Naval Shipbuilding: Sinking Fast

Issue Brief

Like the people they employ and the products they produce, industries have a life-cycle. They are born amidst hope and uncertainty; they grow explosively in adolescence; with luck they reach stable maturity; and eventually they decline. There comes a time in the decline of every industry when even the brightest survivors run out of ideas. For U.S. naval shipbuilders, that time is now.

Although it is the world’s leading maritime power, the U.S. has struggled to maintain a healthy shipbuilding sector. High wage rates, heavy regulatory burdens, and an unwillingness to match the subsidies of foreign nations have combined to undercut sales prospects outside the protected domestic market. When the Reagan Administration decided during its first year in office to unilaterally eliminate construction subsidies for oceangoing commercial vessels, it wiped out domestic production.

Shipbuilders barely noticed at first, because the Reagan defense buildup produced a bonanza in naval construction. But when the Cold War ended, the industry had no commercial market to fall back on. It’s been downhill ever since. Orders for combat ships fell from 13 in 1990 to 10 in 1991, 8 in 1992, 7 in 1993, 5 in 1994 and 4 in 1995. The shipbuilding plan Navy Secretary Gordon England inherited from the Clinton Administration envisions building six vessels per year through 2010 — a rate that eventually would yield a fleet of 180 warships, assuming a service life of 30 years per boat.

And now the Navy is having second thoughts about its next-generation DD-21 destroyer, which was supposed to take the place of Arleigh Burke (DDG-51) class destroyers in shipyards when construction of the latter vessel ends in 2004. A break in construction could mean quick death for two of the nation’s six major shipyards. The Navy must develop quickly a plan to explain what it’s going to do, otherwise Congress will intervene.

The Navy doesn’t need another debacle like the cancellation of the Arsenal Ship, and the Pentagon doesn’t need even more congressional micromanagement. The technologies being developed for DD-21 should be expeditiously wrapped into a “Flight III” variant of the Arleigh Burke with reduced crew-size, enhanced survivability and more relevance to emerging missions like missile defense. If destroyer production lapses, what’s left of the shipbuilding industry will be devastated.

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Loren B. Thompson, Ph.D. is Chief Operating Officer of the Lexington Institute in Arlington, Virginia, and teaches military topics at Georgetown University.