General Dynamics will acquire Norfolk shipyard Metro Machine

NORFOLK

General Dynamics Corp., one of the nation's largest defense contractors, plans to buy Metro Machine Corp., a privately held ship-repair facility in Norfolk.

Metro Machine employs about 400 people on the Berkley riverfront across from downtown. It has been in the Navy ship-repair business since 1972 and is a prime contractor for work on frigates, dock landing ships and amphibious transport docks that are based at local U.S. Navy facilities.

The deal is subject to review by the U.S. Justice Department, in consultation with the Defense Department. It is expected to close in November.

Although terms of the sale were not disclosed Wednesday, Richard Goldbach, Metro's CEO, said the employee-owned stock-ownership plan would receive $148 million after repayment of Metro's debt and other obligations.

An additional $16 million would be placed in escrow to serve as a fund to satisfy certain claims General Dynamics might have. Any remaining balance after 18 months would flow to the employee stock owners.

General Dynamics is based in Falls Church and intends to fold Metro Machine into the shipbuilding and repair operations of NASSCO, a San Diego-based unit that employs 3,400 and is the largest shipbuilding and repair company on the West Coast.

"We're acquiring Metro Machine because we think it represents a growth opportunity," Rob Doolittle, a spokesman, said Wednesday. "The Navy is one of General Dynamics' largest customers today, and we provide very similar-type services to the Navy on the West Coast. So we see this as an opportunity to expand our repair offerings to the Navy and hope to grow."

General Dynamics owns two other East Coast shipyards - Bath Iron Works in Bath, Maine, and Electric Boat in Groton, Conn.

"We have a business group called Marine Systems that comprises those shipyards," Doolittle said. "A majority of their work is new construction, but service and repair is a growing portion of that portfolio."

Richard Sobocinski, vice president/contracts at Colon-na's Shipyard in Norfolk and a former employee at Bath Iron Works, said he didn't think the deal would change the repair "factor" in the port.

"I think it makes Metro a lot more stable than they were under small, private ownership," he said. "Actually, there may be some opportunity for small businesses in the area to work with them."

Metro Machine is the second major Navy ship-repair yard in Hampton Roads acquired by a major defense contractor. Its neighbor in Berkley, Norshipco, was bought by BAE Systems in 2005.

In his letter to employee stock owners, Goldbach said he accepted the offer based on the advice of GreatBanc Trust Co.

"The combination of Metro's superior workforce with General Dynamics's considerable resources should solidify Metro's ability to compete on U.S. Navy work for years to come," Goldbach wrote.

General Dynamics' businesses encompass the marine, aerospace, defense, communications and electronics industries, according to its website. While it sold off many of its defense-related companies in the early 1990s, it began expanding again in 1995.

Since 1997, it has acquired more than 50 companies, revenue has grown from $4 billion to about $32 billion, and its workforce has increased from 29,000 to about 90,000 workers, the website says.

Robert McCabe, (757) 446-2327, robert.mccabe@pilotonline.com