Bush seeks funding for shipyards damaged by Katrina

The Bush administration's latest spending request for Hurricane Katrina relief dollars includes nearly $2 billion to rebuild Navy shipbuilding assets at Northrop Grumman facilities along the Gulf Coast that were damaged by the powerful late-August storm.

The Navy funding came at the behest of John Young, the Navy's assistant secretary for research development and acquisition, who last month concluded that the service would need $2.8 billion to fully recover from the hurricane and keep shipbuilding programs alive in the region.

According to the Navy, the money would keep program delays on some of its top ship procurement programs to a minimum, while also helping to maintain a skilled workforce at three Northrop Grumman shipyards: Ingalls and Gulfport in Mississippi and Avondale in Louisiana.

Specifically, funds would pay to repair damage to Navy ships under construction at the Ingalls yard, including an LPD-17 amphibious transport ship and an Arleigh Burke DDG-51 destroyer.

It also would cover repairing and replacing various ship components and subsystems, including computers and other technology stored at the three yards.

In addition, the money would help cover rising fees due to hurricane-related construction delays on two LPD-17 amphibious transport ships.

The request for $1.98 billion is part of an Oct. 28 White House document asking Congress to redirect $17.1 billion in funds originally intended for the Federal Emergency Management Agency's Disaster Relief Fund to help federal agencies and hurricane victims recover from the storm.

The emergency allocation also would "fund the overhead and labor disruption" caused by nearly three months of downtime in some sectors at both Ingalls and Avondale yards, according to the document.

The damage caused by Hurricane Katrina sparked great concern in the Navy that employees would leave the shipyards, where work is sometimes erratic and often unpredictable, to find reconstruction work and other jobs elsewhere in the region.

"When you talk about an electrician, there is a high demand [for that] in areas other than shipbuilding," said Capt. Tom Van Leunen, a Navy spokesman. "It is important to us that we try to minimize that loss of experience."

Van Leunen, however, stressed that the appropriation is not intended to pay for Northrop Grumman's own infrastructure repairs.

"It is only for legitimate costs to the government -- replacing material and that sort of thing," Van Leunen said. "If Ingalls had a crane damaged that belonged to Ingalls," the reallocated federal funds would not cover that.

During a conference call with investors on Oct. 10, Northrop said that it estimates its damages incurred by Hurricane Katrina at roughly $1 billion. Despite some initial concerns, company executives now expect the defense giant's insurer to cover most of those costs.

"We fully expect to recover from our insurance carriers the preponderance of our cost of property damage, repair and replacement," Wes Bush, Northrop Grumman comptroller, said in the conference call.

By Oct. 10, production had resumed on the 11 ships under construction at the three yards, and about 12,500 of the 19,800 shipyard employees were back to work.