We’ve all heard about the recent reports recommending that the Navy fleet size be increased from the current 296 ships (196 combat ships which are the carriers, cruisers, destroyers, subs, and amphibs) to 350-500 ships depending on which report you hear. The Navy is eager to get going on the expansion so the upcoming Navy shipbuilding budget must be crammed with ships, right?
Well, the proposed Senate budget provides funding for 9 ships, only 6 of which are combat fleet ships. The 6 combat ships are:
1x Virginia class submarine
1x Columbia class submarine
1x Constellation class frigate
1x LPD-17 amphibious ship
2x Burke class destroyers
The remaining 3 ships are:
2x T-ATS towing and salvage ships
1x Expeditionary Fast Transport
Assuming a service life of, say, 35 years for the combat ships, a build rate of 6 ships per year leads to a combat fleet of 210 ships. If we discount the Columbia submarine since it’s not really a combat ship except in a nuclear war, the remaining 5 combat ships lead to a 175 ship combat fleet.
That’s not exactly an explosion of shipbuilding and a sprint towards 350-500 ships, is it?
Hey, 7-8 of those ships are actually useful, at least.
ReplyDeleteBesides, the Navy is likely going to get much less than this in the coming years.
"the Navy is likely going to get much less than this in the coming years. "
DeleteWhich says we're either going to have a much smaller fleet than today or our 'fleet' is going to consist of small, cheap, unmanned craft that have only marginal combat capability - a fleet of combat canoes.
"Hey, 7-8 of those ships are actually useful, at least."
Well, closer examination says even that might not be true. The LPD-17 has no use according to the Marines who have stated that they are out of the assault business and are looking to buy small cargo boats. The salvage ships will be nice to have to pick up the pieces when we find out how wrong we were about fleet composition but they have no combat use. The fast transport has so little capacity that it has no combat use I can see. As I noted, the Columbia can't be used in a conventional war.
So, it looks to me like only 4 of the ships are actually useful!
T-ATS and the Columbia are not standard combat vessels but they're still useful, you need those in the fleet as well.
DeleteThe real problem is that the combat ship ratio and numbers are too low.
On the plus side, there's no Zummy or LCS there, I guess.
Yeah, the LPD needed to be a sub. Forbes also says dump the LCS-1 class, so there goes 10 more hulls in a hurry. If the ghost fleet ship can make it from Louisiana to California 97% manning free (90%) through the canal, then we could get some use out of our smaller shipbuilders. There has also been some talk of Sentinel class hulls for the navy. I'd suggest manned versions of the MUSV. 206'
ReplyDelete"Yeah, the LPD needed to be a sub."
DeleteWell, the sub-building industry has consistently said they have the capacity for two subs per year and with one Columbia and one Virginia …
Industry and the Navy have talked about ramping up to three subs per year but the facilities and, more importantly, the skilled labor just isn't there, at the moment. Facilities take time and money to build but the skilled labor pool is much harder to increase. Given the way our educational system labels every non-college-aspiring high school student a failure, I don't see our vocational education producing more skilled labor any time soon. We need to reintroduce vocational ed into the schools and label it as a valuable and worthwhile career. It used to be that way in my day but vocational ed has all but vanished, today, and students with an interest and aptitude for it are labeled failures and looked down on. Our push to force everyone to be a college grad is biting us in the ass.
I spent a lot of time in college and learned a lot. I also took classes that were expensive, required and a waste of time.
DeleteVocational training certainly has my endorsement.
The Vo-Ed around here is all building trades, hvac, tinners and carpenters. Can the Navy go back to wooden ships ?
Delete"Can the Navy go back to wooden ships ?"
DeleteThey did! The Zumwalt.
"Well, the proposed Senate budget provides funding for 9 ships, only 6 of which are combat fleet ships. The 6 combat ships are:
ReplyDelete1x Virginia class submarine
1x Columbia class submarine
1x Constellation class frigate
1x LPD-17 amphibious ship
2x Burke class destroyers
The remaining 3 ships are:
2x T-ATS towing and salvage ships
1x Expeditionary Fast Transport"
Based on CBO estimates, that's a commitment of about $3B for the Virginia, $7.5B for the Columbia, $1B for the Constellation, $2B for the LPD, $3.6B for the two Burkes, and somewhere around $1.5B for the three auxiliaries. So we are looking at a bit over $18B total, or about $2B per ship. That's actually compares favorably with what the Navy has been getting for shipbuilding budgets, around $20-21B over te last few years. But add a Ford and you pretty well blow those numbers out of the water.
