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Many of the U.S. Navy’s shipbuilding programs are currently running over budget and behind schedule, raising serious concerns about the Navy's future operational strength and the broader capacity of U.S. industry to scale production in the event of a larger conflict. This situation is particularly troubling, given that the United States once held a dominant position in global shipbuilding. So how did the U.S. reach this position, and who is to blame? Is it the Navy, the shipbuilders, private capital, the Pentagon, or even Congress? To unpack these pressing questions, we bring in our panel of experts to analyse the root causes of this decline and explore what can be done to restore the United States’ shipbuilding capabilities.
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EPISODE SUMMARY:
PART I: Shipping Delays - (04:04)
with John Konrad
- CEO of GCaptain
- Former U.S. Coast Guard sea captain
- Policy contributor and maritime project manager
Erosion of U.S. Commercial Shipbuilding Capacity: Post-WWII, the U.S. significantly reduced subsidies for commercial shipbuilding, leading to the dominance of countries like China, South Korea, and Japan in the global market. This shift has left the U.S. dependent on a naval-only shipbuilding framework, limiting flexibility in scaling production during crises and contributing to delays and cost overruns in defence projects.
Dual-Use Shipyards as Strategic Assets: Unlike their U.S. counterparts, Asian shipyards maintain a balance between military and commercial production, enabling them to pivot based on demand. This approach sustains a skilled workforce and ensures operational readiness, a capability the U.S. lacks due to the absence of a robust commercial shipbuilding base.
Structural Issues in U.S. Naval Shipbuilding: U.S. shipyards face chronic delays and budgetary overruns, exacerbated by systemic inefficiencies such as incomplete designs at project initiation, political interference, and reliance on outdated production models. Projects like the Zumwalt-class destroyers and Littoral Combat Ships highlight the compounding impact of design changes and inadequate R&D funding.
Congressional and Political Disconnect: U.S. shipbuilding suffers from low political priority compared to sectors like aviation and agriculture, compounded by fragmented oversight and geographically dispersed suppliers prioritised for political gain. The lack of a dedicated maritime desk within the National Security Council further underscores this misalignment with national defence objectives.
Challenges in Rapid Capacity Expansion: Historical lessons, such as the delays in WWI shipbuilding ramp-ups, demonstrate the long lead times required to rebuild industrial capacity. With limited shipyards and workforce pipelines, the U.S. would face significant challenges in meeting urgent naval demands, requiring years of coordinated investment and policy reform to address.
PART II: Congressional Consumers - (33:53)
with Emma Salisbury
- Sea Power Fellow at Council on Geostrategy
- Assistant Editor at War on the Rocks
- Expert on naval shipbuilding and costs
Post-Cold War Decline in U.S. Shipbuilding: Following the Cold War, U.S. defence budgets were significantly reduced, especially during the Clinton administration, leading to a sharp decline in naval shipbuilding. Rationalisation of shipyards reduced industrial capacity, creating long-term challenges in scaling production, particularly evident during current geopolitical tensions.
Structural Weaknesses in Defence Production: The lack of consistent long-term funding for shipbuilding has hindered private companies’ ability to invest in facilities and workforce development. Without a stable order book, firms face difficulties justifying capital investment, exacerbating delays and inefficiencies, as seen in ongoing shipbuilding projects.
Impact of Modern Supply Chain Practices: The adoption of just-in-time manufacturing in shipbuilding has introduced vulnerabilities. Disruptions in supply chains or design changes can lead to extensive delays due to the long lead times for critical materials like high-grade steel and specialised components, further inflating costs.
Short-Termism in U.S. Defence Policy: Political cycles and the annual line-by-line defence budget process undermine long-term planning and investment. This short-term focus delays necessary maintenance and shipyard modernisation, perpetuating inefficiencies and driving up future costs, with $1.8 billion in deferred Navy maintenance as a stark example.
Holistic Approach to Shipbuilding as Industrial Policy: Revitalising U.S. shipbuilding requires viewing it as part of a broader industrial policy. Expanding both naval and commercial ship production could drive economic growth, create skilled jobs, and strengthen the supply chain. Clustering shipyards and integrating commercial shipbuilding could further bolster the industry’s resilience and capacity.
