Very interesting article. I would be interested in knowing why the British shipbuilding industry in the 19th Century was able to build ships using far fewer labor-hours than the US.
Oh, yes, and congrats on the Guest post at Noahpinion. I hope that it helps you build your audience. You deserve it.
You should check out the issue Washington State is having with it's Ferry system. The system needs 26 boats to fully function, but there is currently only 15 in working order. They have been trying to build new boats for years, but state law requires the boats to be built in state. The one and only ship yard capable of building a ferry bid at nearly double the budgeted amount. Current efforts to change the law and allow boats to be built elsewhere are strongly apposed by unions (who have a lot of influence in the Democrat controlled state.
Years ago, I found myself monitoring the decline of British shipbuilding.
The British shipbuilding industry had 17 trade unions competing for work share. "Demarcation disputes" caused by a disagreement about whether a job belonged to one union or another were expensive and disruptive. They also strongly discouraged any attempt to change the equipment and working practices being used. Ultimately this was the main reason that British shipyards closed down. Another factor was that many of them had been established on fairly small sites in the days when ships were relatively small. During WW2, the Royal Navy ordered warhips 200-250 feet long in large numbers from shipyards that couldn't build anything bigger.
Trade unions - yes. Complacent owners and management were also a factor after the Second World War. (People couldn't imagine that the Japanese could ever produce higher quality products than incumbents - you might be old enough to remember similar attitudes in the auto/carmaking sector in the 80s and 90s).
There was little incentive to invest in transforming existing production sites when profitability was the key objective. (Think of the Big 4 supermarkets in the UK and their failure to respond to the entry of the German discounters - quarterly and annual filings take priority over medium term threats).
The British shipyards also benefited from preferential orders from markets in the Empire, and also dominated regional markets in Europe (Norway) before 1939 - all of which changed after 1945.
As you said, the technological shift towards more efficient manufacturing practices (blocks etc) favoured new entrants who didn't have sunk costs, and had the space to rearrange their yards more efficiently.
(We can see the big Korean shipyards nervously eyeing Chinese investments in robotics and automation - where the Chinese have narrowed the Korean lead significantly in the last five years or so).
But above all - it is worth noting that Japan, Korea and more recently China were willing to essentially subsidise lossmaking or almost unprofitable shipmaking as an intermediate step towards creating large scale industrialisation in their economies. (Shipbuilding (especially unsophisticated bulk carriers), like automaking, was merely a simple cheap and quite easily masterable end-use market, that could create demand for the creation of a national steelmaking sector - which was needed for other applications like manufacturing and defence.)
Did the British shipbuilders and government realise that they were stuck in a long term battle for survival - yes, well before the end of the 1950s, and certainly by 1965.
There is probably another post about technology clusters as well - and the requirement for these countries to develop expertise in all the various machinery and technology markets. Not just the engine and propulsion technologies, but navigation systems etc etc.
Interesting subject area - with relevance today for choices facing the administrations in the States and elsewhere. (Is steel a commodity or a strategic resource is a related question.)
The Chinese shipbuilding industry has but one union competing for work share, and it gets 100% of shipbuilding jobs, whose wages are indexed to 58% of GDP growth, vs. American workers' 43%.
Whoever controls the seas has dominated the world, as controlling a wide majority of trade is a huge advantage. If the US isn't able to compete anymore, I think that will present as one of the greatest existential risks we have faced as a nation.
The issues that have plagued ship building are the same as those that have hampered all infrastructure (nuclear, public transit projects, energy development, automotive)
1. Labor is expensive here
2. The US government tends to intervene in ways that make things significantly less efficient and more expensive
3. We are left to outsource/globalize where we can (automotive, manufacturing) and fall behind where we can't (infrastructure, energy).
Very interesting. I found it terrifying that the builder of aircraft carriers and nuclear submarines because of discrepancies during construction were so severe that Eletson canceled its contract;
Nuclear aircraft carriers and nuclear submarines get controlled by the nuclear safety agencies. Newport News was probably used to that and billing for every change order, expecting a lot of them.
The discrepancies were probably on the order of "We'll have to change it three times, why do a good job now?"
Building commercial ships where there aren't nearly as many change orders probably was a shock.
Not only is it concerning that our industrial capabilities are so low, should another world war emergency arise where we need to spend vast amounts of money we could end up stifling our economy to the dust bin since we already have such a massive federal deficit.
