Mayday, Mayday

They’re crucial to the U.S. and the world economy, yet most people rarely think about them. The U.S. used to lead in their manufacturing, but now has fallen far behind, losing tens of thousands of well-paying blue collar jobs as a result. China has become a leader, while the U.S. has become heavily dependent on southeast Asia, particularly South Korea. Developing a more proactive federal industrial policy for rebuilding the U.S. capacity has bipartisan support, yet it is not clear if this can happen quickly enough – or at all.

Yeah, that's probably not in the U.S. Credit: Bing Image Creator

You’d be forgiven if you assumed I was referring to chips, but that’s one letter off. I am worried about U.S. chip production, but for today I want to talk about ships.  

Daniel Michaels writes in The Wall Street Journal: “No nation has ever successfully ranked as a world naval power without also being a global maritime power.” We used to be such a power, with the biggest navy, protecting the biggest merchant fleet. Those days are long gone. Mr. Michaels laments:

U.S. commercial ships today account for less than 1% of the world fleet. U.S. ports are racked by strikes and battles over the type of automation that has supercharged expansion of container terminals across the globe. The Navy struggles to find commercial vessels to support its far-flung operations.

In Noahpinion, Brian Potter of Construction Physics shares similar concerns:

Commercial shipbuilding in the U.S. is virtually nonexistent: in 2022, the U.S. built just five oceangoing commercial ships, compared to China’s 1,794 and South Korea’s 734. The U.S. Navy estimates that China’s shipbuilding capacity is 232 times our own. It costs roughly twice as much to build a ship in the U.S. as it does elsewhere.

Credit: Voronoi/Visual Capitalist

James Watson, a retired U.S. Coast Guard rear admiral, told Mr. Michaels: “Not thinking of the maritime industry as an important part of your economy, that’s kind of crazy.”

Yes, it is.

We spend massive amounts on our military budget – more than the next nine countries (Chinaincluded) combined spend – yet China’s navy already has more ships and is planning to double that number by the end of the decade. U.S. Navy leaders believe our ships are more capable, but, at some point, quantity outweighs quality.

“It’s a major problem for us, especially if we wound up in a conflict or we wind up in a situation where China decides for whatever reason that they want to, you know, stop our economy and put brakes on it in a big way,” Senator Mark Kelly said in an interview. “They have the ability to do that.” 

And, of course, if and when the U.S. needs to boost its number of navy (or other) ships, we’ll be dependent on our South Korean friends to produce and maintain them. President-elect Trump is already talking to South Korean leaders about our reliance on their capabilities.

Last June, The Center for Strategic and International Studies (CSIS) warned:  

China’s massive shipbuilding industry would provide a strategic advantage in a war that stretches beyond a few weeks, allowing it to repair damaged vessels or construct replacements much faster than the United States, which continues to face a significant maintenance backlog and would probably be unable to quickly construct many new ships or to repair damaged fighting ships in a great power conflict.

“Part of it is we don't have the backbone of a healthy commercial shipbuilding base to rest our naval shipbuilding on top of,” National Security Advisor Jake Sullivan said earlier this month at the Aspen Security Forum in Washington. “And that's part of the fragility of what we're contending with and why this is going to be such a generational project to fix.”

Anyone believe we have a generation before China flexes its naval or maritime prowess, such as in the South China Sea (or the Panama Canal)?

Credit: Infomaritime.EU

When it came to chip manufacturing, Congress finally acted, passing the Chips and Science Act in 2022. It is starting to have an impact, although slower than originally hoped, and it is not clear that it will ever put us back in world leadership. We’re starting to take ship manufacturing more seriously as well. Earlier this month Senators Kelly (D-AZ) and Todd Young (R-IN) and Representative John Garamendi (D-CA) introduced The Ships for America Act.  

Senator Kelly explained:

We’ve always been a maritime nation, but the truth is we’ve lost ground to China, who now dominates international shipping and can build merchant and military ships much more quickly than we can.

The SHIPS for America Act is the answer to this challenge. By supporting shipbuilding, shipping, and workforce development, it will strengthen supply chains, reduce our reliance on foreign vessels, put Americans to work in good-paying jobs, and support the Navy and Coast Guard’s shipbuilding needs.

Sal Mercogliano, associate professor of history at Campbell University, told USNI News: “This is the first major piece of maritime reform since the Merchant Marine Act of 1970. So you’re talking about 55 years since we’ve had anything like this.”

Of course, whether this bill gets a high priority in the next Congress, which will be obsessed with tax and immigration legislation, remains to be seen. But, as CSIS noted, “the clock is ticking.”

As with chips, rebuilding shipbuilding capabilities won’t be easy. Robert Kunkel, president of Alternative Marine Technologies, writes in MarineLink: “The problem is not the cost of labor. It is our inability to build infrastructure that supports ship manufacturing. And with that, the path forward needs to be a fresh start with greenfield locations and new technology in commercial shipyards surrounded by a manufacturing base that supports the effort.”

Mr. Kunkel hopes for some uniquely American approaches:

We are seeing interest from American technology and investment capital as we address questions from investors asking if we can move ship manufacturing to a “Space X” model.  Is it possible to 3D print a vessel or provide new technology to redefine “ship manufacturing”? Can we move toward a full production line similar to the auto industry?  Can this manufacturing process be operated by robotics to ease the reported labor shortages and train a new shipbuilding work force.

Mr. Michaels quotes Navy Secretary Carlos Del Toro, who likes to cite early 20^th century naval strategist Alfred Thayer Mahan: “naval power begets maritime commercial power, and control of maritime commerce begets greater naval power.” We’ve forgotten part of that equation, and that is putting both sides at risk.

As Mr. Potter concludes his piece, when it comes to regaining our shipbuilding capabilities: “The picture is not pretty, and it should concern us all.”

Consider me concerned.