We’ve paired our shipbuilding capacity down to the bone. You see it not just in shipbuilding but in ship maintenance. We just can’t get ships out of maintenance fast enough. There’s a huge backlog of ships just waiting to be maintained because our shipyards don’t have the capacity. You figure that out, you want to come to some kind of consensus on a realistic fleet we can build within a realistic budget topline. The Navy tried to do this back in 2020, their future naval fleet study, but the problem with it was their budget assumptions were extremely optimistic.
… The general consensus was that that plan, which had 455 ships and unmanned vessels, new submarines and all this stuff, is kind of unrealistic. They need to go back to the drawing board and they’re doing that today. Everything I’ve heard, that’s what’s going on right now in the Pentagon.
Then, we are probably going to have to dedicate more resources to the Navy. In particular toward building up a sustainable shipbuilding base and ship maintenance base. Until you do that, even if you decide what types of ships you want to build and say, alright we agree on the threat, we agree on the fleet we want to build, here’s our vision — ok, how do we build it? And industry is going to say we can’t. And Congress is going say, if you can’t execute all this money, then why did you tell me you were going to build all this when you can’t execute it because you don’t have a shipyard to contract. Then you’ll be at square one the following year.
There’s got to be four-part discussion, and it’s got to be really strongly budgeted for. If it’s not, then you’re going to face what every program has faced for the last 20 or 30 years, which is — you’re going to plan to build 100 because that gets you economies of scale, and then you’re going to have cost overruns and cut that number from 100 down to 75. Then it turns out your unit costs is 25% more expensive so you cut more. Pretty soon you’re at 50, then 32, then you’re going to end up like the Zumwalt-class where you build three because the cost overruns were so much you decided it wasn’t worth it to build anymore.
If I were to be talking to the folks writing the National Defense Strategy, I would tell them — you’re not going to magically build a larger fleet. One of the reasons I wrote this article was to counter the idea that we could quickly build a larger fleet that’s relevant for China. You can build a larger fleet, but it’s going to be ships that you don’t want in 10 years, because that’s all we have the capacity to build. There’s a saying if you want it badly you get it badly, well if you want a bigger fleet badly that’s how you’ll get it.
That was from a good discussion with Chris Dougherty on the Chain Reaction podcast. One of the root causes of this lack of shipbuilding and maintenance capacity is the programmatic nature of the budget. DoD directly funds ship programs, usually expecting that capital and enabling technologies are covered on contract overhead. The contractors and government are both incentivized to minimize their capital and supply chain costs. 80 percent of the nuclear submarine supply chain is sole source.
The four public shipyards doing maintenance are long overdue for their measly $1 billion-a-year SIOP plan. The production shops are 76 years old on average, and at Norfolk the equipment is on average 15 years past life expectancy. Budgeting should include a balanced investment plan for program end-items as well as industrial capital (government-owned and contractor-owned).
Indeed, in WWII federal spending on facility expansion was almost nil in 1940, but in in 1942 and 1943 it was about two times larger that all private investment. It quickly ramped back down. The lesson is, either invest in facilities and enabling technologies early, or invest in them when the crisis hits.
In general, I think there is a “realists” view that the Navy can’t really grow the fleet. But it seems strange to me that with a huge stimulus to demand, “industry” would say that they cannot fill it. They would only say that if they were hesitant to invest from their profit into expanding capital. Why would they be hesitant? Because they don’t believe the government will follow through on high and sustained budgets when history has shown budgetary waves. Perhaps to break this cycle, new entrants will have to pick up the slack and assume the risk.
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