Rough waters lie ahead for shipbuilding industry
THE FAILURE OF the congressional “super committee” to reach agreement on $1.2 trillion in budget cuts over the next 10 years creates a super-sized problem for the security of the United States. Without intervention by Congress, automatic cuts will go into effect in 2013, and the Defense Department will shoulder half of the rollback.
That is bad news all ‘round: for Defense, the U.S. shipbuilding industry, and our members employed in that industry.
In an interview at National Defense University Aug. 16, Defense Secretary Leon Panetta warned that “this kind of massive cut . . . would have devastating effects on national defense.” In fact, the Defense Department is already facing $450 billion in budget cuts over the next decade. With the additional $600 billion in reductions resulting from the super committee failure, Defense would need to shave about $1 trillion over the next 10 years.
All military branches will face substantial cuts. The Navy fleet, by some estimates, could shrink to fewer than 200 ships by the time all the cuts are implemented. The current fleet (as of November 2011) stands at 284 deployable battle-force ships, in contrast to nearly 600 ships during the late 1980s.
The Boilermakers union, the Metal Trades Department, and other supporters of a robust maritime industry have fought for decades to get Congress and Defense to stabilize the industry through procurement programs that can sustain the nation’s shipyards and retain skilled ship-building workers. By lobbying vigorously in Washington, we have built relationships with Republican as well as Democratic legislators who support strong Navy and commercial shipbuilding programs. We were encouraged by a 2005 announcement by Chief of Naval Operations Adm. Michael Mullens that the Navy would expand the fleet to 313 ships over a 30-year period (following a long decline from Cold War highs). However, the current focus on austerity puts that expansion at risk.
The GOP’s refusal to consider tax increases for the super rich doomed the super committee to failure...
Vice Adm. Kevin McCoy, Commander of Naval Sea Systems (NAVSEA), addressed the issue before the Metal Trades Department Conference in November. He said the shipbuilding industrial base is already “fragile.” Skilled workers and shipbuilding expertise are stretched thin — without the capability to quickly ramp up in the event of additional national security threats.
“In terms of all the things that could go wrong around the world, we have to have that workforce ready, trained — and it’s already stressed,” particularly with so many seasoned workers nearing retirement age, McCoy said. “We’re down to a handful of major shipbuilders, and we’re potentially losing [the Avondale shipyard]. Suppliers are down to bare bones. So, we’re to the point where if you pull a ship out [of production] you lose a shipyard and a bunch of the supporting industrial base behind it.”
By Adm. McCoy’s estimate, the entire budget for new ships could be wiped out by cuts already in the pipeline, not to mention the additional $600 billion cuts triggered by the super committee failure.
He summed up the dangers facing shipbuilding cutbacks this way: “The naval shipyard workforce may be — the way this country is going with [losses in] manufacturing — the last best industrial base that some future president has to call on. We really need to think about that as a nation.”
Myopic GOP pushes slash-and-burn agenda
THE REPUBLICAN PARTY carries a large share of the responsibility for the current uncertainty about the budget — and the danger of a weakened military. In their zeal to shrink government and strip public sector workers of collective bargaining rights, they have placed their partisan agenda ahead of job creation and economic recovery.
Their refusal to consider tax increases for the super rich in this country (those with incomes topping $9.5 million annually, according to a leading sociologist) as part of a solution to the deficit crisis doomed the super committee to failure from the start. By evading compromise, the GOP has done our national defense potentially great harm. The choice between defending the super rich one percent and protecting the nation’s military was on the table. In a disgraceful and nakedly partisan choice, Republicans stood with their super rich backers.
The GOP seems to think the road to the White House and congressional majorities in 2012 can be achieved by blindly adhering to far-right doctrine. Just as the Defense Department cannot sustain massive budget cuts without subsequent job loss, neither can other sectors of our government be slashed without eliminating jobs. To blame Pres. Obama for a high unemployment rate while simultaneously destroying jobs through severe austerity measures is underhanded and clearly not in the best interest of the nation.
Other nations expand maritime assets; U.S. lags behind
WHILE THE U.S. maritime industry has shrunk through the years, other countries are investing heavily in their ships, ports, and shipbuilding capabilities. Canada recently announced $32 billion in contracts to build warships and noncombatant vessels over a 20-year period, with the investment to be shared between their east coast and west coast shipyards. The kind of certainty and forward planning inherent in their program would allow the country’s primary yards to add thousands of new jobs while contributing to a sustainable and modern industry, and also enable the Canadian government to save money through economies of scale and standardized production methods.
Meanwhile, Japan, South Korea, and China have become powerhouses of maritime might, far surpassing the United States in shipbuilding. The primary U.S. naval shipyards continually struggle to build enough ships to achieve economies of scale. Without a stable and predictable work outlook, keeping a highly skilled U.S. shipbuilding workforce is extremely difficult.
It is disturbing that while China has undertaken a massive build-up of its combat fleet, including a growing submarine force and modern surface combatants, the U.S. naval fleet hovers near historic lows — and now faces further cuts. The Navy’s practice of leasing foreign-built ships exacerbates the problem. If we are short of those ships, we need to build them in U.S. shipyards, creating good-paying jobs and boosting the economy. Northrop Grumman’s announced closing of a major shipyard, Avondale in Louisiana, with the loss of 5,000 jobs, should send alarm bells sounding across the country.
It is also disturbing that, against the wishes of organized labor, Washington pushed through three more free trade deals, with South Korea, Colombia, and Panama last October. Nearly all (97 percent) of the goods flowing between the United States and other countries is carried by foreign ships. Signing free trade agreements with three more countries will be good for foreign commercial fleet owners but will have little or no positive impact for America’s minimal transocean shipping fleets.
Expanding maritime industry would strengthen economy
IF THE UNITED STATES had the will and the vision, it could re-build the nation’s maritime strength — in warships, commercial carriers, and shipyards and related industries. A substantial investment would yield positive results in job creation and economic growth.
A paper submitted to the Naval Post-Graduate School last year by Navy Lt. Nicholas Meyers, titled “An Economic Analysis of Investment in the United States Shipbuilding Industry,” concluded that “increased investments in shipbuilding and repairing can provide a timely and substantial return and should be part of the next effort to provide economic stimulus. Congress may be confident that [authorizing $20 billion annually from fiscal year 2011 through 2015] will provide a healthy benefit in job growth throughout 49 states, as well as about $3.35 billion in increased total economic activity for each $1 billion invested.”
A $3.35 return on each $1 invested certainly makes good economic sense. Unfortunately, Mr. Meyers’ suggestion is not likely to be followed anytime soon. The Republican Party is too busy looking for ways to slash the national budget, burn the programs that improve and secure the lives of ordinary citizens, and destroy the effectiveness of our government. All this so their rich benefactors — individuals and multinational corporations alike — don’t have to endure “excessive” regulatory oversight or pay a fairer share of taxes on their gluttonous incomes and profits earned through special interest tax loopholes.