Trump Inherited a Shipbuilding Disaster

From Paradigm Press, we hope that you had a good Thanksgiving holiday. It’s December, the year is winding down, and let’s get straight to business because there’s much to discuss.

Today we’ll focus on the utter disaster that is U.S. shipbuilding in general, and Navy shipbuilding in particular. It’s a mess, as we’ll see below. And yes, it’s President Trump’s mess although it’s more than fair to say that he inherited it from previous administrations. Still, it’s now his job to fix it.

That is, American shipbuilding is a mess that’s been in the making for over 30 years, with many levels of blame to go around and a long, hard, expensive road ahead.

Okay, perhaps you think that shipbuilding and/or the Navy is not in your investment wheelhouse, but I assure you that what’s happening afloat is critical to the economy and national security. Meanwhile, there’s money to be made in the right companies, a few of which I’ll mention below.

So, to (sort of) borrow a line from Leon Trotsky from a century ago, “You may not be interested in shipbuilding, but shipbuilding is interested in you.”

And with this in mind, let’s cast off all lines and get sailing…

Image of proposed USS Constellation (FFG-62). Courtesy Fincantieri Marinette Marine.

Another Failed Navy Program…

As I drove across Pennsylvania last week, I had the radio on. Around Bedford County, some guy on some news program said that the Secretary of the Navy just announced that the “Constellation-class” frigate program was cancelled. Huh?

I confess… I’m an old Navy guy and I follow things like this. And cancelling a major program of record is a huge deal. I was so curious that I pulled off to the side of the road and broke out my smart phone to hit the wavelengths and find out what this was all about.

Here’s the background… The U.S. Navy is shrinking. We have many old ships and not enough new ones. We’re a far cry from that so-called “600-ship Navy” of the 1980s and the era of President Reagan; although to be accurate, the Navy never reached 600 ships even back then. And I know this because at more than one point in my Navy days I worked in the office of the Chief of Naval Operations (CNO).

Presently, on any given day the Navy has about 280 ships in commission. Most are seaworthy, with many forward-deployed from Japan to the Middle east to (just now) the Caribbean. Other ships are closer to home, training or engaged in what we call “workups” and related operations. More than a few Navy ships are under heavy maintenance and repair, either pierside or torn apart in a shipyard, which means that they are not available for immediate deployment.

Meanwhile, the world remains the same size as it has always been, and it’s still 70% covered with deep blue seawater. This, and Navy missions span the globe from Arctic to Antarctic regions, and every ocean basin in between.

The short version is that the Navy has innumerable missions, and not enough ships and people with which to meet the assignments. Yes, the Navy can do “more with less,” as that glib saying goes. And over time it all comes out of the collective hides of crews and vessels, which wear out under the stress of long and challenging deployments. Which means that eventually, you get “less with less” although nobody at the top of the food chain likes to hear that.

At this point I’ll skip the deep details of expanding the fleet, except to say that some years ago the Navy and Congress came up with a plan to adopt a European ship design – Italian and French – for a type of ship called a frigate, which is smaller than a destroyer. One key selling point was that this vessel was already designed and in commission in the Italian and French navies. And with not-too-many modifications, this warship could be purchased for a relative bargain price, adapted for use by the U.S. Navy, and built fairly quickly here in the good ol’ U.S.A.

What’s not to like about this idea, right? Here we have a proven design with NATO-level commonality and standardization. Just set up shop in an American shipyard and crank these Euro-frigates out in cookie-cutter fashion and voila! More gray hulls! Make more wakes in the water! Cover more missions! Rah-rah, the usual hoopla!

Early on, the advertisement was that the U.S. version of this Italian-French ship would be 85% common, with maybe 15% redesign to accommodate U.S.-specific items. Not a bad ratio, right? Very doable, yes?

Well, then came the U.S. “way of doing stuff,” with innumerable changes, and a never-ending procession of design modifications and ship-alterations. For example, this European vessel had to have an American powerplant, which meant different size, weight, center of mass, hull-strength, wiring, fuel system, control systems and more.

And the European weapon systems were not what the Navy wanted, so out went the old deck gun and missile defenses, and in came a new deck gun and missile defenses, with associated changes to the overall naval architecture and combat control center.

