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U.S. SHIPBUILDING U.S. SHIPBUILDING INDUSTRY HAS MADE GREAT STRIDES IN IMPROVING EFFICIENCY AND REDUCING COSTS A MESSAGE FROM THE CHAIRMAN OF THE SHIPBUILDERS COUNCIL OF AMERICA William E. Haggett, President Bath Iron Works Corporation William E. Haggett The year 1985 witnessed the con- tinued resurgence of the United States as the world's foremost naval power. Measured by any yardstick, the Navy should meet its 600-ship goal by the end of this decade. Pres- ident Reagan, Secretary of De- fense Caspar W. Weinberger, and Secretary of the Navy John F. Lehman Jr. are to be commended for their steadfastness in sticking to this objective. The advent of Gramm/Rudman/ Hollings, with its laudable end of reducing and ultimately eliminating the huge federal budget deficit, means that reductions in defense spending likely will be necessary. The Navy will be asked to bear an equitable share of the burden. How- ever, these cuts must be judiciously made so as to not jeopardize the hard-earned improvements made in the size, structure, and capability of the fleet. Indeed, the task of sus- taining the Navy at adequate levels is as important as building the 600- ship Navy in the first place. We as shipbuilders recognize that we must increase productivity and minimize waste to offset the budget reductions in the next few years. Measurable progress has been achieved. The initial congressional focus of fraud, waste, and abuse in the defense industry caused con- tractors to reexamine internal man- agement procedures and controls and our business relationships and responsibilities, and implement changes where appropriate. It is im- portant to understand, however, that excessive imposition of rules, audits, and law upon the defense industry can complicate the pro- curement process, increase costs, delay schedules, and impair the quality of the end product. In March (1985), I wrote to vari- ous senior members of the Reagan Administration to express our con- cern that unless more positive and supportive actions were taken, the decline of the capability and capac- ity of the shipbuilding and ship repair industry would continue beyond the dangerously low levels then existing. Most notable among the replies received was that from Defense Secretary Weinberger. His reply contained the following: "We in Defense agree that the Nation must take steps to revitalize our maritime industry if we are to have sufficient capacity and capa- bility to meet our mobilization re- quirements. The Navy's current and planned shipbuilding and repair programs are, by themselves, insuf- ficient to support the Nation's pres- ent shipyards at an efficient level of production. Moreover, a further de- cline in the number of shipyards would reduce the competitive base for these essential Navy programs. Clearly what is needed is a revitali- zation of the commercial segment of the maritime industry." Also in March, I met with Senator Ted Stevens, chairman of the Senate Merchant Marine Subcom- mittee, to urge that he undertake a leadership role in the development of some form of maritime legislation to fill the void that exists in mari- time policy as related to shipbuild- ing and ship repair, and pledged that the shipbuilding industry would actively support and partici- pate in such efforts. His response was that he, together with his col- league Senator Daniel K. Inouye, believed that their active involve- ment in working directly with the senior leaders of the industry could produce positive initiatives, and that he and Senator Inouye were prepared to undertake the difficult work required. As the year progressed, it became very clear that there would be al- most no commercial shipbuilding opportunities, and that the Navy shipbuilding and ship repair pro- grams would not provide replace- ment business as the backlog of T- ship programs approached comple- tion. Indeed, at year-end the Navy programs on the basis of funds au- thorized and appropriated by the Congress, exhibited negative growth. Thus, the decline in the national level of ship construction and repair was destined to contin- ue. In August the Bennett-Warner Commission, created but unfunded by the prior Congress and charged with studying and recommending solutions to the national security aspect of the problems confronting the maritime industry, was funded by the Congress. It is clear that the Commission was created by the Congress as a result of its frustra- tion caused by inaction in develop- ing a sound and balanced maritime program. Yet, as this message is written, the five public sector mem- bers of the Commission have not been formally nominated. Although staff has been assigned and is at work, the Commission still lacks leadership and direction. We in the shipbuilding industry hope that the actions necessary to implement the Commission are taken promptly, because we are well aware of the immensity of the tasks that lie be- fore it and the limited time provided to carry out the mandate of the Con- gress. As I have previously stated, the shipbuilding industry has made great strides in improving its effi- ciency and in reducing costs related to shipbuilding and ship repair. Not only have shipyards performed well, but suppliers have also worked hard to achieve these goals. We were pleased when Secretary of the Navy Lehman stated that the shipbuild- ing industry had become the most reliable and cost-effective of the Navy's contractors — and we pledged to him that the industry will continue this performance. It is obvious that the shipbuilding industry working alone cannot suc- ceed. Continuation of the past few years' performance requires under- standing, support, and equally ef- fective management by the Navy and the other government represen- tatives with whom we must inter- face in carrying out shipbulding and ship repair contracts. Despite this need, it is apparent that more ad- versary relationships are developing between some contractors and the government. As a consequence, both time and cost are frequently sacri- ficed in an effort to satisfy Congres- sional critics of the defense indus- try. On a positive note, a vital and important first step to build more ships has been taken. Under the able leadership of Senator Stevens and with the support of many others in both Houses of the Congress, funding for a new shipbuilding pro- gram, "Build and Charter," was pro- vided in the Continuing Resolution passed in December. That program is subject to development and en- actment of authorizing legislation— hopefully in 1986. The program is only possible be- cause of funds saved by the ship- building industry's performance un- der past Navy contracts. We under- stand that the concept does not con- stitute a fully developed maritime plan, and that much remains to be done even after implementation. It is equally clear that the develop- ment of authorizing legislation will be no easy task. It is apparent, how- ever, that "Build and Charter" en- joys broader industry support than many other commercial shipbuild- ing programs suggested in the past, and it is not a subsidy despite what critics may allege. We are determined to carry on our efforts to develop this meaning- ful "Build and Charter" program that will provide vitally needed na- tional security assets and enhance this country's commercial viability at the same time. 1 44 Maritime Reporter/Engineering News
