The Future of U.S. Shipbuilding

U.S. shipbuilding by first tier shipyards—there are only six such yards in the nation—is imperiled by:

  • Failures of government to pursue effective policies and enforce existing laws;
  • Inattention to the job creating potential of America’s last heavy manufacturing industry;
  • Short-sighted management decisions by shipyard owners; and
  • A bias on the part of the media and the general public against the kind of dirty fingernail work that America needs to sustain its strategic industrial base. The U.S. has been “sold” on the notion that the workforce of tomorrow must be a knowledge-based workforce—clean, white collar jobs directing the heavy lifting by lesser educated workforces in foreign nations.

America needs to restore its capability to build ships not only out of the necessity for a strong maritime sector to ensure the national defense, but also as a resource to sustain a heavy manufacturing capability for essential components of renewable energy—including wave and wind energy generation and nuclear containment vessels.

The Metal Trades Department maintains that the U.S. shipbuilding industry is one of the nation’s most under appreciated and underutilized resources. Shipbuilding in major U.S. shipyards employs some 100,000 workers, but supports an additional 500,000 jobs, by conservative estimates, in the shipbuilding supply chain that includes companies in each of the 50 states providing a vast array of materials and supplies critical to the shipbuilding industry.

Unfortunately, a web of laws and policies—including tax loopholes—encourages the mega corporations that own and operate U.S. shipyards to move away from shipbuilding. In the case of Northrop Grumman, for instance, the alternative to selling its shipbuilding business, either in whole or in part, to private equity buyers is less lucrative than spinning the business off as a separate entity. The parent company stands to realize some $2.5 billion in untaxed income in a spinoff instead of $2 billion in a sale to interested and competent buyers. At a time when everyone talks about the budget deficit, what possible public interest is there in forgiving the tax on $2.5 billion in corporate income?

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