Navy Showing Stronger Economic Impact on Local Economy
By Jennifer McDermott
October 23, 2010
$1B annual hike seen as result of boost in sub quota
The Navy's economic impact on the region around the Naval Submarine Base in Groton has increased by more than a billion dollars annually, largely because the service committed to buy two submarines a year instead of one, the base commander said this week.
The impact, which derives both from the sub base and Electric Boat, increased to $4.5 billion in fiscal 2009 from $3.1 billion in fiscal 2008, according to Navy figures.
Capt. Marc W. Denno, the base commander, attributed the jump mostly to the increase in submarine production.
In late 2008 the Navy signed a $14 billion contract with Electric Boat to buy the next eight Virginia-class submarines, one ship per year in 2009 and 2010 and two ships per year from 2011 through 2013.
The federal budget has allocated millions of dollars since fiscal 2008 for the advance procurement of items necessary for the production increase.
Electric Boat and the Northrop Grumman Newport News shipyard in Virginia build the submarines, at about $2.4 billion each, under a teaming agreement. Some of the initial construction work for the production increase has already begun.
The Navy Region Mid-Atlantic business office uses the estimated cost of goods and services in an area - combined with the payroll for military members, retirees and civilians, such as contractors - to calculate the service's impact. Its calculations for this area include southern Rhode Island, where EB has its Quonset Point facility.
The cost of buying goods and services in the Groton region increased by $1.2 billion from fiscal 2008 to fiscal 2009, to a total of $3.8 billion, according to the office, and payroll costs rose by more than $100 million, to about $660 million. The numbers for the 2010 fiscal year are not yet available.
The base employs close to 10,000 people - 7,500 active-duty personnel and 2,000 civilians and contractors. The Pentagon had targeted the base for closure during the 2005 Defense Base Closure and Realignment process, but the base closure panel voted not to close it.
The state gave the Navy $7.65 million last year to make improvements at the sub base and formally offered the Navy another $3.22 million for two more projects last month.
Bob Ross, executive director of the state's Office of Military Affairs, said the economic impact numbers "reaffirm how important the base is to the southeastern Connecticut economy, and to the economy of the whole state."
"This gives us additional evidence that what we're doing to increase the military value of the base is a good strategy," Ross said Friday.
The region is also benefiting from the government's investment in a new ballistic-missile submarine to replace the current fleet of Ohio-class, or Trident, submarines.
The program has already received $495 million from Congress, with another $700 million requested in the fiscal 2011 budget. EB has hired designers and engineers to work on it and plans to hire more in the next two to three years.
"These are projects that are going to last for years," U.S. Rep. Joe Courtney, D-2nd District, said Friday, adding that both submarine programs mean high-value jobs that will benefit the local housing market, commercial real estate and retail.
Gov. M. Jodi Rell called the jump in the economic impact "great news for all of Connecticut" since "employers throughout the state have a major stake in the state's multibillion-dollar 'submarine economy.'"