The army has a disproportionate economic impact on the region
September 29, 2021
The military’s impact on Hampton Roads is undeniable.
Drive along the Hampton Roads Bridge Tunnel and it’s nearly impossible to miss the hazy gray of US Navy ships docked at Naval Base Norfolk, the world’s largest naval station. A few minutes spent in Virginia Beach and one is likely to hear the roar of a Navy F / A-18 fighter jet – the sound of freedom, some locals call it – long before it hits. is spotted above.
Hampton Roads is home to five branches of the military scattered across nine major facilities, though the Navy plays the role largest role, with more than 150,000 soldiers and civilian employees and contractors, according to the Navy’s most recent Mid-Atlantic Economic Impact Statement, released in December 2020. A mid-year economic forecast from Old Dominion University projects spending direct sales to the region by the Department of Defense will reach $ 24.8 billion this year.
Extrapolate that to include indirect spending, and the military accounts for about $ 40 billion of the region’s estimated $ 100 billion gross domestic product – or about $ 4 out of the $ 10 spent in 2021 – says Robert McNab, director of Dragas. ODU Center for Economic Analysis and Policy. .
“If we look at comparable areas or larger areas in the United States, Hampton Roads has the most economic activity attributable to the Department of Defense,” McNab said.
The impact of DOD includes not only some that active service members and their dependents can spend, but also support the contracts and expenses of shipyards and other workers involved in supporting the military.
Industry partners such as Newport News Shipbuilding, a subsidiary of Huntington Ingalls Industries, the country’s largest military shipbuilder, play a major role in the region’s economy.
Construction by the shipyard of the future USS John F. Kennedy, the second in the Navy’s Gerald R. Ford class of nuclear powered aircraft carrier, is approximately 83% complete and first manufacture is underway on the third Ford-class ship, the USS Enterprise. says Matt Needy, vice president of navy programs. In addition, earlier this year, the shipbuilder announced a $ 2.9 billion contract for the mid-life refueling and complex overhaul of the Nimitz-class aircraft carrier USS John C. Stennis.
Not only does the Navy rely on industry to build its ships, it also relies on industry to repair many of them. Bill Crow, a retired Navy captain who spent his active career as a surface warfare officer, is president of the Virginia Ship Repair Association, which includes approximately 30 shipyards – over 80% of which work on Navy ships – and 270 other contractors. and subcontractors.
Ship repair has been seen as an industry essential to the country’s national security throughout the COVID-19 pandemic. Crow says the virus and the subsequent shutdowns of other industries did not appear to affect any local work planned by the Navy.
“If you drive [Norfolk’s] Berkley Bridge – which was pretty much the case throughout the pandemic – you will see that over there along the waterfront on the east branch and south branch of the Elizabeth River in private yards there are has several ships, ”he notes.
But while the military can be a large section of the local economy, it is not immune to federal budget cuts and decisions of Congress. As one possible example, the Navy has proposed decommissioning more than a dozen ships in its next budget to make room for new technology. At least five of them are aging missile cruisers homeported to Hampton Roads, says Crow. “That’s five less that our shipyards have to account for and that are in inventory for them to fix here in this port.”
McNab also warns that other weapon systems, like the Ford Third and Fourth Class Carriers, have drawn the wrath of Congress over the years. These nuances make the military’s disproportionate impact on the region a double-edged sword. Although DOD spending may act as a buffer for the local economy, too much dependence on it has caused the region to lag behind due to the lack of a diverse private sector, he says.
However, the region is focused on diversification, including into unmanned systems and offshore wind, said Doug Smith, president and CEO of the Hampton Roads Alliance. Smith also sees a place for the army. Thousands of servicemen retire each year, and the alliance views these highly skilled veterans as a ready-made workforce and a selling point in attracting businesses to the region.
About 40% of veterans remain in the area, says Craig Quigley, a retired Rear Admiral who heads the Hampton Roads Military and Federal Facilities Alliance.
“We would like to increase that number, and if we can retrain them, put them in a good job, make sure their spouses have [the] opportunity to pursue their career desires as well, so all other things being equal we think we would have a chance to keep them here… [to] contribute to the workforce, ”says Quigley.