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Today's Top News
Sub Makers Stress Economic Stimulus Mission
In addition to touting strategic value, manufacturers selling job creation
More than a decade ago, long before President Barack Obama signed the $787 billion economic stimulus package into law, taxpayer money began flowing to another stimulus program in Groton, Conn.
Since then, the project has created tens of thousands of high-paying jobs around the nation and helped keep a U.S. industry afloat. But despite its vast economic impact, the end product is often hard to spot as it's usually more than 800 feet under water.
The Virginia-class attack submarine is both an economic machine and a fearsome weapon of war - 377 feet long and armed with cruise missiles, torpedoes and mines. It is capable of lurking off enemy coastlines, eavesdropping on communications and landing Navy SEAL commandos. It also can play the classic attack-sub role by battling enemy ships and submarines.
But even though the program keeps workers from Northampton, Mass., to Tacoma, Wash., busy building components ranging from nuclear reactors to specialty valves, it's not certain that the Obama administration's spending plans will include the accelerated sub-building schedule recently authorized by the Pentagon.
In a speech to a joint session of Congress last month, Obama said he would "reform our defense budget so that we're not paying for Cold War-era weapons systems we don't use."
Where will Congress make the cuts?
He did not identify any particular weapons system he had in mind, but some congressional Democrats who are calling for cutting or slowing military spending also have criticized the sub program. Obama's assessment will become clear next month when he releases his detailed budget plan.
While weapons of war generally are evaluated on their strategic strengths and weaknesses, defense contractors also aim to offer products that are recession-resistant. So it is not surprising that in a year of high unemployment and no-growth defense budgets, makers of the Virginia-class subs and other defense systems are playing up their ability to help restore some buoyancy to the sinking U.S. economy.
At this point, the sub program appears to have a good chance of surviving any cuts in defense spending, but it's not certain advocates can fend off efforts to slow the building schedule.
In December, the Navy signed a five-year, $14 billion contract with General Dynamics Electric Boat and Northrop Grumman for eight Virginia-class subs, in addition to 10 already ordered. Under the deal, each shipyard will produce one sub a year beginning in 2011, a doubling of their current production rate.
Congress still needs to appropriate the money for the additional subs, but most observers expect that to happen.
How the sub program measures up
"The Virginia-class subs are in pretty good shape," said Dov Zakheim, who served as Defense Department comptroller during the Bush administration and is now at the Booz Allen Hamilton consulting firm, which counts General Dynamics Electric Boat among its clients. "The Navy has some problems with some of its other ships" - including the DDG-1000 destroyer and the Littoral Combat Ship - he said, but the Virginia-class sub program appears to be safe from cuts "in part because they have been coming in at budget, if not below, and on time."
Robert Work, a defense budget analyst at the nonpartisan Center for Strategic and Budgetary Assessments, said the Virginia-class subs also stand to benefit from the cost-cutting efforts of the manufacturers.
Both Electric Boat's Groton facility and the Northrop Grumman shipyard in Newport News, Va., "have now gotten a lot of the cost out of the boats," he said. "The Navy said they needed to get it down to $2 billion (per sub) in FY '05 dollars; they've done that."
John Casey, president of General Dynamics Electric Boat in Groton, is continuing to press his argument that the sub makes sense from both the economic and national defense perspectives.
"We can't afford to be complacent," he said at a meeting of sub contractors last week. "We cannot take for granted that Congress will continue to support the program."
Anticipating that critics might seize on Obama's remarks and cast the subs as Cold War artifacts, he fired a pre-emptive shot across the bow.
"'Cold War' and Virginia should never be used in the same sentence," he told msnbc.com. "This platform was designed after the Cold War ended, specifically to deal with the threats we face as a nation today."
But with pressure growing from some congressional Democrats to cut military spending, the program may face challenges when work begins on the fiscal 2010 budget.
Barney Frank seeks cuts
Rep. Barney Frank, D-Mass., said last week in The Nation magazine that advocates of Pentagon spending "argue ... (that) military spending is important because it provides jobs and boosts the economy. Spending on military hardware does produce some jobs, but it is one of the most inefficient ways to deploy public funds to stimulate the economy."