And the European electronics had to swap out with U.S. equipment, which required design changes for power systems, wiring, antennae and more; definitely, the Navy had to have a different sonar system which changes more than you can begin to imagine.

And the U.S. Navy tends to have larger crews, which means more berthing, more storage for food, larger water supply systems, and more.

You get the idea, right? Mission-creep, design-creep, cost-creep… At any rate, the original 85-15 level of commonality eventually became more like 15-85. The U.S. took the European design and scrambled it like a big box of broken eggs. All this, and costs exploded upwards and construction timetables shifted outwards into the distant ether. Even worse, the Navy told the builder to begin cutting metal at the U.S. shipyard, despite no final design.

Along these lines, last spring at a major defense conference I spoke with a naval architect who does contract work for the Navy. She expressed total frustration with the overall process: “We can design and build whatever the Navy wants us to design and build. But the brass and bureaucracy keep changing the requirements on us, so we never freeze the design. The ship is a moving target, and it hasn’t even been built.”

Which brings us back to last week just before Thanksgiving when Secretary of the Navy John Phelan announced that the Navy will build just two of these Euro-ships, both already under construction despite the incomplete designs. And under terms negotiated with shipbuilder Fincantieri Marinette Marine, the Wisconsin shipyard will continue to build Constellation (FFG-62) and Congress (FFG-63) but will cancel the next four planned warships and all follow-on options.

So, we now have another failed Navy ship program to go with other busts, such as the three-ship Zumwalt-class (DDG-1000) of super-destroyers that never found a true role; and the horrendous Litoral Combat Ship (LCS) program – aka “Little Crappy Ships,” as many Navy people call them – that has been a running embarrassment since the first prototypes began breaking down during sea trials.

The whole thing is a mess, right? And it recalls the words of long-deceased British Vice Admiral David Beatty (later, Britain’s First Sea Lord), who noted at the conclusion of the Battle of Jutland in May 1916, “There seems to be something wrong with our bloody ships today,” after watching two large battlecruisers explode under German shells.

Let’s Play Blame Games

Yes, we have a mess here and must blame the Navy, right? Blame a long list of current and retired admirals and bureaucrats at Naval Sea System Command, right? They had this perfectly serviceable European frigate design, and just could not resist monkeying around with it, right? (Answer: yes.)

Meanwhile, at a deeper level why doesn’t the Navy have an entire library of modern ship designs of every class, sitting on the drafting tables, updated regularly by teams of dedicated designers, and ready to go when the call comes to build new capital equipment? By comparison, the Russians and Chinese sure do.

Still, and while we’re on the topic, why think small, and focus only on Navy blue-suits? Because there’s plenty of blame to go around our great big federal government, numerous maritime states and localities, and not a few major defense companies as well.

The Navy has problems, but we should think more broadly. Indeed, some of the best discussions on naval issues come from a retired Navy ship-driver who goes by the handle Commander Salamander; as well as a retired Merchant Marine officer named John Konrad. You can find them on X/Twitter and Substack.

As Konrad recently noted: “The primary purpose of a frigate is convoying Merchant Marine ships. Who is by far and away the biggest user of merchant ships during war? The Air Force. Those bombs are heavy, and they drop a lot of them. Planes drink tons of fuel too.”

In other words, the Air Force must concern itself with seaborne logistics, considering that all the C-17s in that service together cannot match the lift capacity of one modest-scale tanker or cargo ship. Although to be fair, last spring I heard a brilliant talk by (4-star) Air Force General Randall Reed, who runs the U.S. Transportation Command, and who clearly and truly “gets it” when it comes to shipping and logistics. So at least we have some light glowing in the darkness.

And what of the Army, which long ago divested of its former fleet of “pre-positioned” logistic ships? And while we’re mentioning the guys in green, in recent years the Army has continuously cut back on its Corps of Engineers. Well, those are the people who ply their trade up and down rivers and harbors, and accomplish missions like building piers. Where are the dredges, barge-cranes and related assets for basic construction and maintenance?

