Navy Cuts Could Devastate Gulf Coast Shipyards

Tony Capaccio of Bloomberg Business News today reported the Navy’s planned program cuts for fiscal 2011-2015. When combined with other recent Navy actions, they add up to a heavy blow for naval shipbuilders on the Gulf Coast. First, the Navy wants to cut one of two 40,000-ton helicopter carriers in its plan of record, billion-dollar ships that are built at the Northrop Grumman yard in Pascagoula, MS. Second, the service wants to eliminate both next-generation command ships in its plan, which almost certainly would have used the same hull employed on the LPD-17 amphibious docking ships built at Pascagoula and the Northrop Avondale yard near New Orleans. Third, there is no sign of additional LPD-17 construction in the plan, nor of a replacement for aging LSD amphibious warships that would probably also use the LPD-17 hull.

The Navy is also cutting funds for “mobile landing platform” vessels and cutting two of eleven high-speed troop-carrying ships that would have been built at the Austal Shipyard near Mobile, AL. Austal is facing a separate challenge as a result of last week’s decision to select a single design for the Littoral Combat Ship being built there by General Dynamics and in Wisconsin by Lockheed Martin. Some observers think the GD/Austal version will be at a competitive disadvantage in any down-select because the Lockheed vessel was begun a year earlier and thus has a more mature design. On the other hand, GD looks like a winner in the decision to shift work on next-generation Zumwalt destroyers to its Bath Iron Works in Maine, leaving construction of smaller Burke-class destroyers at Pascagoula. If the proposal to eliminate a helicopter carrier at Pascagoula is implemented, that will probably drive up costs on the Burkes by forcing that class to carry more of the shipyard’s overhead costs.

You could argue that the Navy has tried to spread around the pain by eliminating one of ten Virginia-class attack submarines to be built during 2011-2015 at the Northrop Grumman yard in Newport News, VA and the General Dynamics yard in Groton, CN. However, that money goes away at the same time the service is likely to commence development of a replacement for Trident ballistic-missile subs, so the two yards may end up experiencing a net gain in revenues despite the loss of a sub.