United Steelworkers not impressed by Huntington Ingalls bonus

FEBRUARY 16, 2018 — The United Steelworkers (USW) union seems less than impressed with news that Huntington-Ingalls Industries is to pay a employees a $500 bonus in recognition of a reduction in the corporate tax ratet.

USW-represented workers at Newport News Shipbuilding are among those who will receive the bonus, which was announced by Huntington-Ingalls President and Chief Executive Officer President and CEO Mike Petters in an earnings call with analysts.

Petters said that the Tax Cuts and Jobs Act had created an opportunity to increase investments in three important areas. The first of thesee were facilities, where the company will now allow invest an additional $300 million in funds designated for facility improvements that expand operational capacity at Ingalls and for investment in digital tools to improve operational efficiencies at Newport News.

“The second area is our employees,” said Petters. “We will provide a one-time cash benefit of $500 to each hourly and salaried employee. In addition, we are accelerating discretionary contributions of approximately $200 million in 2018 for our qualified pension plans.”

Huntington-Ingalls will also make additional charitable contributions to organizations across the country.

“Even with these increased investments,” said Petters, “we are maintaining our path to 2020 commitment to return substantially all of our free cash flow to shareholders through annual dividend increases of at least 10% and opportunistic share repurchases.”

UNION VIEW

“Our members will gladly accept these bonuses,” said Fred Redmond, USW Vice President and Chair of the Union’s Bargaining Committee at Newport News. “However, they would prefer permanent wage increases commensurate with their being the best shipbuilders in the world.

“This $500 bonus is a fraction of the money being paid to shareholders and executives. Let’s not forget who does the work. The average employee will see a one-time check of about $350, after federal withholding and payroll taxes. That doesn’t go very far for a working family. Do the math. It’s a dollar a day.”

“The Republican corporate tax cut will reduce the company’s taxes by over $100 million next year, if it is as profitable in 2018 as 2017. This bonus will cost Huntington-Ingalls less than one-fifth of this windfall. Even Walmart has been more generous.”