If we look at just the combat ships, that is $17B for 6 ships, or about $2.8B per ship. That's not sustainable. To get to a combat force of 350 ships with an average life of 35 years, we would need to build 10 combat ships per year, or $28B per year. The Navy is not going to get that much, year in and year out, from Congress.
Now suppose we could cut the average cost per ship in half, to $1.4B. Now for $21B we can build 15 ships for year, or over 35 years build a 525-ship fleet. So, how do we do that?
- Instead of $14B for a Ford, build a Nimitz for $9B and a conventional carrier for $5B (not a factor this year, but does come into play in any year that we build a Ford)
- Instead of $3.6B for two Burkes, build a Burke ($1.8B), a Constellation ($1B), an ASW frigate ($500MM), and a MCM ship ($300MM)
- Instead of $2B for a LPD-17, build a LPH like French Mistral ($800MM), a cheaper LPD/LSD like British Albion ($600MM), an LST ($400MM), and buy a surplus merchant and convert it to an LPA/LKA ($200MM); I'm not debating whether we should have amphibs, just coming up with an alternative approach to designing the ARG.
I realize that some of those cost estimates may be off, I don't think the impact is material. In this year, without considering the Fords, the $17B that builds six ships would now build 12. Over 35 years, that gives you 420 ships instead of 210.
Key problem is COST. Cost too high for US to build a navy ship.
ReplyDeleteI have wondered if an X-prize type of competition would work in shipbuilding. Lay out the specifications that must be included in the ship, price, performance, weapons fit, crew berths, etc or offer a standard design to be built.
DeleteAll competing first in class ships that meet spec are purchased at the agreed price.
Sea trials of the competing designs are done and a winner is declared and awarded a fixed price contract for a specified number of ships in a specific time frame.
The US Navy could specify increased numbers to be built if the price is lower. 10 ships at 2 billion a ship or 30 ships at 1 billion a ship. Economy of scale could help keep the price lower and result in more ships in the fleet.
"I have wondered if an X-prize type of competition would work in shipbuilding."
DeleteGreat idea! Just look at how much more advanced and successful SpaceX has been compared to recent NASA work. Getting past the current bureaucracy is key.
"Getting past the current bureaucracy is key."
DeleteAnd Congress. I saw somewhere that parts for the F-35 are manufactured in 40-odd states. That's how you get the votes to keep building.
"I have wondered if an X-prize type of competition would work in shipbuilding."
I'm wondering if you might get more competition by saying that everybody who builds a competing prototype gets some part of the final contract. That would seem to encourage more yards to compete, and also to keep more yards going, than a winner-take-all, first-past-the-post competition.
"I'm wondering if you might get more competition by saying that everybody who builds a competing prototype gets some part of the final contract."
DeleteThe losers making money as sub-contractors to the winning company makes sense to me.
"I'm wondering if you might get more competition by saying that everybody who builds a competing prototype gets some part of the final contract."
DeleteI have no idea how that would even work but it would have to be the most inefficient means possible. It would be almost F-35 in nature with manufacturing spread over the country albeit not quite all 50 states like the F-35.
I've already described exactly what we should be doing. We should be doing SHORT, SMALL, FOCUSED runs of ships with 20 year lifespans. That way, we'd build more ships and be able to spread the opportunities around without resorting to gimmick contracts that are inefficient. While one yard is building several destroyers, another can be building several ASW corvettes, and another can be building cruisers, and another can be building …
THAT'S how you keep yards gainfully employed and growing.
Shorter lifespans may require the building of a lot more ships.
DeleteFor example, consider a 300 ship navy. If the average lifespan is 30 years, then you need to build 10 ships a year to maintain. If the lifespan is 40 years, you need 7.5 ships. If the lifespan is only 20 years, then you need 15 years.
One problem with what the navy is doing is that they are building ships in numbers that might be sufficient to maintain if they kept them 40 years, but they are cutting the lives short without considering the impact on number of ships that have to be built. Building on a 40 year life assumption and then retiring at 20 or 30 years means that you will never get to your proposed goal.
"Shorter lifespans may require the building of a lot more ships."
DeleteThat's the whole idea!
