Thursday, May 19, 2005

If Base Closes: Then What?

Studies Show Impact of Base Closures Often Exaggerated

Let's assume the worst is going to happen: The Groton Sub Base is going to shut down. It won't happen right away; these things take time. But in a couple of years, the last subs and sailors will be gone.

What will happen to the Groton-New London area then?

So far, the predictions have been dire. Economic free-fall as a result the loss of thousands of jobs both on and off the base is assumed as a given. So far, the only questions seem to be: How badly will it hurt? Will the rest of the state be dragged down with the southeast? Will we ever recover? and How large will Joe Courtney's margin of victory be?

But let's leave off from the gnashing of teeth and the rending of garments for a moment, let's put the governor's Sub Base "Strike Force" aside for now and take a look at what may actually come to pass.

Here are a few examples of towns where long-established military bases departed, showing that when the ax finally does fall, it won't be as bad as we think:

When Castle Air Force Base near Merced, California, received notice that it was on the list of military bases to be closed, the public braced for a major catastrophe. Newspaper headlines announced the concerns of a community facing doom. Near the base, shopkeepers, bar owners, fast food restaurant managers, and local government officials tearfully anticipated that their community would become an economic backwater or ghost town. Local commissions were formed to try to save the base and the community. Leaders rushed to Congress to complain that closure would ruin their already fragile economy. Congressmen returned to assure citizens that closure would be fought. Task forces estimated the projected tragedy for the County--retail sales would fall $105 million, 3,700 jobs would be lost, County population would decline by 18,000 persons, the unemployment rate would increase by seven points, and decline would spiral (Castle AFB Task Force 2000, 1991). (Bradshaw)

Sounds familiar. Then what?

When the base closed, many compensating factors softened the impact on local markets: military retirees' spending shifted from the base commissary to local stores, purchases made by the base were primarily nonlocal anyway, toxic cleanup replaced construction expenditures on the base, housing construction continued, and military retirees' health care became privatized. These factors helped limit decreases in employment; in addition, many jobs held by departing military spouses became available to nonmilitary workers. Contrary to predictions, unemployment rates increased only moderately, and there was no significant decline in the population. Predictions of dire consequences from a military base closure often prove false because they overstate the effects of economic multipliers and fail to account for the fact that communities often rise to the challenge by forming new alliances and strengthening their organizational capabilities. (Bradshaw)

This article is interesting in many ways, as it examines the positives and negatives of base closures in a reasonable manner. The above example is but one instance of a base closure not having nearly the impact that local communities feared. In fact, Charleston seems to have actually fared better after its historic Naval base left:

Officials express relief that the days of dependence on one employer are over. "In hindsight, the closing of the base was a wake-up call that we can't sit back on our laurels and depend on the federal government to furnish jobs," said North Charleston Mayor R. Keith Summey. His counterpart in Charleston, Mayor Joseph P. Riley Jr., agreed that something good came out of crisis: "We have a stronger economy now than ever." (Jacobson)

Which isn't to say that it wasn't difficult to lose that base. There's no denying that jobs will be lost and that communities will suffer. But the amount of suffering appears to have been overstated by economists and politicians:

Economists overstate the impact of a military pullout. Jon W. Grafton, an economic-development official in Alexandria, says that because troops buy food at commissaries and other goods at the post exchange, the loss of a military job is equivalent to the loss of just a third of a civilian job.
...
When a base closes, few workers lose jobs. About 76% continue to work for Uncle Sam or retire. Only 8% are laid off, according to the Pentagon. And new jobs totaling 60% of the lost slots have been created at bases closed for at least two years. (Crock)

--

Many fears based on industrial dislocation experiences are not applicable to base closures. Compared to a factory or industrial plant of the same size that quits and locks its gates, military bases that close move most of their personnel to other bases, and civilian employees are eligible to be transferred to other government jobs around the country. (Bradshaw)

The more serious problem for New London County, then, is the continuing decline of Electric Boat and other defense-related industries. Unfortunately, little can be done to keep EB going at this point.

Studies show that the towns which suffer the most are the ones who are completely dependent on military bases for their economies (Bradshaw). This is not the case in New London County, which had begun to diversify its economy during the 1990s, when it became apparent that the defense industry would be severely cutting back its activities in the area. Projects like Utopia Studios will help to fuel southeastern Connecticut's new economy, which will be based more on tourism and white-collar industry than on the old standbys of defense and manufacturing. Pfizer is another good example of what the economy of that region will look like in the future.

