Defense Giant General Dynamics Hold Maine Town Hostage Over Tax Exemptions

Maine legislators have a hot potato in their hands. But they don’t seem to be feeling any pain.  On March 6, their Taxation Committee, controlled by the Democratic Party, voted 8-2 to send LD 1781 to the floor with an “ought-to-pass” recommendation. That bill calls for Maine to provide Bath Iron Works (BIW) with a $60 million tax credit extending over 20 years. The proposed legislation would renew a previous 20 – year, $60 million tax exemption that ended in 2017. In return for the bill’s approval, BIW promises to invest $100 million in its Bath shipyard and maintain a workforce of at least 5000 employees until 2023.

BIW is owned by General Dynamics, the nation’s fourth largest defense contractor.  The company located in Bath, Maine – population 8303 – currently builds Arleigh Burke and Zumwalt class destroyers. Each one costs U.S. taxpayers $ 1.84 billion and $4 billion, respectively.  As of late 2017, BIW was building four Burke-class and two Zumwalt-class destroyers.

Burke-class destroyers carry Tomahawk cruise missiles equipped with a conventional warhead or a nuclear one. “U.S. Strategic Command may seek to deploy low-yield nuclear weapons aboard Zumwalt-class warships,” according to a recent report.

Destroyers manufactured in Bath are crucial to the U.S. military build-up directed at China. According to an analyst writing in 2014, “Geopolitical developments across the Western Pacific region are generating a rise in military modernization efforts among U.S. allies and partners and other countries. [They have] stepped up cooperation, especially in the area of ship-based missile defense.”

Maine Veterans for Peace, local peace groups, and individuals have long protested BIW’s mission. Bruce Gagnon, veteran peace activist and founder of the Global Network against Weapons & Nuclear Power in Space (go to:, has provided leadership. Over the course of years, activists have held vigils in front of BIW and staged demonstrations at celebrations of destroyer launchings.  A judge recently acquitted Gagnon and eight other defendants who had been arrested at a launching in 2017.

BIW encapsulates issues that resonate for the activists. They condemn corporate control of U.S. society, U.S. militarization and war-making, nuclear weapons, and the U.S. military’s over-reliance on fossil fuels. They would replace weapons manufacturing with tools and infrastructure that serve people’s long-term needs. For them, military claims on public resources lead to shortchanging of social needs.

Bath’s Democratic representative Jennifer DeChant recently pushed this corps of dissenters into action, when on January 11 she introduced LD 1781. She had bipartisan support. Campaigners protesting the bill have flooded local media with letters and op-ed articles, contacted legislators, and leafleted and buttonholed legislators at the Maine statehouse.

Bruce Gagnon, leading the campaign, began a hunger strike on February 12. He lives within easy walking distance of BIW and, joined by supporters, pickets BIW on workday afternoons as shifts are changing.

In 1997 the city of Bath exempted BIW from paying $81 million in property taxes.  Analyst Chris Busby explains that, along with BIW’s $60 million tax break that year, “BIW stood to receive an additional $53 million in state tax reimbursements courtesy of a program already on the books, bringing the total value of this corporate-welfare package to $194 million.”

BIW spokespersons say the shipbuilder needs help in competing for Navy contracts against the Ingalls shipyard in Mississippi, which also receives financial assistance from its state. Many in Maine think BIW deserves renewal of its tax-credit as payback for maintaining a minimum number of employees.

The central complaint against BIW and General Dynamics is greed. Activists claim the weapons manufacturer already has ample money. Indeed General Dynamics’s market capitalization, which signifies the company’s worth, is $67.2 billion. Maine’s gross domestic product in 2016 was $59.3-billion.

In 2016, the General Dynamics CEO received $21,202,838 in total compensation, $1,585,000 as salary; $5,150,000 as a bonus, and $7,077,746 as stock options.  The company’s annual profits between 2012 and 2016 ranged from $6.13 billion to $4.18 billion. Since 2008 annual revenues have exceeded $30.85 billion.

Reporter Alex Nunes, writing in the Providence Journal and relying on economist William Lazonick’s analysis,  explains that General Dynamics profited enough between 2005 and the first half of 2017 to be able to spend $16.2 billion on buy-backs of its own stocks. The $10.3 billion used to re-purchase stocks in 2013 and thereafter represents 85 percent of the corporation’s profits for those years.

Re-purchase of stocks increases their value. It’s a common practice among major U.S. weapons manufacturers.

Taxpayers are already paying out to General Dynamics.  Bruce Gagnon points out that, “when General Dynamics signs a contract to build ships in Bath most of its costs — worker training, equipment, materials, wages, utilities — are covered by the taxpayer-funded Navy budget. [And] General Dynamics’ taxes owed to Maine can be reimbursed by the federal taxpayers under the contract.”

Local S6 of the Machinist Union, which represents 3600 BIW workers, so far is silent on the issue of a state tax credit for General Dynamics. Yet Bruce Gagnon heard from “a union person in Maine” who reported March 6 that “she had spoken to a representative from the Machinist Union (S6) at BIW who informed her that … the union Executive Committee voted not to endorse LD 1781.”  The public knows nothing of this.

At the rally staged at the Maine State house that day, with the bill was on its way to the Taxation Committee, Gagnon handed out a flyer sounding themes of basic social justice: “There are now 43,000 kids living in poverty in Maine. There is no money to fix pot-holes in roads and our bridges are deemed ‘deficient’ by DOT (Department of Transportation). Thousands in Maine have no health care. In rural Maine hospitals, schools and mills are closing. What could Maine do with $60 million that GD does not really need?”

Yet Maine young people, union people, and working people have not joined the campaign Gagnon has led. Their absence represents a void that itself may be the salient part of this story. Their non-participation has implications for the future of struggle in Maine – and elsewhere – and demands explanation.

In any case, the 27 protesters at the statehouse on March 6 were unable to sit in on the Taxation Committee’s deliberations. Some 40 BIW employees were filling the seats and signs were in place directing other would-be spectators to an overflow room.

Gagnon suggests that, “This whole charade was well planned in advance between BIW/GD and the legislative committee.”  He cites a retired BIW employee who claimed “the workers were likely paid overtime for being at the work session.” Gagnon says his hunger strike will continue until the legislature takes a final vote on LD 1781.

Top Photo | The future USS Michael Monsoor docks in Portland, Maine, after performing offshore sea trials, Jan. 17, 2018. The Bath Iron Works (owned by General Dynamics) built ship is the second in the stealthy Zumwalt class of destroyers. (AP/Robert F. Bukaty)

W.T. Whitney Jr. is a retired pediatrician and political journalist living in Maine.

© CounterPunch

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