Since commercial shipbuilding and warship construction share similar basic construction methods and commercial ships are much less expensive to produce per a given lightship mass, maybe every warship production contract should also be tied to the production of commercial vessels of a design that could be used by MARAD in the logistics reserve fleet (RO/RO transports, Tankers, Handy size transports, etc).
DeleteThe added commercial ships would increase the demand for ship building capacity in the United States and create increased economy of scale. The commercial ships could just sit in the ready reserve fleet or could be chartered to American shipping companies. The commercial ships should use similar/identical hardware as warships (anchors, anchor chain, motors, pumps, piping, electrical wiring, etc.)to have economies of scale in production of components needed for the shipbuilding industry.
Commercial prices for VLCC tankers (43,000 to 50,000 lightship mass) are less than $100 million. Smaller vessels are even less expensive. A Constellation class FFG is slated to be approximately 6,000 lightship weight and likely over $1 billion dollars if you believe the Congressional budget office or $800 million if you believe the US Navy.
You can buy a lot more shipbuilding demand if you purchase commercial vessels in addition to warships. The amount of commercial vessels produced could be tied to a ratio of lightship masses. For every X tons of warship lightship mass produced 5-10X tons of commercial lightship mass needs to be produced.
The commercial builds would still need all the steel, welding rods, paint, etc. that warships need but at larger quantities that should drive down the prices for both the commercial ships and warships.
"The commercial builds would still need all the steel, welding rods, paint, etc. that warships need but at larger quantities that should drive down the prices for both the commercial ships and warships."
DeleteThat's a fascinating idea which essentially duplicates what China is doing as far as fitting out commercial ships for future naval use.
My major question is who would pay for these unnecessary (though potentially helpful) ships? I can't imagine the Navy giving up even one dollar for a non-Navy ship. Heck, the Navy won't even properly fund ship maintenance so I can't see them giving up budget for this. Who's budget would these come from? Any thoughts?
Funding is always a problem. I would advocate for a port docking fee similar to the fees paid by airplanes to land at airports which support the upkeep of the airports. The funds would support "public transportation" like the gasoline and diesel road use tax money supports bus and rail transit. In this case "public transportation" would be MARAD vessels.
DeleteFEMA could be another potential budget source. FEMA could use some of the ships like warehouses for emergency supply storage.
The USDA Commodity Credit Corporation (CCC)could also be a budget source. Bulk storage of grains could be done on properly outfitted bulk transport ships. CCC already pays for storage of grains they could allocate some of the storage to ships.
The strategic petroleum reserve could also be a budget source. Tankers could be used to store the strategic reserves, just as well as the current salt domes and above ground tanks. Tankers would have the added benefit of mobility and would be able to move petroleum around potential disruptions to the pipeline systems.
An alternative would be to have a certification process for the shipyards that wanted to build warships. A 20 percent reduction in payment for the warship would happen if the shipyard did not produce 5 times the lightship mass of commercial ships as warships. The shipyards that embrace the commercial and reduce the cost of production could make money on the commercial ships as well as the warships.
Maybe the US Navy could leverage plans for Robotic vessels and produce optionally manned vessels that could haul freight and be used in a fight if needed.
DeleteThe following link is an article that advocates for Handysize break bulk vessels as a platform for autonomous operation as well as a weapons platform.
Break Bulk Vessels as warships
"optionally manned vessels that could haul freight and be used in a fight if needed."
DeleteThere could be a use for such a vessel, however, the problem is the same as with the Navy's planned unmanned vessels: they can't fight on their own, they're utterly defenseless, and they require outside assets to function. While it is possible to put a missile container on a vessel, it is not possible to put associated sensors, combat systems, defensive systems, damage control, etc. - at least, not for a price that doesn't suggest just building an actual warship. So, if you have a 'blind', 'dumb', and defenseless ship, you've just got a weapon barge that has to be accompanied by other protective and sensing assets. You've got a missile barge. Again, there's a potential use for that, to a limited extent but to think that these vessels could contribute anything more than a slightly expanded magazine for other ships is not realistic. They could not execute missions on their own. They could not survive on their own. They could not find targets on their own.
Also, some people seem to think that placing a containerized weapon on a commercial vessel will somehow confuse the enemy and make it possible to sail right up to the enemy and shoot. In a war, the enemy is going to sink any and all vessels that aren't theirs. They are certainly not going to allow an unknown commercial vessel to sail within firing range. In a war, commercial ships will flee the battle zones. Any single commercial ship that hangs around will immediately be tagged as suspicious and sunk.
