Shipbuilders warn Congress another CR would cause 'sizable reductions' to workforce, operations

November 18, 2019

By Justin Katz

A trade association representing the country's shipbuilders sent lawmakers a letter last week warning that another continuing resolution would lead to sizable reductions in its industry's workforce and operations.

"According to our survey of the industry, under a short CR (under which the industry is already working) operations will shrink by around 15% compared to a long-term CR where operations could shrink by up to 85%," the Nov. 13 letter from Shipbuilders Council of America President Matthew Paxton reads. Paxton's letter is endorsed by five dozen industry executives.

"Small businesses have indicated that the impact of a long-term CR beyond November 21st, 2019 would lead to a 5-50% reduction in their workforce and a 15-35% reduction in their annual revenues," the letter continues.

During a phone interview today with Inside Defense, Paxton attributed the wide range in impacts to the survey's respondents. SCA included a mix of small businesses that produce singular widgets, in addition to major prime contractors with thousands of employees.

Paxton also writes that 94% of companies surveyed would stop hiring new workers if Congress passes another CR.

The current CR expires on Nov. 21. Lawmakers are expected to pass another stopgap spending bill this week that would expire Dec. 20.

Under a continuing resolution, the military is restricted to the previous year's budget levels and cannot begin work on new-start programs.

The letter, obtained by Inside Defense, is addressed to the chairs and ranking members of the House and Senate Appropriations committees.

In the interview, Paxton said the survey included SCA's members as well as the five major ship repair associations. SCA represents 37 companies that own and operate more than 80 shipyards as well as 105 members that "provide goods, services and engineering" to the shipyard industry, according to the organization's website.

"This is the first time that SCA has gone out to specifically assess the adverse impacts of a continuing resolution on our member companies and their abilities to maintain workforces, support supplier product lines and the impact a CR has on their overall ability to build and repair our Navy and Coast Guard ships," Paxton said during the phone call.

Inside Defense previously reported the effects a six-month CR would have on the service.

Navy acquisition executive Hondo Geurts last week told reporters at the Pentagon he already postponed contract awards for two destroyers' maintenance availabilities.

During the same discussion with reporters, Navy Comptroller Thomas Harker said the service is working on a list of programs that may eventually require waivers from Congress under the current CR.