Shipbuilders, lawmakers gird for fusillade of cuts

The Bush administration wants to make multibillion-dollar cuts to Navy programs through 2011, but the nation’s shipbuilding industry and lawmakers from both sides of the aisle will not go down without a fight.
The Bush administration wants to make multibillion-dollar cuts to Navy programs through 2011, but the nation’s shipbuilding industry and lawmakers from both sides of the aisle will not go down without a fight.
 


Already, 36 House members have joined the bipartisan Congressional Shipbuilding Caucus, set up earlier this month to thwart the administration’s plans to cut budgets for Navy destroyers, submarines and carriers by $9 billion over the next five years. And the American Shipbuilding Association (ASA), which represents the six naval yards run by General Dynamics and Northrop Grumman, is gearing up for a protracted budget battle.

The reduction in Navy spending reflects not only an administrationwide effort to reduce deficit spending but also a changing defense strategy increasingly focused on defeating insurgent enemies using highly skilled land and special forces rather than more traditional Cold War-era platforms.

“Concepts of war fighting and defense planning priorities are changing in a way that may pose some new challenges for people who advocate in favor of having a Navy with a larger number of ships,” said Ronald O’Rourke, a naval analyst at the Congressional Research Service.

The Pentagon spelled out its cuts in a Dec. 23 program budget decision, which outlines decreased buys of Virginia-class submarines, DD(X) destroyers and LPD-17 ships. The document also proposes retiring one of the Navy’s 12 aircraft carriers next year.

But the shipbuilding lobby and lawmakers whose districts are closely tied to the industry argue that the cuts will devastate the nation’s sea-power capabilities and ultimately put U.S. national security at risk.

“This is not the last threat this nation’s going to see,” said Rep. Gene Taylor (D-Miss.), one of the caucus’s founders.

Of particular concern is China’s burgeoning shipbuilding industry, which will surpass the size of the United States’ 289-ship fleet within the next decade. Within five years, China’s submarine force alone will be double the size of the U.S. Navy’s.

During a recent congressional trip to Korea and China, lawmakers were astounded by China’s shipbuilding capability, said Rep. Neil Abercrombie (D-Hawaii), a senior member of the House Armed Services Committee.

“If you want to see a bunch of … serious-faced members of Congress, you should’ve seen us after visiting that shipyard,” Abercrombie said. “Capability is hardly the word. Those ships are flying out of there.”
But for many lawmakers, the shipbuilding cuts are as much a domestic jobs issue as a national security concern.

Before the administration proposed this new round of naval cuts late last year, the shipbuilding industry forecast that it would lose 70,000 jobs between 2004 and 2009, said Cynthia Brown, ASA president. That number would grow exponentially if the cuts become reality, mostly affecting jobs in New England and the Southeast.

Sen. Trent Lott (R-Miss.) has become one of the most vocal opponents of the naval cuts, which could result in lost jobs at Northrop Grumman’s Ingalls Shipbuilding, where the company produces the DD(X) destroyer.

In a weekly column featured on his website, Lott said he reserves “the right to criticize Defense Secretary Rumsfeld and any others” who attempt to decrease shipbuilding budgets or “make any other moves which might look good in short-term budgets but actually [are] bad for our long-term defense and might hurt patriotic Mississippi communities.”

Other lawmakers with no direct ties to the industry could oppose the Pentagon’s proposed cuts, including Republican Sen. John McCain, a retired naval officer from landlocked Arizona. Such support could give a boost to the industry’s efforts as a particularly crucial budget season begins.

Rep. Rob Simmons (R-Conn.), another caucus founder, argued that nearly every state would be affected by the cuts through high-tech subcontracts.

While the brunt of the cuts would not come into play until 2009, many congressional and industry sources said the outcome of the 2006 budget ultimately will portend what will happen for shipbuilding down the road.

Still, company officials were hesitant to comment on the potential impact of the cuts because Congress has not rubber-stamped them.

“It is hard to predict and speculate … what will be included, how it will be received by Congress and ultimately what will be passed in the spending bill,” said Northrop spokesman Randy Belote.

Likewise, Adm. John Natham, vice chief of naval operations, said he would not comment on the proposed cuts because they have not yet been finalized.

At General Dynamics, the company’s diverse defense portfolio and its current shipbuilding workload could protect the company from financial hardship.

“My thoughts on shipbuilding is I have a backlog that would choke a horse,” Nick Chabraja, the company’s chief executive officer, said during a Jan. 26 conference with investors. “We, of course, would love to build two submarines a year, but that doesn’t appear to be in the Navy plan and in the cards for the moment.”

Several defense experts predict Congress ultimately will pour money back into shipbuilding, largely because of the strong lobby on Capitol Hill for Navy platforms.

The Army, on the other hand, may bear the brunt of operations in Iraq but has by far the weakest lobby of all the military services because its budget is largely eaten up by personnel dollars rather than pricey platforms.

“The priority the Pentagon can defend is the Army,” said Gordon Adams, former associate director for national security programs at the Office of Management and Budget. “There is probably some expectation in the Pentagon that the Hill will be mobilized by affected contractors to juggle things and put money back in for shipbuilding.

“Budgets are a game, and the game lasts a long time,” Adams added. “This is just one move. The script is extremely well-known.”