By: Sid Salter
Only Walmart/Sam’s employs more people in Mississippi than does Ingalls Shipyards at about 12,500 employees. But Ingalls and other shipbuilders pay significantly better than Walmart.
Since December of 2018, Ingalls has been awarded the following major shipbuilding contracts from the U.S. Navy: $931 million for construction of two new U.S. Coast Guard national security cutters (NSCs); $1.47 billion for construction of a new San Antonio class amphibious loading platform dock (LPD) ship; and $931 million for a planning yard contract for Littoral combat ships.
In addition, VT Halter Marine in Pascagoula in April won a $746 million Navy contract to build three heavy polar icebreaker cutters for the Coast Guard. That contract should drive employment at VT Halter to over 1,300 over the six-year life of that contract.
Clearly, those contracts don’t find their way to the Mississippi Gulf Coast without some nudges in Congress.
Republican Mississippi senior U.S. Sen. Roger Wicker’s posts on the Senate Armed Services Committee and as chairman of the Senate Commerce Committee make him a player in the award of Navy contracts and in the formulation of Coast Guard policy.
There are several Mississippi connections to the VT Halter contract for the polar security cutters. Junior Mississippi Republican U.S. Sen. Cindy Hyde-Smith is a member of the Senate Homeland Security Appropriations Subcommittee while 4thDistrict U.S. Rep. Steven Palazzo holds a seat on the House Homeland Security Appropriations Subcommittee.
Mississippi’s lone Democrat in the U.S. House, 2ndDistrict U.S. Rep. Bennie Thompson, is chairman of the House Homeland Security Committee. Future funding for the Coast Guard polar security cutters in the Fiscal Year 2020 budget could well get caught in the partisan crunch. Thompson made clear in April that Democratic disagreements with the Trump administration over proposed White House cuts in Coast Guard programs could derail the process.
Thompson said the White House proposes to cut $1 billion from the Coast Guard budget that would underfund operational capabilities, personnel and funding for future cutters.
With 14,000 of the state’s highest-paying jobs on the line, one would think that the state’s shipbuilding industry would garner more attention in statewide politics. State subsidies to Ingalls have in the past drawn political fire from conservative politicians, but state lawmakers have continued to do the same thing that lawmakers in other states with substantial shipbuilding industries have done – keep the subsidies in place to protect the jobs.
The industry has two main components – shipbuilding and ship repair.
In 2011, Mississippi had the second largest share of U.S. shipbuilding and ship repair jobs in the country, trailing only Maine. The industry had 23,450 direct, indirect and induced jobs. That same year, Mississippi had just under 10 percent of all the private shipbuilding and ship repair jobs in the U.S. with 13.8 percent of the total national payroll.
Shipbuilding and ship repair in the U.S. have declined over the last decade. China, South Korea, Japan, and those countries control some 75 percent of global commercial shipbuilding. Even VT Halter in Mississippi is at least 51 percent owned by interests in Singapore.
Brookings Institution economic studies fellow Aaron Klein documents that from the end of World War II until the 1970s, the U.S. shipbuilding industry built most of the world’s shipping fleets during a time when countries around the world subsidized their national shipbuilding industries – a practice the U.S. abandoned in 1981.
Mississippi legislators have been wise to continue to make modest subsidies to a shipbuilding industry that has been an economic centerpiece in the state since Ingalls was lured to Mississippi in 1938 to locate their shipyard in Pascagoula under Gov. Hugh White’s “Balance Agriculture with Industry” program.
If we lost that industry, what would replace it? Another Walmart?