It may be possible to concentrate surface combatant construction at a single shipyard, but it wouldn’t be prudent.
In the next decade, the Navy will introduce two new classes of surface combatants, the SC-21 and the arsenal ship, while completing the Arleigh Burke (DDG-51)-class Aegis destroyers. At present, there are two dedicated shipyards for surface combatant construction—Bath Iron Works and Ingalls Shipbuilding—and the Navy most likely will use both to build any future classes. As the defense budget and procurement resources decrease, however, the question remains whether a further reduction in the number of surface combatant shipyards should be considered. Is it advisable for the United States to concentrate orders at a single yard?
Either yard can accommodate the current orderbook of roughly three surface combatants per year. Any rightsizing probably would mean that one shipyard would receive all the remaining Arleigh Burke-class orders. This decision would result in either the certain closure of Bath or the almost certain closure of Ingalls, depending on which yard lost the contract—but there are several reasons why such an event is not advisable.
National security is the primary reason to retain both shipyards. To meet national security needs, the Navy must maintain an industrial base that is capable of delivering complex surface combatants within a reasonable time. Shipyard production limitations and future threat scenarios do not support the reduction of surface combatant shipyards beyond the present number of two.
At present, the maximum number of ships the two yards can produce per year is ten: three at Bath and seven at Ingalls. This number is based on available launching positions at each shipyard and past construction records. There will be three Arleigh Burke-class destroyers, one LPD-17, and possibly a vessel for a foreign government, a commercial ship, an arsenal ship, and/or an SC-21 under construction per year in the future (out to fiscal year 2006). That leaves enough shipyard capacity to produce at most three or four additional ships per year.
A deficiency in shipyard capacity is a major concern during a global war or during the build-up years preceding a conflict. If, for example, relations on the Korean Peninsula deteriorate, or China decides to seek a military solution to Taiwan’s sovereignty, there could be 5-10% losses—6 to 15 surface combatants—as a result of combat damage. It would take both shipyards a minimum of two years to compensate for such loss, providing they had materials immediately available to increase their production. If only one shipyard were available, this time frame could double. The Navy would have to adjust or curtail certain operations until the lost ships could be replaced.
Even in peacetime, the industry still will be stretched to meet Navy requirements. The 1995 Surface Combatant Force Level Study states that 135 surface combatants are needed to respond to two major regional contingencies. If there is no allied contribution, the number will increase to 165.1 In 1995, the Navy had 113 surface combatants—at least a 22-ship deficit. This gap may increase as limitations on procurement and the retirement of the nuclear-powered cruisers and some Oliver Hazard Perry (FFG-7)-class frigates make it difficult for the Navy to maintain a one-for-one replacement rate.
By the end of the next decade, the rest of the Oliver Hazard Perry class will have been decommissioned, and the Spruance (DD-963)-class destroyers will be reaching retirement age. In addition, the Ticonderoga (CG-47)-class cruisers and Kidd (DDG-993)-class guided missiles destroyers will be approaching 25 years of service. The lack of vertical-launch systems and the age of their weapon systems could mean the early retirement of these ships as well. To compensate for the loss of these ships from the active fleet, production would have to be increased to six or more ships per year. Bath, under current conditions, would not be capable of meeting this demand. The strain on Ingalls would be severe unless all other ship orders—including the LPD-17 and future LHX—were canceled. This bow wave of new construction requirements would be too great for any single shipyard.
An option to increase production would be to reopen or convert other shipyards to surface combatant construction. This would not be easy. History shows that once a shipyard discontinues such construction, it never resumes it. For example, Newport News at one time was able to build battleships, but the shipyard now lacks specialized equipment and skilled labor to do so. In the past, Ingalls constructed nuclear submarines, but it cannot today because of equipment, labor, and environmental concerns.
In addition, the lack of commercial activity has resulted in fewer shipyards not already involved with Navy construction programs. According to the Maritime Administration, there are 19 first-tier yards available for ship construction, down from 21 in 1994.2 Nine of these shipyards currently engage in repair or barge construction only. The tenth is Electric Boat. The eleventh, Intermarine, is a small shipyard and the only U.S. yard that constructs mine hunters with composite materials. Of the remaining eight, three have orders for either ferry, tender, or oceanographic ship construction. Only five shipyards—including Bath and Ingalls—are actively building large ships. That leaves just Newport News, Avondale, and NASSCO available for conversion to surface combatant construction.
