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Ingalls' Transition Sees Katrina's Effects Waning

Jan. 13, 2014 - 05:59PM   |  
By CHRISTOPHER P. CAVAS   |   Comments
Irwin Edenzon, president of Ingalls Shipbuilding, watches acceptance trials on board the amphibious ship Anchorage. Company officials routinely go to see new ships to observe sea trials.
Irwin Edenzon, president of Ingalls Shipbuilding, watches acceptance trials on board the amphibious ship Anchorage. Company officials routinely go to see new ships to observe sea trials. (Christopher P. Cavas / Staff)
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PASCAGOULA, MISS. — Irwin Edenzon is stepping down in March after six years of leading Gulf Coast shipbuilding operations, first for Northrop Grumman and then Huntington Ingalls Industries after the March 2011 spinoff. He took over at Ingalls Shipbuilding as the company was struggling to recover from Hurricane Katrina and deal with a host of manpower, infrastructure, quality, cost and schedule problems, and at a time when his primary customer, the US Navy, was none too happy with the shipbuilder that supplied two of three surface ships for the fleet. By most accounts, Edenzon is leaving an operation substantially improved and more stable than when he took over. He spoke with Defense News last month.

Q. When you came into this job in March 2008, what was going on that is not going on now?

A. We obviously had a set of serious challenges, and we needed to get back to basics. I set up four priorities for the shipyard: safety, quality, cost and schedule, in that order. Because if you donít get the first two right, the second two donít matter. We did a lot of things to make sure we had our head in the right place in safety. We did a lot to recapture our commitment to quality and make sure we were delivering great ships. And the whole time, we were trying to mitigate some of the cost issues we had. Our job was to take some contracts that were seriously underperforming and make the best of them that we could.

The first three years were seriously focused on safety and quality. We did what we could to make sure we were meeting the commitments, to get the ships out of here at a cost target that was acceptable at corporation. And we did a lot of things to start restructuring so we could be competitive in the long term.

Q. What kinds of things were you doing?

A. We have gotten to be very good at integrating and testing the ships, changing processes and getting to where we reduced the rework very substantially. Itís one thing to get first-time quality, but before you start chasing first-time quality, you have to get quality. We were struggling about getting the ship right. We invested a fair amount of money making sure we had the right training, the right tools, the right planning paper, the right technical documentation. We have about doubled the training cycle for people coming into the shipyard.

As you bring down your rework and start thinking about how you get more efficient, you bring down your costs. You start taking out layers of management that are redundant, you take out cost. You invest in the facility so you can facilitate new processes, you take out costs.

We spent a lot of time getting the shipyard back up to the right standard. We took a lot of surplus material, trash and things out of the shipyard; we keep the shipyard in a pristine condition now. Why? Safer. We move material around less, we lose less material, it adds to our efficiency. If the shipyard is in the right condition all the time, we are always ready.

We learned a lot in doing after-action reports. I came here after Katrina, but we spent a lot of time doing lessons learned, and we have implemented a very rigorous process for getting ready for a hurricane and recovering from a hurricane. One of the most important things we learned is to get back to work. If you donít think about what youíre going to do when you come back, you donít know how to prepare to come back. How do you deploy your rolling stock? What sequence do you put material away so that when it comes out, youíre ready to go to work?

So we spend time preparing work orders in advance of the hurricane so we can match material, so we know when we come back, we can be productive quickly. We have an operations manual that tells us what you do to get ready. And we have gotten pretty good at it.

Q. Have these improvements made a difference?

A. Absolutely we have seen a difference. The amount of time it takes us to get ready, to recover. All of the memos are written; they are in the manual. All we have to do is fill in the dates. Like I said, itís got to be a core competency. If we were in Minnesota, weíd have to worry about snowstorms, ice storms. We live and work down here on the Gulf Coast and hurricanes are a fact of life.

Q. Only a few years ago, your workforce was shrinking as the Navyís destroyer program was coming to an end. Now itís been restarted and youíve gotten a couple other contracts, with four major programs running. Whatís your workforce now?

A. We are running around 12,000 here; weíre actually growing our hourly workforce. We took out about 1,000 salaried people last year; we are going to take another 200 salaried workforce out this year.

