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<PAGE>
[AVONDALE LETTERHEAD]
April 27, 1994
Dear Fellow Employee:
Enclosed are three articles about shipyard employment. The April
15, 1994 article in The Times-Picayune indicates Avondale will
add 800 to 1,000 new jobs in 1994. I am pleased to report to you
since January 1, 1994 we have already added over 450 new
employees. I am confident that we will accomplish our goal of
adding the 800 to 1,000 new people to the work force this year.
Just as Avondale is on the upswing of adding new jobs, two of
our major competitors, Newport News and Ingalls are experiencing
a downturn in their employment. The reduction in their work
force is tied directly to their not getting the Sealift contract
last September. Newport News Shipyard will lose about 7,000
employees and Ingalls will lose over 6,000 employees.
The Metal Trades Council has accused Avondale of being poorly
managed. However, the facts show that our management has been
able to retain jobs without major layoffs even during the
difficult times we had in the past few years. Meanwhile, two of
our major competitors, both of whose employees are unionized,
have been unable to maintain their employment levels. They
certainly are not out there now trying to hire 1,000 new workers
like here at Avondale.
Clearly, the non-union employees here at Avondale are better off
today than the union employees at Ingalls and Newport News who
are facing the strong possibility of major layoffs in the
immediate future. We continue to believe that being the only
non-union major shipyard gives us a competitive advantage. These
news articles suggest we are right. ESOP participants now have a
chance to show support for company management. Vote FOR the
directors and AGAINST the union shareholder proposals and return
your pink card today.
Sincerely,
Albert L. Bossier, Jr.
<PAGE>
BIG JOBS SEND FIRM TO SCHOOLS
Avondale seeks 1,000 workers
The Times-Picayune
Friday, April 15, 1994
By: JOHN HALL and SANDRA BARBIER
Staff Writers
Avondale Industries wants
welders, shipfitters, ship
outfitters, painters,
sandblasters, electricians,
pipefitters and sheetmetal
workers -- almost 1,000 of
them.
And the company is looking
for them in high school
classrooms.
Avondale will add 800 to
1,000 workers by fall to the
5,500 employees in its main
shipyard on the Mississippi
River, its Avondale Board
Division in Westwego and its
repair yard in Algiers, a
company spokesman said
Thursday.
More workers are needed
fast mainly because of
contracts for three Louisiana
gambling boats and from a
sharp rise in the ship-repair
business, said Bruce Hicks,
controller.
And the company plans to
train the new workers.
"We're hoping to get them
from the high schools," Hicks
said. "We're running (help-
wanted) ads in the newspapers
across the coast, from Mobile
to Lake Charles.
"We are running training
schools to give them the
skills," Hicks said.
The shipbuilder is making
its first foray into high
schools in years. This week,
Avondale representatives
talked with senior classes at
several Jefferson Parish
public high schools to outline
the jobs available, company
policies and the application
process, school system
administrator Dianna Dyer
said.
More trips are planned to
vocational schools and other
high schools around the area,
said Jim Moses, Avondale
training and professional
development manager.
Students must be 18 or
older and they must have
graduated or completed a
General Education Development
program, Dyer said.
They can apply, be
interviewed and offered a job
before graduating. They could
start work the day after
graduation, Moses said. Moses
said that unskilled entry pay
is $4.89 an hour. Top pay is
$12.16 an hour after two years
for top skills, he said.
"The new (gambling) boat for
Norbert Simmons has got to be
done really fast," Hicks said.
Simmons, a New Orleans
businessman, and Bally
Manufacturing plan to operate
the boat from prime gamblers'
row on the New Orleans
riverfront.
The $25 million to $30
million contract for Simmons'
boat came while the boat yard
was busy building two smaller
boats at $11.5 million each,
for Baton Rouge and the Harvey
Canal.
"We may need some of (the
new hires) on the big-ship
contracts later on," Hicks
said.
Last year, the company's
Navy business, the core of
Avondale's business, reversed
its fortunes. It had been
declining. Large layoffs were
looming, and the company's
future looked threatened.
But in October, Avondale
won a $258 million contract to
build another amphibious
assault ship. That boosted the
company's total backlog to
more than $2 billion,
including options that the
Navy is expected to exercise.
That compared with less than
$300 million before the
contract surge began last
summer.
A shipbuilding company's
backlog is a measure of its
future. If it's growing, the
prospects are good.
Blue-collar jobs are coming
quicker for the assault ship,
even though its contract came
last, than for $1.2 billion of
Navy sealift ships and a $258
million Coast Guard icebreaker.
Shipyard work -- as
opposed to engineering and
design, which delays yard work
and employs fewer people -- is
moving along much quicker on
the assault ship. Because of
Avondale's experience, less
drawing-board work is
necessary. It's already well
along on previously awarded
contracts for three of these
ships.
<PAGE>
NEWPORT NEWS YARD MAY CUT A THIRD OF JOBS BY '96
Journal of Commerce
April 12, 1994
Associated Press
NEWPORT NEWS, Va. - The
number of jobs at Newport News
Shipbuilding & Dry Dock Co.,
already at the lowest level
since 1970, will drop by up to
a third over the next two-and-
a-half years, the yard's top
official said.
The number of jobs could
go even lower -- below 10,000
-- if Congress drops a
proposed new aircraft carrier,
W. R. "Pat" Phillips Jr.,
president of the shipyard,
said last week.
