I see this claim being made repeatedly during discussions about ship design and construction. It's a common belief among people commenting on design and construction but being common doesn’t make it true. On a relative basis, it may have an element of truth to it. A quantity of steel may be cheaper than an Aegis array, for example. However, steel is not free and neither is air – not by a longshot. If they were, we'd just build every ship to be the size of a battleship and give them all two feet of armor. Steel has a significant cost and so does air. The Navy and the shipbuilders recognize this even if the blogosphere does not.
Consider the cost of the LCS. The LCS, because of the purchase contract, gives us a unique insight into the cost of the bare hull (the steel and air portion of the ship). I’ve covered this repeatedly so you should know what’s coming. The contracted cost of the LCS, currently around $500M per ship, is just for the bare hull. All the electronics, sensors, radars, weapons, computers, various fittings, etc. are supplied from a separate government account line that is not included in the contracted amount. While the government supplied equipment costs have never been released, a seemingly reasonable estimate would be $200M-$300M. That pushes the cost of the LCS to $700M-$800M and that’s without a module. A module will push the ship cost to up near $1B. Thus, we see that the bare hull, mostly just cheap steel and free air, represents a half to two-thirds of the total cost – hardly cheap and free!
Remember that there are secondary costs associated with steel, as well. Every pound of steel must be propelled through the water which means that every additional pound of steel requires additional horsepower which means bigger engines which, in turn, means more bunkerage. More crew is needed to maintain the larger engines and more crew requires more berthing, mess, laundry, etc.
Before we wrap this up, let’s touch on the “air is free” part of the saying. Now, I understand that it makes a catchy slogan but we need to remember that air is bounded by steel bulkheads, decks, and overheads which cost money. Hence, air is not free. Further, that “air” must be heated, cooled, lighted, cleaned, maintained, manned, powered, and propelled through the water (bigger engines for every cubic foot of “air”). The air above deck may be free but the air below deck costs money!
I’ve seen proposals to enlarge the LCS, adding 20% - 50% length, to accommodate more weapons and make it a “warship”. People brush off the resulting costs with the “steel is cheap and air is free” comment. Well, 20% - 50% more hull would result in a 20% - 50% increase in the hull price of $500M which would give a hull cost of $600M - $750M. That’s not cheap or free.
Many use the “cheap and free” argument to justify frigates the size of Burkes; in fact, many want to use the Burke hull as the basis for a frigate because the “steel is cheap and air is free”. We’ve just demonstrated that steel is not cheap and air is not free. A Burke size frigate would be unaffordable in the numbers required for an effective frigate class.
As we continue to discuss ships costs, let’s bear in mind that steel is far from cheap and air is nowhere near free. Factor that in to your proposals. Carry on!