What sank Massachusetts' Quincy shipyard
The Quincy shipyard has foundered on the rocks of foreign competition, low demand, and politics. General Dynamics announced Wednesday that it will close the 101-year-old Fore River shipyard south of Boston, which employs 4,200 people, by the end of 1986 because it has failed to win any major contracts since 1982. Two Navy ships have recently been finished, and three others will be completed by December of 1986.
General Dynamics' problems go beyond those of the shipbuilding industry as a whole. As of March, the country's second-largest defense contractor was being scrutinized by four congressional committees and three government agencies for allegedly overcharging the government, allocating personal expenses to overhead accounts, trying to bribe government officials, and falsifying financial records, among other things.
``General Dynamics is a household word in Washington, but not the right kind of household word,'' says Frank Cassell, former assistant to the US secretary of labor and now a professor of policy at the Kellogg Graduate School of Management in Chicago.
Besides the Quincy closure, General Dynamics announced this week it is laying off 110 workers at the Electric Boat Division in Groton, Conn., by mid-August, and 700 to 900 more may be let go by the end of the year. It also said it may have to cut its work force further at the Quonset Point, R.I., shipyard this year.
The entire shipbuilding industry is littered with falling stars.
Since 1981, 25 of the country's 110 shipyards have been closed -- at a loss of some 20,000 jobs -- and military observers say 35 yards (employing some 25,000 people) are headed for the block by the end of the decade.
Within commercial shipbuilding, old, inefficient facilities and high labor costs are pushing the United States out of the picture.
American wages are more than five times as high as South Korea's $2-an-hour rate. Lower interest rates abroad and generous terms and subsidies from foreign governments are luring shipbuilders to locate in Western Europe and Asia.
It takes twice as long and costs twice as much to build a ship in the US than in South Korea and Japan, according to the International Trade Commission. Consequently, these two countries are grabbing most of the new commercial contracts.
The Reagan administration dealt commercial shipbuilding a nearly fatal blow in 1981 when it ended its 44-year program of direct construction subsidies. Only a handful of commercial ships are built here today.
That leaves the 110 shipyards fighting over virtually one customer: the US government. Its 600-ship Navy program will keep shipyards building and repairing vessels for some time.
But ``only a maximum of a dozen yards benefit directly from the Navy program,'' says Kip Robinson, a staff member of the House Merchant Marine subcommittee.
In fact, 73 percent of the Navy's $1.2 billion budget for shipbuilding for 1985 is going to three shipyards: Newport News in Virginia, General Dynamics' Electric Boat, and Ingalls Shipyard in Mississippi.
And although more yards would be needed in the event of war -- for repairs, modifying commercial ships for battle, tending to the reserve fleet, etc. -- ``we could probably get by with 50 or 75 shipyards,'' Mr. Robinson says.
After the first 30 to 60 days of a nonnuclear war, more than 90 percent of resupplies to Americans fighting abroad would travel by ship.
``If those yards and the trained work force are gone, it could hamper our ability to launch a full sea war,'' says Robinson. ``There's great concern that were putting ourselves in a position of weakness, one that could push us into a limited nuclear war.''
General Dynamics says it is will spend more than $10 million on severance and bonus benefits and a job placement program.
But displaced workers will still have a rough time of it, predicts Dr. Cassell at Kellogg. Shipbuilding skills (with a major exception being electrical skills) are narrow, he says, and the bulk of the work force may have trouble transferring them to other industries.