Shipyard is left high and dry if spending tap turns off

A massive shipyard will be under threat if potential budget cuts are introduced

Tony Hilario complains that business at his TJ’s Sports Bar is down about 10 per cent on last year.

He blames the potential impact of deep cuts in defence spending on the nearby Newport News Shipbuilding, the largest industrial employer in Virginia and one of the biggest shipyards in the world.

The shipyard, which is about 500 yards from his bar, employs 22,000 people in the town of Newport News. This is where the US fleet of 11 aircraft carriers were all built. All were multibillion-dollar and multi-year projects for the yard. The business also prospers from US military contracts to refit the older, decommissioned aircraft carriers and to construct new Virginia-class nuclear attack submarines. Sitting in the largest drydock in the western hemisphere is the latest carrier, the USS Gerald R Ford, which will cost more than $6 billion and take eight years to build.

The automatic, across-the-board spending cuts, known in Washington as the sequester, that kicked in yesterday has raised fears that staff may be put on unpaid leave or laid off. Local businesses also stand to lose out.

“If they cut them, they affect us too,” said Hilario. “They should have done something a week ago about this. It is ridiculous that people don’t know what to think or they think they will lose their job.”

President Obama visited the shipyard on Tuesday to warn staff that their jobs were in jeopardy if Congress, or more particularly Republicans in the House of Representatives, didn’t do something to avert sequestration. It triggers $85 billion (€65 billion) of spending cuts on US defence and domestic budgets this year and $1.2 trillion in total over the next decade. The president’s appearance in the town this week didn’t appeal to everyone.

“He should have stayed in Washington and done his work. What was doing here? Nothing,” said Hilario.

Contracts cyclical

Sitting at the bar is Paul, who recently retired after four decades at the shipyard. Military contracts are cyclical, he says, and there has always been work at the shipyard regardless of the state of the economy. “I have been here 45 years and there has always been work,” he said.

Job losses at the shipyard are among the many dire warnings the White House has sounded in the past week if Congressional Republicans don’t agree to tax increases as an alternative to the indiscriminate spending cuts.