Budget impasse means Navy is thinking the unthinkable

1 Sos Navy

For the next few years, the Navy’s course is certain, right? No longer required to support two wars in different regions at the same time, it will focus on the South China Sea, moving from a 50-50 split of forces between Pacific and Atlantic to a 60-40 tilt. Its size will stabilize at around 300 ships. An influx of faster, lighter vessels will augment its heavy hitters. And the fleet will sail on to victory, just like it says in “Anchors Aweigh.”

Maybe — if sequestration doesn’t happen first. That’s the bureaucratic term for what will take place if Democrats and Republicans can’t agree on a federal budget by New Year’s Day. At that point, the automatic, across-the-board cuts that Congress ordered last year will wipe out $500 billion over 10 years from the Pentagon’s budget. And that’s on top of similar cuts already proposed.

Brian Gauvin

A Navy amphib at Ingalls Shipbuilding in Avondale, La., — perhaps the yard’s swan song.

“It would be a disaster in terms of the Defense Department,” Leon Panetta, the Secretary of Defense, told a congressional hearing this summer. Mike Petters, CEO of Huntington Ingalls Industries, one of the nation’s two military shipbuilding giants along with General Dynamics, was blunter: “I believe that we ought to get people to quit playing the political games and they need to start coming together and trying to find solutions.”

Joe Carnevale, a retired rear admiral who follows the defense industry for the Shipbuilders Council of America (SCA), said the effect of sequestration on the part of the Navy budget that includes shipbuilding looks like about 12 percent (military personnel are exempt, so cuts fall disproportionately elsewhere). By contrast, he said, the last time the Pentagon took a major budget cut was the “Peace Dividend” of 1990-94, a reduction of about 14 percent spread over four years. “So essentially, 2013 stands to be a reduction greater than the entire peace dividend taken in less than one year.”

If it gets its money, Navy deliveries in future years will probably resemble this year’s. Major combatants that have joined the fleet since our last issue include a submarine, USS Mississippi, from General Dynamics Electric Boat; an amphibious transport, USS San Diego, from Ingalls’ yard in Pascagoula, Miss., and USS Michael Murphy, an Arleigh Burke-class destroyer from General Dynamics Bath Iron Works.

Other vessels range from the third Littoral Combat Ship, USS Fort Worth (Marinette Marine) to USNS Medgar Evers, the second to last in a series of naval replenishment vessels from General Dynamics Nassco. VT Halter Marine in Pascagoula, Miss., delivered USNS Howard O. Lorenzen, a missile range instrumentation vessel, and Ingalls Pascagoula delivered USCGC Stratton, the third National Security Cutter, to the U.S. Coast Guard. Austal USA in Mobile, Ala., completed acceptance trials for USNS Spearhead, the first of the Navy’s Joint High Speed Vessels (JHSV), designed to carry more than 300 troops and a limited payload at an average high speed of 35 knots.

Courtesy General Dynamics Nassco

The 5,000-ton bow section of USNS Cesar Chavez is lifted into place at General Dynamics Nassco.

The Pentagon’s budget for 2013 has generally been kind to shipbuilding. Carnevale estimates that it took out about nine ships, but it did so by ordering early retirement for seven guided missile cruisers and two amphibious ships (Congress is keen to restore some of the cuts). But two of the vessels delivered in the last 12 months, Stratton and Spearhead, demonstrate the vagaries of the budget process, which has to meet year-by-year deadlines in a way that undermines long-term certainty. The Coast Guard wants eight National Security Cutters, but is under pressure to settle for six. And the Pentagon’s budget request cut the number of JHSVs it’s asking for over the next five years from 18 to 10.

The nation’s big shipyards aren’t limited to Navy work, of course. Nassco can balance military and commercial work; its current lack of commercial contracts is unusual. Austal USA, which specializes in aluminum construction, has built ferries at its yard in Mobile, Ala., that rival those delivered by its Australian parent company. And repair and modernization work is huge; in August, for example, Nassco won a $104 million contract to overhaul USS Comstock, a 22-year-old landing ship. Nassco’s parent, General Dynamics, has expanded its reach in fleet repair by buying the ship repair division of Earl Industries in Norfolk, Va., and Mayport, Fla.

Among Tier-2 shipyards, the biggest prize right now is the Coast Guard’s new Offshore Patrol Cutter (OPC). The Coast Guard wants 25 OPCs, which are designed to replace its 210-foot and 270-foot medium endurance cutters. Twelve shipyards are interested in the contract, which the SCA’s Carnevale said may be the Coast Guard’s most important program ever: “If you look at the age of Coast Guard vessels and the number of vessels that OPC is going to replace, it is extraordinarily critical that this program is successful.”

Brian Gauvin

Two Fast Response Cutters for the U.S. Coast Guard at Bollinger Shipyards in Lockport, La. The 154-footers are based on a design by Damen, the Dutch shipbuilder with strong patrol craft experience.

Matt Paxton, the SCA’s president, said the interest in the OPC is a sign of the vitality of the industry. “Twelve capable shipyards competed for that OPC contract — that shows really good competition,” he said.

Paxton believes having a strong commercial industry helps the military builders too. “Even if you’re purely defense, there’s value in having large commercial and smaller commercial vessel construction in the United States,” he said, “because that provides a large supplier industry pool. You have a larger industrial base that you can pull from. You have more skilled craftsmen, you have more of the industry that can do that work.”

Several Navy projects have yet to make headlines. Textron finally received the go-ahead to develop a Ship-to-Shore Connector to replace the hovercraft it built for the Navy between 1984 and 2001. In September, Nassco completed the structural assembly for its first Mobile Landing Platform ship. And the SCA’s Carnevale has his eyes on a possible contract for new towing and salvage vessels for the Navy. “They’re very specialized ships; I would think they would get very competitive bids,” he said. “They’re kind of at a budget level that’s easy to put and take — when you pull out a big ship, you have a little bit of money left, you can go and buy one of these.”

Brian Gauvin

The distinctive shape of one of the pontoons on a Joint High Speed Vessel under construction at Austal USA.

As for the future, Textron has unveiled two 39-foot unmanned surface vessels and the Navy has been testing unmanned undersea vehicles in Narragansett Bay. It hopes to develop one that can stay out for more than 70 days — and then make what “Anchors Aweigh” refers to as a “happy voyage home.”

By Professional Mariner Staff