Bath Iron Works and its largest union met in their first arbitration hearing Friday, trying to settle a dispute over cost-cutting measures the shipbuilder wants to implement to become more competitive.

The conflict between the parties arose late last year as the company floated a plan to reduce costs by outsourcing the manufacturing of some items, followed by a proposal to ask unionized workers to be more flexible about doing tasks not currently assigned to their trade. The company, which is owned by defense giant General Dynamics, says these changes are necessary to allow it to compete for future work, including a major Coast Guard contract that will go out to bid next year.

The largest union at the Bath shipyard, Local S6 of the Industrial Union of Marine and Shipbuilding Workers of America, opposes both proposals. On April 2, the company informed the union that it planned to go ahead with its changes over the union’s opposition, and demanded arbitration. An initial hearing was scheduled for May 29, which was Friday.

The union, which represents 3,400 of the company’s more than 5,700 employees, filed a federal lawsuit in late April to try to prevent the company’s attempt to arbitrate, claiming the topic isn’t eligible for arbitration under a 2001 memorandum of understanding signed by the company and union. The parties have filed various motions in support of their positions over the past month, but the federal judge had made no ruling on the matter as of Friday, so the arbitration hearing went ahead as scheduled.

The arbitration hearing was conducted behind closed doors and both parties have agreed to a “media blackout” until the process is complete, according to Jay Wadleigh, president of Local S6. He said a second day of arbitration has yet to be scheduled, but it could be as early as next week.

BIW spokesman Matt Wickenheiser confirmed the arbitration hearing occurred, but declined to comment on specifics.

The shipyard has built U.S. warships for decades, but that work is expected to dwindle as the Navy downsizes its fleet. BIW wants to bid next year on a contract potentially worth $10 billion to build 11 offshore patrol cutters for the Coast Guard. If the shipyard can’t reduce its costs, the company said it won’t be able to compete against two other nonunionized shipyards in the South. BIW management has maintained that if the shipyard doesn’t get the Coast Guard contract in 2016, it would have to cut at least 1,000 jobs in the coming years.

The union held a protest rally on May 21 outside the shipyard that attracted several hundred workers who chanted, “Go Home Fred!” – a reference to Fred Harris, who became BIW’s president in November 2013.

There is no timeline in place for the parties to reach a resolution in either the arbitration or the federal lawsuit.

Whit Richardson can be contacted at 791-6463 or at:

[email protected]herald.com

Twitter: whit_richardson