Q. What were they doing?

A. Planners, basically support services primarily, engineers. There are no new design engineering programs going on in the business, so the engineering workforce is coming down. We are focused on trying to change processes in the support services so that we not only take the work out, but do it better, faster, cheaper with fewer people. Thatís all part of the restructuring to get the costs down.

But then, the consequence [exists] that if we ever do get another design contract, we are going to have to figure out how to reconstitute some of this. But our objective is to retain critical mass, to protect the core competencies, making sure we know how to do naval architect work, know how to do mechanical engineering, know how to do fluid systems. Those kinds of things we have to protect, but on the periphery of that, if thereís no work, we are going to adjust the workforce. So right now, we are hiring in the craft. We will hire about 1,000 this year, and we will hire more next year.

Q. Whatís driving that?

A. The workload. We have a pretty healthy backlog [of ship orders] right now, and it takes us out through the beginning of 2016. With the way the Navy shipbuilding plan has turned out, we are going to end up probably adjusting the workforce again in the í16, Ď17 timeframe ó and that will affect the craft roles. So we are watching the budget arguments and debates up north and seeing whatís going to happen.

Q. What happens in 2017?

A. If you take a look at the timing [new ship programs] T-AO(X), LXR, LHA 8, they are all in the í17, í18, í19 timeframe. So thereís a period where we end up delivering everything in the backlog, then we come through the valley [of declining ship orders], and then we have to be ready to ramp up for the other side. Not exactly the most efficient way to do the business, but itís a fact of life the way the plan is working out.

Q. You are closing down shipbuilding operations at Avondale in New Orleans. Whatís the status of that facility?

A. Avondale will be done for the most part. The people there will be working on a few units for [the amphibious ship] LPD 27. Primarily, we kept those folks there so that if we do more work [there] in the commercial business, we wanted to have some continuity in the workforce. But for all intent and purpose, Avondale will close when the Somerset, LPD 25, sails away in February. After that, we are done with naval shipbuilding at Avondale.

When I came here in 2008, we had about 4,500 people there, now down to about 450. [They] will go away in October, and thatíll be the end of it.

Now I will also tell you that the workforce at Avondale was outstanding. Despite the news that we were closing at the end of 2013, LPD 25 was the best LPD we ever delivered, and the Navy will tell you the same thing. It is a great ship, and itís a testament to the shipbuilders at Avondale that despite for two years they knew we were going to be closing the shipyard ó the pride and tenacity they displayed to stay on task and deliver a great ship ó it reflects on their professionalism and Iím proud as hell about those guys.

Q. Youíre also closing the composite facility in Gulfport. When is that happening?

A. Gulfport will be closed probably by the second quarter of 2014. Thatís a workforce of just about 450 to 500. We are offering the craft an opportunity to come over ó if they are already a welder, or fitter, or electrician, they can move fairly easily. If they are a composite worker, we have offered to retrain.

Q. Your problems with cost performance on the LPD 17 San Antonio-class amphibious ships are well known. Typically, an optimum level is reached by the fifth ship, but youíre now building the 10th, LPD 26. Are you on cost for that ship?

A. We are very comfortable with our contracts for 26 and 27. We are performing well, and I think we are going to do fine. We have actually made an offer to the Navy to continue production for a ship based on the LPD 17 class design, the LX(R), and a ballistic missile defense variant. We would configure the LPD to host a large radar, and we have done a lot of work on what would we change to make it suitable, and meet the cost objective that the Navy has for LX(R). Both the Navy and the company have invested heavily in the LPD 17 class. There are things on both sides of the equation that could have been done better. We are building a great ship now, and we are getting very positive feedback from the fleet. Since that investment has been made, we should exploit it. If we can prove to the Navy that there are relatively minor changes to the basic design, letís save. Letís use the success we have had now in the last few ships and use that as a platform to continue. We have been aggressive in promoting LPD as an LX(R) solution, and we are interested in continuing the conversation.

Q. Whatís in store for this yard in the next five years or so?

A. The biggest issue is the uncertainty that comes with the 2016, í17, í18 timeframe. We are more than ready to invest. We need to understand what we are going to invest in. ■

Email: ccavas@defensenews.com.

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