
their workplaces.
    "This identification process is meant to raise awareness that injuries
and illnesses are high at these facilities," said Assistant Secretary of
Labor for OSHA Edwin G. Foulke, Jr. "Injuries and illnesses are costly to
employers in both personal and financial terms. Our goal is to identify
workplaces where injury and illness rates are high and to persuade
employers to use resources at their disposal to address these hazards and
reduce occupational injuries and illnesses."
    Establishments with the nation's high workplace injury and illness
rates were identified by OSHA through employer-reported data from a 2006
survey of 80,000 worksites (the survey collected data from calendar year
2005). The workplaces identified had 5.3 or more injuries or illnesses
resulting in days away from work, restricted work activity, or job transfer
(DART) for every 100 full-time workers. The national average during 2006
was 2.4 DART instances for every 100 workers.
    Employers receiving the letters were also provided copies of their
injury and illness data, along with a list of the most frequently violated
OSHA standards for their specific industry. The letter also offered
assistance in helping turn the numbers around by suggesting, among other
things, the use of free OSHA safety and health consultation services
provided through the states, state workers' compensation agencies,
insurance carriers, or outside safety and health consultants.
    The 14,000 sites are listed alphabetically, by state, on OSHA's Web
site at: http://www.osha.gov/as/opa/foia/hot_12.html.
    The list does not designate those earmarked for any future inspections.
An announcement of targeted inspections will be made later this year. Also,
the worksites listed are establishments in states covered by federal OSHA;
the list does not include employers in the 21 states, and Puerto Rico, who
operate OSHA-approved state plans covering the private sector.
    OSHA's data collection initiative is conducted each year to provide the
agency with a clearer picture of those establishments with higher than
average injury and illness rates. Information obtained from the survey
gives OSHA the opportunity to place inspection resources where they're
needed most and also helps the agency plan outreach and compliance
assistance programs where they will be most beneficial.
    Under the Occupational Safety and Health Act of 1970, employers are
responsible for providing a safe and healthful workplace for their
employees. OSHA's role is to assure the safety and health of America's
working men and women by setting and enforcing standards; providing
training, outreach, and education; establishing partnerships; and
encouraging continual process improvement in workplace safety and health.
For more information, visit http://www.osha.gov.
    U.S. Labor Department news releases are accessible on the Internet at
http://www.dol.gov. The information in this release will be made available in
alternative format upon request (large print, Braille, audio tape or disc)
from the COAST office. Please specify which news release when placing your
request. Call 202-693-7773 or TTY 202-693-7755.

SOURCE U.S. Department of Labor

VSRA Member Jo-Kell Is Prepared for Disaster - Are You?

By TOM SHEAN, The Virginian-Pilot
© March 11, 2007

Almost a year ago, the CEO of Jo-Kell Inc. in Chesapeake began wrestling with an issue that many small businesses had ignored. Suzy Kelly wondered how many of the company's 57 employees would show up for work if a flu pandemic struck Hampton Roads. Public health agencies had predicted that a global outbreak of a new, highly contagious strain of flu virus eventually would hit the United States. In addition to inflicting widespread illness and death, the pandemic, they warned, would disrupt business activity. 

As much as 40 percent of the nation's work force might be absent during a pandemic because employees would be sick, frightened or caring for family members, the Labor Department's Occupational Safety and Health Administration has cautioned.

Kelly, whose company distributes electrical equipment for shipboard and industrial use, decided last spring that Jo-Kell employees had to take responsibility for their own welfare in that sort of crisis. She figured that they were more likely to come to work if their families weren't scrambling to find food, water and other necessities.

In an e-mail to employees in April, she recommended that they store at least two weeks of drinking water at home in case of an emergency. In another e-mail, she suggested types of food that they should stockpile. She also recommended that employees set aside medications, first-aid supplies and copies of important personal documents.

To date, the reaction from employees has been favorable, but Kelly wants to know whether they have acted on her advice. She said she plans to survey employees in April on the level of their participation in the preparedness effort.

Rather than dwell on the threat that a pandemic poses per se, Jo-Kell's chief executive officer cast her recommendations as steps to take for a hurricane or other emergency. "The concept of a pandemic," she conceded, "doesn't resonate with people. The reality of what could happen is too abstract."

Federal regulators have been monitoring industries considered essential to the economy and public safety, including banks, electric utilities and telecommunications providers, for their preparations.