Newport News, Avondale, and NASSCO all have existing contracts and obligations with the Navy. To sacrifice these contracts for the construction of surface combatants may be impossible. The priority at Newport News has been to build and overhaul carriers. Additional personnel likely would be directed toward submarine construction, for if Electric Boat were unable to meet the submarine requirements during a major conflict, there would be nowhere else to seek relief but Newport News. Avondale and NASSCO build replenishment ships, and roll-on/roll-off vessels for the Army. Beyond replacing immediate war losses, these two shipyards would be responsible for providing the bulk of any required new-construction sealift. This sealift requirement may not permit the use of these shipyards for surface combatant construction. That reduces the number of shipyards available for surface combatant construction to zero.
The resurrection of an inactive shipyard or increasing production at existing yards will be difficult and expensive because of the dissipation of the specialized labor base. According to the Maritime Administration, in 1982 there were 171,600 people directly employed by the industry in shipbuilding and repair. By 1995 that number had fallen to 106,000.3 Of those, some 71,740 were employed by one of the first-tier shipyards; the remaining workers were employed in smaller yards concentrating primarily in repair work. This level of employment is not sufficient to expand construction in an acceptable period of time.
To reestablish this labor base would require increasing wages to competitive levels and retraining thousands of people. That is costly and—because of a lack of training facilities—time intensive. For example, a machinist or welder must have three and a half years of on-the-job training to advance from craftsman to journeyman. A joiner, shipfitter, electrician, or pipefitter must have four years.4
In addition to manpower, most shipyards will need significant improvements before they can begin construction. Three of the 19 major yards would have to expand their building ways to meet the minimum dimensions required for construction of an FFG-7. Five do not meet the minimum dimensions required for a DDG-51. Many yards would have to increase steel-fabrication throughput capacity and upgrade piping and machine shop spaces and electrical shops. There also are the problems involved with developing a supporting industrial base—suppliers for pipe, cable, steel, electronics, and the weapon systems—without disrupting production at existing shipyards.
The shipyards themselves might mitigate the problem by reentering the commercial market. This would provide a labor force trained in basic ship construction that is not dependent on Navy ship orders for survival and would give the Navy more flexibility in awarding contracts. At present, the Japanese government has such a strategy. It has awarded contracts for four Kongo-class destroyers (with the Aegis weapon system) to four different shipyards, thus allowing each to maintain the capability to build surface combatants. This is possible because the shipyards have large commercial orderbooks (and some government subsidies) that sustain the work force and the supplier infrastructure. At the end of the 1970s, the United States was in a similar position, but with the discontinuation of government subsidies in 1981, the orderbooks for commercial ships decreased to zero by 1988. The U.S. Navy became the sole financial support of the industry.
Only recently has the commercial shipbuilding industry started to reinvent itself. With the help of government Title XI loan guarantees and modernization efforts, the orderbooks for large oceangoing commercial ships have risen from zero in 1990 to nine in 1995.' Additional riverboat construction in smaller yards for the gaming industry also has provided some stability to the labor base. If the reentry into the commercial market is successful, the Navy will be able to stop awarding contracts based partially on protecting the industry. Until that time arrives, however, the Navy must maintain at least two surface combatant shipyards.
1 Surface Combatant Force Level Study: Requirements for Joint Warfare, Director, Surface Warfare, Office of the Chief of Naval Operations. August 1995.
2 “1995 Report on Survey of U.S. Shipbuilding and Repair Facilities," Maritime Administration, U.S. Department of Transportation, p. 44.
3 Ibid., p. 56.
4 “Prospects for Shipyard Mobilization: the Shipbuilding Industry and the U.S. Navy in Peace and War,” Naval Engineers Journal, January 1989.
5 "Newport News Shipbuilding Pushes Full Speed Ahead," Maritime Reporter and Engineering News, March 1996. p. 74.
Mr. Nikles is a management analyst for the defense contractor Logicon Syscon Inc. He graduated from George Washington University’s Elliott School of International Affairs in 1994 with a Masters of Arts degree specializing in science, technology, and public policy.