To return to the linked article, if someone wants to convert one of these ships to autonomous operation for AI experience, that's fine. To count on them as combat ships is fantasy unless there is an identified need for missile barges (the arsenal ship concept).
I tend to think that autonomy would best used in logistics since we will not likely have the number of Merchant mariners to crew the ships needed to move the necessary supplies. Moving supplies across the Pacific to support a peer war will require a similar effort that was required during World War II.
DeleteI would focus the majority of the autonomy demonstrations in logistics and signals intelligence. I don't think of robotic ships as combat ships anymore than the LCS's are combat ships. If you cannot do damage control you are not a combat ship.
I would like to see the money spent on a platform that when the autonomy demonstrations fail to produce the magical results envisioned by the US Navy the platform can be put to some use.
Too many on the food chain. Politicians and well-connected work together to suck blood from defence contract.
ReplyDeleteLook at China, how can they build an equivalent ship ~1/3 cost in ~1/2 time? Look at man-hour spending you can find labor cost difference actually is a small contribution although we also need to ask slack union workers to work harder. Politicians and well-connected bite much more.
Or maybe it is because the Chinese workers are slaves to their communist party masters. Labor costs are serious considerations if you care about your workers.
DeleteAsking union workers to work harder is fine but that will never be as effective as threatening them with prison or death of they don't.
"Look at China, how can they build an equivalent ship ~1/3 cost"
DeleteThey can't. Two objects that are identical cost the same, especially in this global economy. What's different is the degree of government subsidy, the extent of government furnished equipment, the cost of labor, and the size of the profit, if any. We have no idea of the degree of Chinese subsidy other than to recognize that it's significant. We have absolutely no idea what equipment is supplied by the government at no visible cost. We have no idea what the real labor cost is. We have no idea what the profit margin, if any, is.
We can't pin down the true US Navy shipbuilding costs and that's in a supposedly open and transparent society. Trying to compare costs between countries when one of them is a closed, opaque society is absolutely meaningless.
If one could somehow, magically, include ALL the factors that go into reported costs, one would almost certainly find that the final costs are nearly identical.
The costs that China cites are for propaganda purposes, not accurate cost accounting. So are the US Navy costs, for that matter!
"how can they build an equivalent ship ~1/3 cost in ~1/2 time?"
DeleteThey just don't, it's mostly lying on the costs.
The actual difference is probably much smaller, even though the USN process is massively wasteful and inefficient (the Chinese aren't saints either).
"how can they build an equivalent ship ~1/3 cost in ~1/2 time?"
DeleteIf we assume the ship is truly equivalent (as well as labor rate), then if they build it in half the time, then it costs half as much. To rephrase, if we were able to cut our build time in half then with a consistent labor rate, the cost would be half. One of the points that ComNavOps has made in the past is that a healthier build rate (as well as an significant commercial shipbuilding industry) would increase available labor pool, expand the vendor base, and lead to real economies of scale in production. The current trickle production at most of the ship yards increases overall cost per hull. Assuming each build lane or graving dock is a limited resource, then by occupying that space for longer periods inflicts additional cost. In a similar way that reduced hull counts increases unit cost when the R&D costs are amortized over fewer hulls.
Within a single country, the hull costs are easier to calculate, but when you need to compare different designs to over another on different economic frameworks them out is impossible. For instance, if a ship requires 100 units of steel and 10 units of copper, country A with a strong steel industry compared to country B with an anemic steel industry, then the cost would be less in country B. Similarly, if country A has limited copper resources and B had large resources, then the cost would be higher in A. The efficiencies of not just shipyards, but supplies and raw material producers factors into the equation of cost in a difficult way to tease apart. On top of the intricate economic landscape are the strategic needs (that the Navy has ill defined). If, for instance, country A absolutely needs 10 ships to execute its strategy, then cost is irrelevant. If country B needs 100 planes, and can execute its strategy with 5 ships, then those precious resources should be allocated towards planes even if it was more efficient (i.e. cheaper) to produce ships.
"Look at China, how can they build an equivalent ship ~1/3 cost.
ReplyDeleteThey can't. Two objects that are identical cost the same, especially in this global economy"
With respect, although you keep saying this, it simply isn't true.
