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Southeastern Virginia’s Military Industry Feels Effects of Sequester

March 28, 2013 at 12:00 AM EDT
While the sequester debate continues in Washington, communities in parts of the country are already feeling the automatic budget reductions. Cathy Lewis of WHRO reports from Southeastern Virginia on how furloughs and cutbacks could affect the backbone of the local economy.
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JUDY WOODRUFF: Next: to the automatic federal budget cuts known as the sequester.

Defense Secretary Chuck Hagel said today that the Pentagon is trying to ease the impact on as many as 800,000 civilian employees, cutting the number of unpaid furlough days by a third. Hagel credits a new spending bill signed by President Obama. It gives the Defense Department more flexibility to deal with billions of dollars of across-the-board cuts that began on March 1st.

At a news conference this afternoon, however, Joint Chiefs of Staff Chairman General Martin Dempsey said that the Pentagon is still being forced to make difficult choices.

GEN. MARTIN DEMPSEY, Joint Chiefs of Staff Chairman: On Monday, we will be halfway through the fiscal year, and we will be 80 percent spent in our operating funds. We don’t yet have a satisfactory solution to that shortfall. And we’re doing everything we can to stretch our readiness out.

To do this, we will have to trade at some level and to some degree our future readiness for current operations. It will cost us more eventually in both money and time to recover in the years to come. We will be trying to recover lost readiness at the same time that we’re trying to reshape the force. We can do it, but that’s the uncomfortable truth.

RAY SUAREZ: Despite the Defense Department’s efforts to mitigate the impact of sequestration on the nation’s military readiness, the across-the-board budget cuts are already starting to take a toll in communities where federal spending is the backbone of the local economy.

That’s true of southeastern Virginia.

Correspondent Cathy Lewis of WHRO in Hampton Roads brings us this update on how her region is coping. Her story is part of our collaboration with public media partners across the country in a series we call Battleground Dispatches.

PROTESTER: No more furloughs!

CATHY LEWIS, WHRO: These federal civilian workers know furlough notices are coming, and they’re not happy to lose the work.

In the Hampton Roads region of southeastern Virginia, where nearly half the economy relies on federal spending, workers were protesting being forced to take days off without pay between now and September. Today’s news from the Defense Department will ease that pain, reducing the number of furlough days from 22 to 14.

But this region remains anxious over the impact of sequestration on the local economy. The cuts are the result of the so-called sequestration act, the automatic across-the-board reduction in spending that started to kick in March 1st. It mandates roughly $85 billion dollar cut from federal spending by September.

MAN: Blow your horn! Blow your horn!

CATHY LEWIS: Staying home one day a week adds up.

MAN: It’s going to affect my whole family. I got three kids. I got kids in school. It’s ridiculous. It’s a lot of money. It’s roughly about seven grand.

CATHY LEWIS: Hampton Roads has the largest concentration of American military assets in the world. Six percent of the population here wears a military uniform. It’s the only place in the country where nuclear aircraft carriers are built, but the federal presence extends far beyond the fleet.

The region is home to a NATO command, the largest concentration of Coast Guard assets in the world, and 13 federal departments, including NASA and the Jefferson Lab. It’s beginning to sink in that sequestration is part of a bigger trend here, an inevitable new normal of less defense spending, now that the U.S. is out of Iraq and disengaging in Afghanistan.

Craig Quigley is a retired rear admiral who now heads the Hampton Roads Military and Federal Facilities Alliance.

RET. ADM. CRAIG QUIGLEY, Hampton Roads Military and Federal Facilities Alliance: We can get smaller in our defense establishment and I believe still do what the nation requires their military to do, but sequester is not the mechanism to do it. It takes away all judgment. It doesn’t allow for chopping off from the bottom of the least important programs to protect the most important programs.

CATHY LEWIS: While the president exempted uniformed personnel from pay cuts, service members are not spared the effects of sequestration.

Because it needed to reach the dollar targets of the sequester, the Navy canceled the six-month deployment of the aircraft carrier Truman, all with only two days’ notice. That sent more than 5,000 sailors scrambling.

CRAIG QUIGLEY: If you’re a single sailor and you were expecting to deploy and that was stopped at the last minute, if you own a car, you have put it in storage or perhaps you have sold it. You have gotten out of an apartment or a home you may share with a few other people. You have put your household goods in storage. You have disconnected from the world.

And now, all of a sudden, you’re not going. And now I need to get that car back, I need to get my household goods out of storage, I need to find another apartment. And the Navy pays for none of that.

CATHY LEWIS: There are also nearly 40,000 civilians at work in shipyards like this one. When a ship goes into the yard, it’s called an availability. There were 11 such availabilities on tap this summer that were threatened by federal inaction.

Now it looks like the money will be there for those 11 availabilities, along with two aircraft carrier overhauls. But no one is celebrating just yet.

MAN: Insecure. Everybody is insecure, fear, a little angry. But what can you do?

CATHY LEWIS: Captain Bill Crow spent more than 30 years in the Navy. Today, he heads the Virginia Ship Repair Association, representing more than 200 shipyards.

RET. CAPT. WILLIAM CROW, Virginia Ship Repair Association: If they were to cancel these availabilities, I can tell you, yes, they were concerned about being able to put bread on their table from being furloughed or laid off. And that may still come to pass.

But I will also tell you that, deep down in their heart, each and every one of those 40,000 people take great pride in the fact that they play a part in the maintenance and readiness of our United States Navy. And they’re doggone proud of that.

CATHY LEWIS: Both Quigley and Crow say, in all their years around federal budgeting, they have never seen anything like this.

Neither have the owners of Davis Interiors. For more than 58 years, they have custom-built and installed the furniture that goes on ships at sea. It’s a three-generation family business for Whitney Metzger.

WHITNEY METZGER, Davis Interiors: We know that we will be busy at least through May or June, but after that, we’re not entirely sure what’s going to happen. Right now, we have had to let go about five employees, unfortunately. And we have furloughed most of our staff that were working three- and four-day workweeks.

People are working Fridays on an as-needed basis, but, for the most part, it’s empty here on Fridays now.

CATHY LEWIS: Like many in the front offices and on the front lines, Metzger worries about the future for her company and her employees, and she wants Washington to know that real people’s livelihoods are on the line.

WHITNEY METZGER: This isn’t a political game. And it’s very frustrating to see so many politicians in Washington turn it into that.

CATHY LEWIS: Ten of the 11 members of Congress from Virginia voted against the bill that would have avoided sequestration. Metzger says trimming the staff now allows Davis Interiors to retain a smaller, but still highly skilled work force.

Keeping those skilled workers in the area when work is becoming more scarce is a concern shared by the region’s leaders who, some say, haven’t done enough to diversify the economy.

Craig Quigley says the potential loss of 12,000 good-paying jobs and more than $2 billion dollars in the local economy may be a wakeup call that’s finally too loud to ignore.

CRAIG QUIGLEY: The day has arrived. OK? The federal spending in Hampton Roads is going down. So, we can accept a lower level of economic vitality, no growth, flat economy. Is that really what we want?

Or do we want to get serious finally about diversifying the economy, finding something to supplement, not replace — I don’t want to go to zero in federal spending, but I want to supplement it and reduce it as a percentage of the gross regional product, so that we are not totally drug-dependent on that.

CATHY LEWIS: But this region that depends so heavily on the business of government had hoped for a phased withdrawal of federal spending. Making so many cuts by Sept. 30th feels to many like quitting cold turkey.