Shipbuilders, Suppliers Head to Capitol Hill

Friday, March 31, 2006
U.S. shipbuilders and their suppliers are descending on Capitol Hill this month, as lawmakers debate how the U.S. can afford new Navy vessels. Aircraft-carrier suppliers assembled for a congressional breakfast on March 30, following a similar event for submarine suppliers on March 16. Also, executives from shipbuilding titans General Dynamics Corp. (GD) and Northrop Grumman Corp. (NOC) have been summoned to testify before congressional panels mulling next year's budget. And the Navy League's annual meeting next week will draw corporate and Navy officials from around the world. According to MarketWatch, the parade of Washington assemblies reflects the marine defense industry's challenges. As new programs have proven more costly than expected, the Navy has had to prune further to stay within its budget. Now Congress is weighing the costs and benefits of buying new ships from an industrial base perspective, as well as from a national security viewpoint. So far, lawmakers have strongly resisted any further consolidation among the two major shipyards, which the Navy says will have a price tag of its own. The Navy says its shipbuilding workforce is generally stable, despite low demand. The design workforce, particularly for submarines, is in a more precarious position, officials told Congress this week. The Navy has mapped out its shipbuilding plans for the next 30 years, in an effort to stabilize its plans and provide more security for the industry. Aircraft carriers, destroyers and submarines are the highest profile ships under discussion. Current plans call for limiting the DD(X) destroyer to a handful of ships, trimming the carrier fleet to 11 from a previous level of 12 active ships, and buying only one new submarine a year until at least 2012. Companies say fleet cuts and delays have driven up costs. For example, the Navy's next-generation aircraft carrier has become more than $1 billion more expensive because of delayed construction. (Source: MarketWatch)

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