While I no longer have either the motivation nor the information access to do calculations, the general rule is that no one anywhere has consistently made money building ships since 1945, at least. I suspect that this holds true for China. (In my experience, albeit limited, Chinese firms are not strong at understanding their real cost structure.)
Interesting, it seems that China’s main advancements came from joint venture technological transfer and government support.
What is really important here is I believe China understands this very well. When they become the most advanced in whatever industry they lie in, they’ll make sure to keep technological transfer limited domestically. (Caveat: China has been building factories in Mexico recently so maybe as the country gets richer, business owners will seek to expand to cheaper labor pools and the recipient can take advantage of the same joint venture strategy)
So the question becomes, how can the US adapt? Throwing inordinate amounts of money at the problem only seems to work if combined with the technological transfer aspect, so strengthening our relationship with Korea and Japan seems to be essential here. Another idea could be to focus on making America as open and friendly to skilled immigrants as possible as such to incentivize these people to move here and build these communities.
Would be really interesting to see how Korea did it though as they might be easier to emulate.
Great article. Strategically the USA needs to work restore some of our shipbuilding capacity. Unfortunately, we don't have a low-cost labor advantage. What recommendations would you make to political and military leaders to make progress on restoring our capacity?
On a comparative advantage basis it makes no sense for the U.S. to build commercial ships domestically. For security purposes we must make our own naval vessels but it's quite costly, although we do make the world's best so that quality somewhat compensates for cost. The principal naval builders do have the facilities to build commercial vessels in an emergency; the problem is labor. Most of the shipbuilding trades are interchangeable with construction trades, with very minor adjustment, so that in case of real need the labor is available.
I think that focusing on "a comparative advantage basis" is a huge strategic mistake. The fact is that construction trades are also short of workers, so we cannot rely on our existing base of trades workers to jump into shipbuilding if we suddenly go to war and need to build ships fast!
It took China a very long time to ramp up its shipbuilding industry, and I'm very concerned that if we go to war with them, we won't HAVE THE LUXURY OF TIME.
We need to start investing in shipbuilding infrastructure, workers, and ships NOW.
I'd love to see the Trump Administration aggressively federalize our ports and get some coast guard ships in the water asap! Build skills and a workforce on the smaller projects and ramp up to the capacity to do the really large ones.
AND, I disagree about building commercial ships. That's a relatively simple and inexpensive platform to practice on compared to a high-tech military platform. We just need to get back to building stuff, even if it costs more for us to develop the skilled workforce to do that.
Side benefit, just like the SpaceX teams, we'll be on the cutting edge of AI and manufacturing tech as well. That intersection between AI, design, and production is where the "comparative advantage" will lie.
While I no longer have either the motivation nor the information access to do calculations, the general rule is that no one anywhere has consistently made money building ships since 1945, at least. I suspect that this holds true for China. (In my experience, albeit limited, Chinese firms are not strong at understanding their real cost structure.)
Interesting and detailed article. Thank you
Of course they are the largest....didn't anyone else see the movie 2012?? All seriousness, good work!
You're a beast, man. Can't wait to buy your new book.
Interesting, it seems that China’s main advancements came from joint venture technological transfer and government support.
What is really important here is I believe China understands this very well. When they become the most advanced in whatever industry they lie in, they’ll make sure to keep technological transfer limited domestically. (Caveat: China has been building factories in Mexico recently so maybe as the country gets richer, business owners will seek to expand to cheaper labor pools and the recipient can take advantage of the same joint venture strategy)
So the question becomes, how can the US adapt? Throwing inordinate amounts of money at the problem only seems to work if combined with the technological transfer aspect, so strengthening our relationship with Korea and Japan seems to be essential here. Another idea could be to focus on making America as open and friendly to skilled immigrants as possible as such to incentivize these people to move here and build these communities.
Would be really interesting to see how Korea did it though as they might be easier to emulate.
Great article. Strategically the USA needs to work restore some of our shipbuilding capacity. Unfortunately, we don't have a low-cost labor advantage. What recommendations would you make to political and military leaders to make progress on restoring our capacity?
On a comparative advantage basis it makes no sense for the U.S. to build commercial ships domestically. For security purposes we must make our own naval vessels but it's quite costly, although we do make the world's best so that quality somewhat compensates for cost. The principal naval builders do have the facilities to build commercial vessels in an emergency; the problem is labor. Most of the shipbuilding trades are interchangeable with construction trades, with very minor adjustment, so that in case of real need the labor is available.
That's for your thoughts, Will!
I think that focusing on "a comparative advantage basis" is a huge strategic mistake. The fact is that construction trades are also short of workers, so we cannot rely on our existing base of trades workers to jump into shipbuilding if we suddenly go to war and need to build ships fast!
It took China a very long time to ramp up its shipbuilding industry, and I'm very concerned that if we go to war with them, we won't HAVE THE LUXURY OF TIME.
We need to start investing in shipbuilding infrastructure, workers, and ships NOW.
I'd love to see the Trump Administration aggressively federalize our ports and get some coast guard ships in the water asap! Build skills and a workforce on the smaller projects and ramp up to the capacity to do the really large ones.
AND, I disagree about building commercial ships. That's a relatively simple and inexpensive platform to practice on compared to a high-tech military platform. We just need to get back to building stuff, even if it costs more for us to develop the skilled workforce to do that.
Side benefit, just like the SpaceX teams, we'll be on the cutting edge of AI and manufacturing tech as well. That intersection between AI, design, and production is where the "comparative advantage" will lie.
nice work... I learned something....