Fund for Shipbuilding Design and Outsourcing
 
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Fund for Shipbuilding Design and Outsourcing

      6/13/2005

A shipbuilding benchmarking study is recommending that the United States establish a five-year, $148.2 million Shipbuilding Industrial Base Investment Fund that would help the two major U.S. defense shipbuilders better design and produce vessels, outsource services and supply and streamline the government's involvement in the shipbuilding process. The 184-page proposal was laid out in late May in the first half of the "Global Shipbuilding Industrial Base Benchmarking Study," produced by the Defense Department's Office of Industrial Policy as part of an ongoing defense industrial base review. The second part of the study is slated for release early next year and will focus on smaller shipbuilders.

The study found that the six largest U.S. defense shipyards, equally owned by Northrop Grumman and General Dynamics, together improved their practices "significantly" over the past five years to the point that they now only slightly trail the average of foreign shipyards. The improvements are attributed to U.S. Navy and industry initiatives. But "large" technology gaps still exist in "some" unidentified U.S. shipyards, particularly in the pre-production stages, the study found. The study recommends $60.4 million of the funds go toward shipyard remedies that address design, engineering and production engineering issues alone. Another $27 million would go to production processes, and $18 million would focus on organization and operating systems. At the same time, $28.3 million would help U.S. military shipbuilders with outsourcing and supply chain integration, with $20 million alone for outsourcing strategies including regionalization and consolidation. International shipyards outsource a high proportion of outfit manufacturing and selected steelwork, while U.S. shipyards tend to maintain all capabilities necessary within a single business entity, the study said.


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