American Shipbuilding Association

Seven Ships Appropriated for FY 2004

Approving $11.5 billion for the Navy’s shipbuilding and conversion budget, on September 30th the President signed into law the FY 2004 Department of Defense Appropriations Act.  The agreement reached by House and Senate Appropriations Conferees provides for the construction of seven new ships, a two ship increase over last year’s budget.    

The conferees agreed to adopt the Senate’s proposal approving multi-year procurement contract authority for five Virginia class submarines.  Though rejecting the Navy’s request of a multi-year for seven submarines, conferees agreed to a multi-year contract with the expectation that the approval will serve to stabilize the program and reduce overall costs.  This action reflects a progressive move by both the Navy and Congress to adopt new ship financing methods that will lower costs to the taxpayer while ensuring the Navy can procure the ships it desperately needs. 

Conferees added $20 million over the Administration’s request for modernization and upgrades of the DDG-51 class of surface combatants.  An additional $135 million was approved for advanced procurement of long lead materials and module construction for LPD 23, which will facilitate the Navy budgeting the remainder of the funds requested for this ship in FY 05, thus filling a gap in the program.  Funding in the amount of $722 million for two T-AKE’s, which was rejected by the Senate, was restored in conference.  

The conferees included $168 million for continued research and development of the Littoral Combat Ship (LCS).  However, in order to ensure there is no duplication between LCS and other platforms, conferees directed the Navy to outline the mission details of LCS.  Additionally, conferees expressed concern over the Navy’s plan to purchase the first LCS and DD(X) with research and development funds.  Conferees agreed that should the Navy’s FY 05 request include funding these ships within RDT&E, “all research and development acquisition rules shall apply, including technology readiness reviews, milestone decisions, and test and evaluation before these ships may transition to procurement.”    

While the Administration and Congress are finally moving in the right direction by increasing funds for the construction of naval ships, and adopting smart business practices for the acquisition of these ships, procurement numbers remain historically low.  The naval fleet has dropped to 295 ships.  In order to rebuild the fleet to a meager 300 ship force, 12 ships will have to be ordered each year. 

Funding For Deepwater Increased

Signed into law on October 1st, the Homeland Security Appropriations legislation for FY 2004 included $668 million for the Coast Guard’s Integrated Deepwater Systems Program.  This is a $168 million increase over the Administration’s budget request. 

The Deepwater Program is aimed at replacing the majority of the Coast Guard’s aging fleet of cutters and upgrading obsolete technologies.  The Program marks the largest recapitalization effort in Coast Guard history. 

Strong Shipbuilding Industrial Base Essential for U.S. Strength

Years of low procurement have taken their toll not only on the naval fleet, but the shipbuilding industrial base.  Discussions on the need to reverse the decline were the focus of the second of this year’s American Sea Power in the 21st Century Forums held on September 16th. 

“The United States cannot continue to remain a world power without a strong Navy and strong shipbuilding industrial base, and we need only look at history to see that when a nation loses its shipbuilding strength, it deteriorates as a nation.” stated Senator Trent Lott (R-MS).  Vice Admiral John Nathman, Deputy Chief of Naval Operations for Warfare Requirements & Programs, acknowledged that while the United States Navy is the dominant force in the world today, the question is how to maintain that dominance.  The Admiral concluded that the only way to achieve this goal is to invest in the country’s naval future starting today. 

However, Senator Lott was critical of the Pentagon, which in his view, fails to develop budgets to meet its needs, stating that Congress must often step in to raise the number of ships and funding for those ships.  While he does support the Navy’s approach to finding alternative methods of financing ships, such as multi-year procurement and incremental funding, Senator Lott commented that the Navy does not fight enough for a larger piece of the defense budget. 

While it is imperative to increase the number of ships in the Navy budget, it is equally important to ensure that there exists a viable industrial base to construct these ships.  The past decade witnessed dramatic shrinkages in the shipbuilding workforce and supplier base.  Fluctuations in procurement rates lead to hiring and firing binges of highly skilled craftsmen, which impair recruitment and retention.  Such extremes can be avoided through stable production rates.  Sustained production also filters down to the supplier level, allowing companies to maintain stable production, and in turn, prices.  Senator Mary Landrieu (D-LA) stressed that investing in the Navy strengthens not only our national security, but domestic security through jobs. 

Representing the industry perspective, Phil Dur, President of Northrop Grumman Ship Systems, noted that while there is competition among the yards for naval contracts, there is a great deal of cooperation as well.  In an era of low procurement, surface combatant builders, for example, are working closely to ensure the highest quality and most capable surface combatant ships in the world.  However, industry cooperation can only continue if ship procurement levels increase.  Dugan Shipway, President of Bath Iron Works stressed that the nation must have a financially sound shipbuilding base and a highly skilled workforce in order to respond to increased build rates.  Because of the interdependence between the shipyards and the Navy, there needs to be a consideration of near and long term naval requirements, and the ability of the industrial base to meet those requirements.  According to Phil Dur, “If, as a nation, we are unable to articulate a national imperative for a Navy, clearly define mission and set number requirements for the types of ships needed, we will weaken the shipbuilding industry, which will imperil our ability to build in the future.”  Therefore, it is very important for Congress and the Navy to evaluate the needs and capabilities of the shipbuilding enterprise to ensure industry resources are available. 

Op-Ed Urges “Supporting the Fleet”

In a September 18th article written by Senator Trent Lott (R-MS), “As America faces new threats that more than ever require our naval mobility, it’s time we stopped living off shipbuilding investments made during the 1980’s, and begin charting a course to ensure our country remains the world’s largest, most formidable maritime power….Shipyards and defense contractors are doing their job…but it takes investment to turn next generation ideas into reality, into ships that can defend America’s interests and carry our cargo well into the 21st Century… America must encourage its shipbuilding industry to engage in the production of all kinds of ships – not just military, but commercial and civilian ships, too.  Shipyards cannot simply stop production, lay people off, and then expect to resume operation later with the same capacity, the same good prices for the taxpayers, and the same quality, high-tech product.  Indeed, we must feed our shipbuilding industry regardless of whether we are at war or peace… America is at a crossroads.  We must decide whether we intend to remain a maritime nation or gradually fade.  Increased shipbuilding investment across the board, in both military and commercial shipbuilding, is necessary if we are to maintain our maritime capability and our national security.”   

ASA Welcomes New Members

ASA welcomes Battelle and Raytheon Integrated Defense Systems (IDS) as new Partner companies.  Headquartered in Columbus, Ohio, Battelle designs and builds detection and security technologies utilized in naval warfighting, special missions, and environmental initiatives undertaken by the Navy and Marine Corps. 

Raytheon IDS, headquartered in Tewksbury, Massachusetts, provides integrated air and missile defense and naval and maritime warfighting solutions to U.S. armed forces. 

Industry News

World Trade Center Steel Used in LPD 21

More than 24 tons of steel from New York City’s World Trade Center has been melted down and processed for the USS New York, the new LPD-21 amphibious ship.  The ship will be constructed at Avondale in New Orleans, Louisiana. 

NASSCO Starts Construction on New Ship Class

Construction on the first T-AKE, a dry cargo/ammunition ship, has begun at National Steel and Shipbuilding Company (NASSCO) in San Diego, California.  Designated the Lewis and Clark class, T-AKE will be operated by the Military Sealift Command, and will replace two classes of aging cargo ships. 

Well Said!

“Investing in the Navy not only strengthens our defense and national security, but our domestic security.  Building ships is building jobs.”

Senator Mary Landrieu (D-LA)
American Sea Power in the 21st Century Forum
September 16th, 2003