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Trump budget fails to fund naval expansion

Warship Technology: July/Aug 2017

Since coming to power in early 2017 US President Donald Trump has advocated a dramatic expansion of the US fleet to in excess of 350 ships, a level far above that of the US Navy during the Obama administration (around 275 frontline vessels).

 

President Trump has said on numerous occasions that he wants to build dozens of new warships in what would be one of the biggest peace-time expansions of the US Navy, but the recently unveiled budget doesn’t include more vessels than would have been expected had Obama still been in power. Moreover questions have been raised about whether shipyards and the supply chain in the US are in a position to build all of the new vessels that would be required. The problem is, it is suggested, not that the well-known naval yards in the US don’t have the technical wherewithal to respond to the President’s plan, but that the supply chain would be severely challenged with yards needing to hire and train tens of thousands of workers.

 

Reports say Defense Secretary Jim Mattis was recently handed a report that explored how the industrial base in the US could support higher levels of naval shipbuilding, production that highlighted two significant issues – there are not enough skilled workers in the market; and, after years of comparatively low levels of production, shipyards and their suppliers will struggle to respond (the two largest naval shipbuilders in the US, General Dynamics and Huntington Ingalls Industries, told Reuters that they are planning to hire a total of 6,000 workers in 2017 just to meet current orders).

 

The Department of the Navy budget for FY18, US$171.5 billion, is part of the US$762 billion defence budget President Donald Trump submitted to Congress in May 2017.

 

Rear Admiral Brian Luther, deputy assistant secretary of the navy for budget, briefed media during a Department of Defense press conference about the Navy and Marine Corps portion of the budget and said: “In a challenging fiscal context, the navy’s FY18 budget request reflects the best balance of investments across people, presence, readiness and capability.”

 

Restoring wholeness
The US Navy said the budget submission “strives to restore readiness” and includes a US$54.6 billion request for operations and maintenance, funding 100% of projected ship depot maintenance and requesting the maximum executable amount for aviation depot maintenance and the flight hour programme. The operations and maintenance request represents an emphasis on the importance of restoring wholeness in order to build capacity and improve lethality in the future.

 

The submission will build on current programmes as well as invest in innovation. It includes a US$49.5 billion (base) procurement budget that would buy eight new ships, fully fund the Columbia class nuclear-powered ballistic missile submarine (SSBN) programme and invest in high-tech systems including unmanned, cyber and directed energy weapons. It would fund a Ford class aircraft carrier (see elsewhere in this issue), two Arleigh Burke class destroyers, two Virginia class nuclear-powered attack submarines and one littoral combat ship (LCS). The budget would also fund 91 aircraft in FY18. By fully funding the Columbia class SSBN programme, the FY18 budget maintains the US Navy’s commitment to the sea-based strategic deterrent.

 

In December 2016, the US Navy released a new force-structure goal that calls for achieving and maintaining a fleet of 355 ships of certain types and numbers. According to a recent report from the Congressional Research Service (CRS), the 355-ship goal replaced a 308-ship force-level goal that the US Navy released in March 2015. The actual size of the Navy in recent years has generally been between 270 and 290 ships.

 

The figure of 355 ships appears close to an objective of building toward a fleet of 350 ships that was announced by the Trump campaign organisation during the 2016 presidential election campaign. The 355-ship goal, however, reflects the national security strategy and national military strategy that were in place in 2016 (the Obama Administration’s national security strategy and national military strategy).

 

Compared to the previous 308-ship force-level goal, the new 355-ship force level goal includes 47 additional ships, or about 15% more ships. More than 47 ships, however, would need to be added to the US Navy’s 30-year shipbuilding plan to achieve and maintain the Navy’s 355-ship fleet, unless it extends the service lives of existing ships beyond currently planned figures and/or reactivates recently retired ships.

