Bath Iron Works’ parent company selected a veteran manager to take over the shipyard from Fred Harris, who is retiring after a three-year stint that saw substantial workforce growth but also the loss of a “must win” contract.

General Dynamics announced Monday that Dirk Lesko – a BIW employee since 1990 currently serving as general manager – will become president on Jan. 1. He will take over at a time when the shipyard is bustling with work but faces a potential slowdown in the not-so-distant future unless the pace of Navy shipbuilding picks up.

Harris, 71, is retiring as the president of both BIW and General Dynamics’ NASSCO shipyard in San Diego, a dual position he has held since November 2013. In a related announcement, General Dynamics said that Kevin Graney will move from general manager to president of NASSCO, which builds both Navy and commercial ships.

“Dirk and Kevin are seasoned leaders with proven track records of managing complex shipbuilding projects and driving continuous improvement at every level of their business,” John Casey, executive vice president of marine systems at General Dynamics, said in a statement. “Both have worked for General Dynamics for more than 20 years and they have the right management and operations experience to ensure these shipyards are positioned for the future.”

Under Harris’ tenure, BIW grew to more than 6,000 employees – a workforce level not seen in more than a decade at the shipyard, which is one of Maine’s largest employers. The shipyard also completed work on the largest and most technologically advanced destroyer ever built for the Navy, the more than $4 billion “stealth destroyer” USS Zumwalt.

But Harris’ approach to cost-cutting stoked tensions with BIW’s largest labor union.

“I’m hoping it will be a bit of a morale boost for employees, and hopefully it is a positive change,” Rich Nolan, president of the Local S6 chapter of the Industrial Union of Marine and Shipbuilding Workers of America, said of the coming leadership transition at BIW.

In one of the highest-profile clashes between the union and BIW’s upper management, Harris attempted to outsource construction of some components of the ship to other companies. The union fought the measure, but members eventually agreed to considerable concessions on pay, benefits and work rules in order to help the shipyard compete for a Coast Guard cutter contract potentially worth up to $10.5 billion.

BIW lost that contract – which Harris and others had described as a “must win” – to a lower-cost Gulf Coast shipyard in September, putting as many as 1,200 jobs at risk as the pace of Navy work slows. The loss did not improve relations with union members still frustrated with the contract concessions.

Although Nolan said he does not believe the Coast Guard contract had an impact on Harris’ decision, he acknowledged that union members have at times been dissatisfied with the shipyard’s leadership under Harris.

“This is a very proud workforce: they take a lot of pride in ‘Bath built is best built,'” Nolan said, repeating BIW’s longtime slogan. “And he tried to tell us we weren’t the best . . . so some people took that hard.”

A General Dynamics spokeswoman said neither Harris nor Lesko were available for interviews on Monday. The company also declined to comment further on the timing of the transition or release photos of Lesko.

In his statement, Casey recognized Harris’ commitment to shipbuilding and “outstanding” service to the company and employees during his career. Harris is a Maine Maritime Academy graduate who first joined General Dynamics in 1973 as a senior engineer on the trident ballistic missile submarine program.

“Throughout his extensive career with General Dynamics, Fred has held leadership roles at all three of our shipyards and made significant contributions to the U.S. Navy’s shipbuilding programs,” Casey said.

Sens. Susan Collins and Angus King released a statement commending the decision to name Lesko president of BIW and thanking Harris for his years of service. Collins serves on the defense subcommittee of the powerful Senate Appropriations Committee while King serves on the Senate Armed Services Committee and the Senate Budget Committee.

“We have both worked with Dirk very closely over the years and are confident that his depth of experience, proven track record and longstanding commitment to the yard will make him a good leader who will work well with the talented and skilled employees at BIW,” the senators said. “We look forward to continuing to work with him in his new capacity to help position the shipyard for success in the future.”

Nolan, the union president, said he hopes the leadership change will result be a positive move for the shipyard and the state, given BIW’s contribution to the local economy. He said the union’s leadership has had “fairly good” relationships with Lesko since he became general manager last year.

“We don’t always agree on things, but I don’t care who is in that position or in my position, we’re not going to agree all of the time,” Nolan said.

BIW is in the midst of a building boom as crews work on the final two destroyers in the three-ship Zumwalt class as well as four more Arleigh Burke-class guided missile destroyers. While at least three additional Arleigh Burke destroyers will be built in Bath as part of a multi-year contract awarded by the Navy in 2013, the amount of work is expected to lessen when the final Zumwalt destroyer leaves the yard later this decade.

Of course, the recent elections could affect the Navy’s shipbuilding program.

President-elect Donald Trump has pledged to ask Congress to eliminate automatic budget cuts known as “sequestration” – something President Obama also unsuccessfully sought – that have reduced defense spending. Trump is also calling for a 350-ship Navy, up from the 308 ships that are the current official goal. The Navy now has less than 300 ships.

That 350-ship figure would require increases in most types of Navy vessels – from submarines and to support ships – but Trump specifically mentioned the missile defense systems offered by destroyers.

“As we expand our Navy toward the goal of 350 ships, we will also procure additional modern destroyers that are designed to handle the missile defense mission in the coming years,” Trump said, according to a transcript of the September speech. “Accomplishing this military rebuild will be a 50-state effort. Every state in the union will be able to take part in rebuilding our military and developing the technologies of tomorrow.”

The Navy has traditionally divided its destroyer contracts between Bath and Ingalls Shipbuilding in Pascagoula, Mississippi. Harris and other BIW officials have repeatedly warned, however, that the shipyard needs to reduce costs to better compete for future Navy work.

A recent analysis by the Congressional Research Service estimated that a 350-ship Navy would require $3.5 billion to $4 billion in additional funding annually over the 30-year build-out period.

Staff Writer Gillian Graham contributed to this report.