Largely thanks to the Jones Act, any ship built in US shipyards comes with a huge cost premium, which is why the US builds only 1% -2% of the world's ships. The total number of Jones Act compliant merchant ships built in US shipyards (8-10 p.a.) is a small fraction of the output of a single large Asian shipyard.
Study after study has confirmed that US shipyards require 40% - 60% more man hours to construct the same ship as many foreign yards, and that US shipbuilders rank at close to the bottom in terms of productivity, construction and design, shipyard layout, and product engineering (and the gap is widening). We lag our foreign competitors in the use of modular construction techniques, in tooling, in the degree of automation, in the use of robotics, and in the methods of processing, joining, and assembling materials.
Best estimates are that a tanker or a container ship built in the US cost between 4 and 5 times the cost of the same ship built overseas.
Okay - these are cost comparisons for merchant ships, but is there any reason to suppose that the situation with our naval construction is in a very different place?
Just by way of example, let's look at sealift capabilities; last year the head of U.S. Transportation Command, explained the decision to pursue used foreign‐built ships (RoRos) during a March 2019 congressional hearing by noting that such vessels cost $25–60 million depending on age. New domestic‐built ships, he added, would cost twenty‐six times as much.
While I accept that naval construction costs are opaque, and that Chinese data of any kind is inherently problematic, it's surely a matter of commonsense to realize and accept that China - a first rate shipbuilding nation - is leveraging its expertise in all forms of shipbuilding to deliver large numbers of excellent quality warships much faster then we can, and at a much lower cost.
So to state that "two objects that are identical cost the same" is not merely incorrect but flies in the face of all the evidence. I doubt that you would find an economist anywhere in the world, or even an accountant for that matter, who would agree with you.
Thanks for the blog btw - I really enjoy reading it :)
"Largely thanks to the Jones Act,..."
DeleteWhat, exactly, is the Jones Act? I really don't know but have seen it mentioned here before. What is the purpose of it? How does it raise costs?
I know that I should research it but the lazy in me wants the quick and easy way to learn from here.
"Two objects that are identical cost the same, especially in this global economy"
DeletePerhaps I should be clearer. When I say identical, I mean identical: same standards, same quality, same techniques, same requirements, same equipment, same regulations, same everything. For example, if country A is building to maximum safety codes and country B is building to minimum safety codes then of course there will be a cost difference. What standards are Chinese ships built to? I have no idea. I stand by my statement. If two objects are identical then they'll cost the same. Yes, there were some differences in labor pay rates in the past but even those have begun to even out in recent times.
To believe that China can build the same warship for 1/3 the cost is ludicrous. Once you start adding in the govt subsidies, govt supplied equipment, and accounting for all the other factors, that 1/3 starts quickly leveling out.
"head of U.S. Transportation Command, explained the decision to pursue used foreign‐built ships (RoRos) during a March 2019 congressional hearing by noting that such vessels cost $25–60 million depending on age. New domestic‐built ships, he added, would cost twenty‐six times as much."
I vaguely recall the statement. Now, note what was actually said. A new RO/RO ship would cost 26 times a used one which he claimed was $25M-$60M. Well, 26 times would translate to $650M-$1.56B for a run of the mill RO/RO!!!!!!!!!!!!!!!!!!! Does that seem believable to you? Actual US ship construction data shows that we can build giant tankers for $100M, as one example not too long ago. There's simply no way that a run of the mill RO/RO would cost $650M-$1.56B. The guy was either incompetently wrong or was engaging in some hyperbole to make a point. His point, by the way, was perfectly reasonable - that used ships were a good option.
"China - a first rate shipbuilding nation"
I have no reason to believe or disbelieve this statement. I have no information on Chinese shipbuilding quality. If you have any authoritative references, I'd love to see them.
"What, exactly, is the Jones Act? I really don't know but have seen it mentioned here before. What is the purpose of it? How does it raise costs?"
DeleteThe 100 year old Jones Act—formally known as Section 27 of the Merchant Marine Act of 1920 — mandates that vessels engaged in the domestic transport of goods (aka Cabotage) be built in the United States, crewed by U.S. citizens, owned by U.S. citizens, and registered under the U.S. flag.
The effect of the Jones Act is to shield US shipyards from foreign competition with the following entirely predictable outcomes;
Point to point transport costs are twice as high compared to a ship that is not subject to the Jones Act.
Operating costs are more than 2.7 times higher due to the requirement for an American crew.
The price of having a ship built in the United States is 3-5 times higher than having the same ship built outside of the US.