The latest job cuts will
come on top of reductions that
have seen the shipyard's work
force fall from a peak of
30,000 in the mid-1980s to
21,000 now. Mr. Phillips said
the level will reach 14,000 to
15,000 by the end of 1996.
"We don't intend to let it
become an out-of-control
downward spiral," he said at a
news conference to announce
the cuts. "We would expect at
least half of them to come by
way of attrition. I don't see
any mass layoffs."
The only immediate layoffs
announced last week affected
108 employees in the steel
fitters shop, who will receive
60-day notices. Mr. Phillips
said those cuts resulted from
the yard having no new steel
hulls to begin work on.
In the 1980s, the shipyard
and its Houston-based parent,
Tenneco Inc., poured more than
$1 billion in improvements
into the facility as the Navy
began expanding toward a 600-
ship fleet.
But the end of the Cold
War and Navy budget reductions
have left the yard with little
more than finishing existing
contracts and performing
overhauls.
Two carriers -- the John
Stennis and the United States
-- and five Los Angeles-class
submarines are still being
built, and the yard has turned
to seeking commercial
shipbuilding jobs.
William Fricks, the
yard's executive vice
president, said the company is
one of five shipbuilders that
are finalists for four
frigates that the United Arab
Emirates wants built. Its
competitors are shipyards in
the Netherlands, Germany,
France and Great Britain.
The shipyard also hopes
to obtain more Navy overhaul
work, particularly for its
submarine facility. The
Navy's newest attack submarine
is expected to be built at the
Electric Boat shipyard in New
England.
"Our challenge now is to
find other work that is
adaptable to our facility,"
Mr. Phillips said. The
shipyard recently won a $1.9
million maintenance contract
from the Navy for the
submarine Norfolk.
Mr. Phillips said the
announcement of the work force
reduction was unrelated to
upcoming contract talks with
the United Steelworkers of
America. The yard's pact with
its 13,000 hourly workers
expires in February 1995, and
talks are to get under way
this fall.
Mr. Phillips said the job
reductions would affect hourly
and salaried workers in about
equal proportion to their
current numbers, with salaried
workers perhaps being hit
slightly harder. The yard has
8,000 salaried workers.
<PAGE>
6,000 JOBS ON INGALLS HIT LIST
Cuts to come over five years
The Sun Herald
By: JIM HANNAFORD
April 22, 1994
PASCAGOULA -- Ingalls
Shipbuilding will have to
eliminate as many as 6,000
jobs over the next five years
because of the Navy's
shrinking demand for ships,
company President Jerry St.
Pe' said Thursday.
Layoffs will begin late
this summer, and the
shipyard's work force will
shrink from about 17,000
workers now to about 11,000 in
1996, St. Pe' said.
He said he hopes the firm
can maintain a consistent work
force of 10,000 - 11,000,
which was the level for years
before a labor buildup began
about three years ago.
The announcement was a
sharp about-face from two
weeks ago, when Ingalls won
$571 million in contracts to
build two destroyers. Company
and congressional officials
sounded optimistic, and a
company spokesman said the
contract would guarantee
employment for the next year.
The good news, St. Pe'
said, is that the Navy still
wants the types of ships that
are Ingalls' specialty. And
other shipyards may be forced
out of business, leaving less
competition for Ingalls.
Speaking to a group of
business and industry leaders
at an economic symposium
Thursday, St. Pe' said the
layoffs are the result of a
changing world in which the
Soviet Union is no longer
perceived as a huge military
threat. The Navy's
"downsizing" plan will be a
challenge for Ingalls, which
is the state's largest private
employer, he said.
Ingalls employment is at
its highest since 1977, when
the shipyard had 24,000
workers. Projections are that
the employment will be cut by
1,150 workers over the next
year and by 6,000 workers over
the next five years. The
company projects this
breakdown: 15,500 workers in
1993, 13,000 in 1994, 12,000
in 1995 and 11,000 in 1996.
A sustaining force, St.
Pe' said, will be the Navy's
appetite for Arleigh Burke-
class destroyers, a major part
of Ingalls' production. The
shipyard has contracts to
build 10 of the ships, and the
Navy wants another 19 of them
over the next five years.
The Navy also wants a USS
Wasp-class amphibious assault
ship in 1996. Ingalls has
built one of those ships and
is building four others.
Ingalls and Bath Iron
Works in Maine are the only
shipyards that build the
destroyers.
St. Pe' said there are
five shipyards around the
country that are able to build
surface ships for the Navy.
"Given that so many
shipyards are hurting at this
time, I think it's
significant that Ingalls is
continuing to get good
contracts," said Claire
Louder, executive director of
the Jackson County Area
Chamber of Commerce. "The
reduction in the work force
will be gradual, so I think
it's something we can adjust
to."
St. Pe' said that until a
few months ago the Navy's wish
list included 40 new ships
over the next two years. Now,
the Navy wants 12 new ships
during that period. Those
plans include a new fleet of
sealift ships and the first of
a new class of amphibious
assault ships known as LX, he
said.
Ingalls will bid on those
projects.
Ingalls also will bid on
the overhaul of the Aegis
cruiser USS Ticonderoga and
already has submitted a bid to
modernize some Venesuelan navy
ships, he said.
And Ingalls will make an
effort to re-enter the
commercial market by bidding
for contracts to build double
hulls on tankers as required
by recent pollution laws, he
said.
Ingalls has a backlog of
work worth $4.5 billion from
contracts awarded in the past
two years, St. Pe' said.
