September 8, 2025 • 50 mins
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The U.S. once built 90% of the world’s ships—today, it produces less than 1%. What went wrong, and can America reclaim maritime dominance?
In this episode of the “At the Boundary” podcast, GNSI’s Dr. Guido Rossi sits down with maritime expert Dr. Randall Gentry, the principal research scientist at CNA Corporation, to unpack the crisis in U.S. shipbuilding. Together, they trace the decline of the industry, from globalization and shifting trade patterns to decades of policy choices that weakened America’s industrial base.
They also explore the current administration’s executive order on maritime dominance and the Ships Act for America, analyzing whether these measures can revive shipbuilding. Issues include: the urgent need for a skilled and stable workforce, how multi-ship contracts and long-term investment could change the game, and the role of allies like South Korea and Japan in strengthening U.S. capabilities.
If you care about American industry, national security, and the future of naval power, this episode dives deep into one of the most urgent questions facing U.S. strategy today.
Links from the episode:
• Register for a webinar on irregular warfare with Dr. Rob Burrell and Chris Mason!
At the Boundary from the Global and National Security Institute at the University of South Florida, features global and national security issues we’ve found to be insightful, intriguing, fascinating, maybe controversial, but overall just worth talking about.
A "boundary" is a place, either literal or figurative, where two forces exist in close proximity to each other. Sometimes that boundary is in a state of harmony. More often than not, that boundary has a bit of chaos baked in. The Global and National Security Institute will live on the boundary of security policy and technology and that's where this podcast will focus.
The mission of GNSI is to provide actionable solutions to 21st-century security challenges for decision-makers at the local, state, national and global levels. We hope you enjoy At the Boundary.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jim Cardoso (00:00):
Jim, hello everyone. Welcome to this week's
(00:14):
episode of at the boundary, thepodcast from the global and
national security Institute atthe University of South Florida.
I'm Jim Cardoso, Senior Directorfor genocide, and your host for
at the boundary. Today on thepodcast, we're bringing into the
studio the authors of our latestgenocide decision. Brief,
(00:35):
doctors Randall gentry and GuidoRossi their decision. Brief,
dives into the state ofshipbuilding in the United
States and what it will take torevitalize it. Immediately
following World War Two, the USproduced almost 90% of the
world's ships today. That numberis less than 1% Dr Gentry is a
(00:56):
Principal Research Scientist atCNA Corporation, while Dr Rossi
is one of our own GNSI researchfellows. We look forward to
having these two experts expandon what they wrote in their
decision brief and give us aglimpse into the state of that
Bellwether industry before weget into that conversation.
However, we want to remind youthat registration is open for
(01:17):
not one, not two, but threeupcoming events on the GNSI
calendar. First and mostpressing is tomorrow's webinar
with Dr Christopher Mason, thecreator of the study of internal
conflict research project. He'llbe talking with our own Dr Rob
Burrell, one of the world'sacknowledged experts on
irregular warfare. Dr Masonclaims that his five factors
(01:40):
model can predict with 100%accuracy whether a government
will win or lose in a civil waror insurgency. That webinar is
at 10am Eastern tomorrow.
Registration is free, butrequired to participate in this
talk, so do so now to check foryourself this bold claim next on
October 16, GNSI will be hostingthe 12th cyber beacon conference
(02:05):
here at USF. Cyber beacon is theflagship conference of the
College of Information andcyberspace at the National
Defense University. It's thefirst time CIC has held the
conference outside ofWashington, DC, and we are proud
to be the first outside partnerfor the event. Again, no cost to
attend, but registration isrequired. Finally, we've opened
(02:27):
registration for the first everFlorida security forum, port and
maritime security risks andresilience will be held on
November 4 at Port Tampa Bay.
Our partners for the conference,Florida's deepwater ports
contribute over $117 billion tothe economy every year and
(02:48):
support nearly 1 million jobs.
And of course, Portvulnerabilities present very
real national security issues.
This is going to be a canvasevent registration and more
information are on our website.
We'll drop links to all theseevents in the show notes. Okay
with all that out of the way,let's listen to our interview
between Guido Rossi and RandallGentry as they discuss the state
(03:09):
of us shipbuilding industry hereon at the boundary.
Dr. Guido Rossi (03:19):
Hey, Randy, thank you so much for joining
us.
Dr. Randall W Gentry (03:22):
It's my pleasure. Guido, thanks for the
invitation to talk today.
Absolutely.
Dr. Guido Rossi (03:26):
I think there's only a few people more qualified
than you to talk about thesevery important and very much
current problem of the of thecrisis of a marine American ship
building. Because, after all,it's a crisis, right?
Dr. Randall W Gentry (03:46):
Yeah, it is. And, you know, I have to say
that we're one of many in acommunity, right? So the
maritime community is fairlyrobust. There have been quite a
few people who've identifiedthis crisis and explained why
it's a crisis and how we gothere. So I think, you know, we
have to recognize that there arequite a few people active in
(04:08):
this space right now and reallyworking to get to a solution
space, to solve the problem,working the problem, if you
will. So I would agree it's acrisis
Dr. Guido Rossi (04:20):
and and I think it transpired from your words
also that these is, there's,there's several people currently
working on it, including,including the administration.
It's not one of those creepingproblems that the it's not at
the forefront of people's minds.
But whether the opposite,
Dr. Randall W Gentry (04:39):
oh, I think, I think that's true. I
think the administration came inand identified it as a priority
problem for this administrationto attempt to solve, or at least
put the framework together tobegin to solve the problem. And
part of that was the executiveorder that President Trump
signed emphasizing maritimedominance. This, and also the
(05:01):
recent draft bill that Congressput forward, the ships act for
America. And I think both ofthose initiatives have outlined
where the problem exists, whereit needs to be fixed, or at
least the pathway for it to befixed, and an approach which
would include development of amaritime action plan. So I think
(05:24):
all of these activities point tothis administration, this
Congress, attempting to takesteps to to rectify sort of
this, this issue in the maritimecommunity,
Dr. Guido Rossi (05:37):
before getting into, you know what's, what are
the provisions of the executiveorder and and of the ships of
for America Act? First of all, Iwanted to ask you, so this is,
this is not a new problem. It'sbeen in the making for several
decades. So why withoutnecessarily, you know, pointing
(05:58):
fingers at the previousadministration. But why has, why
is only this presentadministration dealing with it?
