March 21, 2005
On the offense | William McDonough of the Seacoast Shipyard Association on the effort to keep Portsmouth Naval Shipyard off the Pentagon's base closure list
By Sean Donahue
Uneasiness runs through every community that's home to a military base when the government is preparing to cut back on its facilities. But the unease is especially strong this year in the communities surrounding Kittery's Portsmouth Naval Shipyard, as the Department of Defense plans to release by May 16 a list of up to 100 bases recommended for closure as part of its Base Realignment and Closure process.
The growing concern stems from the fact that PNS competes with three other shipyards across the country for the nuclear submarine reconditioning and maintenance jobs it performs ˆ and that each of those other yards works on more than just subs, conceivably making them more valuable to the Navy. The overall outlook for naval shipyards also grew cloudier when President Bush unveiled a budget this winter that sharply reduced Navy shipbuilding funds. Those factors have led some industry and military analysts to speculate that PNS is a likely candidate for closure this time around, which would be a severe blow to the local economy. PNS employs 4,800 people ˆ 2,951 of them in Maine ˆ contributing about $318 million in payroll to the surrounding communities and purchasing nearly $30 million worth of goods from New England states, according to shipyard supporters.
But the Kittery yard has its strengths, too, starting with the fact that it consistently delivers reconditioned subs better, cheaper and faster than other yards, according to the Seacoast Shipyard Association, an independent group of shipyard supporters. Led by retired Navy captain and former commander of the shipyard William McDonough, the Seacoast Shipyard Association is coordinating the now two-year-old lobbying effort to keep the Portsmouth yard off the closure list. The group's primary functions are raising money to hire consultants and feeding information that they hope can influence the Defense Department's decision-making process to Maine and New Hampshire's congressional delegations.
To accomplish those goals, McDonough estimates the SSA will spend between $250,000 and $300,000 before the BRAC process is completed. But that bill is a bargain compared to what larger states with dozens of bases on the potential closure list must spend. Last year, for example, Florida agreed to pay $50,000 a month to a consulting group that includes former Sen. William Cohen, former Sen. Dick Armey and a retired admiral, to help keep its 21 military installations off this year's BRAC list.
But McDonough notes that the Portsmouth yard also can count on some political horsepower of its own. Recently, Massachusetts Sens. Edward Kennedy and John Kerry joined Maine and New Hampshire senators in lobbying on behalf of PNS, since about 100 Massachusetts residents work at the yard. "The fact that we have six U.S. senators focused on the shipyard, that's significant," says McDonough.
With the BRAC deadline approaching, Mainebiz recently met with McDonough to discuss the shipyard's strengths and vulnerabilities, as well as the role his organization is playing in the BRAC process. An edited transcript of the conversation follows.
Mainebiz: Analysts seem to be increasingly pessimistic about the shipyard's chances of surviving this BRAC round. Do you share that pessimism?
McDonough: No. The reason for a lot of that [pessimism] is that the secretary of defense has set such a large target for closures. Now, we are strongly of the opinion that the tremendous excess in capacity that he talks about ˆ the naval shipyards do not contribute to that at all. We had eight shipyards in 1990, and those eight shipyards had a workforce of some 70,000 people. As a result of the closure actions in the 90s, four of those eight were closed and that 70,000 people went down to 22,000. So the naval shipyard component, which is an identifiable, unique part of the overall defense infrastructure, was reduced by far greater than 50%. In that period, the operating forces of the Defense Department were reduced by 35%, and the base infrastructure only reduced by 20% or 21% ˆ so some outfits didn't come down much, in other words.
Next, what's different about a naval shipyard? First of all, you've got to have a deep water harbor, and you've got to have drydocks, which are expensive. And if you're going to be in the nuclear business, which we are, you have to have a nuclear license. None of those three things are portable. We haven't made a new nuclear license since Seabrook in 1971, I think. When you give up a Navy yard, in the near term the waterfront features of it are gobbled up by something else. You don't get the return of 8,000 jobs that may have been lost, but the waterfront gets utilized. Maybe it's condominiums, or, in the case of Long Beach [Calif.], they filled in some of their dry docks so they could make it a container port.
So our position is, you may have excess capacity overall, but we're not contributing to it. And if you think that you can close an activity and reopen it if it's needed, in the case of shipyards it's almost impossible. So we feel there should be some reason for optimism with shipyards.
But there are four shipyards that can perform this type of nuclear overhaul work. Can't that be seen as redundancy even if shipyards in general aren't part of the Defense Department's overcapacity?
