BY NOEL K. GALLAGHER

MaineToday Media, Inc.

The Navy's decision to build a third Zumwalt-class destroyer seemingly satisfies almost everyone.

The Navy gets another stealth ship, as well as more of the Arleigh Burke-class destroyers that it needs to address current threats.

Bath Iron Works and its suppliers get a big new contract and a reinvigoration of BIW's legacy program.

Politicians claim victory for bringing jobs back to their states.

"This was the compromise that gets everyone on board. It's a perfectly livable situation," said defense analyst Jay Korman of the Avascent Group.

Everyone agrees that the next big hurdle is the House Armed Services Committee, which has opposed the third Zumwalt, or DDG-1000, as too expensive and unnecessary. But Monday's decision bought a lot of good will, Korman said.

"There's enough of a constituency now to get it through," Korman said. "If they don't commit to this, they could easily defer this decision to the next president, and I don't think they want to get involved in presidential politics. No one wants to live with this uncertainty.

"They'd rather lock in an agenda before (Barack) Obama or (John) McCain comes in." Navy spokesman Lt. Clayton Doss said Tuesday that the Navy's decision wasn't a reversal, since its original budget request included a third DDG-1000.

"This is a capabilities-based decision, a capabilities-based plan," he said.

Bath will build two Zumwalt-class destroyers, while its competitor, Northrop Grumman's Ingalls of Pascagoula, Miss., will build one. BIW has already started some advance work on the first Zumwalt, which it will deliver in 2013.

In late July, the Navy announced that it did not need the third Zumwalt, and wanted to re-start the DDG-51, or Arleigh Burke line, with plans to build eight Arleigh Burkes between 2010 and 2015.

It planned to use $2.2 billion in the current budget to jump-start the program, purchasing components such as propellers and shafts.

The switch set off alarm bells and prompted a flurry of letters between members of Congress and Navy officials. It also spilled into Maine's Senate race, with incumbent Republican Susan Collins fighting to keep the DDG-1000, while her opponent, Democratic U.S. Rep. Tom Allen, supported the Navy's decision, saying the plan to build more Arleigh Burkes would maintain work force levels at BIW.

Doss acknowledged that the switch resulted in conflict.

"When you are that far along, trying to make changes can be difficult. That's why we're conforming to the request as submitted," he said.

Doss said the Navy would look to find the $2.2 billion for Arleigh Burke start-up costs in other line items of the fiscal 2009 budget, such as research and development. If approved, it will be the first production funding for the DDG-51 program since 2005, when the line was shut down.

In the current budget proposal, shipbuilding accounts for $14.1 billion of the total $149.3 billion Navy budget.

Money from past appropriations is still flowing into the Arleigh Burke program. BIW, which employs 5,900 workers, is currently building five DDG-51s, with the last scheduled to go to the Navy in 2011.

Korman said the argument for ending the DDG-1000 was that it was too costly and complex, and not necessarily well-suited for immediate needs. Instead, the argument went, better to take that money to upgrade the DDG-51s with better equipment and electronics.

For shipbuilders, a return to the DDG-51 is good because it's a known quantity. With decades of production experience, the companies involved know how to produce the ships efficiently.

"It may not be as stealthy (as the DDG-1000), but to meet the core threat, they'd rather put some minor investment in the DDG-51 program," Korman said.

Doss said the decision to back the third DDG-1000 was also influenced by the Navy's interest in a stable environment for shipyards and subcontractors.

"The industrial base is certainly an important consideration," he said.

That industrial base is reeling, according to Cynthia Brown, president of the American Shipbuilding Association.

"I think it's fair to say it has been a very strange year," Brown said Tuesday. And although the industry supports the Navy's decision to order whatever ships it needs, she is concerned there will not be enough work.

To keep current employment levels, she said, the industry needs orders for three DDG-51 ships a year. The Navy proposal only calls for one or two a year between 2010 and 2015.

The current orders are "inadequate," Brown said, and the shifting landscape is also a problem.

"You can't keep switching on us," she said. "We need the ability to plan our workload and know what we're doing from one year to the next. We have just been in total chaos this year."

The current difficulty is actually the result of a three-year production gap created when Congress ended funding for the decades-long Arleigh Burke production, but didn't approve new construction funding for the Zumwalt class until 2008. That has sent shipyards scrambling to pick up extra work, such as BIW's Portland Harbor project on a commercial ship.

Smaller subcontractors were suddenly out of work while the Navy funded only research and development for the Zumwalt class.

"Historically, the Navy has never transitioned to a new class without an overlap," Brown said. "It's like a factory ... anytime there is a gap in the production line, it is a gap that will be felt for years to come."

BIW spokesman Jim DeMartini said the yard has been able to maintain its force by adding other work.

"The surface combatant industrial base is in the midst of a painful transition," Brown said. "This has been another year of uncertainty in a manufacturing process that doesn't need it and can't afford it."

As evidence of what happens when work dries up, Brown noted the sale last month of General Electric's marine gear product line to another company, Philadelphia Gear. GE was the only company making the main reduction gears for the Arleigh Burkes, she said.

"GE is getting out," Brown said. "Lots of companies go out of business if they don't have additional work, or they find other work and exit the Navy business.

"It's not a pretty picture."