Why didn't the or did theprevious administration, for
instance, did the previousadministration do anything to
try to us to address thatproblem? Considering that the,
you know, the rise of China asan adversary for the United
(06:19):
States is also another new,recent thing, and they've been
developing their fleet since theestablishment of Xi Jinping as
their leader in the nearly 2010sand 20 and 2012 so did the
previous administration attemptto do anything to solve this
problem? And if they didn't, whyand why only now?
Dr. Randall W Gentry (06:43):
Yeah, I have to say, and it's not sort
of a placing of blame. Thisoccurred over decades of time
that probably started with theend of the Cold War, and so at
that point in time, the Reaganadministration sort of began
transitioning from a wartimeconfrontational stance to more
(07:04):
of a peacetime stance. And socertain funding that was
available in terms of subsidiesto the industry other
activities, in terms of thefunding that went into a certain
size Navy, certain size defense,just wasn't the same. And so we
saw this continual erosion ofthe industry, and probably the
(07:27):
the start of globalization andoutsourcing from from the US to
other entities. And so thecombined effects of all of that
really brought us to where weare today. Previous
administrations have tried toplace funding and emphases on
(07:48):
the building of ships,particularly naval ships. I
don't think probably that muchin terms of the commercial,
commercial maritime. I think thecurrent administration has
probably made it an emphasis tolook at the broad maritime
industry, so Merchant Marine,naval forces, all of the above,
and probably put resources toit. So part of that was to look
(08:14):
at the funding necessary, atleast in terms of an initial
analysis, and to try and getthat funding in the right place.
So again, not looking atnecessarily blame as what was
then viewed as a world at peaceand probably different
requirements, leading to, over aperiod of time, an erosion of
(08:37):
probably national security fromthe standpoint of economic
security, and the US hascapability in both shipping
defense and the combined sector,in terms of maritime
opportunities.
Dr. Guido Rossi (08:51):
Okay, that's that's very interesting. And I
was also thinking, Could youalso be perhaps because of a
greater inclusion of Russia as aanother adversary, again,
alongside with China, with thedifference though, that I don't,
I would say that the RussianNavy, except for the Submarine
Force, has never been anenormous threat to the United
(09:16):
States. Is that, is that a isthat another fair reason why the
recent, recent, you know,greater focus against China, due
to the embarrassment of Russiaand Ukraine, further reductions
of the of the Russian fleet, andso with, with the rising
importance of China as anadversary. Then there's been
also, you know, greater emphasishas been placed on confrontation
(09:42):
indices?
Dr. Randall W Gentry (09:44):
Yeah, well, I think so. I think that
when you look at economic power,shipping and controlling of
those corridors, marinecorridors for that purpose, in
addition to fishing, fishing.
Out areas, and also protectionof that those areas as a
national resource are important,so the combined activities
(10:09):
became much more important. So Iyou know, I wouldn't say that
Russia was never a threat. Itprobably was a different threat
during the Cold War period thanit was after the Cold War
period, and certainly today,where it's, you know, it's
probably been a destabilizedkind of environment for them.
(10:33):
But I would have to say thethreat is still real. In terms
of Russia, I think the threatwas growing over many decades.
From a China perspective, theaggressiveness that we see in
terms of the China Coast Guard,particularly incursion into
fishing areas that areinternational waters, and
(10:55):
claiming, yeah, the Philippinesparticularly, and the claiming
or asserting of certain rightsover areas that they have not
historically had any kind ofdominance or national ownership
mentality of has really beensort of growing over time. But I
(11:17):
would say over the past decade,the past five years, it's really
reached a peak. And so I thinkthat's the impetus for the
concern these days, is thatwe're nowhere near where we need
to be in terms of maintaining,much less growing, a particular
(11:38):
naval force?
Dr. Guido Rossi (11:43):
Yeah, I can, I can see that so and there's many
avenues that I like to take tofurther explore the topic with
you today, I'd say, first ofall, let's try to define the
problem a little bit more. Whatdo we mean exactly by crisis of
American ship building, and howdoes that impact, exactly,
(12:05):
national security? Yeah.
Dr. Randall W Gentry (12:06):
And let me point towards two books. I think
the least the listeners shouldpay attention to. One was a book
that was put out by the maritimeaccelerator for for resilience.
And this is, this is a verystrong group of commercial
maritime, individuals with a lotof history in the Coast Guard
and and other areas as well. Andthe book was called 0.4 how US
(12:29):
leadership in maritime willsecure America's future. And in
that book, they go through a lotof these principles that we're
talking about. And so I thinkit's a good resource, and that's
why I'm pointing towards it, andthey talk about this issue of
economic security as a nationalsecurity facet. And the other is
returning from Ebb Tide. Andthis is a book that was put out
(12:51):
by the Navy League, and it wasedited by Dr Steven wills.