Karen L. Cole, co-president of a Mechanicsville consulting firm that provides business-continuity and disaster-recovery advice, said large corporations have their own teams of planners working full-time on possible disruptions, including the threat of a pandemic. "They already have their plans in place," she said.

One of these is USAA, the financial services organization that has a call center and regional office in Norfolk. The organization, which provides auto and homeowners insurance to members of the military, their families and military retirees, started planning for a pandemic early last year, said Lynn McChristian, a spokeswoman. A team at USAA meets monthly to update the plan, she said.

Many smaller companies, however, have yet to address the impact that a pandemic could have on their employees and operations. In Hampton Roads, small businesses "are starting to get engaged, but it's slow," said Erin Sutton, an emergency planner at the Virginia Beach Department of Public Health. In February, a health department workshop on planning for disruptions from a pandemic attracted about 60 representatives from local businesses and nonprofit organizations. The $3,000 cost of the event was financed with money from the federal Department of Health and Human Services.

After several news reports in 2005 and 2006 about the threat of a flu pandemic, some business owners in the region expressed skepticism about the repeated warnings, Sutton said. They've insisted that "it's not going to happen this year."

The level of preparation that Kelly conducted at Jo-Kell is unusual. Among small business owners and managers in the region, "she's definitely in the minority," Sutton noted.

What prompted her to encourage preparations by employees, Kelly said, was concern about their welfare and a commitment to planning.

"We don't like things to creep up on us," she said at Jo-Kell's main office and warehouse in Greenbrier Industrial Park. The company also has facilities in Richmond and Jacksonville, Fla.

Kelly, who described her planning efforts at the Virginia Beach Department of Public Health workshop last month, urged business owners and managers to be financially prepared for a prolonged downturn in sales if a pandemic struck. But predicting the broad economic impact may be impossible, she said afterward.

"You can only do so much," Kelly said. "I don't know how you can plan for not having any commerce."

Because many companies could be hobbled by high rates of absenteeism, experts say managers must decide ahead of time which of their operations are essential and which can be shut down. Employers also must designate back up employees to make decisions in case managers are unavailable.

Some businesses will be especially vulnerable to a drop in sales because consumers probably won't risk exposure to the flu by congregating in public spaces or shopping for items that they don't need immediately.

"It's less likely that you'll buy that pair of jeans or get your hair done" during a pandemic, said consultant Cole, who previously worked on business continuity issues for the financial services company Capital One Financial Corp.

For small companies, preparation for a pandemic is crucial, said Cole, because they will have to work harder than their larger rivals. "A customer of a small business is likely to switch to a large company because they think that a larger one is better prepared to keep its doors open," she said.

Her message to business owners and managers is that they shouldn't concentrate on making money during a pandemic. Their focus, she said, has to be on keeping the doors open.

That could be a challenge for companies that maintain lean inventories and depend on frequent deliveries of raw materials or finished goods. Manufacturers, trucking companies and contractors will likely have their own problems with absent workers and be forced to scale back operations.

As part of its emergency plan, 30-year-old Jo-Kell distributed employees' home phone numbers, cell phone numbers and e-mail addresses as a way for them to stay in touch. Several employees, according to the company's disaster plan, would work from home via the Internet during a pandemic.

A surge in the number of people telecommuting during a pandemic, however, could strain parts of the nation's communications system. Schools, too, would turn to the Internet for instructing students at home, Sutton said. Whether the Internet would be overloaded by millions of additional people working from home "is an open, unanswered question," she said.

Cole, the consultant, said she was more optimistic about the capacity of the Internet. Any strains on the system, she said, probably would show up in metropolitan areas that have large concentrations of white-collar workers, who would be more likely to use computers for working at home.

However, businesses that expect their employees for the first time to work from home via the Internet can't assume that workers can learn to do it once an emergency strikes, Cole said. Employees, she said, have to be trained to do that well in advance.

Before Kelly began working on her employees' preparation for a pandemic, she sought support from Jo-Kell's managers. Without that backing, "I would have been spinning my wheels," the CEO said. And rather than dropping an entire emergency plan onto employees, she broke it into pieces that were distributed to them every two weeks.

Later this month the company will distribute to its workers a 14-page "Employee Disaster Preparedness Guide" that consolidates the advice in Kelly's messages.

Cole acknowledged that many small companies can gather the needed information on their own from government agency Web sites and other sources. However, small business owners sometimes feel overwhelmed when trying to plan for an emergency such as a pandemic.

"You've got to do it in manageable chunks," Cole suggested.

•  Reach Tom Shean at (757) 446-2379 or tom.shean@pilotonline.com.