For example, consider the most recent vessel built at the failing Philly Shipyard, the Kaimana Hila, built under the Jones Act to transport goods from the West Coast to Hawaii, the ship has a cargo capacity of 3,600 TEUs (20‐foot equivalent units) and cost $209 million. Now consider the world’s largest container ship, the 21,413 TEU capacity OOCL Hong Kong, built in South Korea for $158 million. Six times the cargo capacity at a price $51m lower.
Amazingly, the Philly shipyard even managed to lose money on the deal - the Korean shipyards are profitable and unsubsidized.
Unsurprisingly, the United States no longer builds ocean going ships for export, and hasn't done for decades.
And yet we are to believe that the situation in naval shipyards is completely different?
"Perhaps I should be clearer. When I say identical, I mean identical: same standards, same quality, same techniques, same requirements, same equipment, same regulations, same everything".
DeleteIt doesn't work like that; whether you're assembling iPhones, or building washing machines or warships, scale and productivity are going to drive your price outcomes., and the idea obviously, is not to build an identical product, but a better product.
US shipyards are between 15 and 20 years behind international best practice in implementing productivity-enhancing changes, and in use of
technology. This is why other countries can build better ships, cheaper ships, and can build them more quickly then we can. It's surely a statement of the obvious that inefficiencies and low productivity in merchant shipyards are almost certainly going to be mirrored in naval shipyards. Why would it be otherwise?
"China - a first rate shipbuilding nation"
"I have no reason to believe or disbelieve this statement. I have no information on Chinese shipbuilding quality. If you have any authoritative references, I'd love to see them."
Well Korea is also a first rate shipbuilding nation, but China is the world's #1 in terms of tonnage launched, so I guess that makes it a first-rate shipbuilding nation. But nobody is suggesting that the US is today a first rate shipbuilding nation, and the production advantages that we had in WW2 are long gone.
Here's an interesting article https://thediplomat.com/2017/04/chinese-naval-shipbuilding-measuring-the-waves/
I don't know how well Chinese ships are built, and outside of China, I doubt that anyone else does either. But if I look at a pic of a Chinese Type 55, and compare it with a pic of a Tico or a Burke, both of which, if you took away the radar mast, look like they could have been designed in WW2, I'd be inclined to think that the Type 55 was likely to have a few advantages.
(Interesting aside; Jones Act compliant shipping is now so expensive that cattle ranchers in Hawaii not infrequently airfreight their cattle to the West Coast, rather than put them on boats.)
"A new RO/RO ship would cost 26 times a used one which he claimed was $25M-$60M. Well, 26 times would translate to $650M-$1.56B . . ."
DeleteExcluding the lead ship, the average estimate to complete cost (per a 1997 GAO report) for the follow-on ships of the Bob Hope-class was about $290 million per ship. Which is about the same cost for the follow-on ships of the Watson-class. Reference Table 5 of that report.
Adjusting for inflation from 1997 would put their cost today at $464 million. And, considering the the cost growths of the LCS, Zumwalt, Ford classes, I could see them easily costing $600-$700 million today.
In comparison, the average estimate to complete cost of the follow-on ships of the Shugart and Gordon classes (converted cargo ships) was slightly less at $277 million. Which adjusted for inflation would be $443 million today. Reference Table 4 of that report.
Per a recent CRS report on the John Lewis-class tankers, "The Navy’s FY2021 budget submission estimates that TAO-205s cost about $530 million each when they are procured at a rate of two per year."
The Navy used to know how to build a ship on-time and on-budget, but those days are long gone. Its way past time for the Navy to relearn that skill if they have any hope to expand the fleet.
I goofed up the hyperlink to the 1997 GAO report.
DeleteHopefully, this one works.
"It doesn't work like that"
DeleteOf course it doesn't! That's the point. Trying to compare costs between countries who don't use the same methods, same standards, same materials, same anything is pointless. The only valid comparison between, say, a Chinese Type 055 and a US Burke is that they bear a certain similarity in appearance. Beyond that, we have no idea what might or might not be similar so how can anyone make any valid cost comparison?
In each case I've looked at where someone has made the claim that X country produces some ship far cheaper than the US, what I've found is that by the time you account for all the factors the cost winds up being pretty near the same.
Here's a conceptual example. Many countries make it a practice to scavenge used equipment from old ships to supply and build new ones. The scavenged equipment is, essentially, free in the new build. That makes the cost appear to be far less than it really is.
