U.S. Shipbuilders Batten Hatches As Navy Weighs Cuts

NEWPORT NEWS, Va.–Mike Petters keeps a well-thumbed volume of naval history handy on his desk. One of its lessons, he says, is that maintaining a fleet is a long-term national investment that outlasts short-term politics.

“You end up building ships for the administration after next,” said Petters, the president and chief executive of Huntington Ingalls Industries Inc. “That’s the history of shipbuilding.”

But with economic constraints putting pressure on the Pentagon’s budget, it may not be the future of shipbuilding — at least in the U.S.

Huntington Ingalls, formed as a spin-off of Northrop Grumman Corp., is building the USS Gerald R. Ford at its shipyard here. The Navy plans to buy the next Ford-class aircraft carrier in fiscal 2013, as part of a request to be submitted to Congress early next year.

In recent months, however, rumors have swirled in Washington about a possible delay. Rather than buying one carrier every five years, as it does now, the Navy may buy one every six or seven years.

Such attempts to save money, Petters said, can drive up the cost of the ships, which the Navy currently estimates at around $11 billion each.

“When you start stretching them out, you have to start disbanding the [shipbuilding] teams, and you have them go do other things,” he said. “So you break those learning curves, and suddenly you’ve lost the opportunity to create efficiency.”

How many ships does the nation need? Not everyone agrees that the Navy should maintain an 11-carrier fleet, its current force, set by law.

The Sustainable Defense Task Force, a nongovernmental panel endorsed by Reps. Barney Frank (D., Mass.) and Ron Paul (R., Texas), concluded in a June report that the Navy could downsize to nine carriers without compromising national security.

“The capabilities to do what we did in the past with fewer carriers are there,” said Carl Conetta, co-director of the Project on Defense Alternatives and a contributor to the report.

Naval shipbuilding has even emerged as an issue in the 2012 presidential campaign, with Republican candidate Mitt Romney proposing a 50% boost in shipbuilding budgets in a speech last week.

In congressional testimony in July, Adm. Jonathan Greenert, now the Navy’s top officer, told lawmakers that a five-year interval between purchases was “about in the sweet spot” for carrier construction. Asked whether a longer interval was being considered, he conceded that a “whole host of items” were on the table in internal discussions about the 2013 budget. Navy officials said no decisions had been made to change the procurement schedule.

Building carriers is a labor-intensive task that requires a sizable work force and major investments in heavy equipment. The 550-acre Newport News shipyard, which stretches for two miles along the James River, is bustling with activity: In addition to the work on the new carrier, employees are busy overhauling the USS Theodore Roosevelt, another nuclear carrier, and are building two Virginia-class submarines.

It also requires handing down skills from one shipbuilder to the next. Inside the machine shop, Jimmy Witt, a 50-year veteran of the yard, supervised shipbuilder Kenny Walker as he machined a 55-ton propeller shaft for the new carrier.

“Young guys are not too fond of the grinding and the legacy shipbuilding stuff,” said Joey Perry, the head of the machine shop. “We’re trying to make this stuff exciting and challenging as a career path.”

Naval analyst and author Norman Polmar said the Newport News yard could easily maintain its nuclear expertise without building carriers at the current rate, because it also builds nuclear-powered submarines. But piecing together a massive carrier, he said, “is a major issue, because that’s 100,000 tons of steel, and it takes a lot of skill to glue it all together.”

The yard currently employs 20,000 people, and with unemployment high around the nation, it has few problems attracting job applicants. Christopher Spanos, a second-generation shipbuilder who is enrolled in the company’s apprentice school, said the yard offered the promise of steady, long-term employment. “When the economy headed downhill, it was time to come back to what you know,” he said.

Petters, the Huntington Ingalls CEO, said the budget debate had forced a return to a recurring discussion in Washington: “How big does the Navy need to be? What do we need a Navy for?”

The key difference now, he said, was the nation’s fiscal situation. “Now we’re at the point where it’s time to make the deal,” he said. “Are we going to build the ship, or are we going to do something else?”

(c) 2011 Dow Jones & Company, Inc.

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