$744 Million Contract Saves Jobs and Boosts Economy
Last week, NASSCO announced that the Navy awarded the local company a $744 million contract to build two Mobile Landing Platform (MLP) ships. NASSCO’s contract includes the option to build a third MLP which would increase the contract to $1.3 billion. The MLPs, a new class of auxiliary ship, will enable the Navy and Marine Corps to respond quickly to crises around the world by acting as floating offshore staging areas that will carry and transfer equipment and supplies for military operations.
This contract is crucial to the San Diego region. Just months ago, NASSCO announced it would have to lay off hundreds of workers because of a slowdown in its shipbuilding operations. The new contract allows NASSCO to retain a majority of jobs previously marked for elimination. NASSCO is the only ship building company on the west coast and employs 3,600 employees.
Department of Defense (DoD) spending is critical to the region’s economy and job base. The close and long-standing relationship between the military and the business community makes San Diego the largest military industrial complex in the world. In April, the San Diego Military Advisory Council (SDMAC) released its 2011 SDMAC Military Economic Impact Study showing that military spending has increased in the last several years. The study revealed DoD spending was responsible for one-quarter, approximately 354,657 jobs in the region, $18.2 billion in direct economic impact, and $30.2 billion in overall impact in 2009. As the military’s presence is expected to grow in the region, DoD spending is predicted to exceed those numbers considerably through 2011.
There are concerns that the federal government may cut back on DoD spending next year. The federal government is facing more and more pressure to address the growing budget deficit. Drawdowns of DoD operations in Iraq and Afghanistan may lead to large cuts in defense spending that could affect San Diego’s economy. In addition, the Chamber is very concerned with recent comments by elected officials speculating the federal government might initiate another Base Realignment and Closure (BRAC) process beginning in 2012.
Given our close relationship with the military and with many defense firms located in San Diego, the Chamber will fight to maintain the military’s presence in the region should such actions take place.
Click here for the announcement from NASSCO.