Under the Eisenhower administration we literally (and this indeed provably true, btw) heavily subsidized Japanese, Korean, and German steel makers while refusing any help, even just with tariffs, for US firms. Also, the Korean and then Vietnam wars put large strains on US firms. Although US firms' management generally did make some poor decisions regarding which tech to choose (the modern era of steel making was comeing into being and big investment decisions had to be made at the time).
How does the US commercial shipbuilding compare to its military ship and submarine capacity? My understanding is that it currently boasts a top 3 naval fleet and by far the most advance fleet among those 3. While the commercial shipbuilding loss is lamentable, I wouldn’t be as concerned until we’re at that same deficit martially.
The US is currently enjoying by far the best and most resilient major post COVID economy and that’s saying something given the state of our political institutions. America has been miles ahead of every other country during the Information Age and that’s including the 1980s when Japan made incredible headways. As we potentially enter into an AI Age, we have almost no competition and that’s inclusive of the fact we don’t even control our own chip fabrication.
I would contend our position is better than many trending narratives, but I wouldn't go that far. We have very real, significant problems. No one would look at this economy and say it being good is as good for people as past good times. Yes, jobs are easy to find, but houses aren't, cars aren't, timely healthcare.......
Very interesting article. I would be interested in knowing why the British shipbuilding industry in the 19th Century was able to build ships using far fewer labor-hours than the US.
Oh, yes, and congrats on the Guest post at Noahpinion. I hope that it helps you build your audience. You deserve it.
You should check out the issue Washington State is having with it's Ferry system. The system needs 26 boats to fully function, but there is currently only 15 in working order. They have been trying to build new boats for years, but state law requires the boats to be built in state. The one and only ship yard capable of building a ferry bid at nearly double the budgeted amount. Current efforts to change the law and allow boats to be built elsewhere are strongly apposed by unions (who have a lot of influence in the Democrat controlled state.
https://www.seattletimes.com/opinion/let-international-shipyards-compete-for-wa-ferries/
I appreciate this post, but to be honest I came away not convinced that it's especially important for the US to have a major shipbuilding industry
Excellent article.
Years ago, I found myself monitoring the decline of British shipbuilding.
The British shipbuilding industry had 17 trade unions competing for work share. "Demarcation disputes" caused by a disagreement about whether a job belonged to one union or another were expensive and disruptive. They also strongly discouraged any attempt to change the equipment and working practices being used. Ultimately this was the main reason that British shipyards closed down. Another factor was that many of them had been established on fairly small sites in the days when ships were relatively small. During WW2, the Royal Navy ordered warhips 200-250 feet long in large numbers from shipyards that couldn't build anything bigger.
Trade unions - yes. Complacent owners and management were also a factor after the Second World War. (People couldn't imagine that the Japanese could ever produce higher quality products than incumbents - you might be old enough to remember similar attitudes in the auto/carmaking sector in the 80s and 90s).
There was little incentive to invest in transforming existing production sites when profitability was the key objective. (Think of the Big 4 supermarkets in the UK and their failure to respond to the entry of the German discounters - quarterly and annual filings take priority over medium term threats).
The British shipyards also benefited from preferential orders from markets in the Empire, and also dominated regional markets in Europe (Norway) before 1939 - all of which changed after 1945.
As you said, the technological shift towards more efficient manufacturing practices (blocks etc) favoured new entrants who didn't have sunk costs, and had the space to rearrange their yards more efficiently.
(We can see the big Korean shipyards nervously eyeing Chinese investments in robotics and automation - where the Chinese have narrowed the Korean lead significantly in the last five years or so).
But above all - it is worth noting that Japan, Korea and more recently China were willing to essentially subsidise lossmaking or almost unprofitable shipmaking as an intermediate step towards creating large scale industrialisation in their economies. (Shipbuilding (especially unsophisticated bulk carriers), like automaking, was merely a simple cheap and quite easily masterable end-use market, that could create demand for the creation of a national steelmaking sector - which was needed for other applications like manufacturing and defence.)
Did the British shipbuilders and government realise that they were stuck in a long term battle for survival - yes, well before the end of the 1950s, and certainly by 1965.
There is probably another post about technology clusters as well - and the requirement for these countries to develop expertise in all the various machinery and technology markets. Not just the engine and propulsion technologies, but navigation systems etc etc.
