Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, June 24, 1993 TAG: 9306240240
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
SOURCE: The Washington Post
DATELINE: WASHINGTON LENGTH: Medium
Electric Boat's win would be bad news for its Virginia competitor, Newport News Shipbuilding and Drydock Co., the country's only other builder of nuclear submarines. Both yards have laid off thousands of employees, and their struggle for dwindling contracts has been so fierce that many experts had predicted that one or both could go under.
The battle over who will build submarines is an early example of the political and economic skirmishing that will accompany the Pentagon's "downsizing" of the military. The stakes are huge for the Hampton Roads area, the economic fortunes of which have been linked for decades to the huge Norfolk Naval Base and the Newport News shipbuilding complex.
The victory for Electric Boat is said to be contained in drafts of a lengthy, as-yet-unreleased Pentagon report, known as the "bottom-up review." The review, which has delayed other Pentagon work for months, lays out the size of future military commands and weapons purchases.
Industry sources said the review dealt specifically with how to preserve the nation's ability to make submarines at a time when there is little need for new ones - and concluded Electric Boat should get Navy contracts to ensure its survival, industry sources said.
The conclusions of the bottom-up review are closely held in the Pentagon, but news of the emerging Pentagon consensus on the sub issue emerged in published reports and interviews with military, industry and congressional officials.
General Dynamics, based in Falls Church, Va., and its Electric Boat division - which has been building submarines in Groton, Conn., since 1899 - gained advantage with skillful lobbying in the Pentagon, industry and government officials said. Newport News and its parent company, Tenneco Inc., were caught flat-footed and failed to make their case that submarine work done by Electric Boat should be moved to Newport News.
A decision in favor of Electric Boat probably would mean contracts to build future Seawolf attack submarines in the mid-1990s, and possibly the new Centurion-class sub when work is set to begin in 1999.
Tenneco's frustration with the lobbying battle was evident June 10 when its chairman and chief executive officer, Michael Walsh, held a press conference to denounce the Pentagon, his firm's primary customer. He said the Defense Department was short-sighted for embracing an approach that is biased and "makes no sense."
Both companies are among their states' largest employers and are key to their regions' economic health. Virginia and Connecticut are among the states most dependent on defense dollars, and their elected officials have aggressively lobbied to protect their facilities' contracts.
Virginia Sen. John Warner, a leading member of the Senate Armed Services committee, proposed a compromise Wednesday that would keep money flowing for both the Navy's ninth Nimitz class aircraft carrier and a third Seawolf submarine.
The plan offered by Warner, a Republican, was designed to help resolve a rivalry for scarce funds between the two nuclear shipyards.
"Our nation's nuclear shipbuilding base is in serious jeopardy and we must find a way to preserve that industrial base," Warner said. "I don't want to see a major regional fight in the Senate over an ever-smaller amount of Navy shipbuilding funds."
Warner has been seeking to include money in next year's budget for the $4.3 billion carrier. But with money scarce, the project could conceivably be forced to take a back seat to the Seawolf, a step that would hurt Newport News, Virginia's largest private employer.
The stakes are very high for the two firms, because their sprawling yards look more ghostly every day. At the height of the Reagan defense boom, Electric Boat's plants in Connecticut and Rhode Island employed 25,000. By 1996, it expects to have 7,500 employees, a decline of 70 percent.
Newport News also fears a dramatic drop. The shipyard now employs 21,500 people, a 27 percent drop from its peak several years ago. Of that total, some are involved in sub construction; the rest work on surface ships.
The Navy has preferred Electric Boat's nuclear sub work for years. But in recent months, General Dynamics, which for decades has been known for muscular lobbying, persuaded key Pentagon officials that Electric Boat should be declared the country's main sub builder. They argued that Newport News, which for years has made both subs and aircraft carriers, should mainly make carriers, industry and government officials said.
"GD's been all over the Pentagon" promoting these ideas, an industry official said. "Newport News didn't take the initiative, and [General Dynamics Chairman William A.] Anders took steps to protect his franchise."
by CNB