A shipbuilding action plan for the Trump administration

As the Trump administration’s national security team takes office, shipbuilding will clearly be a top priority for the Pentagon, the National Security Council, and even the president himself.

The reason for this focus is simple. China is leveraging its booming commercial shipbuilding industry to expand its military capabilities, whereas shipbuilding in the United States is virtually a monopsony, with the US Navy being the near-exclusive customer. While our warships have quality that our competitors simply cannot match, it will be increasingly difficult to dominate the seas if we lack the quantity of ships that are needed.

There are immediate opportunities for the incoming administration and Congress to move the needle on shipbuilding.

Use the tools at hand. Any plan to improve shipbuilding must begin with a bottom-up review of the root causes of the differing challenges within each program. This need not be an extensive reform of major acquisition authorities, which could take years to design and implement. Instead, the focus should be assessing what can be done under current contractual and statutory authorities to address the problems specific to each program or each shipyard — whether that pertains to people, facilities, supply chain, process, or something else.

While working on that review, the upcoming budget should prove shipbuilding is a top priority. The Biden administration and Congress unleashed billions of dollars of investment in the submarine and broader shipbuilding industrial base, attacking fragility in the supply chain, difficulties in workforce recruiting, and opportunities with advanced manufacturing. But more needs to be done, including raising wages for shipyard workers to compete with other employers, and investing in modernized shipyard infrastructure.

Most importantly, this process of thinking about how to use authorities at hand and making changes must begin immediately, in order to justify a larger shipbuilding budget.

Friends can help. The strengths of American naval technology are being challenged by China’s hyperscaling of shipbuilding capacity. While the US barely registers in the world market as a commercial shipbuilder, the good news is that our allies — particularly South Korea and Japan — make up the balance of the world’s shipbuilding capacity not currently serviced by China.

Our Navy is significantly short of the number of logistics vessels that it needs for worldwide operations, to say nothing of what would be required during a conflict. Leveraging our allies’ commercial shipbuilding capabilities is a clear opportunity, but how to do so is less straightforward.

President Donald Trump himself seems on board with this idea. In an early January interview, Trump said, “We used to build a ship a day. We don’t build ships anymore. We want to get that started. And maybe we’ll use allies, also, in terms of building ships. We might have to.”

The president will certainly demand that a plan to capitalize on US and allied shipbuilding capabilities will be a win for America, which will mean wins for key stakeholders: the Navy, shipbuilders, shipyard workers, and suppliers. Helping them all come out ahead is a challenge, but it is also an opportunity for the incoming administration to convene partners in industry, labor, Congress, and the Navy to hammer out a plan this year.

Get real about how much ships cost. Each year, the president’s budget tells Congress that a certain number of ships can be bought for a precise amount of money. The point has been reached where those numbers are wrong more often than they are right.

We must restore realism in budgeting for ship procurement. And it’s not as if this is an impossible thing to figure out: Analysts outside the Navy, particularly the Congressional Budget Office, are right far more often than they are wrong.

For years, ships have been budgeted at a lower costs than they can be produced. This means the Navy is asking Congress each year for additional funds to complete ships already under construction. Congress has lost its patience for these follow-on costs, and this practice must end. A renewed emphasis on budgeting to independent cost estimates, rather than rosy scenarios, could produce sticker shock. But it is preferable to the current trap of not reliably fulfilling promises to buy each ship at a transparent price.

Get the right people in the right seats. While not a sexy, high-level job, there is no position more important to shipbuilding reform than the Assistant Secretary of the Navy for Research, Development, and Acquisition. This official will be responsible for building and executing the plan to reform shipbuilding, and there is no alternative to having a Senate-confirmed official in the seat as soon as possible. The president should nominate, and the Senate should confirm, a fully qualified candidate by this summer.

It’s not just the Navy. It’s America. Finally, and most ambitiously, the administration and Congress must look beyond the Navy as the source of, and solution to, our nation’s eroding maritime industrial strength. The shipbuilding industrial base is a subset of the defense industrial base, and the defense industrial base is a subset of the American industrial base. Creating policies for the Department of Defense to help shipbuilders is good; whole-of-government efforts to invigorate manufacturing are better.

All levers of government power must be put on the table to maximize the impact of the renewed focus on shipbuilding. That includes renewed focus on national workforce training programs — not just those at the waterfront — and examining how grants and tax credits can incentivize industry investing in its own renewal.

Addressing the shortfalls in America’s maritime industrial base is not the only action that needs to be taken to improve our military capabilities to match the challenges to our security, but the remedies are unique. Maximizing our military advantages in other domains or capabilities requires approaches focusing on accelerating technology adoption, removing red tape, or sometimes simply increasing production rates (read: more funding).

But shipbuilding is different than the rest of America’s arsenal. Solutions to this problem will not be found in disruptive start-ups, an organizational change, or simply writing bigger checks and expecting a different outcome. Instead, the common thread among these recommendations is that rethinking the business of shipbuilding offers a more promising outcome for our economic, political, and military strength.

But we have to start now.

Erik Raven is a non-resident Senior Advisor at CSIS and former Under Secretary of the Navy.

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