There is a drawback. There are four Navy yards, located at Pearl Harbor, Hawaii; Puget Sound in Washington; Norfolk Naval Shipyard in the Chesapeake Bay; and Portsmouth. Those other three all have the capability of handling aircraft carriers in addition to the kind of ships we do.
There are two shipyards that are not part of the Defense Department infrastructure ˆ Electric Boat [in Groton, Conn.] and Newport News [Va.]. These are the shipyards that have been building our submarines, and they are technically capable of doing the kind of work we do. Many of these pundits see that and say, "[Secretary of Defense Donald] Rumsfeld can look to those yards as a way to get work done if he closes down too much Navy stuff." And that's a concern that I share, because the administration has a great desire to turn everything they can over to the private sector.
We also are in the position now that the administration has been cutting back on the building of ships. With that cut in the [private shipbuilders'] workload, they are actively looking for more work. And where are they looking? They are looking at our work.
Now, we have plenty of examples of private shipyards trying to do repair work and having problems. It's new to them. It's a different culture from the shipbuilding part. Currently, there is submarine repair activity in Connecticut that is running way over in cost compared to what we do.
I saw that the latest letter sent by the Maine and New Hampshire delegations to Secretary Rumsfeld made a point of detailing Portsmouth's high performance marks, such as completing projects early and under budget. I take it that those performance measures are a big part of your argument for keeping the shipyard open.
This shipyard for the last six or seven years has turned out six major overhauls in a row, each one in less time and at a lower cost than the one previous. They are coming in below the Navy's targets for duration and dollars. And when we're in competition against the other shipyards, we stand out as being way ahead of them.
All of these factors bode very well for the shipyard. As Sen. Snowe said in Washington when we were down there in January, "The facts are there. All we need are the facts and a fair evaluation and we're in good shape."
So what is the Seacoast Shipyard Association's strategy for making that case?
We say, "Look at the facts. We are the best performer in every way you look at it. You are going to continue to have a submarine force. We're concerned that you're letting it get too small and will soon recognize that and start building up again, and in view of the fact that we are the best performer in time and cost, we should be the last to close, not the first."
We also rebut the idea that we're the logical candidate for closure because we are the leader [of the submarine reconditioning process]. We are the brains of the overall shipyard complex, according to the head boss of the shipyards in Washington, Vice Admiral [Phillip] Balisle. We do the advanced preparation and planning work and farm it out to all the others. Some people are very irritated ˆ they say we're training our competition, that we're sending Pedro over to the other team. But we're doing it, and today we have people in all the other yards helping them. So we take the position that the Defense Department should be looking at us as essential.
Other facilities appear to be adding new functions, facilities or services to their bases in order to enhance their standing in the BRAC process, such as Brunswick Naval Air Station's proposal to create a National Guard and Reserve training center. Is Portsmouth trying anything like that?
"Jointness" is the term. We have taken on responsibilities in support of the Department of Homeland Security ˆ which didn't exist at the time of the old BRACs. We now have three Coast Guard cutters home-ported in the shipyard. That's jointness to a degree.
There are other things: The naval shipyards are what's known as maintenance depots in the Defense Department, which offer the highest level of maintenance for various things like ships, airplanes, tanks, what have you. We can't send our ships to an Army base in Kansas, but equipment from Kansas could be brought here. All of the maintenance depots have a lot of commonality ˆ they have machine shops, they have inspection departments, procurement [capabilities] and a talented workforce. So we could take on additional work.
You mean taking on maintenance projects that aren't related to ships at all?
Sure, sure. You know, a tank is nothing but a funny-shaped submarine. Inside you have pipes, wires, motors, hydraulic systems, and it's all wrapped in steel. We're certainly capable of working on any kind of steel. So that's one of the things we're stressing, that there's the capacity and desire to take on component work from all over.
How do you present ideas like this to the Department of Defense? Does the congressional delegation feed the Department of Defense specific information?
For almost two years now, the various services of the armed forces have been collecting data. They have these things called "data calls," which go out to all the shipyards asking for specific information. All of that is being done in extreme secrecy.
But we've been through this before and we know what's going on. And the rules of the game say that only "certified" data is to be used, so an outfit like us can't come along and feed information in and have it set down on the table next to the data [the Defense Department] is collecting.
First of all, we do everything to figure out what they're looking at and what they're thinking. Then we say, "Okay, if they're looking at us, what kind of information do we want to make sure they have?"
The reason we use the congressional delegation is that they have the ability to write to the secretary of defense and secretary of the Navy and they get attention. If we at the Seacoast Shipyard Association wrote to Secretary Rumsfeld, the letter would go right in the trash. The congressional delegation has provided over 20 significant documents addressed to either the secretary of defense or secretary of the Navy, or both.