Admiral James fogo did theforeword for this book. And
again, it goes through a lot ofthe history from the Cold War
era, the elimination of thesubsidies and then and then the
globalization impacts and theoutsourcing, particularly of
manufacturing operationsoffshore, and America's loss of
(13:14):
that capability. Well, not thecapability, I'd say the
capacity. So certainly, we'vealways had the capability, but
the capacity to build thenumbers that are necessary was
is certainly not the case. So toget back to your point again, I
think these are good books forfolks to delve into. But, but
the point is the economicsecurity. And why is that
(13:37):
national security? And I thinkfishing is an as an example,
shipping as an example. This thethis is just simply how a lot of
America's resources tend to comeinto the American families. So
it's, you know, as much as we wetend to try and cover as much as
(13:59):
we need in terms of chain supplyequities within the United
States borders, by necessity,all countries get export
material in and that exportmaterial is vastly controlled by
shipping on the oceans, and thatdominates a lot of global
(14:20):
economy these days, from anenergy perspective, from a
household goods perspective,from a food security
perspective, also in the contextof national security, grains,
oils, other food goods, otherfood goods that may be used from
a materials perspective. So allof these dominate most countries
(14:46):
in economic conditions to a to adegree that if you were to shut
off shipping, or shipping wasgreatly impacted, it would
affect your your nationalsecurity capability, just
because of the economic. Impactfrom some type of degradation of
inflow of materials to yourcountry. So I think that's one
(15:07):
perspective. I think the energyperspective is another. We all
import certain things that areneeded. From an energy
perspective, the US is trying togrow its provenance in terms of
being an LNG exporter, but infact, we still import oil, even
though we produce quite a bit ofoil. So I think all of these
(15:30):
things are important to considerin terms of a national security
perspective. They affect what isthe fabric of America and the
fabric of our economy, and soit's something that we have to
protect.
Dr. Guido Rossi (15:44):
And what about more directly to directly to
defense of the United States? Sonamely, the ability to build
ships for the US Navy. Yeah.
Dr. Randall W Gentry (15:56):
So I think that's that is a critical point.
So the US is, is highlydependent upon a skilled
workforce to be able to buildit's, it's, it's ships for
defense. There's been quite abit of commentary in the media
about the Navy's abilities tomeet its building demand, and an
(16:23):
inability to meet that demand iswhere we currently are now, but
improving, and part of that isworkforce, and part of it is
consistency, and in the way thecontracting works to build these
ships, which is dependent uponthe funding put forward to build
These ships. And as with allthings, how the contracts are
(16:44):
let to build these ships. So Ithink all of this goes into a
stable sector within themaritime industrial base, which
is part of the defenseindustrial base as well for the
purpose of building ships. And Ithink anytime we have a lapse in
(17:06):
capacity to do that, whether itbe on the commercial or the
defense side, it's a big impact.
Dr. Guido Rossi (17:15):
So one problem for the shipbuilding industry in
the United States has been theworkforce, namely that there
isn't nearly enough qualifiedworkforce. The United States
have sort of passed on to somehistorical allies, especially
Japan and South Korea, buildingcapacity, and they have let them
(17:37):
do the job. And meanwhile, ourcapacity here in the in the
States, has decreased over time,but that was very much
interested in the in theconnection between the
commercial side and the naval ormilitary side of shipbuilding,
because they are, they are tiedtogether, connected. There.
Dr. Randall W Gentry (18:02):
There.
There is a connection in termsof the workforce, capacity and
capability. I do have to saythat if most subject matter
experts that you will talk intothis, talk about this with,
would argue that there's adegree of separation between
what's done in terms of thecommercial ship building and
(18:23):
what's done in terms of navalship building. The argument I
posit is that there may be adegree of separation in terms of
the physical shipyard and what'soccurring in certain spaces in
the shipyard, but the combinedactivities to bring the
industrial base up to be able todo that, production is highly
(18:45):
connected, and many areas thatmay do some commercial still
probably have a market segmentdependency upon Naval ship
building or naval repair, thesustainment of those vessels in
some way, shape or fashion. So Ithink the thing to recognize is
(19:07):
it's a highly complex marketsegment that includes commercial
it includes naval ship building.
They are typically not the sameactivities. There's different
standards associated with eachtype of construction and but
(19:27):
when you when it gets, when youget down to the the worker skill
set. In order to do thatmanufacturing, it's the same
skill set. So it's the sameskill set applied to a different
specification, whether it becommercial or military. And so
when we talk about the maritimeindustrial base, we usually talk
about a combined workforce thatmay be doing commercial or naval
(19:51):
shipbuilding, but we don'tintend to say that they're doing
both at the same time, but maybethey should be doing both in
some kind of new model. Thatwould allow an exchange of
workforce between those types ofprojects. It may be part of the
solution space that we need tolook at
Dr. Guido Rossi (20:09):
so. So two things I think, I think the
value in the actions that thispresent administration has taken
have have value in revitalizingthe USF building industry
precisely because they don'tonly address the Naval Military
aspect, but also they try toaddress also the commercial side
(20:29):
of things, and at least from theperspective of funding and
workforce. They're so connectedthat cultivating, you know, the
workforce will benefitessentially both, and not just
the commercial or the militaryside. And then correct me if I'm
wrong, of course. And then thethe other thing that I think
(20:54):
it's, it's interesting, it's, orthat struck me, at least, was
that when we're talking aboutshipbuilding industry, and we're
talking about shipyards the it'ssomewhat different from other
industries, because the monetaryinvestments that need to be made
to build these capacity andbuild these infrastructures and
(21:15):
form the workforce are massive,To the point that a degree of
involvement by government, notonly on the naval side of
things, but also commercial andprivate side of things, is, is
is required to allow thisindustry to survive and thrive.
Dr. Randall W Gentry (21:35):
Yeah, yeah. I think that's absolutely
correct. Guido, I think, youknow, I think part of the issue.
And maybe how I look at it is,you know, in the US, the model
is still very much open markets,so anybody can participate in
whatever market. They seek acompetitive edge, they try to
take that competitive edge, andthat's their business model,
right? That's how they outcompete in the open market. For
(21:59):
for business capability, ourbusiness awards, and so
typically there's, there's anadvantage to being able to be
resilient in that space, bybeing able to bring in different
types of projects and to be ableto plan long term for those
projects. So I think you knowthe issue is having a stable
(22:24):
workforce that you can go towith the right skill set to be
able to do that that job,including innovative solutions.
