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U.S. Shipbuilders: Budget Uncertainty Hurts Operations and Hiring

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File image courtesy USN

By The Maritime Executive 11-20-2019 07:21:43

America's shipbuilders are concerned that Congress may encounter delays in finalizing the next year's budget, requiring more continuing resolutions (CRs) that limit the government's ability to contract for repair work and new construction. 

The federal government is already operating on a short-term CR which will run out at midnight on Thursday. The House of Representatives passed an additional one-month CR on Tuesday, and to avert a government shutdown, it must be passed by the Senate and signed by the president before the deadline. A CR typically keeps spending static at current levels and is seen as less damaging than a shutdown, but it still has negative effects on long-term contracting, procurement and maintenance spending activities.

"The effects of a Continuing Resolution (CR) are detrimental to the shipyard industrial base's ability to support the nation's Navy, Coast Guard, and other agencies," said the Shipbuilders Council of America (SCA) in a letter to the Senate and House Appropriations committees. "A recent survey conducted by the SCA found that if the government continues to operate under a CR, 94 percent of companies surveyed will have to halt hiring for their workforce and limit their investment in future planning and material procurement."

According to the SCA, the impact of a long-term continuing resolution would have serious effects on small businesses in the shipyard industry. In survey responses, small businesses indicated that the impact of a long-term CR beyond Thursday, November 21 would lead to a five to 50 percent reduction in their workforce and a 15-35 percent reduction in their annual revenues. Additionally, a long term CR would likely shrink ongoing operations: under a short term CR, operations will be reduced by around 15 percent, but under a long term CR, the reduction could be as high as 85 percent. 

"Without stable and predictable funding, we fear the nation is putting at risk the industrial base that services the critical national security vessels on which our sailors depend," the SCA wrote. "We ask that you move to pass appropriations bills that provide certainty and stability for government shipbuilding and repair programs in the Department of Defense, Coast Guard and Maritime Administration."