In that process, can the delegation point out the potential hardships a closure would cause, or can they only argue for the shipyard on the merits of its performance and strategic importance?
They can make the hardship argument, but it's recognized that it's a useless one because everybody's in the same situation. It's going to be severe in every place. And in our case, they could always throw back at us, "What do you mean there'd be hardship? Look, they closed Pease Air Force Base and it's one of the premier examples of how good things can be after that."
The General Accounting Office recently came out with a report showing what happened at all the bases that closed [previously]. When Pease Air Force Base closed there were about 400 civilian jobs lost. The rest of the almost 5,000 people over there were Air Force people who were transferred to other parts of the country. But there were only 400 civilian jobs lost, and now they have 5,000 [new jobs].
They call that "recovery" ˆ Pease is at 1,200% recovery. But look at naval shipyards that have closed like Mare Island in Vallejo, Calif., which is the closest thing comparable to this one. It was closed in 1993, when it supported 7,000 civilian jobs. They've recovered like 18% now. Long Beach, when they closed, recovered something like 4%. Charleston [S.C.] Naval Shipyard had come back to 50%.
Still, some people in the area have taken the stance that even though closing the shipyard will be a short-term hardship, the long-term potential for re-use of the site might result in greater economic benefits.
Are you talking about [Peter] Francese [of the New England Economic Partnership]? He's a dreamer. When you look at the pay scale here and see what the average salary is, you're not going to get those kind of jobs. The mid-level jobs [at the shipyard] are in the $50,000 range. And take a look at our island ˆ it's 279 acres. Pease was 5,000 acres or something like that, so there was all kinds of room to expand. People think, "Oh yeah, we could open up a hotel and a marina." Well, we've already got a marina there, and they don't turn out a big number of jobs. When you look at the recovery percentages for other shipyards, it's not like Pease. So we don't agree at all when people say it would be easy to bounce back.
So what are the next steps? What will you be doing between now and May when the list comes out?
As I've said, the facts are with us. The data supports our position of leadership. Now we're moving to get a very large, highly visible, vocal support group from the community to recognize value of the shipyard to the country's military effort ˆ not just asking to keep jobs here.
There will be a letter-writing campaign to recognize the shipyard, because what is going to make us stand out from the other guys when everybody is arguing the same way? It's sort of the 12th-man concept in the football world or, you know, the way that the Red Sox and the Patriots say that the fans were also instrumental in their victories. We're trying to get several thousand communications to the secretary of defense saying, "We fully support this shipyard. We recognize all that it's doing for the country, and it is the best performer. How can you even consider it as a candidate?"
The growing concern stems from the fact that PNS competes with three other shipyards across the country for the nuclear submarine reconditioning and maintenance jobs it performs ˆ and that each of those other yards works on more than just subs, conceivably making them more valuable to the Navy. The overall outlook for naval shipyards also grew cloudier when President Bush unveiled a budget this winter that sharply reduced Navy shipbuilding funds. Those factors have led some industry and military analysts to speculate that PNS is a likely candidate for closure this time around, which would be a severe blow to the local economy. PNS employs 4,800 people ˆ 2,951 of them in Maine ˆ contributing about $318 million in payroll to the surrounding communities and purchasing nearly $30 million worth of goods from New England states, according to shipyard supporters.
But the Kittery yard has its strengths, too, starting with the fact that it consistently delivers reconditioned subs better, cheaper and faster than other yards, according to the Seacoast Shipyard Association, an independent group of shipyard supporters. Led by retired Navy captain and former commander of the shipyard William McDonough, the Seacoast Shipyard Association is coordinating the now two-year-old lobbying effort to keep the Portsmouth yard off the closure list. The group's primary functions are raising money to hire consultants and feeding information that they hope can influence the Defense Department's decision-making process to Maine and New Hampshire's congressional delegations.
To accomplish those goals, McDonough estimates the SSA will spend between $250,000 and $300,000 before the BRAC process is completed. But that bill is a bargain compared to what larger states with dozens of bases on the potential closure list must spend. Last year, for example, Florida agreed to pay $50,000 a month to a consulting group that includes former Sen. William Cohen, former Sen. Dick Armey and a retired admiral, to help keep its 21 military installations off this year's BRAC list.
But McDonough notes that the Portsmouth yard also can count on some political horsepower of its own. Recently, Massachusetts Sens. Edward Kennedy and John Kerry joined Maine and New Hampshire senators in lobbying on behalf of PNS, since about 100 Massachusetts residents work at the yard. "The fact that we have six U.S. senators focused on the shipyard, that's significant," says McDonough.