So it's not just about theworkforce, it's also about
learning new techniques andadvanced techniques for doing
(22:45):
the same job, right? So itbecomes about productivity. So
all of these are layers, usuallyin the complex business model
for these types of operationsthat allow them to compete. But
the only way they can compete isif they know what the the
landscape of the competitionwill be over an extended period
(23:07):
of time and and how they canadjust their business models to
be economically beneficial. Andusually, if you talk to subject
matter experts in this space,they will, they will describe
the incredibly tight margins inthe ship building space, meaning
there's not a lot of latitude tolook at a disturbance in a
(23:29):
project. It's just not resilientto large scale, small scale
disturbances, at least most ofthe ones that I hear from in
this space anyway, so they tryto build that resilience through
multiple projects that they cankind of buttress up against each
other and expect a longer termbusiness operation to provide
(23:52):
that resilience. The disruptionmay come in if a platform is
discontinued, if a platformcanceled or discontinued. A
platform is altered midstream.
Something different is specifiedfor a ship after the beginning
of the construction. These kindof things can be disruptive to
(24:14):
that practice. So you often hearcommentary about perhaps we
should look at adaptingstandards that are more
commercial into the naval shipbuilding practice. And I think
that's a complex conversation,because in the end, you have to
(24:35):
really define what you'regetting at in terms of adapting
those commercial standards inthe end you you, you have to
consider what the end effect isgoing to be in the ship being
built, and is it, is it going toaffect the survivability? Is it
just about the production rate?
(24:58):
So some optimization has to. Tooccur there, and it has to
include the business model,where the economics and the
technical economics are takeninto account for the life cycle
of the ship being built, andthen it's sustainment. After
that,
Dr. Guido Rossi (25:15):
you address the difficulties of margin
profitability. Marginprofitability from private
shipyards. So when you'retalking about the interferences
in the platforms, in the designof platforms, or changes to the
platforms, those interferences,they are mostly by the Navy.
Correct? When we're talkingabout commissioning of vessels
(25:36):
by the Navy, it's the Navy thatoftentimes delivers incomplete
projects to the shipyards andretains the right to intervene
later, to alter those models, orthen ends up canceling these
models, these, these, these,these contracts all together,
and that creates problems forthe private shipyards.
Dr. Randall W Gentry (25:56):
Yeah, and you know it's, it's not
something that I blame the Navyfor, I think it's describing the
reality of the situation wherethe Navy is trying to build or
design a force and complementedwith the correct ships for X
(26:16):
number of years out. Andsometimes that requires a
technical innovation where it'son the edge. So it's not
completely worked out, if youwill. So I think there have been
examples where some of thesetechnological innovations,
energy requirements, otherthings have impacted that, ship
(26:38):
building, production rate. Ithink that's what you would hear
from, from some of the shipyardsthat, on occasion, that can
create delays or missedopportunities in terms of
reaching certain milestones. Butin fact, it is the Navy that
puts the requirements forward.
It is the maybe that will alterthose requirements. If some new
(26:58):
platform, if some new energyrequirement comes down and needs
to be included in a new design,whether it be a destroyer, a
frigate or any other platform ofship,
Dr. Guido Rossi (27:12):
considering that there, you know, presently,
shipyards are building a numberof Navy platforms, contracts,
including, you know, frigates,second aircraft carrier, second,
four class aircraft carrier,submarine and ballistic missile
(27:33):
submarines as well, and a numberof other ships and that they're,
all you know, massively delayed.
But also the the the award forthis contract is extremely
substantial for the shipyards.
So what is the problem in termsof profitability for all these
shipyards, if, if the money thatis being awarded for this
(27:54):
contract is so is so massive?
Dr. Randall W Gentry (27:58):
Well, the the amounts may be massive by
the value that that mostAmericans would look at in terms
of the budgets for this, for theshipbuilding, because of the
scale of the ship. So theseships are enormous, right? So
you mentioned the the aircraftcarrier, the Ford aircraft
carrier, first of all, nuclearvessel, completely, the
(28:23):
propulsion system is the newtype, as they say, in terms of
nuclear propulsion, but just amassive ship in terms of its
size and capability. So so thenumbers are going to be what I'm
trying to say is the numbers aregoing to be large no matter
what, right? That doesn'tnecessarily mean that that's all
(28:45):
going into profit, right? So avery small percentage of that
typically goes into profit,right? So the company will come
in, they have to have aworkforce, they have to have
material flow, they have to havea supply chain to deliver, to
build that ship. All of thesethings factor into the
construction of that ship. Andthere may be certain so where
(29:07):
the company may tend to make itsmoney is it really doesn't
probably plus up much in termsof salaries and rates and this
kind of thing. In fact, I thinkto remain competitive, they have
to bid in such a way thatprobably all of those type of
rates are kept very close toeach other, all of the
shipyards. So the profitabilitycomes in, the incentivization to
(29:30):
get it done at certainmilestones. And so there may be
payments, and particularlyprofit based payments, to meet
those time requirement,incentives, and so those are,
those are just not huge dollarsin terms of the profit side of
the percentage versus the total.
So when you look at the numberand that you're looking at these
(29:53):
things, a submarine or aircraftcarrier, and you're looking at
numbers that are in the billionsof dollars, you. Like, wow, that
just must be a massive amount ofmoney that the shipyard is going
to make to do that. And in fact,I think it's the business of
business that the shipyard ismaking profit on, which means,
you know, some relatively smallpercentage of that flow of
(30:16):
opportunity is what they're ableto turn into what the business
can reinvest in terms ofprofits. The rest of it goes to
labor and materials. And sothat's, I think that's just the
reality of it. Very little ofthat is plussed up and in terms
of some kind of profit margin.
