New England Shipbuilding's Fate Hangs on Salvage Budget

The fate of New England's shipbuilding industry and thousands of jobs will depend on a series of top-level discussions that began yesterday at the Defense Department, where Navy officials are scrambling to salvage long-term plans to buy new warships and submarines built at shipyards in Maine and Connecticut. The region narrowly escaped the closure last summer of its two largest naval facilities, in Kittery, Maine, and Groton, Conn., but its multibillion-dollar ship manufacturing sector remains in jeopardy, according to defense officials and lawmakers. The Pentagon is seeking major budget cuts to help reduce the federal deficit and finance the priorities of the war on terrorism -- $7 billion worth next year alone -- and is considering further reductions in the size of the naval fleet, they said. ''Maine, New Hampshire, and Connecticut have gone through a very traumatic base-closure process that initially promised to devastate the region and destroy our industrial capabilities in submarine maintenance and repair as well as surface ships," said US Representative Rob Simmons, a Connecticut Republican whose district includes General Dynamics Electric Boat Division in Groton, which designs and builds nuclear-powered submarines. ''We were successful in taking the Portsmouth Naval Shipyard and the New London Submarine Base off the [closure] list, but that's not the end of the story. The Navy needs to build more ships." The final deliberations on the future of the fleet got underway yesterday when Admiral Michael Mullen, the new chief of Naval operations, was briefed on the Navy's own recommendations for the size and makeup of the future fleet, senior Navy officials said. On Nov. 9, the Navy will meet with top Defense officials to chart the course of the DD-X destroyer program, billed as the centerpiece of the Navy's future surface fleet. By the end of the year, the Navy and the Pentagon leadership are expected to lock in recommendations for major weapons purchases for the coming decades. Those recommendations, including a new budget and the completion of a military-wide reassessment termed the Quadrennial Defense Review, will then go to Congress for approval. But how the $9 billion shipbuilding budget will fare remains a big question mark. It has been slashed repeatedly in recent years as the Pentagon has grappled with skyrocketing weapons costs of the Iraq War. Congress has sought to restore some of the cuts, but it, too, is under growing financial pressure. According to Navy figures, the number of ''battle-force" ships in the fleet has shrunk from 450 in 1985 to 280 this year. Yesterday's briefing called for a fleet of 313 battle-force ships, according to senior Navy officials. Current Navy projections call for just four ships to be procured in 2006, followed by seven in each of the next two years, then rising gradually to 12 in 2011. John J. Young, assistant secretary of the Navy, said in an interview Wednesday that the situation is not a storm yet, but ''It is raining. Rain makes some things grow. It makes other things under water. It is going to be tough" to prevent further cuts. The Navy budget currently has barely enough money to build one attack submarine and one destroyer per year, far below what the industry says would sustain it long term. Construction is split between shipyards in New England and the South. Meanwhile, the DD-X program is mired in cost overruns and engineering delays and at risk of being canceled before full-scale production gets underway. Raytheon Co. of Waltham, New England's largest defense contractor, has a multibillion-dollar contract to develop radar and other systems for the DD-X. Simmons said the potential impact of further Pentagon cuts on the 11,300 employees at General Dynamic's Electric Boat in Groton and Quonset Point, R.I., and the company's 6,200 workers at Bath Iron Works in Bath, Maine, would be so severe that he has begun lobbying the Pentagon to allow the Connecticut yard to begin building submarines for allies such as Taiwan to help cushion the blow. ''We are talking about layoffs and the loss of critical skills in the shipyards that are very hard to replicate," Simmons said. ''The industrial base is at risk. You cannot allow these layoffs to happen and then decide five years from now you are going to turn the lights back on. It doesn't work that way. When you lose your skilled workforce you don't get it back." Congress already is proposing that the Navy build two more older destroyers, called DDG-51s, that the service did not request to allow Bath and another shipyard in Mississippi to keep working until the DD-X program is fully underway. ''The basic problem with the New England shipyards is the Navy isn't buying enough ships to sustain them," said Loren Thomp-son, a defense specialist at the Lexington Institute in Arlington, Va. This month, officials will begin their final deliberations to decide whether they can afford to build the two Virginia-class attack submarines each year that the Navy says it needs, and the 30-ship DD-X program. Industry executives and supporters in Congress say their best hope is Mullen, the Navy chief who received yesterday's briefing. Top officials say that in private meetings Mullen has pledged to ''fence" shipbuilding funds -- even if it means raiding other Navy programs -- to avoid further cuts. But those recommendations will face a far harder test when they reach Defense Secretary Donald H. Rumsfeld's desk. Robert Work, a senior defense analyst at the Center for Strategic and Budgetary Assessments in Washington, says the high costs for new ships and submarines could be prohibitive. ''A lot is going to boil down to the final cost figures," he said. The Virginia class submarines cost well over $2 billion apiece, while the first DD-X is estimated to come in at more than $3 billion. Young, the assistant Naval secretary, said he remains hopeful he can save the DD-X program and secure the resources to begin buying two submarines and two destroyers per year by the end of this decade. That would enable Electric Boat to build at least one sub a year -- Newport News Shipbuilding in Virginia would likely build the other -- and allow Bath to construct one destroyer annually.