With the BRAC deadline approaching, Mainebiz recently met with McDonough to discuss the shipyard's strengths and vulnerabilities, as well as the role his organization is playing in the BRAC process. An edited transcript of the conversation follows.
Mainebiz: Analysts seem to be increasingly pessimistic about the shipyard's chances of surviving this BRAC round. Do you share that pessimism?
McDonough: No. The reason for a lot of that [pessimism] is that the secretary of defense has set such a large target for closures. Now, we are strongly of the opinion that the tremendous excess in capacity that he talks about ˆ the naval shipyards do not contribute to that at all. We had eight shipyards in 1990, and those eight shipyards had a workforce of some 70,000 people. As a result of the closure actions in the 90s, four of those eight were closed and that 70,000 people went down to 22,000. So the naval shipyard component, which is an identifiable, unique part of the overall defense infrastructure, was reduced by far greater than 50%. In that period, the operating forces of the Defense Department were reduced by 35%, and the base infrastructure only reduced by 20% or 21% ˆ so some outfits didn't come down much, in other words.
Next, what's different about a naval shipyard? First of all, you've got to have a deep water harbor, and you've got to have drydocks, which are expensive. And if you're going to be in the nuclear business, which we are, you have to have a nuclear license. None of those three things are portable. We haven't made a new nuclear license since Seabrook in 1971, I think. When you give up a Navy yard, in the near term the waterfront features of it are gobbled up by something else. You don't get the return of 8,000 jobs that may have been lost, but the waterfront gets utilized. Maybe it's condominiums, or, in the case of Long Beach [Calif.], they filled in some of their dry docks so they could make it a container port.
So our position is, you may have excess capacity overall, but we're not contributing to it. And if you think that you can close an activity and reopen it if it's needed, in the case of shipyards it's almost impossible. So we feel there should be some reason for optimism with shipyards.
But there are four shipyards that can perform this type of nuclear overhaul work. Can't that be seen as redundancy even if shipyards in general aren't part of the Defense Department's overcapacity?
There is a drawback. There are four Navy yards, located at Pearl Harbor, Hawaii; Puget Sound in Washington; Norfolk Naval Shipyard in the Chesapeake Bay; and Portsmouth. Those other three all have the capability of handling aircraft carriers in addition to the kind of ships we do.
There are two shipyards that are not part of the Defense Department infrastructure ˆ Electric Boat [in Groton, Conn.] and Newport News [Va.]. These are the shipyards that have been building our submarines, and they are technically capable of doing the kind of work we do. Many of these pundits see that and say, "[Secretary of Defense Donald] Rumsfeld can look to those yards as a way to get work done if he closes down too much Navy stuff." And that's a concern that I share, because the administration has a great desire to turn everything they can over to the private sector.
We also are in the position now that the administration has been cutting back on the building of ships. With that cut in the [private shipbuilders'] workload, they are actively looking for more work. And where are they looking? They are looking at our work.
Now, we have plenty of examples of private shipyards trying to do repair work and having problems. It's new to them. It's a different culture from the shipbuilding part. Currently, there is submarine repair activity in Connecticut that is running way over in cost compared to what we do.
I saw that the latest letter sent by the Maine and New Hampshire delegations to Secretary Rumsfeld made a point of detailing Portsmouth's high performance marks, such as completing projects early and under budget. I take it that those performance measures are a big part of your argument for keeping the shipyard open.
This shipyard for the last six or seven years has turned out six major overhauls in a row, each one in less time and at a lower cost than the one previous. They are coming in below the Navy's targets for duration and dollars. And when we're in competition against the other shipyards, we stand out as being way ahead of them.
All of these factors bode very well for the shipyard. As Sen. Snowe said in Washington when we were down there in January, "The facts are there. All we need are the facts and a fair evaluation and we're in good shape."
So what is the Seacoast Shipyard Association's strategy for making that case?
We say, "Look at the facts. We are the best performer in every way you look at it. You are going to continue to have a submarine force. We're concerned that you're letting it get too small and will soon recognize that and start building up again, and in view of the fact that we are the best performer in time and cost, we should be the last to close, not the first."
We also rebut the idea that we're the logical candidate for closure because we are the leader [of the submarine reconditioning process]. We are the brains of the overall shipyard complex, according to the head boss of the shipyards in Washington, Vice Admiral [Phillip] Balisle. We do the advanced preparation and planning work and farm it out to all the others. Some people are very irritated ˆ they say we're training our competition, that we're sending Pedro over to the other team. But we're doing it, and today we have people in all the other yards helping them. So we take the position that the Defense Department should be looking at us as essential.