Konrad also points out that on the commercial side of shipbuilding, America has companies that build ships using materials that come from innumerable suppliers across the nation, and almost all are stretched thin. So, who is in charge of assisting commercial companies that are critical to national security? It’s not the Navy. It’s the Departments of Treasury and Commerce.

And what about shipyards themselves? One national-level issue is lack of adequate labor force to do shipyard work. And who or what pushed the past two generations of Americans away from trade schools and into college? Well, it’s a cultural thing for sure; but definitely, the so-called “Department of Education” made it easy to borrow money to extend the childhood of many Americans into their early 20s, pick up a worthless degree in some bizarre field or another, come out deep in debt, and lack useful skills to make one’s way in the world. Again, who laid out this roadmap to ruin? (Hint: not the Navy.)

And what of commercial shipping and shipbuilding, a sector that is tiny within the U.S. economy and dwarfed by foreign competition, certainly from China-China-China? Well, there’s this thing called the Department of Transportation, and an organization called the U.S. Maritime Administration (MARAD) whose job is to advocate for shipyards. And who runs MARAD? Just now it’s an “acting” guy because the Trump administration doesn’t have anyone in that job.

Looking further afield, if you run a shipyard, what makes your life miserable? Who ties up industry with red tape? Begin with federal regulations from, say, EPA and Department of Labor. Plus, the tax code and IRS. Plus, state and local governments along with the entire state and federal legal systems that view industry as a bottomless well of defendants for every manner of lawsuit and regulatory enforcement.

And then there’s the overall investment climate in the U.S., where developers raise funds for waterfront projects that turn prime shipyard acreage into condos and shopping malls. For example, consider how the former – irreplaceable – Naval Shipyard at Mare Island, California was summarily closed in the 1990s, and land subsequently sold off to Lennar Homes for a massive housing development. (Hint: Thank you, President Clinton.)

Zillow site; homes on Mare Island, Calif, former naval shipyard. Screen shot.

Looking Ahead With (Just a Little) Hope

Again, citing John Konrad, “There are a few dozen critical problems with shipbuilding that the Navy has nothing to do with, but this is why it’s critical for Navy admirals to be more vocal.”

That is, the Navy must sell its shipbuilding case not just to its close partners in the defense-side of government and industry, but also in arenas as diverse as law, commerce, money, environment, labor and more.

Per Konrad, “A big reason why Phelan was brought in (as SecNav) is because he understands finance and can help (the shipbuilding industry) shore up their balance sheets. He is certainly capable of doing that, but the SecNav is busy. And is shoring up a commercial entity’s bottom line the Navy’s job? No, it’s the job of Treasury & Commerce to make sure strategic industries stay afloat.”

Meanwhile, per Konrad, “the Navy is trying to fix problems they do not have the resources or authority to fix.”

Konrad cites a recent incident where Navy teams spent many days reviewing bottom conditions and water depths at old shipyards they might want to reactivate. But in a very real, administrative sense that’s not a “Navy job.” And no, it’s not that Navy people can’t measure water depths; it’s more that the primary source for charts like that ought to be the Army Corps of Engineers.

Meanwhile, what did this Navy group decide to do with facilities that have silted up? They crossed them off the list because the Navy doesn’t have dredges to fix the problem. But then again, isn’t dredging also an Army job? (Hint: yes.)

The bottom line is that at some point a whole lot of people must talk with each other and reassign tasks towards fixing shipbuilding and the Navy. And gee, if only there was someone in charge – a Big Guy at the Top! – who had vast construction experience, and knew how to build complex projects, and had a temperament to herd cats and kick people in the butt to get things accomplished… Yes, if only.

Meanwhile, who are the big Navy shipbuilders? Huntington Ingalls (HII) builds aircraft carriers, many surface ships, and some submarines. General Dynamics (GD) builds submarines and surface ships. And Leidos Holdings (LDOS)owns one of the premier naval architecture firms, Gibbs & Cox, which has been designing Navy ships for about 90 years. All three should do well in years to come.

There’s more to say, but that’s more than enough for now. Well… other than to reinforce how President Trump and his staff must get their act together if they want to fix U.S. shipbuilding and beef up the Navy.

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