It costs twice to 4x as much “to build a ship in the U.S. as it does elsewhere” because our shipbuilding industry “is propped up by some of the most restrictive protectionist laws in the world” and governed by unions that oppose “dramatic changes in shipping and shipbuilding technology.” (“A Japanese shipbuilding executive noted that if ships were behind schedule, American yards were inclined to throw more labor at the problem, where Japanese yards would ask for the reason behind the delays and resolve the fundamental issues.”)
That leads to higher “ship costs and construction times,” and a dwindling market share that is propped up by the Navy and Jones Act. If our instinct is more protectionism, we’re just conceding that in a fight we’ll be reliant on the foreign shipyards we’re shielding from American ingenuity.
What is the value of national security and resilience in manufacturing, a supply chain, and a trained, experienced workforce? Have we learned nothing from China and their approach?
Financial efficiency leads to system fragility. Fragile systems for discretionary systems, durable, more expensive systems for critical systems. It's operational readiness, and that requirement (guaranteed startup and throughput) has a cost. And if you are outsourcing across nation state borders, you limit control over outcomes and destiny.
> Have we learned nothing from China and their approach?
China combines protectionism with cheap labour and moderate productivity. (Korea and Japan, expensive labour with very high productivity.)
We can’t change our labour costs. But without productivity enhancement, that requires either massive subsidies or a moribund industry. The unions block those productivity enhancements since they could lead to lay-offs in the short term; we see the same problem at our docks.
I agree, but also without unions, we see the dystopian hellscape the US labor market is. So, while productivity enhancement is a necessary, desired component of a solution, unions are non negotiable. We are past the point "unions bad," no one is eating that shit sandwich anymore [1] [2]. 88% of people under 30 view unions favorably—a record-breaking level of support from young workers, for example.
Then we need to lower protectionism (i.e. force the unionised shipyards to compete), massively ramp up subsidies or concede we’ll be reliant on foreign shipyards in a war of attrition. Given the first and second are politically unrealistic inasmuch as they require long-term commitments, to not roll back into protectionism or cut subsidies in a budget crunch, we’re left with the third.
Massive subsidies historically only worked in a war footing. Also, because subsidies only won’t produce commercially-competitive vessels, your only natural customer will be the DoD. The only way to sell this is by launching forever wars.
We need to subsidise our production. But unless we want to return to our 2000s, we must marry that to loosened protectionism to force American shipyards to compete internationally.
A model that achieves a desired outcome, but is suboptimal, is superior to a proposed optimal model that cannot or will not be implemented. The latter are simply thought experiments or dreams.
> The only way to sell this is by launching forever wars.
There will always be a need for a standing inventory of military hardware, so long as there are potential nation state adversaries.
> model that achieves a desired outcome, but is suboptimal, is superior to a proposed optimal model that cannot or will not be implemented
I’m arguing the impossible model is the one that relies on American voters writing a blank cheque to sustain above-average lifestyles among a minority of workers doing their jobs in a demonstrably-inefficient way for the purpose of remaining employed (and cashing in those cheques).
It works if we can sell it as blowing up stuff abroad. But not in peacetime. (And as a result, that production does nothing downstream, e.g. in offshore wind farm installation or domestic seaborne shipping, where, as the article notes, our high costs and the Jones Act make many projects uneconomical.)
> will always be a need for a standing inventory of military hardware
You’re underestimating how far behind we are. What will we do with two orders of magnitude more ships standing around every year [1]? Just keeping that many ships maintained and stored would be a challenge. Do you really think the public would support a shipyard-to-scrapyard programme for more than a few years without war?
Strong unions and massive protectionism, in the long term, means we’ll from time to time ramp up subsidies, do a war, and then ramp them down thereby laying everyone off. As the article points out, that’s our strategy. We’ve been doing it for 100 years. It sort of works, even if there is a better way, because we refuse to compromise on either unions or protectionism, leaving subsidies as the only lever that can do any work.
I believe we simply place different value on different socioeconomic and political system components (capital/fiat, labor, defense capability), and have different risk assessments leading to outcome deltas. Good chat regardless, appreciated as always, improves perspective understanding and context/model improvement.
> we simply place different value on different socioeconomic and political system components (capital/fiat, labor, defense capability)
Where I think we agree but I’m having trouble communicating is in labour and defence goals being able to both be achieved, but where instead of labor getting short-term stability and high pay amid long-term instability, shipbuilders get short-term instability amid high pay and long-term stability.
There is no structural reason America cannot have a competitive commercial shipbuilding industry. Including with collective bargaining. High-productivity industries naturally command high pay; we can guarantee that with regulation. Where the problem comes up is in purchase protectionism, which hinders our shipyards’ capabilities and quality (bad for defence) and creates a safe harbour from which our delicate industry can’t venture.
The goal I see is a lot of highly-productive dual-use shipyards that are subsidised for military procurement but must also compete to sell commercial ships. Subsidies are awarded systemically, but never guaranteed in the long run to a specific shipyard. The shipyard may need to grow and shrink as they win and lose business (and subsidies), but that’s better than the entire industry expanding and contracting on generational timescales, systematically training up a naïve workforce before dumping them into a market where their skills are near worthless.
Did we read the same article?
It costs twice to 4x as much “to build a ship in the U.S. as it does elsewhere” because our shipbuilding industry “is propped up by some of the most restrictive protectionist laws in the world” and governed by unions that oppose “dramatic changes in shipping and shipbuilding technology.” (“A Japanese shipbuilding executive noted that if ships were behind schedule, American yards were inclined to throw more labor at the problem, where Japanese yards would ask for the reason behind the delays and resolve the fundamental issues.”)
That leads to higher “ship costs and construction times,” and a dwindling market share that is propped up by the Navy and Jones Act. If our instinct is more protectionism, we’re just conceding that in a fight we’ll be reliant on the foreign shipyards we’re shielding from American ingenuity.