The Afterguard

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Building ships for the sake of building ships

Two articles appeared on NSnet in the last week that caught my attention. The first was "US shipyards unhappy with defense budget," which originally appeared in the Virginian-Pilot. In this article, Cynthia Brown from the American Shipbuilding Association criticized the Bush administration's defense budget for cutting back funds for shipbuilding. She said "We don't advocate building ships for the sake of building ships." But that is exactly what she is advocating.

US blue-water shipbuilders long ago abandoned international commercial work. They focused on the more profitable and secure Jones Act vessels and Navy building. To protect these markets, they have relied on political influence more than meeting the needs of their customers. Just like the American auto industry which makes larger profits on SUVs and luxury cars, US shipbuilders make more money on large programs and projects like nuclear submarines and aircraft carriers.

The American auto industry has managed to lose an opportunity as its customers start to turn away from conventional auto engines to hybrids. The Japanese have come to the market with products and technologies that position them for fundamental changes in the transportation infrastructure, like alternative fuels and fuel cells. The Europeans are taking another tack and looking at more efficient diesel engine technologies. What is the first product to be offered by an American auto manufacturer? Well Ford is offering a hybrid-powered SUV. What are the others doing? Building the same products while trying to hit a hydrogen-powered homerun.

What's this got to do with shipbuilding? Well another article appearing in NSnet should be a wake-up call to shipbuilders: "The new look for the US Navy" (from The State.com). This article describes how the Navy is redefining what it needs in the new defense environment. The Navy wants classes of ships that are smaller, faster, and cheaper. They want them to be able to operate in shallower coastal areas, the green water.

So guess what? The customer has changed what they are looking for. The big cold war ships are more expensive and less effective in a changed defense environment. NG and GD should get a clue: the market has shifted and they're missing it. What's more, I'm also not sure I like the idea of the shipyards telling the Navy what it is going to buy regardless of what the Navy says it needs.

Now smaller shipyards and manufacturing operations are the competition. The Navy will still need a blue water fleet, but as they say, just not as many of the big ships as we have currently. Lots of little ships should help the numbers game: for one $12B aircraft carrier we could build 50 smaller ships. If we do that, then the number of ships in the fleet goes way up. Think of all the communities and districts that would benefit from the construction and home-porting of all those smaller ships. There goes the political support.

Posted at 13:54:51 on 02/18/05 by Tom Swift

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