Hey, there's nothing wrong with reusing equipment if it makes sense but when a cost based on scavenged equipment is compared to a new US shipbuilding program, the comparison becomes invalid. Even if we were to ask country X to build us a run of those 'cheap' ships, they couldn't do it for their previous price because that much used equipment doesn't exist. Once you start factoring that kind of stuff in, the costs start getting closer and closer to each other.
"Jones Act... mandates that vessels engaged in the domestic transport of goods (aka Cabotage) be built in the United States, crewed by U.S. citizens, owned by U.S. citizens, and registered under the U.S. flag."
DeleteA few years back, here is NM, there was a great debate over letting trucks from Mexico begin regular work here without hinderance. Arguments for it were cheaper goods, more competition driving down delivery costs and etc.
So far, it has failed, since people complained about the lost U.S. jobs, sub-par environmental systems on cheap Mexican trucks and other factors.
This Act seems similar to me. Just going by your post, I fully support the Jones Act, despite the higher costs and etc. The results that you mentioned seem to be your opinions. Thus, I hope that you will show some actual data to support your opposition to the Act.
I would even go so far as to suggest expanding the act to include ALL shipments into U.S. ports, even from overseas.
I can imagine the one HELL of a shot in the arm of U.S. shipbuilding by China if the cheap chinese crap being sent in had to be sent by U.S. built, crewed and flagged ships.
Delete"I would even go so far as to suggest expanding the act to include ALL shipments into U.S. ports, even from overseas."
DeletePoliticians and lobbyists would scream, so you know it's a good idea.
I believe the Korean Steel in the un-subsidized ship is subsidized.
ReplyDelete"I believe the Korean Steel in the un-subsidized ship is subsidized."
DeleteSteel (a not insignificant input into the construction of a warship) is actually a good example of how one of ComNavOps's "identical products" can cost much less when produced in e.g. Korea or China than in the USA, just like ships.
Commodity grade steel (e.g. the mild steel used to build a ship's hull, or rebar) is fungible - it doesn't matter where it's made, as to all intents and purposes it's essentially the same product.
Chinese steel is much cheaper than US steel not because of subsidies (although China does subsidize its steel industry), but because China has a younger and more productive workforce, more modern production facilities, and - most importantly - while the US produces circa 75m tonnes of steel p.a., China produces over 1 billion tonnes p.a.. And this despite China importing the vast majority of its steel inputs (iron ore and coal), while the US has its own domestic resources of these materials.
So, yes shipbuilding is subsidized across Asia, including in Korea, but this doesn't account for the huge price differentials in the cost of constructing the ships.
The US subsidizes merchant ship construction covertly through the Jones Act, naval ship construction covertly through the prohibition on building in overseas shipyards, and overtly e.g through funding Austal with $50m to develop a steel hull building capacity.
"I believe the Korean Steel in the un-subsidized ship is subsidized."
DeleteFrom offshore-energy.biz, 4-Feb-2020,
"... in November 2018, Japan requested WTO dispute consultations with South Korea due to Korean subsidies to local shipbuilders. Japan claimed that the challenged measures, which include funds, loans, guarantees, insurance and other financing, were inconsistent with the WTO’s rules."
I think the problem is that the admirals don't like ships or people. They try to keep people to a minimum and trying to reduce number of ships. They do like money so they need to keep the price per ship as high as possible to increase the budget while decreasing the number of ships.
ReplyDeleteWith more ships and people there is a bigger risk that there are more incidents, collisions/groundings training accidents and death. This is bad PR and no one want to answer the newspaper when they call and ask what occurred and why.
Also, how many of the admirals and other higher officers are recruited by the shipbuilding industry, or some other part of the defense industry?
Would be interesting to get a number and percentages.
"Two objects that are identical cost the same, especially in this global economy"
DeleteAdam Smith, David Ricardo, and James Mill explained why this is wrong about 250 years ago. Basically, it's called the law of comparative advantage, and it's probably the most important concept in classical economics and international trade. It largely explains how and why nations and businesses devote resources to the production of particular goods.
As this is becoming a bit circular I'll sign out now, other than to thank you once again for your excellent blog
Thank you!
Delete"2x T-ATS towing and salvage ships"
ReplyDeleteDon't you see CNOps!?!! The Navy has finally read your blog and taken it to heart. They're gearing up to un-sinkex the OHPs!