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Growing Pentagon budget crimps Navy

The future is now in doubt for the Bath Iron Works in Maine, which delivered its first ship to the Navy in 1891.
The future is now in doubt for the Bath Iron Works in Maine, which delivered its first ship to the Navy in 1891.Darren McC ollester / Getty Images file
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The military budget includes enough money to pay for bullets, uniforms, unmanned aerial vehicles, and outposts from Kwajalein Atoll in the Pacific to Macedonia in the Balkans.

But does it include enough money to save jobs at the venerable Bath Iron Works in Maine, which built its first ship for the Navy in 1891?

The Joint Chiefs of Staff testified Thursday to the Senate Armed Services Committee on how they propose to spend the roughly $500 billion, about 20 percent of all federal outlays, that Congress will allot to the military in Fiscal Year 2006, which begins on Oct. 1.

Although North Korea's nuclear arsenal was much in the news Thursday morning, it drew less comment during the hearing than the overall pressure of rising personnel and weapons acquisition costs, putting strains on a Pentagon budget that, although big, is not big enough to prepare for all the risks.

The North Korea news wasn't news to the joint chiefs or the senators on the panel who are well aware that Kim Jong Il's regime has been and remains a nuclear-armed threat.

Pressure from personnel
Even though military outlays have grown from $294 billion, 16.5 percent of federal spending, in 2000 to $456 billion, nearly 20 percent of federal spending, in 2004, the Pentagon’s budget planners are under pressure to find ways to pay for increasing numbers of Army and Marine personnel, while at the same time buying costly weapons systems over long time horizons.

"Competing costs are slowing the pace and reducing the scale" of ship-building and aircraft-building programs, Adm. Vern Clark, the Chief of Naval Operations, told the committee.

"Ship-building and aircraft procurement costs are escalating at an alarming rate and eroding our buying power," he said.

Even after adjusting for inflation, Clark said, it costs the Navy 123 percent more to build a destroyer today than it did in 1967 and costs 400 percent more to build a submarine than in 1967. One reason is that the new ships are technologically superior to the older ones, but another, said the admiral, is "we're buying them at such low order rates" that factories with high fixed costs aren't being used with full efficiency.

Sen. John McCain, R- Ariz. told Clark that he was alarmed at the Bush administration's proposed construction pace of four ships a year, which he called "a drastically diminished ship-building program."

Looking across at Clark, McCain said, "I know you share my view that Iraq has diverted our attention from perhaps long-term the most critical part of the world and that's Asia — which has a whole lot of water around it."

Retire the Kennedy? Armed Services Committee chairman Sen. John Warner, R- Va., himself a former Secretary of the Navy, questioned Clark sharply about the proposed decision to retire the aircraft carrier the USS John F. Kennedy (first deployed in 1968), telling Clark the reduction from 12 carriers to 11 was "a very dramatic departure" from previous defense plans.

Under questioning from Sen. Bill Nelson, D- Fla., Clark conceded that he'd proposed to keep 12 carriers but was forced by a budget directive from Defense Secretary Donald Rumsfeld to find cost savings. (The Kennedy is home-ported in Mayport, Fla., one reason Nelson is keen on this issue.)

If you live in Bath, Maine, what you wanted from Clark to hear is how many new DD(X) destroyers the Navy will build at the Bath Iron Works and how rapid a pace of building the budget will sustain.

All of the Navy’s large “surface combatants”  — destroyers, cruisers and frigates — are built at two shipyards, Bath Iron Works, which is part of General Dynamics Corp., and Northrop Grumman’s Ingalls yard in Pascagoula, Miss.

Slowing construction
In 2003, the Navy had proposed to build 24 DD(X) destroyers, at a rate of two per year, a pace that would have kept Bath and Ingalls busy until 2017.

Last year Congress provided $350 million in procurement funding for the new Navy destroyer. Each DD(X) ship would cost between $1.8 billion and $2 billion in current dollars. 

Last year the Pentagon said it wanted 12 DD(X) ships by Fiscal Year 2011.

But the Bush administration budget proposal unveiled Monday calls for slowing the planned pace of construction of the DD(X) to only five ships between 2007 and 2011.

"I'm mystified how the requirement could shift so dramatically so quickly," Sen. Susan Collins, R- Maine, told Clark. "This decision had to be driven by budget constraints rather than by military requirements."

Clark replied that eventually he wants to see "about a dozen or so" of the DD(X) destroyers built. "It's an affordability issue," he said, as to how quickly they will be built.

During a break in the hearing Collins said, "It is very important that the Navy keep two shipyards in order to have competition and, in order to do that, you have to have a certain level of work. The budget not only flies in the face of our military requirements, as Adm. Clark essentially conceded this morning, but it also poses a real threat to the industrial base and the skilled workforce at both shipyards."

The big picture, Collins said, is that overall the Defense Department's budget needs to be bigger.

Right now the Bath Iron Works is building Arleigh Burke-class destroyers, but that work will end in six years.

Will there be enough DD(X) ships built to keep both Bath and Ingalls busy?  Perhaps not.

“This (five-ship) decision really puts Bath Iron Works at risk” for closure, said Robert Work, senior analyst at the Center for Strategic and Budgetary Assessments (CSBA) in Washington.

“A Navy decision at some point to build DD(X)’s at one yard rather than two could put the non-DD(X) yard under substantial financial pressure,” said national defense analyst Ronald O’Rourke in a report issued late last month by the Congressional Research Service.

Insurance policy
Sen. Olympia Snowe, R- Maine argued for Bath as an insurance policy. “Look at what happened with Hurricane Ivan last fall," Snowe said Wednesday. "It bypassed Ingalls shipyards by 50 miles. If it had not taken that U-turn, it could have hit Ingalls shipyard.”

As for Maine’s economy, Collins said, “Bath Iron Works is the second largest private employer in Maine. It employs over 6,000 workers and it is a significant provider of very good skilled jobs”

Author Michael Sanders, who lives in Maine near the shipyard and wrote a 1999 book, “The Yard,” on how a destroyer is built at Bath, said if the shipyard is closed, even if temporarily, the skilled workers will disperse to other yards or retire.

“If you look at the median age of the Bath Iron Works worker, I’d really be surprised if it was below 50,” Sanders said. “That tells you one thing: there are not a lot of young people coming in to do this work. When you’ve had layoffs as Bath has had in the last couple of years, it’s the young who leave first. These skills have to be cultivated. When they are gone, they are gone.”