 

The CRS estimated that 57 to 67 ships would need to be added to the Navy’s FY17 30-year (FY17-FY46) shipbuilding plan to achieve the 355-ship fleet and maintain it through the end of the 30-year period. The Congressional Budget Office (CBO) estimated that 73 to 77 ships would need to be added to the FY18 30-year (FY18-FY47) shipbuilding plan to achieve the 355-ship fleet and maintain it not only through the end of the 30-year period (through FY47), but another 10 years beyond the end of the 30-year period (through FY57).
“Even with increased shipbuilding rates, achieving certain parts of the 355-ship force-level goal could take many years,” said the CRS report. “CBO estimates that the earliest the US Navy could achieve all elements of the 355-ship fleet would be 2035. Extending the service lives of existing ships and/or reactivating retired ships could accelerate the attainment of certain parts of the 355-ship force structure.”

Funding requirements
Procuring the additional ships needed to achieve and maintain the 355-ship fleet would require several billion dollars per year in additional shipbuilding funds. CRS estimated that procuring the 57 to 67 ships that would need to be added to the FY17 30-year shipbuilding plan would cost an average US$4.6 billion to US$5.1 billion per year in additional shipbuilding funds over the 30-year period, using today’s shipbuilding costs. However, the additional shipbuilding funds mentioned above are only a fraction of the total costs that would be needed to achieve and maintain the 355-ship fleet instead of the 308-ship fleet. The CBO estimates that, adding together shipbuilding costs and ship operation and support costs, the 355-ship fleet would cost an average of about US$11 billion to US$23 billion more per year in constant FY17 dollars than the 308-ship fleet. This figure does not include additional costs for manned aircraft, unmanned systems, and weapons. US Navy officials have also indicated that, prior to embarking on a fleet expansion, they would first like to see additional funding provided for overhaul and repair work to improve the readiness of existing ships, particularly conventionally powered surface ships, and for mitigating other shortfalls in readiness.

 

Supporting a plan to achieve a 355-ship naval force would be particularly challenging for the nuclear submarine enterprise. Much of the shipyard and industrial base capacity was eliminated following the steep drop-off in submarine production that occurred with the cancellation of the Seawolf programme in 1992. “The entire submarine industrial base at all levels of the supply chain will likely need to recapitalise some portion of its facilities, workforce, and supply chain just to support the current plan to build the Columbia class SSBN programme while concurrently building Virginia class SSNs,” said the CRS, noting that additional SSN procurement would require the industry to expand its plans and associated investment.

 

Shipyard labour resources include the skilled trades needed to fabricate, build and outfit major modules, perform assembly, test and launch of submarines, and associated support organizations that include planning, material procurement, inspection, quality assurance, and ship certification.

 

Since there is no commercial equivalent for naval nuclear submarine shipbuilding, these trade resources cannot be easily acquired in large numbers from other industries. Rather, these shipyard resources must be acquired and developed over time to ensure the unique knowledge and know-how associated with nuclear submarine shipbuilding is passed on to the next generation of shipbuilders.

 

The mechanisms of knowledge transfer require sufficient lead time to create the proficient, skilled craftsmen in each key trade including welding, electrical, machining, ship fitting, pipe welding, painting, and carpentry, which are among the largest trades that would need to grow to support increased demand. These trades will need to be hired in the numbers required to support the increased workload.

 

Although both shipyards have scalable processes in place to acquire, train, and develop the skilled workforce they need to build nuclear ships, these processes and associated training facilities need to be expanded to support the increased demand. As with the shipyards, the same limiting factors associated with facilities, workforce, and supply chain also limit the submarine unique first tier suppliers and sub-tiers in the industrial base for which there is no commercial equivalency.

 

Expanding the supply base
According to the CRS, the supply base is the third resource that will need to be expanded to meet the increased demand over the next 20 years. During the Ohio, 688 and Seawolf submarine construction programmes, there were over 17,000 suppliers supporting submarine construction programmes. That resource base was ‘rationalised’ during submarine low-rate production over the last 20 years. The current submarine industrial base has about 5,000 suppliers, of which about 3,000 are currently active (with orders placed in the last five years), 80% of which are single or sole source (based on US$).

