Economics and Management of American Shipbuilding and the Potential for Commercial Competitiveness

Defense conversion and commercial shipbuilding competitiveness have become major goals of the government in maintaining the U.S. shipbuilding base. The government enacted the National Shipbuilding and Shipyard Conversion Act of 1993, established a National Shipbuilding Initiative, disbursed ARPA funds for various enhancement projects, and provided support to the industry through Maritech. Yet these initiatives may not help to revive the industry and reestablish it as world class. In this paper the reasons for the lack of competitiveness and the effects of the proposed government measures are discussed in economic terms. The differences between U.S. and foreign shipbuilding costs are analyzed in a rational manner without subterfuge under clouds of real or imagined protection or subsidies offered. The conclusions are that U.S. Government involvement in encouragement or protection has a very high price and that the U.S. shipbuilding industry may have a better chance of survival and revival with less or no government aid, protection, and involvement.