Interesting subject area - with relevance today for choices facing the administrations in the States and elsewhere. (Is steel a commodity or a strategic resource is a related question.)
The Chinese shipbuilding industry has but one union competing for work share, and it gets 100% of shipbuilding jobs, whose wages are indexed to 58% of GDP growth, vs. American workers' 43%.
This is a great article.
A great complimentary article that looks more forward is Austin Vernon's piece on Revitalizing American Shipbuilding (https://austinvernon.substack.com/p/revitalizing-us-navy-shipbuilding). While this is on the navy side, I think the crossover is clear.
Whoever controls the seas has dominated the world, as controlling a wide majority of trade is a huge advantage. If the US isn't able to compete anymore, I think that will present as one of the greatest existential risks we have faced as a nation.
Really interesting article.
The issues that have plagued ship building are the same as those that have hampered all infrastructure (nuclear, public transit projects, energy development, automotive)
1. Labor is expensive here
2. The US government tends to intervene in ways that make things significantly less efficient and more expensive
3. We are left to outsource/globalize where we can (automotive, manufacturing) and fall behind where we can't (infrastructure, energy).
I'm interested in how we fix this.
Very interesting. I found it terrifying that the builder of aircraft carriers and nuclear submarines because of discrepancies during construction were so severe that Eletson canceled its contract;
Nuclear aircraft carriers and nuclear submarines get controlled by the nuclear safety agencies. Newport News was probably used to that and billing for every change order, expecting a lot of them.
The discrepancies were probably on the order of "We'll have to change it three times, why do a good job now?"
Building commercial ships where there aren't nearly as many change orders probably was a shock.
Excellent article. Never knew the history of US ship building.
Excellent article, again!
Not only is it concerning that our industrial capabilities are so low, should another world war emergency arise where we need to spend vast amounts of money we could end up stifling our economy to the dust bin since we already have such a massive federal deficit.
The fundamental problem is the infrastructure to build one
Under the Eisenhower administration we literally (and this indeed provably true, btw) heavily subsidized Japanese, Korean, and German steel makers while refusing any help, even just with tariffs, for US firms. Also, the Korean and then Vietnam wars put large strains on US firms. Although US firms' management generally did make some poor decisions regarding which tech to choose (the modern era of steel making was comeing into being and big investment decisions had to be made at the time).
So _that's_ why it's called a Clipper Card
How does the US commercial shipbuilding compare to its military ship and submarine capacity? My understanding is that it currently boasts a top 3 naval fleet and by far the most advance fleet among those 3. While the commercial shipbuilding loss is lamentable, I wouldn’t be as concerned until we’re at that same deficit martially.
Can't have one without the other. This is why the navy is suffering. Takes time to build up a Navy, takes time to tear one down too.
You might investigate, for instance, the condition of your “oilers” for starters — it’s hard to get very far without them …
Didn't the US Navy buy ships from Italy?
https://www.cnbc.com/2020/05/04/italys-fincantieri-will-build-newest-class-of-us-navy-warships.html
US shipbuilding, to the extent it exists, is much more a story of building for the government (Navy/Coast Guard/NOAA etc) than commercial work — see Figure 5 on pg. 12: https://www.maritime.dot.gov/sites/marad.dot.gov/files/2021-06/Economic%20Contributions%20of%20U.S.%20Shipbuilding%20and%20Repairing%20Industry.pdf
Highly informational and surprisingly exciting, thanks for sharing, Brian!!
Hey Brian. Loved the post. But what do we do about it?
Just more indication of the decline of the U.S. empire.I estimate that the U.S. peaked around 1965 and no signs that the decline is over.
The US is currently enjoying by far the best and most resilient major post COVID economy and that’s saying something given the state of our political institutions. America has been miles ahead of every other country during the Information Age and that’s including the 1980s when Japan made incredible headways. As we potentially enter into an AI Age, we have almost no competition and that’s inclusive of the fact we don’t even control our own chip fabrication.
I would contend our position is better than many trending narratives, but I wouldn't go that far. We have very real, significant problems. No one would look at this economy and say it being good is as good for people as past good times. Yes, jobs are easy to find, but houses aren't, cars aren't, timely healthcare.......
You also lead the world in companies the majority of whose profits amount to economic rents. Congratulations, I guess?
Oh, but they’re not terribly productive in real resource terms, so maybe hold off on the self-congratulation just yet …
1975