THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, February 19, 1995 TAG: 9502190040
SECTION: FRONT PAGE: A10 EDITION: FINAL
SERIES: BASE CLOSINGS:
THE FINAL ROUND
What's at stake for Hampton Roads?
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Long : 172 lines
When the Charleston Naval Station and Naval Shipyard appeared on the base-closing list in 1993, the region launched an intensive three-month campaign to save both.
The Chamber of Commerce in the South Carolina community trotted out the figures: A total of 31,000 jobs would be affected. The direct impact was calculated at $644 million, the indirect impact at $569 million. The total: $1.2 billion.
Impressive numbers.
Still, the third largest naval complex in the nation, which generated more than a billion dollars for its region's economy, was closed.
As the fourth and final round of base closings gets under way next month, Hampton Roads is arming itself even earlier in the process than Charleston did - and with numbers even more impressive: The Defense Department employs more than 180,000 military and federal civilians at 12 major defense installations in Hampton Roads.
By one estimate, the loss of three uniformed military personnel from the area translates into almost two support jobs lost in the civilian community. The loss of government shipyard workers carries an even greater impact.
No one is expecting a major hit on what the local base-defense team calls the ``Hampton Roads Military Complex.'' But to make sure of that, local base defenders still must justify the military and economic value of the region's installations to the Defense Base Closure and Realignment Commission.
The process isn't easy.
The Defense Department offers communities with military installations a vague outline of how to calculate the economic impact of its bases, a key factor in the base-closing commission's decision.
Confusion sets in when number-crunchers try to calculate how many nonmilitary jobs in the community would be affected by a base closing, often called a ``multiplier.''
``Every community is different, depending upon what multiplier effect it has,'' said James Meyer, the head of the Alexandria, La., Chamber of Commerce. Meyer helped lead Alexandria's defense of England Air Force Base. ``The characteristics of the community affect what sort of prediction comes out of it,'' he said.
It's impossible to calculate exact numbers, but a few economic models can give communities a sense of the degree to which they would be affected.
The Hampton Roads Planning District Commission, a regional planning agency, is spearheading the region's base defense, but declined to share its economic-impact data. The commission will release the information only if a local base makes the base-closing list, scheduled to be made public March 1, executive director Arthur Collins said.
Should the information be available before then, other communities with bases at risk may use the data against Hampton Roads, Collins said.
Defense downsizing overall is expected to mean heavy losses in Virginia. Nationally, the largest losses are expected in Virginia, the District of Columbia, Hawaii, Alaska, Connecticut, Maryland, California and Massachusetts, according to the Governor's Commission on Base Retention and Defense Adjustment, a commission Gov. George F. Allen formed last June.
The loss of uniformed military personnel would hurt the community first as each military man or woman stopped spending money in the economy, and second, as each loss hit services and support jobs. Fewer dry cleaners or auto repairers, for example, would be needed.
In Hampton Roads, the loss of military personnel would have a significant economic effect, said economist Russel Deemer at Crestar Bank, who calculated the projected economic impact of base closings using input/output analysis. Input/output analysis involves calculating the total value of a product or service, the output, from the defense jobs lost, the input.
According to Deemer's economic analysis, for every 1,000 uniformed military personnel the area loses, 641 jobs in the community, worth $66 million a year, would be lost.
``Most of the job losses are in the support sector,'' Deemer said. ``That's what you'd find anywhere in a community where the military is a big presence.''
Industries or market sectors that would be hard hit by military base closings would include restaurants and bars, hospital support personnel (not including doctors or nurses), food stores, general merchandise stores, such as a Wal-Mart retailer, and real estate.
Because the military presence pervades all areas of the community, the effect of a base closing would translate to losses even at religious organizations (two jobs lost per 1,000 military jobs), day-care facilities (three), Postal Service employees (four), and elementary/secondary schools (six).
The loss of jobs at shipyards would have a greater effect on the economy than other military jobs because federal civilian employees there are paid higher wages and spend all their money in the community. Military personnel have the option of buying goods and services at lower prices at the military exchange or commissary, retail outlets open to military members.
