American Shipbuilding Association

The Case for a Navy Budget Increase

At a March 20th House Armed Services Procurement Subcommittee hearing, Chairman Curt Weldon (R-PA) stated that the annual rate of combat ship procurement, “gives the committee cause for concern from three perspectives. First, the low rate, if sustained would leave the Navy well short of its long-term combat ship requirements. Second, substantial increases in the annual shipbuilding rate are not planned until the end of the Future Year Defense Plan (FYDP) when other modernization demands may compete with funds for this purpose. Finally, the low rate of combat ship procurement in this budget may have a detrimental effect on our Nation’s shipbuilding industrial base – the skilled labor and the investment needed to sustain a robust capability to meet our future shipbuilding needs.”

Ms. Cynthia L. Brown, President of the American Shipbuilding Association, testifying on behalf of the shipbuilding industry, urged the committee to increase the Navy’s shipbuilding budget by $3.6 billion to procure one additional DDG-51, and one additional LPD-17; provide for an Economic Order Quantity procurement of SSN-774 materials to save money in the program and facilitate an increase in submarine production to two per year; increase funding to accelerate the LHD-class of Amphibious Assault Ships; and restore the originally planned schedule to order the CNV(X) in 2006. “While this increase will not fix the decade of neglect, it is an urgently needed first step in stopping the rapid deterioration of America’s sea power capability,” said Brown.

“During the 1980’s, under President Ronald Reagan, the Navy ordered an average of 19 ships per year in an effort to build a 600-ship Navy. During the 1990’s, the Navy ordered an average of only six ships per year. While we in industry thought the Navy’s shipbuilding rate could go no lower – it has. This year’s Department of Defense Budget represents the largest overall increase in defense spending in years, but instead of rebuilding the Navy – it cuts naval ship procurement by $1 billion and funds only five new ships. The Administration’s budget is also $5 billion below President Clinton’s FY2001 budget request of $11 billion for 8 ships. At this low rate of ship procurement, the fleet will continue its nosedive toward a force of 180-ships, and the unit cost of ships will continue to rise,” Brown stated.

Ms. Brown noted that, “a tremendous disconnect exists between Navy shipbuilding requirements and Navy budgets, which presents a grave danger to the shipbuilding industry and to the Nation. In order for the Navy to sustain a force of 305-ships, it needs to procure 10 ships a year. One aircraft carrier every four years is required, but this budget proposes one every six years; two Virginia class submarines are required each year, but this budget proposes only one; four DDG-51/DD (X) surface combatants are required each year, but this budget proposes only two; two LPD class amphibious ships are required each year, but this budget proposes only one; one LHD class amphibious assault ship is required every three years, but this budget proposes only one every seven years; plus the several combat logistics ships that make up the battle force.  For each year that less than 10 ships are procured, additional ships must be procured in subsequent years to make up for the shortfall to sustain a 305-ship Navy.  Today the Nation enters 2003 with a 42-ship deficit in maintaining 300 ships. Said another way the Nation is already on course to drop to 258 ships, based on previous enacted budgets. A declining Navy, combined with the fact that it takes four to eight years to build each warship, speaks to the urgency of investing immediately in naval shipbuilding. No matter the age or capability of a ship – it cannot be in two places at the same time.  Numbers do matter.”

“The shipbuilding industry and the Navy are intricately linked. A shrinking Navy equates to a declining shipbuilding industry. Neither can exist without each other, and the Nation is loosing both. The industry is down to only two builders of nuclear ships, two surface combatant builders, and two builders of auxiliary and amphibious ships to meet the Nation’s defense requirements. In our supplier base there are only two, and in many cases only one, suppliers left of critical ship components. This state of the industry is a direct result of under-budgeting the Nation’s naval fleet requirement.  Despite the hundreds of millions of dollars the industry has invested in facilities, technologies, processes, and people to increase efficiencies to mitigate the cost of low rates of naval production, the industry no longer has the financial means to invest based on this budget. We are facing huge layoffs over the next five years, as we deliver our backlog with few new orders on the horizon.  The supplier base will continue to contract with us. This further contraction and loss of our people places in jeopardy this industry’s ability to build the number of ships required to meet America’s defense needs in the future if orders are not increased now. Delay equates to irreversible decay,” testified Brown.

