Although Groton-based Electric Boat Co. (above) might be cutting as many as 2,400 jobs, those losses could be tempered by economic and job growth in the rest of southeastern Connecticut.
It’s been a rough year for southeastern Connecticut, but experts on the economy and real estate believe the effects of the recent announcement that up to 2,400 jobs could be cut from Electric Boat Co. may be tempered by economic and job growth in the rest of the region.
“Is it a death blow? No,” said Peter Gioia, chief economist for the Connecticut Business & Industry Association.
The submarine builder announced last week that 2,400 jobs are at stake, and that the company could eliminate half its workforce in coming years. Most of the 2,400 jobs will be cut from the shipyard in Groton, but 500 to 600 will be cut from its facility in Rhode Island, according to the Associated Press. Decreases in contracts to make Navy submarines and a policy that has the Navy doing repair work at its own shipyards were pinpointed as reasons for the cuts.
The news follows the possible closure, then salvation, of the Naval Submarine Base New London in Groton. The announcement also comes after news that Foxwoods Resort Casino in Mashantucket will build a $700 million, 2 million-square-foot addition that is expected to provide another 2,300 jobs. Also, eastern Connecticut is seeing better job growth than the rest of the state, and other major employers, like pharmaceutical giant Pfizer Inc., expect to remain steady next year, according to John Bolduc, executive vice president of the Eastern Connecticut Association of Realtors.
“One of the things about the southeastern Connecticut economy is that it’s much more diversified than it used to be,” he said. “We’ve got the tourism industry; we’ve got the casinos.”
And although the Foxwoods expansion will not be completed until 2008, it will add about 1,800 construction jobs to the region in the meantime, Bolduc said.
“I think the economy will absorb a good part of [the layoffs],” he said.
‘Tight Enough’
The announcement of the layoffs may have a slight effect on real estate, but the market responds to demographics, and baby boomers and their children will continue to drive the market.
Also, none of the sectors in that market – commercial, industrial and residential real estate – are overbuilt, Gioia said.
“Nothing’s overbuilt. That reduces the [impact] somewhat,” he said. “The supply conditions are tight enough.”
The real estate market is slowing anyway as interest rates grow, so it will be difficult to determine how much of an impact the layoffs will have, Gioia said.
Sales in 2006 are expected to be slightly slower than in the past few years, Bolduc said. Inventory has been growing in the region, and the Eastern Connecticut Association of Realtors expects a 4 percent increase in value, less than in the past few years. But a leveling-off could be good for the market, according to Bolduc.
“That’s healthy. That’s good,” he noted.
Still, the announcement of the layoffs is not a small one for the region, and it will certainly affect southeastern Connecticut in some way, Gioia said.
“This is a serious layoff,” he said.
Some congressmen from Connecticut and Rhode Island are trying to spur submarine manufacturing, but the likelihood of them saving the jobs is not high, according to Gioia. While politicians were successful in saving the submarine base, dealing with military contracts is much more complicated.
“These layoffs are, unfortunately, likely to stick,” Gioia said.
Gov. M. Jodi Rell is one of the politicians fighting the layoffs.
“Let me say first that we fought the sub base closure – and we will fight these job cuts as well,” she said in a prepared statement about the layoffs. “We won on the sub base, and I intend to win on this one.
“These job cuts are not just numbers in a press release, they are valuable workers – workers who have families counting on them and families who do not welcome this news at any time, let alone at the holidays.
“I cannot fathom the decision-making in Washington, D.C.”
Rell also wrote a letter to Gordon R. England, secretary of the Navy, urging him to reconsider the policy that would redirect submarine repair work to the Navy’s own shipyards.
“First and foremost, the unilateral decision to award this work to the four NAVSEA [Naval Sea Systems Command] shipyards in Maine, Virginia, Washington and Hawaii must be reconsidered,” Rell wrote. “The work should be awarded on the basis of lowest cost and most responsible bidder – just as any government contract should be awarded – rather than giving preferential treatment to particular facilities.
“I am also deeply frustrated and disturbed that this decision runs counter in every respect to the one of the major reasons cited by the Base Realignment and Closure Commission for keeping [Groton’s submarine base] open: the unique and irreplaceable synergy that exists between the base and EB, just a few miles up the Thames River.”
Electric Boat President John Casey told the AP that the decision to cut up to 20 percent of his workforce next year was a “despicable task” but said the future of the company is at stake. Electric Boat, which is a division of General Dynamics Corp., employs 11,800 people.
After 2006, company spokesman Bob Hamilton said, the numbers get murky, but he said company projections include a 50 percent reduction if new contracts aren’t awarded. That would mean a workforce of about 6,000 in a region where submarine building is a way of life.
Submarine advocates have been pressing the Navy to boost production from about one to two ships a year, according to the AP. Projections show the nation’s submarine fleet dwindling from the mid 50s to as low as the 30s, but the Pentagon isn’t expected to release its official numbers until next spring.
