There was an interesting exchange at the 2022 Reagan National Defense Forum where Senator Wicker was discussing adding funding for defense and shipbuilding in particular — as Wicker is from Mississippi where HII has a shipyard in Pascagoula. Here is CNO Gilday’s follow-up remarks:
In terms of looking at our investments right now, on the Hill, is the largest shipbuilding budget in the history of the United States Navy at $27-and-a-half billion. You cannot throw much more money at these seven shipbuilders that build U.S warships in the United States of America right now. Their capacity is about at maximum, and Congress is helping us max them out. I would say the same thing for weapons production if you take a look at our budgets and where we’re putting money, we’re trying to send a very strong signal to industry that we need consistent stable production lines for weapons with range and speed for a long time.
Now, this is interesting for at least a couple of reasons. First, the Navy pulled a destroyer from the FY 2023 budget which was received poorly on the Hill, and Congress recently added a third DDG-51 Flt III destroyer back.
Second, the CEO of the largest shipbuilder in the United States, HII, recently said that he sees inflation and supply chains as making it challenging to get new ships under contract due to price. He asserted that HII sees its mission tech business unit growing faster than shipbuilding. The company recently acquired Alion for $1.65 billion. Indeed, HII was recently rebranded from Huntington Ingalls to signal the shift.
HII Pascagoula is one place where DDG-51s are produced. Presumably investment in shipbuilding capacity was an alternative use of the $1.65 billion used for acquisition. But HII is rational, and so they chose not to invest in shipbuilding capacity despite record SCN budgets and support from the Hill for a good business reason. This perhaps mirrors the reluctance for industry to invest ahead of demand for munitions.
Congress and the Navy should take a good look at themselves because industry incentives starts with government. It sounds like contract wrangling is just as much to blame for low-and-slow production rates as is capacity.
The Navy wants to grow its ship count to at least 355 if not more to include unmanned vessels. If traditional industry won’t take an influx of funding, then maybe the Navy Unmanned Task Force can use it to reward and grow new capacity based on lessons from Task Force 59 and other exercises like IMX, SCOUT, and RIMPAC.
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