PART III: The Shift to Shanghai - (1:02:57)
with Matthew Funaiole
- Vice President of the CSIS Ideas Lab
- Senior Fellow at the China Power Project
- Expert on Chinese shipbuilding and trade
China’s Dual-Use Shipbuilding Strategy: Unlike Western democracies that maintain strict separations between commercial and military shipbuilding, China co-locates these industries, leveraging synergies in technology, workforce, and resources. This strategy enables China to maintain production capacity during economic downturns by shifting focus between military and commercial shipbuilding, creating a highly resilient shipbuilding ecosystem.
Strategic State Support in Shipbuilding: The Chinese shipbuilding industry benefits from decades of heavy state subsidies and indirect support, such as access to domestically produced steel, which accounts for 25% of shipbuilding costs. The Chinese government’s ability to tightly oversee and directly invest in state-controlled entities like CSSC ensures consistency and scalability in both commercial and military projects.
Comparison of US and Chinese Models: The US shipbuilding industry is predominantly private and focused on military production, resulting in slower production rates and limited flexibility. By contrast, China’s state-led model enables rapid production and frequent commissioning of vessels, allowing it to launch 20–35 ships annually compared to the US’s 1–5 ships, though Chinese vessels often prioritise quantity over technological parity with US assets.
Emerging Challenges for China’s Navy: The rapid expansion of China’s naval fleet between 2015 and 2019 is now entering a costly maintenance phase, with many ships requiring significant overhauls. Rising labour costs and material expenses, coupled with the growing demands of the civilian shipbuilding sector, could strain the budget and slow the pace of military vessel production in the coming years.
Technological Evolution and Strategic Implications: China’s ability to leapfrog certain technologies, such as bypassing steam catapult systems for electromagnetic ones in its aircraft carriers, highlights its focused modernisation efforts. While the US retains a qualitative edge in advanced systems, China's accelerated development of platforms like the Type 055 destroyer signals its increasing capability to field advanced vessels at scale, posing strategic challenges in regional and global theatres.
PART IV: Captured Capital - (1:21:24)
with Thomas Shugart
- Adjunct Senior Fellow, CNAS Defence Program
- Former US Navy Submarine Commander
- Expert in undersea warfare and nuclear strategy
Strategic Prioritisation of Submarine Programmes: The U.S. Navy is heavily prioritising the Columbia-class ballistic missile submarines as a critical component of the nuclear deterrent. This focus has redirected resources from other vital programmes, such as the Virginia-class attack submarines, causing significant delays. Balancing these priorities is essential to maintain a comprehensive maritime capability.
Differences in U.S. and Chinese Shipbuilding Models: U.S. shipbuilding relies on private industry and limited competition, leading to inefficiencies and high costs. In contrast, China's state-subsidised shipyards integrate commercial and military production, enabling high-volume, cost-effective outputs. This dual-use capability grants China strategic flexibility and economic advantages while undercutting global competition.
China’s Increasing Naval Modernisation and Export Market: China has advanced from relying on Russian designs to producing indigenous, innovative platforms such as the Type 055 destroyers and Type 76 amphibious assault ships. Concurrently, Chinese shipyards dominate the global export market, supplying naval and commercial vessels to nations worldwide, strengthening economic ties and geopolitical influence.
Challenges in U.S. Shipbuilding Industrial Base: The U.S. shipbuilding industry struggles with high costs, complex security requirements, and insufficient capacity to scale production or repair combat losses swiftly. Unlike China, which has robust state-backed shipbuilding, U.S. shipyards lack the subsidies or support to maintain consistent output, creating vulnerabilities in a protracted conflict.
Debate Over Subsidies or Nationalisation: To address strategic challenges, the U.S. may need to reintroduce federal subsidies for shipyards or even consider nationalising critical shipbuilding facilities, akin to pre-Reagan or WWII models. These measures could reduce cost overruns, increase production capacity, and enhance oversight, ensuring long-term maritime superiority and industrial resilience.
Sunk Cost: The US. Navy's Shipbuilding Crisis
(Released Dec 23rd)
THE RED LINE'S EPISODE 127 READING LIST:
I: Warship builders, An Industrial History of U.S. Naval Shipbuilding, 1922-1945
- By Thomas Heinrich
II: U.S. Naval Power in the 21st Century: A New Strategy for Facing the Chinese and Russian Threat
- By Brent D. Sadler
III: Case Studies in Defence Procurement Volume II: From Ancient Rome to the Astute Class Submarine
- By David Moore
This episode is dedicated to our Patreon members: Brody Don, Kevin Martin, Bonnie Acosta, Blake, David Geaton, Alexei M, Caspian C, Emilie Fugulin, Jens Nordberg, Haresh Patel and Petra Mills.
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