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
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