Shipyard Contracts Feature Labor Cost Relief

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Shipyard contracts feature labor cost relief

Newport News Shipbuilding and Dry Dock Co. and Steelworkers Local 8888 negotiated a 46-month contract that included several features intended to restrain labor cost increases. The Virginia shipyard, the Nation's largest, had asked for cost relief to improve its competitive position in the industry, following the loss of several submarine building contracts to General Dynamics Corp. This led to the layoff of 1,250 employees in November 1986 and cuts in health insurance benefits for employees not represented by the union.

The 16,600 employees received an immediate lump-sum payment of $1,000, to be followed by an $800 payment in December 1988, and a 3-percent wage increase (averaging about 34 cents an hour) in February 1990. (Under the prior 43-month agreement, employees had received three wage increases totaling nearly 25 percent.) In another change, the progression pay rates for new employees were reduced and the interval between the increases was stretched to 1,600 compensated straight-time hours, from 1,384. These changes only apply until employees attain the handy-person level, from which they move to the mechanic classification according to their skills and employer production needs.

A health insurance cost containment program also was adopted, under which the plan pays 80 percent of medical costs in excess of annual deductibles of $150 per person and $300 per family. The plan pays all costs after a family's deductible and copayment costs total $1,300 in a year. Previously, the plan paid the full cost above a $100 per person deductible for prescriptions and visits to doctors' offices. Other provisions of the program require precertification of nonemergency hospital admissions, subject to a $300 penalty if the precertification is not obtained; second surgical opinions for certain elective procedures; outpatient surgery for certain procedures, subject to a $300 penalty if performed on an inpatient basis; and nonemergency hospital admissions limited to Monday through Thursday. …