So yes, losing the base will hurt. It's going to be hard to see the Navy leave after all these years... but if and when they do, we may find that the economic impact won't be quite as harsh as we thought.

Sources and further reading (no links, sorry--all in subscription databases):
Bradshaw, Ted K. "Communities Not Fazed." Journal of the American Planning Association 65.2 (1999).

Crock, Stan. "The Real Math of Military Shutdowns." Business Week 03/29/99.

Jacobson, Louis. "There is Life After a Military Base Closes." National Journal 32.17 (2000).

Schulte, Bret. "A Rough Road Once the Pentagon Pulls the Plug." U.S. News & World Report 138.19 (2005).

Spiegel, Peter. "Close a Base, Create a Job." Forbes 160.6 (1997).

9 comments:

MVD said...

Wouldn't it be a good idea to make the Groton/New London area a center for stem cell research, which I think the State is thinking of investing in. This would fit nicely along with Pfizer, and would create a medical research community in SE CT.

Conn-Tiki said...

MVD, wouldn't that just have the effect of having Biotech become the new Defense industry for SEConn? I mean, it sounds great, but wouldn't encouraging a little more diversity be an even *better* idea?

ebpie said...

Biotechnology jobs tend to have a fair amount of staying power and create a lot of high paying employment opportunities. Bringing those firms to SE CT would really help the economy. The loss of the sub base will make the 'Utopia' project in Norwich all that more appealing. While it may not fully offset the job loss caused by BRAC, it will go a long way towards getting the region back on its feet.

Great Santini said...

If I'm not mistaken, this is the first nuclear base that the DOD has closed. There will be some special remediation procedures that will keep some people employed for years. Look how long it has taken to shut down the various nuclear plants that have closed in New England. Also there is an environmental indemnification in the BRAC law that could keep federal money flowing in for cleanup for years. Groton/New London has a great location - something a lot of the other bases that have closed didn't really have. Biotech isn't the silver bullet either. Pfizer is looking to cut billions of dollars from its budget in the next several years. Undoubtedly some of that will come from the Research Center in Groton.

Genghis Conn said...

Great Santini,

A good point about environmental cleanup. State officials are already saying that the DoD's figure of $23.9 million for environmental cleanup of the base is very, very low.

MikeCT said...

I'm troubled by this argument that the site is such an environmental wreck that we might as well keep the base open because cleanup would be so expensive. If it is such a toxic site, aren't current military personnel, civilian employees, and neighbors at risk? Why is there an assumption that if we keep the base open, these toxins will never need to be cleaned up?

stomv said...

^

Some environmental hazard risk is only realized when the buildings get torn down. This is true for both lead paint and some asbestos, both of which show up as environmental baddies.

To be sure, not all toxins are in this category, but I do know that asbestos flooring and lead paint do fall into this category. Don't mess with them and the toxins aren't a problem. Start breaking or scraping, and now you've got a health hazard.

Indian2Nighthawk said...

MVD mentioned the $ that have been proposed for stem cell research...

putting $ in does sound nice but it isn't enough. Tens of millions (although a lot) isn't anything! California is spending three times more per capita, Mass/NY/NJ are all spending hundreds of millions on stem cell research.

Can we honestly expect to have an emerging bio-tech community in Groton?

If we are going to focus on being that type of economy then lets make a real investment. Our state puts meaningless money into too many worthwhile areas.

We need to make a choice and go with our strengths and not fund projects that we aren't putting our full weight behind.

I am sad to say that our state runs like this -

"oh ten of you want to build a new economy for Connecticut? I've got enough for four of you to be successful - but I lik you all and will give each of you 40% of what you need to be successful."

Let's get realistic. Governing is about choices and thus far I have not seen true leadership and governing by our statewide leaders!

I am not saying bio-tech isn't the key to our state's future, i'm just saying that it isn't if we are putting only a sliver of the money other states are.

MVD said...

I'd like to agree with what Mike CT said about the clean-up of the sub base. If it's so hazardous, isn't it dangerous now? Also, if it's so toxic, maybe we'd be better off if they close it down and clean up the site.