Dr. Guido Rossi (30:37):
So, so the would you say that the solution
would be to increase the amountof these awards for military
contracts for naval vessels orother solutions should be
instead looked at andimplemented.
Dr. Randall W Gentry (30:53):
Yeah, I think people you know in the
community have put forward someideas that would be helpful in
this space. So I think lookingat multi ship awards so
contracts for for more than oneship in place at a time, would
allow a much more stablebusiness model for these
shipyards to be able to to makea sustained profit on that way
(31:19):
they can negotiate moremeaningful agreements with
collective bargaining units,with the labor they can sustain
more resilient contracts for thesupply side of their business.
So I think that's, that's oneaspect,
Dr. Guido Rossi (31:34):
and that's, that's, for instance, how
companies that also contractors,contracting companies like
General, General Dynamics, forinstance, they have those type
of contracts in place for someplatforms, for the US
government, for instance, theupgraded Abrams tanks, but they
(31:55):
don't Have for theirsubdivision, the General
Dynamics, electric submarine inright now in Groton, Groton,
Groton, yeah, despite being thesame contracting industry, they
don't have similar contracts inplace when it comes to vessels,
(32:16):
even if they have it for othertypes of platforms.
Dr. Randall W Gentry (32:20):
Yeah, that Well, that's true. I think they
probably have it in place for avessel. Maybe they have it
before two vessels. And you haveto look at the period of time it
takes to produce some of theseships, right? So certain ships
may take seven years, you know,from from initial construction
activities to launching theship. So, you know, that's
(32:41):
that's a long period of time,right? So being able to balance
a workforce and all of thesupply chain logistics around
that really becomes the issue.
If you have multiple ships whereyou can partner in the right way
for those supply chain logisticsand labor markets, then it's
just going to make the situationbetter. And I think that's what
the shipyards and others haveargued, is that the multi ship
(33:03):
contracts probably would be ofmost benefit. Then I think
there's other things that, youknow, the Navy and others could
do in terms of looking at whatare the right incentives to one,
to keep these companies moststable, because they are a part
of your defense industrial base.
(33:26):
And you know, what are the typeof incentives that we can we can
use as a tool to, one,strengthen the companies so that
we have a better industrialbase. But two, improve
performance, at least in thecontext of what the customer
needs,
Dr. Guido Rossi (33:43):
how? So exactly,
Dr. Randall W Gentry (33:46):
well, so I don't think there's a simple
answer there. You know, youcould, you could talk about
payment structures. You couldtalk about keeping the margins
on, say, Hold back of paymentsto the lowest level possible, so
that the shipyards are are nothaving to wait till the delivery
of the ship to get certainfunding sources. Some of that is
(34:10):
just routine in terms oftraditional contracting, and
you're always going to have somekind of verification process in
terms of of how funds are heldback just in terms of final
delivery. But there can beunique ways to structure that,
such that it's it's notnecessarily an impediment to the
company in terms of theirworkforce and supply chain
(34:32):
stability,
Dr. Guido Rossi (34:34):
and then perhaps limiting the, you know,
to to a to a reasonable degree,so not eliminate completely the
say that the Navy has in theconstruction of the vessels, but
perhaps limiting somewhat andeasing that way, the work of
shipyards in building militaryvessels, and also the
(34:54):
interference also in part ofCongress as well through the
National Defense Authorization.
An Act, yeah.
Dr. Randall W Gentry (35:02):
So the one thing we all have to recognize
is that there always is going tobe oversight, right? And if
you're spending billions ofdollars, you have to have
oversight, right? So somebodyhas to look out for the the
American citizen as a consumertoo, right? So we, you know, in
order for the citizen to paytheir taxes and then that be
used for the national defense.
There does need to be oversight,but I think that oversight has
(35:25):
to be balanced in such a waythat it does not prevent, in
terms of the relationship to thecorporate entity, the production
of these ships. I think the Navythen has to go back and look at
its processes, and I think it'sdoing that. I think it's going
back and and doing some rootcause analysis. Where did things
go wrong? What do we need tofix? We don't need to be
(35:49):
changing requirements andspecifications early on in the
shipbuilding process or evenlater in the shipbuilding
process. That could, in fact,delay delivery, if they're you
know. So somehow, you know,there could be new ship designs
that would accommodate themodularity of the requirement of
(36:12):
some of these changes that arebeing requested that could be
built into the early design. Solook at a modularity concept
where you've kind of got a bringthe package on of this type
energy requirement, this type ofweight and size, and, you know,
sort of reconceptualize how thattraditionally occurs, as opposed
(36:36):
to building nothing butunicorns, where it's, you know,
such an extremely unique type ofvessel. The uniqueness can come
in the form of the of themodularity. And I think others
have proposed this as well, interms of looking at a new way of
doing ship design. Part of italso is we need new designs. I
(37:00):
think that the actual design ofthe ship, in terms of its hull,
in addition to its mechanicaland electrical there's probably
some innovation space there thatcould be looked at, and new
approaches to that design whichprobably haven't been looked at
and quite a few years.
Dr. Guido Rossi (37:23):
And maybe these may be a question with an answer
kind of above your expertise,perhaps or but do you think
those change? Because I thinkit's really interesting what you
just talked about, implementingchanges in the structure of
ships. Do you think thesechanges could maybe marry well
with also greater adaptation ofof the standards, military
(37:47):
standards for ship closerperhaps to commercial vessels.
Or would that would beproblematic?
Dr. Randall W Gentry (37:54):
Yeah, and you know, there's a possibility
to look at some way to adaptcommercial standards into
military ship building. I thinkthere are experts that need to
come together in thatconversation. Again, the you
know, the optimization there isgoing to need to look at both
cost constructability, but alsosurvivability, that once that
(38:17):
ship is in a congested,contested logistics scenario
that it has the appropriatesurvivability that's intended.
