NORFOLK — The hammerhead crane hangs over the shipyards here, a pistol-shaped steel cage that could lift 350 tons in its day. It is rusting, its power system has been disconnected, and the U.S. military has no plans to ever employ it again. For several years, military leaders and local officials have debated whether to spruce it up — to keep as a shrine to the region’s economic past — or tear it down.
They have yet to decide.
The crane is obsolete, built to lift turrets onto battleships the Navy no longer deploys. But its fate embodies the economic uncertainty that has swamped one of the nation’s most military-dependent regions.
For three-quarters of a century, the Hampton Roads area rose and fell with the federal defense budget, always confident that any cutbacks would prove temporary. Under President Obama, a new reality has sunk in. Spending cuts have stalled growth in the region, pushed thousands of blue-collar workers out of good-paying jobs and forced civic leaders to contend with a once-unmentionable question: how to survive if the military spigot never opens again.
The Norfolk area has suffered disproportionately, even among defense communities, from decisions by Obama and Congress to reduce the size and composition of military budgets. Economists and union leaders say that is because Hampton Roads has been late to follow the lead of other regions, including the Washington area, that took steps over the past decades to incubate private industries and balance out their reliance on defense.
Norfolk has become a national outlier, saddled with a workforce that is less educated than many comparable communities and an economy that has depended too much, for too long, on government.
“When a pipe-fitter at the shipyard in Hampton Roads loses his job, there aren’t as many opportunities to transfer his skills to other industries in the region,” said Christine Chmura, chief executive and chief economist of Chmura Economics & Analytics, a Richmond-based firm that studies defense spending.
Communities across America have struggled with economic transition in recent decades, particularly ones reliant on industries heavy on manual or factory labor. Many of them have followed a similar playbook. They use tax breaks and other government incentives to attract clusters of businesses in knowledge-based industries such as technology. And they woo entrepreneurial, high-skilled workers who might work at those companies — or start their own businesses.
Norfolk had not launched such an effort, in earnest, until 2012. That is when officials began to worry that this drop in defense spending was not like previous downturns, which had reversed in due course.
“We haven’t had a concerted effort in the past because, quite frankly, we haven’t needed one,” said Bryan Stephens, the head of the Hampton Roads Chamber of Commerce.
They need one now. Defense spending has fallen quickly from making up more than half of the Hampton Roads economy to less than 40 percent.
Over the past two years, nearly 4,000 manufacturing workers in the region have lost their jobs, according to the Labor Department. Layoffs from defense contractors, including 700 members of the Boilermakers union who were given pink slips less than a month before Christmas, came as the Navy reduced spending on ship building and maintenance.
“It’s just unprecedented,” said Dwain Burnham, an international representative for the Boilermakers.
“Even though we’re seeing work trickling in, we’re not seeing the return of laid-off members,” he added. “A lot of people are still drawing unemployment, a lot of people are still looking for work and hoping that they will be called back.”
The cuts have drained buying power from the local economy. Compounding the problem, there are nearly 30,000 fewer military jobs in the region today than a decade ago, and the remaining members of the military stationed here have seen their pay curbed in recent years.
Federal defense contract spending in the region was $9.4 billion in 2015, a $1.5 billion drop from the previous year — and lower than 2009 levels, even before adjusting for inflation.
Since the end of the Great Recession, economic growth in the region has averaged about 1 percent, less than half the rate for the nation as a whole. Job growth is up just 0.5 percent over the past year, compared with 2.5 percent for Northern Virginia and the state as a whole.
The pain goes beyond jobs that depend on defense contracts: High-paying, private-sector industries have shed workers in Hampton Roads over the past several years, a major reason it is the largest metro area in the state to not have recovered all the jobs it lost during the recession. Norfolk lost more businesses in the economic recovery than any other major city in the nation, according to census data compiled by the Economic Innovation Group.
“We simply have not been able to diversify the economy,” said Vinod Agarwal, an economist and director of the economic forecasting project at Old Dominion University in Norfolk. “We’re still short of what we have lost. And many of the jobs that were lost are jobs that aren’t coming back.”
The debate over how to transition the region’s economy is not far along. The local chamber of commerce and a nonprofit economic development are seeking to identify “clusters” of industries that could carry the region going forward and have preliminarily found a few, including biotechnology and advanced manufacturing. But their report is not finalized, and local leaders are only beginning the process of figuring out how to seed the growth of those industries.
The economic diversification work led by the chamber and the nonprofit, Reinvent Hampton Roads, follows the lines of many more-established efforts by communities across the country. It includes lobbying to keep the companies and industries already in the region — in this case, attempting to block further defense cuts — while wooing outside companies large and small.
Regional officials do not hold much hope of defense spending surging again, at least not in a way that will lift Hampton Roads. Today’s Navy is shifting focus to the Pacific Ocean, which means more action for West Coast shipyards and less here. Across its branches, the military is spending more on information technology, which benefits higher-tech regions such as the Washington area.
“We’d be naive” to think defense spending will ever again make up half the region’s economy, Stephens said. Still, he is optimistic because he believes the region’s ex-defense workforce will catalyze the transition to new industries.