Frank also indicated that he has the Virginia-class subs in his sights, citing a 2007 report by the Institute for Policy Studies, a left-of-center think tank, that called the vessel "a weapon looking for an enemy."
Lawrence Korb, a defense analyst at the Democratic-leaning Center for American Progress, said the Virginia-class sub is "a very useful" part of the Navy fleet, but "you get down to a question of affordability."
Building one sub a year rather than two, Korb said, would not jeopardize the subs' ability to perform their role in the fleet.
Debating the pace of construction
But Casey, the Electric Boat executive, argued that an increased pace in sub building would be an efficient creator of jobs. And he said slowing the pace would raise the cost per vessel, because purchasing efficiencies come from a faster pace of construction.
"If we only build one per year, the most you're going to get is 30 (subs) in 30 years and you cannot possibly maintain the levels the Navy requires with that math," he said.
About 5,000 of Electric Boat employees work directly on the Virginia program on any given day, but the multiplier effect of those jobs is considerable.
In 2005, after the Pentagon slated the New London submarine base for closure, the Connecticut Department of Economic and Community Development estimated that that the sub base, an affiliated sub school, and Electric Boat together created 31,500 direct and indirect jobs, adding $3.3 billion to the state's economy every year.
Eventually the Base Realignment and Closure Commission decided to keep the base open.
Sub building is its own "Buy America" program. Virtually all of Electric Boat's spending on subcontractors - about 98 percent by dollar value - goes to U.S. firms.
Supplier work on the subs is spread from Northampton, Mass., (Kollmorgen Corp.) to Tacoma, Wash., (Bradken-Atlas Castings) not to mention the main sub building sites in Groton and in Newport News. Each of those congressional districts happens to be represented by a Democratic member of the House of Representatives.
So while Barney Frank and his allies in the Democratic Party see a need for defense cuts, others in the party can be expected to fight to protect the defense jobs in their districts.
Korb, the defense analyst for the Center for American Progress, said cutting or slowing military spending always entails a political struggle. The question that lawmakers should be asking, he said, is, "Is this best way to stimulate the economy if we have a given dollar figure?"
If the "save our jobs" argument isn't persuasive to members of Congress, manufacturers can still fall back on the national security rationale.
China's 'impressive' naval buildup
But just as the jobs numbers are subject to interpretation, experts are divided when it comes to the need for more Virginia-class submarines.
Work, the defense analyst for the Center for Strategic and Budgetary Assessments, sees a strong need for more of the vessels.
China "has embarked on an impressive buildup of naval war-fighting capabilities - many of them directly targeting the U.S. fleet," he wrote in a report last month.
"This is the first time since 1890 that the U.S. Navy is faced with the prospect of competing against a potentially hostile naval power possessing a shipbuilding capacity that is equal to, if not superior, to its own."
He elaborated in an interview with msnbc.com, saying that "China is upgrading its submarine fleet very substantially. Many of them can fire anti-ship cruise missiles from under water now. They are far superior to what the Chinese had. They have the capacity to build six or seven a year if they wanted to."
But the 2007 Institute for Institute for Policy Studies report criticized those who are "trying to build-up the People's Republic of China as the new ‘superpower' that will challenge the U.S. As yet there is no credible, consistent evidence supporting this viewpoint."
This task of dealing with the Chinese navy "can be handled quite well" by the existing sub fleet, it argued.
Ebbs and flows in production
Ebbs and flows are part of the natural cycle of sub building, and fighting to keep the New London sub base and the Electric Boat plant alive has become a well-practiced drill for people in southeast Connecticut.
In 1943, at the height of World War II, Electric Boat produced 25 submarines - simpler ones, of course, than today's attack subs. But in 1992, the plant barely survived after the administration of President George H.W. Bush urged the cancellation of the Seawolf sub, the predecessor to the Virginia-class. Eventually three Seawolf subs were built and the shipyard stayed alive.
Given that historic backdrop and the deepening recession, the workers in Groton will be very happy to produce just one Virginia-class sub annually for the next several years.