Replies

I can assure you that if the Congress decided to double the number of ships in the Navy (and the hidebound bureaucrats in the Pentagon went along with it), the folks at Newport News and Electric Boat would quickly put in place the infrastructure to respond to the increase in orders.

I don't think so. Replacing infrastructure takes time. You just don't slap stuff like that together overnight. Once you've scrapped a major facility, restoring it takes a concerted effort, if you are able to do it at all. Better to keep what you have rather than trashing it for short-term "gain", then having to scramble to recover it when you get caught with your pants down.

Harder to replace is skilled labor and intellectual capital once that goes away. I was involved with an R&D project a few years ago that needed some specialty nuclear materials that used to be supplied by Oak Ridge. I called down there and the division that used to handle that stuff was disbanded a few years prior. The people that worked there were laid off and scattered to the four winds. They finally found an old-timer that had previously worked there that they kept on as a janitor or something. He checked into the possibility of restarting the work and found that all the machinery and equipment used to make the materials had either been scrapped or sold to the highest bidder on the foreign markets. The only supplier I found for the materials was a company in Europe and they said it might take up to two years to get an export license (for me to import technology that, ironically, had been invented and developed here). The research program was canceled as a result.

"Once you've scrapped a major facility ..."

Newport News and Electric Boat are hardly on the endangered species list. Newport News employs about 19,000 people and Electric Boat about 11,500. They both have excess capacity and are constantly lobbying Congress and the Navy for more contracts. The decline in Navy shipbuilding is the primary reason why we have fewer and smaller domestic shipyards, and that is the result of a *political* decision having nothing to do with free trade. Let the Chinese and the Nordic countries build low-value commercial ships (which have very few complementarities with military shipbuilding) and we'll focus on building the next generation of aircraft carriers and submarines.

"Harder to replace is skilled labor and intellectual capital once that goes away."

Here I agree with you completely. But I am certain that, for example, Newport News would not turn down a contract for another carrier on the grounds that it couldn't hire the requisite skilled labor. They have turned down (or, more correctly, declined to bid on) commercial contracts because they don't think they can make money on them *and* they know from past experience that they wouldn't have beneficial spillovers for their defense work.

Harder to replace is skilled labor and intellectual capital once that goes away. I was involved with an R&D project a few years ago that needed some specialty nuclear materials that used to be supplied by Oak Ridge. I called down there and the division that used to handle that stuff was disbanded a few years prior. The people that worked there were laid off and scattered to the four winds. They finally found an old-timer that had previously worked there that they kept on as a janitor or something. He checked into the possibility of restarting the work and found that all the machinery and equipment used to make the materials had either been scrapped or sold to the highest bidder on the foreign markets. The only supplier I found for the materials was a company in Europe and they said it might take up to two years to get an export license (for me to import technology that, ironically, had been invented and developed here). The research program was canceled as a result.

What a sad story!