So I think all of these thingsare possibilities. I think there
are certain commercial standardsthat could be looked at in terms
of the construction andconstruction approaches. The
(38:40):
other part that is probablyaround design is probably going
to be a little bit morestringent and always military
like, because that that gets tothe survivability issues. But
when it comes to how wires run,if a wire needs to be patched,
how welds are inspected oncommercial ships versus military
ships, those kind of things,those kind of standards probably
(39:01):
are the more low hanging fruit,okay?
Dr. Guido Rossi (39:04):
And alongside with, I just thought about
these, this question is, alongwith perhaps the potential, the
possibility of somewhat loweringslightly the military standards,
is there a hope, a possibilityof maybe raising the commercial
standards a bit to sort of, youknow, having the two types of
(39:28):
standards made halfway, or youthink it would cut too much into
in the profitability,profitability of the building of
commercial vessels for thecommercial industry, and it
would make it, you know, itwould kill essentially, what
we're trying to achieve here.
Dr. Randall W Gentry (39:47):
Yeah, I think that's a very strong
possibility. And I think you youraise a very good point. Guido,
I think there is the potentialthat if you bring the commercial
standard closer to an alignmentwith the military standard, then
you're looking at. Cost issuesand profit loss potential. But I
think the right people in termsof naval architecture need to
have that conversation aboutwhat the possible is. I think
(40:11):
where the two parts of theindustry could learn from each
other, and particularly themilitary, could learn from some
of the commercial is some of thenew aspects of robotics and
automation and the constructionpractices, and applying that to
sort of the militaryconstruction side as well. So I
think there's, I think there arethings that could be done. And
(40:33):
we tend to use the thephraseology of adopting
commercial standards, butunderstanding what that really
means in terms of theconstruction piece of it, the
design piece of it, and then theevaluation piece of it, post
construction or duringconstruction, to certify the
vessel or certify theconstruction. I think all of
(40:53):
those are pieces that that haveto be weighed independently, but
they all lead towards standardsand standards adaptation that
could be useful.
Dr. Guido Rossi (41:04):
So during during this interview, we
mentioned a few times SouthKorea, or also Japan, as being
greater manufacturers of shipsthan the US are. And although
the objective, the goal is torevitalize us shipbuilding. You
know, the My understanding isthat the growth, the very rapid
(41:27):
growth of the Chinese fleet, isthreatening, and it's not. It's
not slowing down much. And whilethe capacity for building ships
here in the United States isbeing rebuilt. Would the
(41:49):
possibility of having somevessels sorely needed to fill
urgent gaps in the US Navy fleetbuilt instead by these partners.
Would that be? Could that be a,you know, a viable interim
solution, that I understand,that it would require changes in
(42:10):
the US procurement law. Butshould, should those like legal
changes be made to allow forthis to happen to just as an
interim solution? Do you thinkit would be a viable short term
fix.
Dr. Randall W Gentry (42:26):
I think, Well, I think we have to talk
about it, and I think we have tounderstand what it means. And,
you know, the way the law iscurrently constructed. You know,
foreign entities cannotconstruct US military ships. And
so I think the you know, theissue becomes, if you look at
(42:48):
what the government, USgovernment, was attempting to
and not only the US government,actually Australia and the UK
were attempting to do with theaukus agreement, and looking at
shared shipbuilding of thesubmarine fleet, the appropriate
submarine marine fleet. Youcould look at similar models for
(43:09):
where shipbuilding of surfacewarfare combatants, particularly
where Centers of Excellenceexist in shipbuilding. So South
Korea is, is very well known inthis space Japan, very well
known as space, certainly forcommercial vehicles, but but
also for military vehicles. So Ithink it is something we have to
(43:30):
talk about, and we have tounderstand what it would take to
get there.
Dr. Guido Rossi (43:35):
So these would be, these would be all, I think,
short term solutions in terms oflonger term solutions that are
the I my mind, they're alwaysthe real solutions to the
problem, right? They're nottemporary fixes, but they are
actually addressing the rootcause of this type of issues. So
do you think, for instance,that, or would you agree that a
(43:59):
basis and a root of thedifficulties that the US
shipbuilding industry isencountering is also due to the
fact that it's rooted in thevery traditionalistic view,
capitalistic view, that theprivate sector is private And
that US government has orshouldn't have, shouldn't
(44:22):
interfere with it, and ininstead that a possible solution
would be greater intervention bythe government with funding,
either in terms of loan orincentives to the private
shipyards To to encourage themto build, rebuild this capacity
and and restart the productionthat way. Do you think that's,
(44:50):
that's a fair, that's a fairpoint to be addressed?
Dr. Randall W Gentry (44:56):
Yeah, I do. I do think it is a fair
point. I you. So one of the jobsof government, and it's it's the
only thing that government cando that industry can't do, and
it is de risking the marketspace. So part of the issue is
that the government does have tocome in and de risk it so that
(45:19):
shipyards can build up, thatthey can build up the workforce
programs and the labor programs,and that they can look at the
types of models that can be putin place to accomplish both the
commercial and the military shipbuilding. So part of that
requires de risking, meaning thegovernment coming in,
(45:41):
identifying where the barriersexist in the marketplace, for US
companies to be able to do this,and then lowering those
barriers, whether that means taxincentives, whether that means
real estate, type ofincentivization for shipyards,
there's A host of tools that thegovernment can come in and de
(46:03):
risk that space. Some of ittraditionally has been in the
form of subsidies, and those canalways be used as well so and
part of it is changes in lawthat may be part of the barrier
that prevent the types ofshipbuilding across different
spaces that may be necessary,particularly with friends and
(46:27):
allies.
Dr. Guido Rossi (46:28):
Well, these are very complex, complex topic of
no easy of no easy solution,like you said, experts and and
people at high levels reallyneed to have in depth and good
conversation to try to addresssome of the base difficulties,
(46:50):
from like like I mentioned, fromfrom the design of ships itself,
to the relationship that existsbetween the government and
private industry, and but thisis, it is, I think it is
encouraging that finally, atleast it's gotten back in the
center of attention and it's atleast being addressed.
