The largest issue facing the nation’s private shipyards is the ability to attract and retain a quality workforce with a single government customer, the president of the Shipbuilders Council of America told the House Armed Services Committee Wednesday.
The federal government is making greater investments in education programs in the trades, which help yards attract a quality work force, said council president Matthew Paxton. The effect is further felt through the yards’ long supply chain’s businesses being able to hire trained workers in their specialties.
The shipbuilding industry is clustered in southern New England, Virginia’s Tidewater region and along the Gulf Coast, and training is often isolated. Best practices in one area might not travel to apprentice schools and local community colleges in other places.
A set of federal standards could help remove differences in training, Paxton said.
Former Deputy Defense Secretary David Norquist, now president and chief executive officer of the National Defense Industrial Association, also stressed the workforce in his testimony, noting that 1.1 million Americans are employed in this sector of the economy. But 3 million people were working in the defense industry in 1985, the former defense secretary said.
Approximately 17,000 companies either folded, were bought by a competitor or left government work since the Reagan administration, despite rising defense spending and a critical infrastructure designation during the COVID-19 pandemic, Norquist said.
The entire sector from shipbuilding to aircraft to vehicle manufacturers is “shaped by a single customer, the federal government,” testified former Secretary of the Army Eric Fanning, president and chief executive officer of the Aerospace Industries Association. That means defense industry is subject to “successive decisions [that] are unpredictable and inconsistent” in a new administration, the Defense Department or Congress.
Take shipbuilding as an example, Paxton said. The Navy sends a confusing signal to the private yards that build, maintain and modernize the fleet when it sends a new shipbuilding plan every year, he said.
He described the industry as one requiring a “highly intensive capital investment” in facilities and equipment that can retain a trained workforce.
Achieving the fleet size the Navy wants “begins with a stable budget,” Paxton said.
Added continuing resolutions with limits on how much and where money can be spent until an annual budget is signed into law further complicate decision-making, Fanning said. “We’re still digging out from sequestration 10 years ago” with congressionally-set caps on domestic and defense spending.
Paxton said 30-year shipbuilding plans look too far into the future when conditions and threats will certainly have changed. What would be helpful is to know the 10-year plan.
Some committee members suggested a five-year plan that builds in operations and maintenance costs, not only for shipbuilding but all other major platforms such as the F-35 Lightning II Strike Fighter would be even more helpful in congressional decision-making.
Looking at the more immediate needs the Navy anticipates allows “shipyards to make decisions on facilities and workforce,” Paxton said. He cited Austal’s shipyard in Alabama as one that made a major investment in infrastructure to add Navy contracts for the Light Amphibious Warship and possibly the Constellation-class frigate to its work orders.
Paxton “fundamentally disagrees” with the Navy’s assumptions that the private yards were not capable of producing three Arleigh Burke guided-missile destroyers and two Virginia-class submarines while working on the Columbia-class ballistic missile program.
“We have underutilized assets and unused assets” that the Navy is not considering, he said.
Split building contracts, such as those for the building Virginia class submarines between Newport News Shipbuilding and Electric Boat and Burke-class destroyers between Bath Iron Works and Ingalls Shipbuilding, help industry retain workers and plan for the future, Paxton said.
Multi-year contracts and block buys further benefit smaller companies doing business with the larger firms building major platforms for the Pentagon, Norquist said. With that knowledge, they can plan future demands and work force needed for periods longer than a year.
“A brittle industrial base is a strategic vulnerability,” he said. “A resilient industrial base is a deterrent.”
What is needed from the Defense Department is “a consistent, upward and adequately funded demand spiral,” Paxton said.
Without that consistency, the defense industrial base is geared toward efficient operations in a peacetime environment, Fanning said.
Having entered an era of Great Power competition now, the Pentagon needs to make its priorities clear on what it expects in high-end conflict and the surge it will entail: stockpiles of munitions, spare parts or platforms, Norquist said.
“Where is your priority for investment?” he said.
“We support surge, but we don’t want to be in conflict” with each other, Paxton said, referring to where the Navy is investing in major projects like new dry docks that would be needed for repairs in such a fight.
Norquist added in the new emphasis on high-end conflict “all the risk models [used by the Defense Department and defense industry] are changing.”
His advice to the Pentagon is clarity.
“Be clear about what the nation needs,” he said.