Skip to comments.U.S. Navy Is Removing Life Support For Shipbuilding Industry
Posted on 07/11/2005 10:19:47 AM PDT by mr_hammer
Manufacturing News July 8, 2005 Vol. 12, No. 13 812 Words Page 1
U.S. Navy Is Removing Life Support For Shipbuilding Industry
The United States shipbuilding industry is on the verge of losing most of its component suppliers due to severe cuts in naval shipbuilding budgets and Department of Defense procurement rules that encourage acquisition managers to buy products from the lowest-cost commercial suppliers overseas, claims the American Shipbuilding Association.
Next year's proposed budget for naval ships is $3.2 billion less than the amount appropriated in 2005, says Cynthia Brown, president of the American Shipbuilding Association. Since 2001, defense spending has increased by 28 percent, which does not include supplemental appropriations, yet the naval ship procurement budget has declined by 33 percent. If present budgetary trends continue, the U.S. naval fleet will drop from 288 ships today to fewer than 200 ships by 2015.
The situation is becoming increasingly difficult for the six major shipyards, but it is even worse for U.S. equipment suppliers. "The Department of Defense has been working to repeal and weaken laws that require ships and certain ship components to be manufactured in the United States," said Brown in prepared testimony to the U.S.-China Economic and Security Review Commission. "The reliance on U.S. manufactured equipment is dissipating in response to pressure from DOD to open competition to foreign sources and to lower military specifications in an effort to reduce costs. DOD has been urging defense contractors to rely more on commercial off-the-shelf systems rather than systems built to military specifications. This emphasis on contracting with the lowest-cost producer is forcing all member companies of the defense shipbuilding industry base to source more of its material, components and systems foreign."
In most naval ship subsystem and component categories there is only one U.S. manufacturer remaining, Brown notes. Eighty-percent of the components manufactured for the Virginia Class submarine come from sole sources. "Production rates are not high enough to sustain more than one company and the companies left are struggling to stay in business," says Brown, whose membership includes the six major shipyards and 70 suppliers.
The U.S. industry, which employs 350,000 people, is producing six ships per year. (Market leader, Hyundai Heavy Industries of South Korea, produced 60 ships last year.) U.S. production is set to decline to four next year, due in part to the high cost of steel, a result of booming demand in China. The Navy says nine or 10 ships need to be built each year in order to have a 300-ship armada.
While the direction of the U.S. naval shipbuilding industry remains on a downward slope, the situation is the opposite in China. China is aggressively investing in its shipbuilding capacity. It is expected to have a submarine fleet that is twice the size of the U.S. fleet of 33 subs by 2010. It has started building a new class of destroyer that is "believed to match the air defense capability of the DDG-51 class," says Brown. "In 1989, China had essentially no shipbuilding industry or market share. In a little over a decade, China has invested in its shipbuilding industry to become the third largest builder of commercial ships behind South Korea and Japan."
China now has the capacity to produce 16-million deadweight tons a year. Its China State Shipbuilding Corporation recently announced a $3.6-billion shipyard construction project on Changxing Island. "Once completed, the shipyard is expected to have the capacity to produce more than 4.5-million deadweight tons a year, making it the largest shipyard in the world," says Brown.
China is also investing heavily in its component suppliers. It has stated that it wants 100 percent of all systems, components and materials to be produced in China.
"More and more manufacturing of ship components and systems will migrate to China as DOD encourages foreign sourcing in its efforts to find the cheapest sources," says Brown. "This has already begun with regard to materials for naval components. The manufacture of entire components and systems will migrate to China in the next several years under current DOD policy with respect to outsourcing."
The United States needs to address China's naval security challenge, Brown asserts. "If the industry is reduced further, the U.S. will have to reconstitute the industry if it is to counter the threat from China," she says. "Reconstitution of facilities and the skilled workforce, if possible, will be extremely costly and will take a decade."
She recommends that DOD's shipbuilding budget be sustained at between $15 billion and $16 billion a year, and that 12 combatant and logistics support vessels be built each year. At current rates, China will surpass the U.S. in naval vessels in 2015, based on the conservative estimate of China adding 12 ships per year. By 2024, China is projected to have more than 300 naval vessels, to about 180 for the United States.
The U.S. Congress should also require that naval ships and their components be manufactured in the United States, says Brown. "This action will ensure America's independence in determining its own destiny."
Can't possibly see any good to this given China's recent Naval build up. Not good, not good at all!
You mean like we did to the Soviet oil pipeline industry?
This is great news! We'll be able to save a bundle by buying warships on the cheap from the Chi-Coms. Maybe if we offer a bonus package, they'll deliver our new ships before the war breaks out.
There is no US ship building industry.
There was even a lame effort to build two US built cruise ships but that fell flat due to corruption and union thugs.
In the end US ship building has gone the way of the US merchant marine.
It just costs too much to flag a ship with a US flag. The navy deals were just a way to keep the knowledge if not the capacity alive.
The union thugs and the Democratic legislators they got elected created what they thought was the "ideal" laws and regulations. Now their actions are coming back to bite them in the a**.
The unions, socialists all, are responsible for this decay.
I was thinking the exact same thing.
It's just plain murder!!! Someone ping the Terri activists!
Why don't we just outsource our entire military overseas?
I'm sure the Chinese would be willing to provide us an Army to fight themselves.
Why not ask the Clintons?
and oddly the american merchant marine union sits on a pension fund of several hundreds of millions.
Unions are never about workers or jobs, unions are about controling and profiting from the administration of pension monies.
Don't forget Bill Clinton crowing that America isn't "the big dog on the block" anymore.
The Navy League is a good organization to join if you want to do something to stop the decline of the maritime industries in the United States.
They are very concerned about the Merchant Marine,ship building capacity in the US and the shortage of American mariners and seafarers. They have a strong caucus and are working with Congress to correct some of these deficiencies.
But China is no threat to us! Just ask President Bush and all the senators who voted for normalizing trade relations with the Chicoms.
I am quite afraid you are right!
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