SJR 177

Joint Subcommittee Studying Economic Incentives to Promote the Growth and Competitiveness of Virginia's Shipbuilding Industry

November 22, 2000, Newport News

The joint subcommittee met to study issues that have had an impact on the growth and competitiveness of the shipbuilding industry. Some of the issues discussed were:

Promoting the Competitive Advantages of the Port of Hampton Roads

The subcommittee heard testimony that there is great competition amongst the nation's shipyards to procure United States Navy construction contracts and contracts for commercial work. The competition is a direct result of the rapidly dwindling number of new Navy construction contracts.

Industry representatives believe that a coordinated marketing effort to promote Virginia's ports and shipyard industry is necessary to effectively compete in the dwindling Navy market and to gain market share in new and emerging commercial markets. The industry believes that at least $100,000 per year for four years is needed to create a long-term marketing program and has asked for funding from the Commonwealth to establish such a program. The industry representatives requested that the subcommittee address this issue in the upcoming session through legislation and/or amendments to the Appropriation Act.

Incentive Grants for Capital Investments

As part of remaining competitive and entering new commercial markets, Virginia's shipyard representatives point to the need for modernizing machinery and tools and overhauling dry-dock equipment. The subcommittee heard testimony that industry profits over the last decade were insufficient to allow the shipyard industry to self-finance these needed capital investments. The industry urged the subcommittee to introduce legislation similar to SB 573 in the 2000 Session.

Senate Bill 573 established a program that would pay grants to ship repair companies for making certain capital investments. Eligible capital investments were those that increased the productivity of the ship repair company or resulted in the utilization of a more advanced technology by the company. A minimum $50,000 investment was required for grant eligibility. Under SB 573 the grant was in an amount equal to 10 percent of the cost of the capital investment. Under the program, the aggregate amount of grants outstanding at a given time could not exceed $80 million. The 2000 Session of the General Assembly carried over SB 573.

Enhanced Training for Shipyard Workers

Many of Virginia's shipyard workers have acquired basic skills such as painting, pipefitting, and welding. The subcommittee heard testimony that more than just basic skills are necessary for career advancement opportunities of shipyard workers. The shipyard industry has witnessed high turnover in personnel partly because career advancement opportunities are limited for most shipyard workers.

The shipyard industry would like to retain its workforce and limit personnel turnover. It believes that one means of doing this is to help shipyard workers improve their training and skill sets, which will make working in Virginia's shipyards a career for many workers.

To this end, shipyard representatives have been working with local colleges to develop a three-year academic program specifically designed for current shipyard employees. Such a program would be a combination of on-the-job training and classroom education. In addition, enhanced skills training would be incorporated into the program. Each person satisfactorily completing the program would receive an Associate Degree in Applied Sciences.

Shipyard representatives estimate that an initial grant in the amount of $500,000 from the Commonwealth would be needed to implement and carry out the program. Industry representatives requested that the subcommittee address this issue in the upcoming session.

The Honorable Thomas K. Norment, Jr., Chairman
Legislative Services contact: Mark Vucci