 

It will take roughly 20 years to build the 12 Columbia class submarines that start construction in FY21. The shipyards are expanding strategic sourcing of appropriate non-core products (decks, tanks) in order to focus on core work at each shipyard facility (module outfitting and assembly). Strategic sourcing will move demand into the supply base where capacity may exist or where it can be developed more easily. This approach could offer the potential for cost savings by competition or shifting work to lower cost work centres throughout the country. Each shipyard has a process to assess their current supply base capacity and capability and to determine
where it would be most advantageous to perform work in the supply base.

 

“Achieving the increased rate of production and reducing the cost of submarines will require the shipbuilders to rely on the supply base for more non-core products such as structural fabrication, sheet metal, machining, electrical, and standard parts. The supply base must be made ready to execute work with submarine-specific requirements at a rate and volume that they are not currently prepared to perform,” said the CRS report.

 

“Preparing the supply base to execute increased demand requires early non-recurring funding to support cross-programme construction readiness and EOQ funding to procure material in a manner that does not hold up existing ship construction schedules should problems arise in supplier qualification programmes. This requires longer lead times (estimates of three years to create a new qualified, critical supplier) than the
current funding profile supports.”

 

It went on to say that supporting the 355-ship navy “will require industry to add capability and capacity across the entire shipbuilding value chain.

 

Change in demand
“Industry will need to make investment decisions for additional capital spend starting now in order to meet a step change in demand that would begin in FY19 or FY20. For the submarine enterprise, the step change was already envisioned and investment plans that embraced a growth trajectory were already being formulated. Increasing demand by adding additional submarines will require scaling facility and workforce development plans to operate at a higher rate of production.

 

“The nuclear shipyards would also look to increase material procurement proportionally to the increased demand. In some cases, the shipyard facilities may be constrained with existing capacity and may look to source additional work in the supply base where capacity exists or where there are competitive business advantages to be realised. Creating additional capacity in the supply base will require non-recurring investment in supplier qualification, facilities, capital equipment and workforce training and development.”

 

As the report also notes, industry is more likely to increase investment in new capability and capacity if there is certainty that the US Navy will proceed with a stable shipbuilding plan and positive signals of commitment from the government would need to go beyond a published 30-year Navy Shipbuilding Plan and line items in the Future Years Defence Plan and include elements such as multi-year contracting for block procurement which provides stability in the industrial base and encourages investment in facilities and workforce development; funding for supplier development to support training and qualification efforts; government incentives for construction readiness and facilities/special tooling for shipyard and supplier facilities; and procurement of additional production back-up material to help ensure a ready supply of material to mitigate construction schedule risk.

 

Matthew Paxton, President of the Shipbuilders Council of America (SCA) said that, to increase the US Navy’s fleet to 355 ships, “a substantial and sustained investment is required in both procurement and readiness.

 

“To meet the demand for increased vessel construction while sustaining the vessels we currently have will require US shipyards to expand their work forces and improve their infrastructure in varying degrees depending on ship type and ship mix,” he said, “but first, in order to build these ships in as timely and affordable manner as possible, stable and robust funding is necessary to sustain those industrial capabilities which support naval shipbuilding and ship maintenance and modernisation.

 

Maintenance
“Beyond providing for the building of a 355-ship Navy, there must also be provision to fund the ‘tail,’ the maintenance of the current and new ships entering the fleet. Target fleet size cannot be reached if existing ships are not maintained to their full service lives, while building those new ships. Maintenance has been deferred in the last few years because of across-the-board budget cuts.

 

“Long-term, there needs to be a workforce expansion,” Paxton said. “Some shipyards will need to reconfigure or expand production lines. This can and will be done as required to meet the need if adequate, stable budgets and procurement plans are established and sustained for the long-term. Funding predictability and sustainability will allow industry to invest in facilities and more effectively grow its skilled workforce. The development of that critical workforce will take time and a concerted effort in a partnership between industry and the federal government.

 

“US shipyards pride themselves on implementing state of the art training and apprenticeship programmes to develop skilled men and women that can cut, weld, and bend steel and aluminium and who can design, build and maintain ships. However, the shipbuilding industry, like so many other manufacturing sectors, faces an aging workforce. Attracting and retaining the next generation shipyard worker for an industry career is critical.”

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