The Virginia-Pilot - Ship-Repir Industry is Threatened with Major Cutbacks

News Article

By Bill Bartel

For the second time in less than a year, Hampton Roads' ship-repair industry is threatened with major cutbacks in Navy contracts, jeopardizing the jobs of thousands of skilled workers and subcontractors.

The threat sounds similar to early 2013, when Navy leaders warned that the combination of automatic budget cuts - known as sequestration - and Congress's inability to approve a budget might force it to cancel billions of dollars in ship-maintenance and construction projects.

Six months ago, local shipyards were in danger of losing $287 million in contracts for repair work on 11 ships. But the Navy was able to find funds for most of the work, and the yards avoided layoffs.

But that outcome is unlikely for the new federal fiscal year, which begins Oct. 1.

A divided Congress has not approved a new annual budget, nor is there any significant effort on Capitol Hill to block or weaken the second year of sequestration.

And the Navy said it doesn't have any extra funds stored away this time.

"I've got good news and bad news," U.S. Sen. Mark Warner told about 100 shipyard workers in hard hats who surrounded him Friday afternoon at BAE Systems near Norfolk's riverfront.

The good news is that deep cuts in shipyard contracts were avoided in 2013, said the Virginia Democrat. Not so for 2014, he said, because partisan feuding in Washington has blocked any agreement on budgets and the country's growing national debt.

"I'm not going to lie to you," he told the unsmiling crowd. "If we don't get a fix - if we don't get the folks that I work with... to stop being Democrats and Republicans and put our country first, it's going to be worse in this coming year."

Sequestration, which began in March, requires $1.2 trillion in cuts over 10 years, with half from defense and half from domestic programs.

Adm. Jonathan Greenert, chief of naval operations, warned in a speech Thursday that the Navy would have to cancel repair work on 34 surface ships in 2014 as part of $14 billion it must cut from its budget.

Sailors' pay will be exempt, Greenert told the American Enterprise Institute, but other parts of the Navy budget will have to shrink by 14 percent, including reductions in aircraft maintenance, ship construction and training.

Greenert said he hopes to convince Congress to at least give the Pentagon the authority to move money between accounts, rather than the across-the-board cuts required by sequestration.

"I would see the loss of a littoral combat ship, an afloat-forward staging base and advanced procurement for a Virginia-class submarine and a carrier overhaul," Greenert said. "We might lose two more - a submarine and a destroyer - if we are unable to reprogram and move money into those accounts."

U.S. Rep. Randy Forbes, a leader on the House Armed Services Committee, said he expects legislators will work with the Navy as they did this year to help them shift dollars between accounts.

"We have been very lenient with the Navy," said Forbes, a Chesapeake Republican. "What I don't think you'll see is a carte blanche to move it wherever you want."

BAE Vice President Russell "TJ" Tjepkema said the Navy hasn't provided details of possible ship-repair cutbacks but noted that Hampton Roads shipyards have been expecting to overhaul 19 ships during the next fiscal year.

About 2,500 people work at the BAE facility, including almost 1,000 subcontractors. The industry employs about 40,000 people in the region.

Warner said after talking with the workers that unless elected leaders can find a compromise to end sequestration, the cuts will only get worse.

"The idea that we're going to be spared if this sequestration continues would be just wishful thinking," he said.

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