Friday, September 17, 2010

American Shipbuilders Must Hate Money

Of the $787 billion in the American Recovery and Reinvestment Act, only $132,000 was spent on actual shipbuilding - all of it in a contract to Horizon Shipbuilding of Alabama. There was $98 million spent on capital improvements to infrastructure of shipyards issued by the Maritime Administration (see full list here), but not on actual ships.

Shipbuilding is critical to any global economy, indeed it is one of the most interesting aspects of the global economy today. For example, it isn't a coincidence that South Korea somehow avoided recession in 2009, and China was barely hit by the global downturn while both countries lead the world in shipbuilding. Vietnam has the worlds fourth largest shipbuilding industry by market share and has the fastest growing economy in the world. I think it is interesting Japan, with the worlds third largest shipbuilding industry, is the only country among the 4 mentioned that took a major hit with the latest global recession - although shipbuilding is a very small piece of the overall Japanese economy today, unlike the other three nations.

I've been reading through a Naval Postgraduate School report by LT Nicholas Meyers titled An Economic Analysis of Investment in the United States Shipbuilding Industry (PDF). It is fantastic and well sourced, indeed I have been reading just about every source cited for more information. It is well researched and well done, and it has me asking myself lots of questions.

Like - how did some LT at the Naval Postgraduate School do a better job in one paper advocating the case for shipbuilding in the United States today than the American Shipbuilding Association has done in - decades? I think everyone on that list hates money, because giving money to the ASA has proven completely ineffective. I am sure Cynthia Brown is a nice woman, but if the ASA was a results oriented organization or if whomever is giving them money cared about results, the entire leadership of that organization would be fired for ineffectiveness. If that is the best advocate for shipbuilding this nation has - then label me underwhelmed.

When all boats over 65' in the US Coast Guard has an average age of 41 years and the Navy has declined to 288 ships from nearly 600 - with a stated goal of 313 that looks unreachable right now, we are not building enough of everything. The United States isn't even competitive in the construction of commercial shipping globally even though we are the most dependent nation in the world on sea trade. The ASA has turned the shipbuilding discussion in the United States into a very inept lobby for naval power, when it should be a robust analytical organization advocating and developing mind share regarding the value of maritime power and it's vital relationship to our nations economy.

Read the report by LT Nicholas Meyers, and if you are in the shipbuilding industry - study it. If another stimulus bill is pushed through by this administration - that NPS report is the foundation of solid gold research that makes the case why stimulus money for shipbuilding would likely be a significantly positive investment for our national economy.

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