Government Owned Shipbuilding Yards

Discussions of naval shipbuilding have noted the scarcity of active shipbuilding yards in the US.   Up to, and during, WWII, the US operated dozens of shipbuilding yards.  Now, US shipbuilding has shrunk to a very few.  The reasons are many and include increased safety, environmental, and labor laws and regulations that have put US shipbuilders at a disadvantage relative to foreign shipyards.  Naval shipbuilding demand has also steadily decreased over the last few decades which has increased the cost of what new construction there is which, in turn, has further lowered the numbers of new construction – a classic death spiral.

The lack of shipyard competitors has created a semi-monopoly with all the attendant problems such as elevated prices, limited selection, stagnant designs, corruption, etc.  One of the common suggestions is for the government to operate its own shipyards.  If nothing else, the elimination of profit would lower costs, according to proponents.  With that background, let’s take a deeper look at the concept of government operated shipbuilding yards.

Once upon a time, the Navy did own and operate shipbuilding yards.  These yards were required to competitively bid on construction projects just like private yards.

“Since the nation's earliest days, the U.S. Navy has operated its own shipyards.  There were 13 in total, four of which are still active.   In addition, eight naval stations - one in the U.S., seven overseas - had some shipbuilding capability.  At the end of WWII, the Navy terminated or cancelled almost all new ship construction contracts and only a few new ships were built in the Naval Shipyards thereafter.  Then, in 1972, a report was published that demonstrated that ships built in Naval Shipyards cost, on average, about 30% more than ships built by private-sector shipbuilders: as a result, all new ship construction in the Naval Shipyards ceased and five of the nine remaining yards were closed.” (1) [emphasis added]

“In 1972, Booz-Allen compared the costs of comparable ship work, including new construction, conversions, and overhauls In public and private yards for the fiscal years 1966-71. They found that the cost of new construction was, on average, about 35 percent higher in naval shipyards.” (2)

There are now only four shipyards and none engage in shipbuilding.  They are limited to repairs and upgrades.  The surviving yards are listed below.

• Portsmouth Naval Shipyard - overhauls, repairs, and modernizes Los Angeles-class submarines

• Norfolk Naval Shipyard - specializes in repairs, overhauls, and modernization of ships and submarines

• Pearl Harbor Naval Shipyard - repairs, maintains and modernizes the U.S. Pacific Fleet

• Puget Sound Naval Shipyard - Maintains, modernizes, and retires ships

We see, then, that while the supposition that government owned and operated shipbuilding yards would be cheaper seems reasonable on the surface, the historical data indicates otherwise.  This is in line with almost all other large government programs.  For example, the US Post Office is far more expensive than private firms such as FedEx or UPS.  Similarly, Social Security, which is a form of insurance/annuity, is inefficient, costly, and failing compared to private sector insurance and annuity financial firms.  In fact, if the Social Security program were private, it would not be allowed to operate as it fails to meet private sector laws and regulations.  One final example, the Veteran’s Administration hospital service is a complete failure compared to private sector hospitals.  Thus, there is overwhelming current and historical data that indicates that government owned and operated shipbuilding yards would not provide cheaper ships but would, instead, provide more expensive ones.  

Government shipbuilding yards are not the solution to our out of control shipbuilding costs.

______________________________

(1)http://www.shipbuildinghistory.com/shipyards/public.htm

(2)“Overhaul Costs In Public And Private Shipyards: A Case Study”, Marianne Bowes, The Public Research Institute, Oct. 1981, CRC 442

Bagikan Artikel ini