Dr. Randall W Gentry (47:13):
Yes, I would agree with that. And I
think, and I would hope, thatmost Americans would go out and
take a look at the ships forAmerica Act. Understand what's
being proposed, understand thetype of government
infrastructure being put inplace or proposed to be put in
place, and if they're able tosupport the passage of that
(47:37):
bill, so that they can moveforward to support the industry.
Dr. Guido Rossi (47:42):
Randy, thank you. Thank you so much for
taking some time to talk to meabout this very important topic.
Dr. Randall W Gentry (47:48):
Yeah, absolutely. Thank you, Guido
again. Thank you for theinvitation and thank you for the
conversation. Thank you for theintellectual engagement on this
topic in terms of the decision.
Brief, much appreciated. Mypleasure. You
Jim Cardoso (48:03):
a special thanks to our guests today, Drs Randall
gentry and Guido Rossi, fortheir in depth examination of
the US shipbuilding industry andtheir recently published
decision brief on that sametopic. Dr Gentry will also be a
featured guest speaker at ourupcoming Florida security forum
conference on November 4 at PortTampa Bay, next week on at the
(48:24):
boundary, we're going to explorea fascinating topic many of you
probably have never heard ofPNT. However, even if you've
never heard of PNT, if yourphone GPS has ever navigated you
to say that popular newrestaurant you've never been to,
you appreciate it. P and Tstands for positioning,
navigation and timing, as youcan imagine, beyond finding the
(48:48):
best cumin sandwiches, P and Tis critical to many facets of
the US, military, and even morebroadly, to many six sectors of
society. It's especially topicfor the newest member of our
GNSI team. Air Force LieutenantColonel Jay Patrich, he joined
us a few weeks ago as the veryfirst member of GNSI National
Security Research Fellowship. Hesat down recently with fellow
(49:11):
Air Force officer, major Jessehumpal to discuss PMT more
specifically, what happens if anadversary like China, for
instance, takes out all of thesatellites that are vital to GPS
operations. That's next week onthe show. Thanks for listening
today. If you like the podcast,please subscribe and let your
friends and colleagues know.
Follow along with GNSI and ourLinkedIn and X accounts at USF,
(49:33):
underscore GNSI And check outour website as well at
usf.edu/gnsi, gnsf.edu/gnsi,while you're there, don't forget
to subscribe to our monthlynewsletter
that's going to wrap up thisepisode of at the boundary. Each
(49:55):
new episode will feature globaland national security issues we
found to be inside. Helpful,intriguing, maybe controversial,
but overall, just worth talkingabout. I'm Jim Cardoso, and
we'll see you at the boundary.
You.
Jim, hello everyone. Welcome to this week's
(00:14):
episode of at the boundary, thepodcast from the global and
national security Institute atthe University of South Florida.
I'm Jim Cardoso, Senior Directorfor genocide, and your host for
at the boundary. Today on thepodcast, we're bringing into the
studio the authors of our latestgenocide decision. Brief,
(00:35):
doctors Randall gentry and GuidoRossi their decision. Brief,
dives into the state ofshipbuilding in the United
States and what it will take torevitalize it. Immediately
following World War Two, the USproduced almost 90% of the
world's ships today. That numberis less than 1% Dr Gentry is a
(00:56):
Principal Research Scientist atCNA Corporation, while Dr Rossi
is one of our own GNSI researchfellows. We look forward to
having these two experts expandon what they wrote in their
decision brief and give us aglimpse into the state of that
Bellwether industry before weget into that conversation.
However, we want to remind youthat registration is open for
(01:17):
not one, not two, but threeupcoming events on the GNSI
calendar. First and mostpressing is tomorrow's webinar
with Dr Christopher Mason, thecreator of the study of internal
conflict research project. He'llbe talking with our own Dr Rob
Burrell, one of the world'sacknowledged experts on
irregular warfare. Dr Masonclaims that his five factors
(01:40):
model can predict with 100%accuracy whether a government
will win or lose in a civil waror insurgency. That webinar is
at 10am Eastern tomorrow.
Registration is free, butrequired to participate in this
talk, so do so now to check foryourself this bold claim next on
October 16, GNSI will be hostingthe 12th cyber beacon conference
(02:05):
here at USF. Cyber beacon is theflagship conference of the
College of Information andcyberspace at the National
Defense University. It's thefirst time CIC has held the
conference outside ofWashington, DC, and we are proud
to be the first outside partnerfor the event. Again, no cost to
attend, but registration isrequired. Finally, we've opened
(02:27):
registration for the first everFlorida security forum, port and
maritime security risks andresilience will be held on
November 4 at Port Tampa Bay.
Our partners for the conference,Florida's deepwater ports
contribute over $117 billion tothe economy every year and
(02:48):
support nearly 1 million jobs.
And of course, Portvulnerabilities present very
real national security issues.
This is going to be a canvasevent registration and more
information are on our website.
We'll drop links to all theseevents in the show notes. Okay
with all that out of the way,let's listen to our interview
between Guido Rossi and RandallGentry as they discuss the state
(03:09):
of us shipbuilding industry hereon at the boundary.
Dr. Guido Rossi (03:19):
Hey, Randy, thank you so much for joining
us.
Dr. Randall W Gentry (03:22):
It's my pleasure. Guido, thanks for the
invitation to talk today.
Absolutely.
Dr. Guido Rossi (03:26):
I think there's only a few people more qualified
than you to talk about thesevery important and very much
current problem of the of thecrisis of a marine American ship
building. Because, after all,it's a crisis, right?
