Corporate welfare pays to shut down Avondale

23rd May 2011   ·   0 Comments

By Zoe Sullivan
Contributing Writer

Adolph Ross worked at the Avondale Shipyard for 17 and a half years. That stretch would have been longer were it not for a layoff in the mid-1980s and a later illness that kept him from work.

Early this year, Ross was laid off once again. This time for good.

He now struggles to support his three teenage children on an unemployment check of $247 a week.

Even if he got a job as a contractor, Ross said, he’d likely have to travel at least an hour to get there, and with gas at almost $4 a gallon, he would spend at least $400 a month on gasoline alone.

“They just throw you to the curb. I’m just trying to find me something else, and make the best of whatever I get,” Ross told The Louisiana Weekly.

One problem, though, he said, is that his job at Avondale provided many benefits. Now, as an unemployed individual, “insurance is so high, you can’t afford to keep it.”

Ross was one of many former workers and local business people who came to the Avondale Truck Stop in Westwego on Tuesday to talk to elected officials. Congress Member Cedric Richmond was there along with representatives from Senator Mary Landrieu and Congress Member Steve Scalise offices.

While the meeting was called a “listening session” aimed at letting the federal representatives know about local concerns, it also served as the opportunity to present 400 letters written by local business people in support of the plant.

While the Department of Commerce recently announced a $1.5 million grant to support researching ways to re-direct those who will lose their jobs when the plant closes, listening session attendees raised questions about the negotiation between Huntington Ingalls, the current owner of Avondale, and the Department of Defense on a $310 million subsidy for closing the plant.

The company’s request for funds is legal, and has been ad­dressed to the Federal Acqui­sition and Relo­cation Program, and the Defense Base Closure and Realign­ment Commission (BRAC). Still, at a time when 13 million Americans are unemployed, the request raises eyebrows.

Avondale currently employs approximately 4,700 workers and is Louisiana’s largest manufacturing employer.

Northrupp Grumman, which recently spun off the shipyard, said in its 2010 annual report that the Defense Contract Audit Agency had not approved its initial request for a $310 million reimbursement linked to the costs associated with ending the shipyard’s operations. A slide from a Huntington Ingalls’ investor presentation indicates that funds from this “restructuring recovery” will help make the firm’s cash flow “significantly positive in the future.”

A representative of Huntington Ingalls responded to inquiries from The Louisiana Weekly about this subsidy and the impact of closing the plant on the local community with “no comment.”

The Department of Defense did not respond to a request for comment in time for publication.

Congressman Richmond assured The Louisiana Weekly: “we will do everything in our power to ensure that the Avondale workers’ tax money isn’t used to reward their employer for closing the plant.” An aide to Senator Landrieu’s responded that: “Unfortunately, our office is not privy to the details of the negotiations now underway between HII [Huntington Ingalls Industries] and the Navy.”

Some of those who have been fighting to keep Avondale open complain that this kind of money makes it more attractive for the firm to close than it does to try and find new, commercial ventures that would keep the shipyard running.

LSU Professor Emeritus Loren Scott says that the loss to the state’s treasury would be about 7% of Avondale’s total payroll. Based on an average annual wage of $62,000, that means an estimated loss of $22 million to the state from the Avondale jobs alone.

“For every job created at Avondale, there are at least three other jobs created elsewhere in the state.” So, if the Avondale jobs are lost, those other jobs go as well, multiplying the loss to the state. Scott said that a conservative estimate of the total loss to the state’s coffers would be $86 million. This figure does not include the losses to local governments, which Scott estimated at roughly $67 million.

Professor Steve Striffler of the University of New Orleans told The Louisiana Weekly that the lack of attention to the closing is remarkable.

“If we were talking about closing all the hotels in New Orleans, this would be front page news until we resolved it…It has a big impact on the whole area.” As unionized positions earning well above minimum wage, Avondale employees support a range of other area businesses. This recognition prompted the letter-writing campaign completed with the delivery to Congressman Richmond.

“We’re being collectively naïve or silly about some of these alternatives,” Striffler went on, pointing out that there was some discussion of converting the shipyard to an industrial park, but this proposal didn’t seem to include adequate attention to the displaced workers.

Moreover, Striffler said, “no shipyard has ever been converted after being shut down,” making the importance of finding alternatives for Avondale more pressing.

While the defense contracts that have fueled Avondale’s work until now may not be as plentiful, some suggest that converting the plant to commercial use could be a viable way to keep it running.

Stan Swigart, a Research Associate at the Merritt C. Becker, Jr. Institute for Trans­portation at the University of New Orleans, noted that the Department of Transportation has classified the Mississippi River as an M55 maritime highway. Swigart said that a new container terminal proposed for the mouth of the river might be able to take advantage of possible increased activity resulting from the expansion of the Panama Canal.

He suggested that the terminal could employ new vessel designs, including self-propelled container ships similar to barges used in Europe. “[They] would need to be U.S. flagged. The idea is that if those vessels were going from one U.S. port to another, they would have to be US flagged, and they would have to be built in the U.S., which would be an opportunity for Avondale.”

This article was originally published in the May 23, 2011 print edition of The Louisiana Weekly newspaper