Maritime Reporter, February 1989

<BODY> <div> LONG TERM OUTLOOK FOR U.S. NAVY SHIPBUILDING NAVY PROJECTS SPENDING $11 BILLION PER YEAR By James R. McCaul, President International Maritime Associates, Inc. Editor's Note: This article only forecasts business opportunities in the shipbuilding sector. For a pro- jection of business opportunities in the ship repair and maintenance sector over the next 10 years, see Mr. McCaul's article, "U.S. Ship Maintenance & Repair—A $50 Bil- lion to $60 Billion 10-Year Market," in the Naval Technology & Shipbuilding Supplement in the December 1988 issue of Maritime Reporter and Engineering News. The U.S. Navy ship construction program has been a major source of business for shipyards and manu- facturers in the U.S. Over the past five years, the Navy has spent an average of $9.5 billion per year on Photo: The aircraft carrier, USS America (CV-66), underway. U.S. Navy photo. ship procurement. While this spending is expected to continue, the Navy will be required to make difficult decisions on the size and composition of its shipbuilding pro- gram over the next several years. These decisions will have important implications for many firms. Overall Situation The Navy views a future ship- building program of about $11 bil- lion per year as necessary to main- tain the current force structure. This figure would support a build- ing rate of 18 to 20 ships per year. However, the U.S. Navy has en- tered a period of unsettling change. Defense objectives are being re- examined, the federal budget is un- der heavy pressure and technical problems and cost overruns are hurting the Navy's image. Navy Options The Navy is faced with making long-term strategic decisions. Op- tions include: • maintain current fleet size by per- mitting an aging process which pro- duces the average ages shown in Exhibit 1. • retire older ships—and accept a lower force structure. • continue to build ships at a rate necessary to replace those facing ob- solescence. • compromise by accepting (1) a somewhat lower force structure, (2) a gradually increasing average age and (3) a somewhat stretched out building program. Exhibit 2 summarizes how IMA views the direction and composition of Navy shipbuilding over the next 10 years. The remainder of this arti- cle describes the most likely course of action in each of the major pro- grams. SUBMARINES The number of missile subma- rines will decline and the attack submarine force increase slightly over the next 10 years. Tridents—The ballistic missile submarine fleet will shrink to 17-23 ships as new Trident submarines replace older SSBNs. Each Trident has 24 missile tubes vs. 16 tubes in Polaris/Poseidon submarines. Few- er submarines are needed to provide the same missile launching capabili- February, 1989 29 </div> <span id="lblContents"></span> <br /> <br /> <a href="http://www.digitalwavepublishing.com/" title="Digital Magazine">Digital Wave Publishing</a> </BODY>