Administration Urged To Support
“Tax on Delivery” Legislation

Senator John Breaux (D-LA), joined by 38 of his colleagues, urged the Senate Appropriations Committee to appropriate $50 million for the Title XI Ship Loan Guarantee Program in Fiscal Year 2003. This powerful group of Senators represents a sustained and continued coalition of supporters of Title XI in the face of continued attempts to eliminate the program by the Office of Management and Budget.  These Senators, in a letter dated March 5, 2002, stressed to Chairman Fritz Hollings (D-SC) and Ranking Member Judd Gregg (R-NH) that, “Without Title XI Ship Loan Guarantees, commercial ship construction in the United States will, for all practical purposes, come to a halt.”  The Senators went on to cite the program’s importance for small and medium sized ship owners and operators to secure financing for vessel construction to promote U.S. commerce and energy self-sufficiency while protecting our environment and sustaining the defense shipbuilding industrial base.

The following Senators joined Senator Breaux in advocating Title XI funding in fiscal year 2003: Daniel Akaka (D-HI), George Allen (R-VA), Barbara Boxer (D-CA), Maria Cantwell (D-WA), Thomas Carper (D-DE), Lincoln Chafee (R-RI), Max Cleland (D-GA), Thad Cochran (R-MS), Susan Collins (R-ME), Jon Corzine (D-NJ), Christopher Dodd (D-CT), Richard Durbin (D-IL), John Edwards (D-NC), Jesse Helms (R-NC), Kay Bailey Hutchison (R-TX), Daniel Inouye (D-HI), Ted Kennedy (D-MA), John Kerry (D-MA), Herb Kohl (D-WI), Mary Landrieu (D-LA), Joseph Lieberman (D-CT), Trent Lott (R-MS), Barbara Mikulski (D-MD), Frank Murkowski (R-AK), Patty Murray (D-WA), Jack Reed (D-RI), John Rockefeller (D-WV), Rick Santorum (R-PA), Paul Sarbanes (D-MD), Jeff Sessions (R-AL), Richard Shelby (R-AL), Gordon Smith (R-OR), Olympia Snowe (R-ME), Arlen Specter (R-PA), Debbie Stabenow (D-MI), Robert Torricelli (D-NJ), John Warner (R-VA), and Ron Wyden (D-OR).

Mark Your Calendar!

On April 23rd the American Shipbuilding Association, will hold its “Salute to the 107th Congress” reception from 5:30 p.m. to 7:30 p.m., in room 2167 Rayburn House Office Building. During the event, Congressman Gene Taylor (D-MS) will be awarded The Herbert H. Bateman Award for consistent, outstanding, and inspirational leadership in support of a strong American shipbuilding industrial base.  For more information please call (202) 544-8170 or fax your RSVP Form to (202) 544-8252.

Industry News

Gibbs & Cox

On February 28th Ted Tribolati retired as Chairman of the Board of Gibbs & Cox, Inc. capping a 47-year career in the maritime industry. During his tenure with the company he held positions as Head of the Design Control Department, Hull Division Project Engineer for the FFG-7 class detail design, Assistant Head of the Hull Division, and Head of the Production Planning and Control Division.  He was appointed Chairman in 1997. Prior to joining the company in 1973, he worked for the New York Naval Shipyard.

On March 1st, Mr. Kevin E. Moak was appointed as the new Chairman of the Board for Gibbs & Cox, Inc. Mr. Moak has extensive experience in naval architecture, structural design, concept and feasibility studies, contracts, program management, corporate management, and strategic planning.

Newport News Shipbuilding

On March 7th, Newport News Shipbuilding (NNS) was awarded a multi-year, multi-ship, contract by the U.S. Navy for non-propulsion work on Nimitz-class aircraft carriers. The work will be done in San Diego and extended through 2007. The contract is valued at approximately $150 million. The work will integrate private sector topside work while the carriers are undergoing nuclear propulsion work. NNS will lead a team of San Diego based contractors consisting of: National Steel and Shipbuilding Co., Continental Maritime, Pacific Ship Repair, Fabrication Inc., and SouthWest Marine Inc.

“Be just to those who built up the Navy, and, for the sake of the future of the country, keep in mind those who opposed its building up. Read the “Congressional Record.” Find out the Senators and Congressmen who opposed the grants for building the new ships; …The men who did these things were one and all working to bring disaster on the country.”

President Theodore Roosevelt
The Strenuous Life Speech, Given at the Hamilton Club, Chicago, April 10, 1899