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San Diego's Nassco Wins Major Navy Ship Contract : Jobs: The yard will build a new class of cargo vessel designed to supply combat zones. Threat of layoffs no longer looms.


SAN DIEGO — The Navy on Wednesday gave San Diego's economy a much-needed shot in the arm by awarding National Steel & Shipbuilding Co. a $1.3-billion contract to build as many as six gigantic supply ships.

The contract is a major plum for Nassco, as the shipyard is known. It is the West Coast's last major shipbuilder, and management had been worried that it might have to order numerous layoffs once current contracts were filled in 1996.

While the new contract won't mean additional jobs, Nassco's 3,700 workers now can expect to have work at least into 2001, said Fred Hallett, the firm's vice president of finance. The new contract may indirectly create more local jobs because Nassco will have to hand off ship repair work to neighboring yards, officials said.

San Diego has been hit hard by cuts in military spending. Unemployment in the area this summer hit 9.2%, the highest rate in a decade.

The contract calls for construction of the strategic sealift ship, a new class of self-loading vessel that measures 965 feet in length (almost as long as an aircraft carrier) and is designed to allow heavy fighting equipment, such as tanks and trucks, to be driven aboard.

The Navy was caught seriously short of heavy transport vessels during the Persian Gulf War and had to use foreign navies and merchant ships to deliver equipment to the war zone. The contract calls for at least one ship, valued at $269 million, and options for five additional ones, for a total of $1.3 billion.

U.S. Rep. Randy Cunningham (R-San Diego) said chances are good that Congress will fill those options. "We had to use the Russian Navy to get our stuff over there" during the Gulf War, he said.

The ships fit the Navy's goal of having loaded cargo ships at strategic sites around the world. They are to be filled with things needed in time of war, from ammunition and tanks to food and medical supplies. Design work on the first ship will begin immediately, with delivery due in 1997.

The Navy contract is also expected to give Nassco the financial stability it needs to bid competitively on a wave of oil tanker refittings over the next couple of years. A 1990 federal oil pollution law requires American tankers sailing in U.S. waters to have double hulls to guard against spills, and Nassco hopes to get a major chunk of that business.

Nassco currently has contracts totaling $1 billion to build four Navy ships in the AOE fast-combat support class--supply ships that can travel at 25 nautical m.p.h. The program has had cost overruns totaling $677 million.

The AOE contracts created controversy in April, when it was disclosed that the Navy, in the final days of the Bush Administration, awarded the fourth $365-million segment to Nassco--seeking to keep President Clinton from blocking or delaying the program. The inspector general's office had advocated canceling the last AOE ship.

Employees at the shipyard have been working without a contract since October, when workers struck for two weeks.

Hallett said the contract will not affect the yard's wage offer. Union officials were not available for comment.

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