Is there a bright side to a shipyard shutdown?

For years, conventional wisdom has had it that if either Pease Air Force Base or the Portsmouth Naval Shipyard closed, the world as we know it would end.

It didn’t happen when Pease closed, and now, some are predicting that the Seacoast might actually benefit if the shipyard went the way of the dodo bird.

But ask diehard shipyard supporters what will happen if the yard closes, and they say it would spell economic disaster for the Seacoast.

Capt. William McDonough, spokesman for the Seacoast Shipyard Association – a group lobbying to keep the yard open — the facility’s demise “would hit extremely hard.”

“It would be devastating,” said McDonough. “The shipyard’s contribution to the area approaches half a billion dollars in workforce salaries, plus military salaries of almost $30 million, and all the goods and services we procure, and contracting out like maintaining the grounds and plowing the snow.”

The Seacoast’s largest employer, the yard had 4,803 civilian workers in 2004, and paid them $318.3 million; its military payroll was $29.3 million, according to the Seacoast Shipyard Association.

But ever the rebel, Exeter demographer Peter Francese says closing the yard – which will turn 205 years old in June — could actually have very positive long-term effects on the Seacoast economy, even though it would be tough in the short run.

The shipyard’s demise would put some 5,000 people out of work, a ready labor force that could lure new business to create new world-class shipping and other new business in the area, said Francese, director of demographic forecasts for the New England Economic Partnership, an association of economists in the six-state region.

“There’s a tremendous amount of talent and human resources tied up in the shipyard, and once that’s freed from what one could call government control, a firm could come in that might want to do private shipbuilding or private maintenance and build a private yard or lease parts of it,” said Francese. “You have two enormous resources — the people and the equipment. As a resource in private hands, it could become a substantial employer, employing even more people.”

The spectacular site also could be cleaned up for all kinds of recreational uses from tourist to high-end housing, and more, said Francese.

“In the short term, there’s no question that closing the shipyard would hurt the Seacoast economy,” said Francese. “But in the somewhat longer term, the redevelopment opportunities for that fabulous piece of property as a private shipyard, a very upscale boatyard-marina-condominium-hotel resort — the opportunities are tremendous. It’s an enormously valuable piece of property.”

A ‘very real’ threat

As the Pentagon gears up for another round of base cuts, McDonough says the yard’s prospects for survival look especially grim.

McDonough, a former shipyard commander, said the threat to the yard is “more real than any time in the past. It’s very, very real.”

McDonough blames the end of the Cold War, the growing cost of the war in Iraq and competition with private shipyards.

“The problem is they are not building ships,” said McDonough. “So the shipbuilders — Electric Boat and Newport News — are both technically capable of doing the work we do, and they take it away from the navy yards, so there’s a dearth of work.”

Founded in 1800 in the age of sail on an island on the Kittery, Maine, side of the Piscataqua River, the yard today refuels nuclear subs and is home to three Coast Guard cutters. It is competing for survival with three other public shipyards, the Norfolk Naval Shipyard in Portsmouth, Va., the Pearl Harbor Naval Shipyard in Pearl Harbor, Hawaii, and the Puget Sound Naval Shipyard in Bremerton, Wash.

To stave off closure, local officials are working with New England’s congressional delegation. Portsmouth’s legislative delegation wants the state of New Hampshire to pony up $100,000 for the fight. And the town of Kittery has applied for a $175,000 Defense Department “Advance Planning” grant to help with the transition in case the yard closes.

Meanwhile, Francese said redevelopment could actually help the area if the government leaves the yard pristine.

“Its value is dependent on the federal government paying for the (hazardous waste) cleanup if its use changes dramatically, but all you have to do is look at that vacant, neglected and abandoned prison, and you realize that if you got the federal government to tear it down and put up a building of equal size, it would be a fantastic resort and create hundreds of jobs,” said Francese. “Long-term, there’s tremendous opportunity.”

But McDonough said Francese is “dreaming.”

“He doesn’t know what he’s talking about. These facilities are designed to do what they’re doing,” said McDonough. “It’s not like Pease.”

McDonough cites a January 2005 GAO report on jobs recovered after other base closures.

“For example, the Mare Island Shipyard in California, closed in the ‘93 round, lost something like 7,600 civilian jobs and recovered about 18 percent,” said McDonough.

“The government says Pease is the best example of recovery in the country, but re-using the shipyard is not practical at all. Pease Air Force Base, which closed in 1988, lost 400 civilian jobs and gained 5,000. The rest were all military — they were all transferred,” said McDonough. “Pease had 5,000 acres; we have 270. Pease had wide-open space and buildings that could be torn down easily to lure dot-com, high-tech people. The shipyard is designed to do heavy metal work.”

A ‘positive location’

Portsmouth mayor Evelyn Sirrell said closing the shipyard would hit harder than the Pease closure.
“You saw what happened then,” said Sirrell. “We lost a lot of children out of the school system, real estate went up for sale, the downtown shopping area and restaurants got hurt.” If the shipyard closes, she said, “it will be devastating.”
According to Ross Gittell, James R. Carter professor of management at the University of New Hampshire’s Whittemore School of Business and Economics, environmental issues would have to be resolved before the yard could be re-used.
“It seems like a positive location — the proximity to I-95, on the waterfront, across from Portsmouth, but it might not be relevant if it can’t be used for many purposes because of environmental issues.”
And the yard’s workers are more specialized. “Pease has been more successful than anyone anticipated, but this is a very different situation. The workforce and the location itself can’t be reused in a whole range of new endeavors – one, because of environmental concerns, and two, maintenance work on nuclear submarines is very, very specialized. How transferable these skills are to other industries is unclear, at least to me.”
March 15 is the deadline for President Bush to name nine people to the Base Realignment and Closure Commission. A closure list of about 100 bases is due May 16 for a final decision by President Bush by Nov. 7.
With Secretary of Defense Donald Rumsfeld calling for 24 to 25 percent of the nation’s 425 military bases to be shut down in the next round of closures, McDonough said: “All the experts say this round of closures is going to be bigger than the previous four combined. Mark my words, this time it’s dangerous.”

Shipyard spokeswoman Debbie White referred questions to the Department of Defense Web site at www.defenselink.mil/brac.