Other facilities appear to be adding new functions, facilities or services to their bases in order to enhance their standing in the BRAC process, such as Brunswick Naval Air Station's proposal to create a National Guard and Reserve training center. Is Portsmouth trying anything like that?
"Jointness" is the term. We have taken on responsibilities in support of the Department of Homeland Security ˆ which didn't exist at the time of the old BRACs. We now have three Coast Guard cutters home-ported in the shipyard. That's jointness to a degree.
There are other things: The naval shipyards are what's known as maintenance depots in the Defense Department, which offer the highest level of maintenance for various things like ships, airplanes, tanks, what have you. We can't send our ships to an Army base in Kansas, but equipment from Kansas could be brought here. All of the maintenance depots have a lot of commonality ˆ they have machine shops, they have inspection departments, procurement [capabilities] and a talented workforce. So we could take on additional work.
You mean taking on maintenance projects that aren't related to ships at all?
Sure, sure. You know, a tank is nothing but a funny-shaped submarine. Inside you have pipes, wires, motors, hydraulic systems, and it's all wrapped in steel. We're certainly capable of working on any kind of steel. So that's one of the things we're stressing, that there's the capacity and desire to take on component work from all over.
How do you present ideas like this to the Department of Defense? Does the congressional delegation feed the Department of Defense specific information?
For almost two years now, the various services of the armed forces have been collecting data. They have these things called "data calls," which go out to all the shipyards asking for specific information. All of that is being done in extreme secrecy.
But we've been through this before and we know what's going on. And the rules of the game say that only "certified" data is to be used, so an outfit like us can't come along and feed information in and have it set down on the table next to the data [the Defense Department] is collecting.
First of all, we do everything to figure out what they're looking at and what they're thinking. Then we say, "Okay, if they're looking at us, what kind of information do we want to make sure they have?"
The reason we use the congressional delegation is that they have the ability to write to the secretary of defense and secretary of the Navy and they get attention. If we at the Seacoast Shipyard Association wrote to Secretary Rumsfeld, the letter would go right in the trash. The congressional delegation has provided over 20 significant documents addressed to either the secretary of defense or secretary of the Navy, or both.
In that process, can the delegation point out the potential hardships a closure would cause, or can they only argue for the shipyard on the merits of its performance and strategic importance?
They can make the hardship argument, but it's recognized that it's a useless one because everybody's in the same situation. It's going to be severe in every place. And in our case, they could always throw back at us, "What do you mean there'd be hardship? Look, they closed Pease Air Force Base and it's one of the premier examples of how good things can be after that."
The General Accounting Office recently came out with a report showing what happened at all the bases that closed [previously]. When Pease Air Force Base closed there were about 400 civilian jobs lost. The rest of the almost 5,000 people over there were Air Force people who were transferred to other parts of the country. But there were only 400 civilian jobs lost, and now they have 5,000 [new jobs].
They call that "recovery" ˆ Pease is at 1,200% recovery. But look at naval shipyards that have closed like Mare Island in Vallejo, Calif., which is the closest thing comparable to this one. It was closed in 1993, when it supported 7,000 civilian jobs. They've recovered like 18% now. Long Beach, when they closed, recovered something like 4%. Charleston [S.C.] Naval Shipyard had come back to 50%.
Still, some people in the area have taken the stance that even though closing the shipyard will be a short-term hardship, the long-term potential for re-use of the site might result in greater economic benefits.
Are you talking about [Peter] Francese [of the New England Economic Partnership]? He's a dreamer. When you look at the pay scale here and see what the average salary is, you're not going to get those kind of jobs. The mid-level jobs [at the shipyard] are in the $50,000 range. And take a look at our island ˆ it's 279 acres. Pease was 5,000 acres or something like that, so there was all kinds of room to expand. People think, "Oh yeah, we could open up a hotel and a marina." Well, we've already got a marina there, and they don't turn out a big number of jobs. When you look at the recovery percentages for other shipyards, it's not like Pease. So we don't agree at all when people say it would be easy to bounce back.
So what are the next steps? What will you be doing between now and May when the list comes out?
As I've said, the facts are with us. The data supports our position of leadership. Now we're moving to get a very large, highly visible, vocal support group from the community to recognize value of the shipyard to the country's military effort ˆ not just asking to keep jobs here.
There will be a letter-writing campaign to recognize the shipyard, because what is going to make us stand out from the other guys when everybody is arguing the same way? It's sort of the 12th-man concept in the football world or, you know, the way that the Red Sox and the Patriots say that the fans were also instrumental in their victories. We're trying to get several thousand communications to the secretary of defense saying, "We fully support this shipyard. We recognize all that it's doing for the country, and it is the best performer. How can you even consider it as a candidate?"
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