For every 1,000 shipyard jobs lost, 991 jobs in other industries in the area - worth $116 million a year in the local economy - would be affected.
Hospitals, real estate, restaurants and bars, food stores and building maintenance or repair would be the industries hurt most by job losses at military shipyards.
But even newspapers (five jobs per 1,000 military jobs), hotels (25), auto dealers (28), and legal services (13) would be affected.
For instance, if Norfolk Naval Base - which employs 100,554 military personnel - were closed, 5,994 restaurant jobs and 4,223 hospital staffers would be affected. No one is suggesting that Norfolk's base would be closed, but the loss of any uniformed personnel from the base has a ripple affect.
These job-loss projections, however, are only isolated effects of a base closing. They would occur only in a vacuum, if all other factors or conditions in the economy or region were not taken into account.
These projections also do not take into consideration the continued growth or development of the local economy, Deemer warned. As a base closes, other jobs would be added or other industries would expand, he said.
``The whole Hampton Roads economy is growing,'' he said. ``It's not going to go away.''
Local employment grew at a respectable rate of 1.6 percent in 1994 compared to 1993, he said. Nonfarm jobs increased 3.4 percent, or 20,700 jobs, from December 1993 to December 1994 locally, according to the Bureau of Labor Statistics. Much of the employment growth came from the retail, business, financial and other service sectors.
Hampton Roads' economy is starting to slow only now, mirroring the national economy's slowdown, as the Federal Reserve's interest rate hikes reign in the momentum.
Plus, if any bases were closed or moved, the changes would take place gradually so the economic impact would be blunted, Deemer said.
For instance, the economic impact of Oceana Naval Air Station in Virginia Beach may not be as severe or as widespread as local political leaders have imagined, says John Whaley, economist for the Hampton Roads Planning District Commission.
``We've done more work in that area than anybody in town, to my knowledge,'' he said. ``We produced a number of military impact studies over the past 15 or more years.''
What those studies have shown, he said, was that the impact of military spending in Hampton Roads communities is smaller than that generated by a major civilian industry.
``The reason the multiplier (economic impact) is so low for the military is that many of them are outside the area much of the time or, if they're in the area, they're shopping on the bases,'' said Whaley. ``And, the bases themselves spend relatively little in the economy as compared to a comparably sized private enterprise.
``So . . . research that we've done and research that other people have done suggest that the effect is relatively small when compared to various kinds of civilian workers. There's a tendency for the impact to be clustered fairly close to the origin of the impact.''
This means, he said, that the first to feel economic pressures from military buildups or downsizing are the used car lots, bars, pawn shops, appliance stores and service businesses located outside the gates of a military base.
Charleston has had some time to shift gears and replace those support jobs, as well as the military jobs they depended on. Two years after the community's naval station and shipyard were ordered closed, they remain open, said Mary Graham, director of the Center for Business Research at the Charleston area's Trident Chamber of Commerce. The base-closing law gives the Navy six years to finish shutting a base; Charleston expects to shed 7,500 jobs by April 1996.
The community embarked on a plan to attract manufacturers, medical or pharmaceutical industries, industrial machinery firms and chemical companies. It trumpets its port as its most attractive asset. And since organizing its economic development plan, Charleston has attracted 12 new businesses or expansions, or 398 new jobs. It also attracted 63 companies in other sectors for a total of 2,000 jobs.
``We would've been in the economic development business before,'' Graham said, ``but because of the large military presence, we haven't had a need to have a large economic development presence the way other communities have. Now we do.'' MEMO: Staff writer Bill Reed contributed to this report. ILLUSTRATION: Graphic
KEN WRIGHT/Staff
THE IMPACT OF DOWNSIZING
SOURCE: Crestar Bank, Richmond
[For complete graphic, please see microfilm]
KEYWORDS: MILITARY BASES BASE CLOSINGS by CNB