Dr. Randall W Gentry (03:46):
Yeah, it is. And, you know, I have to say
that we're one of many in acommunity, right? So the
maritime community is fairlyrobust. There have been quite a
few people who've identifiedthis crisis and explained why
it's a crisis and how we gothere. So I think, you know, we
have to recognize that there arequite a few people active in
(04:08):
this space right now and reallyworking to get to a solution
space, to solve the problem,working the problem, if you
will. So I would agree it's acrisis
Dr. Guido Rossi (04:20):
and and I think it transpired from your words
also that these is, there's,there's several people currently
working on it, including,including the administration.
It's not one of those creepingproblems that the it's not at
the forefront of people's minds.
But whether the opposite,
Dr. Randall W Gentry (04:39):
oh, I think, I think that's true. I
think the administration came inand identified it as a priority
problem for this administrationto attempt to solve, or at least
put the framework together tobegin to solve the problem. And
part of that was the executiveorder that President Trump
signed emphasizing maritimedominance. This, and also the
(05:01):
recent draft bill that Congressput forward, the ships act for
America. And I think both ofthose initiatives have outlined
where the problem exists, whereit needs to be fixed, or at
least the pathway for it to befixed, and an approach which
would include development of amaritime action plan. So I think
(05:24):
all of these activities point tothis administration, this
Congress, attempting to takesteps to to rectify sort of
this, this issue in the maritimecommunity,
Dr. Guido Rossi (05:37):
before getting into, you know what's, what are
the provisions of the executiveorder and and of the ships of
for America Act? First of all, Iwanted to ask you, so this is,
this is not a new problem. It'sbeen in the making for several
decades. So why withoutnecessarily, you know, pointing
(05:58):
fingers at the previousadministration. But why has, why
is only this presentadministration dealing with it?
Why didn't the or did theprevious administration, for
instance, did the previousadministration do anything to
try to us to address thatproblem? Considering that the,
you know, the rise of China asan adversary for the United
(06:19):
States is also another new,recent thing, and they've been
developing their fleet since theestablishment of Xi Jinping as
their leader in the nearly 2010sand 20 and 2012 so did the
previous administration attemptto do anything to solve this
problem? And if they didn't, whyand why only now?
Dr. Randall W Gentry (06:43):
Yeah, I have to say, and it's not sort
of a placing of blame. Thisoccurred over decades of time
that probably started with theend of the Cold War, and so at
that point in time, the Reaganadministration sort of began
transitioning from a wartimeconfrontational stance to more
(07:04):
of a peacetime stance. And socertain funding that was
available in terms of subsidiesto the industry other
activities, in terms of thefunding that went into a certain
size Navy, certain size defense,just wasn't the same. And so we
saw this continual erosion ofthe industry, and probably the
(07:27):
the start of globalization andoutsourcing from from the US to
other entities. And so thecombined effects of all of that
really brought us to where weare today. Previous
administrations have tried toplace funding and emphases on
(07:48):
the building of ships,particularly naval ships. I
don't think probably that muchin terms of the commercial,
commercial maritime. I think thecurrent administration has
probably made it an emphasis tolook at the broad maritime
industry, so Merchant Marine,naval forces, all of the above,
and probably put resources toit. So part of that was to look
(08:14):
at the funding necessary, atleast in terms of an initial
analysis, and to try and getthat funding in the right place.
So again, not looking atnecessarily blame as what was
then viewed as a world at peaceand probably different
requirements, leading to, over aperiod of time, an erosion of
(08:37):
probably national security fromthe standpoint of economic
security, and the US hascapability in both shipping
defense and the combined sector,in terms of maritime
opportunities.
Dr. Guido Rossi (08:51):
Okay, that's that's very interesting. And I
was also thinking, Could youalso be perhaps because of a
greater inclusion of Russia as aanother adversary, again,
alongside with China, with thedifference though, that I don't,
I would say that the RussianNavy, except for the Submarine
Force, has never been anenormous threat to the United
(09:16):
States. Is that, is that a isthat another fair reason why the
recent, recent, you know,greater focus against China, due
to the embarrassment of Russiaand Ukraine, further reductions
of the of the Russian fleet, andso with, with the rising
importance of China as anadversary. Then there's been
also, you know, greater emphasishas been placed on confrontation
(09:42):
indices?
Dr. Randall W Gentry (09:44):
Yeah, well, I think so. I think that
when you look at economic power,shipping and controlling of
those corridors, marinecorridors for that purpose, in
addition to fishing, fishing.
Out areas, and also protectionof that those areas as a
national resource are important,so the combined activities
(10:09):
became much more important. So Iyou know, I wouldn't say that
Russia was never a threat. Itprobably was a different threat
during the Cold War period thanit was after the Cold War
period, and certainly today,where it's, you know, it's
probably been a destabilizedkind of environment for them.
(10:33):
But I would have to say thethreat is still real. In terms
of Russia, I think the threatwas growing over many decades.
From a China perspective, theaggressiveness that we see in
terms of the China Coast Guard,particularly incursion into
fishing areas that areinternational waters, and
(10:55):
claiming, yeah, the Philippinesparticularly, and the claiming
or asserting of certain rightsover areas that they have not
historically had any kind ofdominance or national ownership
mentality of has really beensort of growing over time. But I
(11:17):
would say over the past decade,the past five years, it's really
reached a peak. And so I thinkthat's the impetus for the
concern these days, is thatwe're nowhere near where we need
to be in terms of maintaining,much less growing, a particular
(11:38):
naval force?
Dr. Guido Rossi (11:43):
Yeah, I can, I can see that so and there's many
avenues that I like to take tofurther explore the topic with
you today, I'd say, first ofall, let's try to define the
problem a little bit more. Whatdo we mean exactly by crisis of
American ship building, and howdoes that impact, exactly,
(12:05):
national security? Yeah.
Dr. Randall W Gentry (12:06):
And let me point towards two books. I think
the least the listeners shouldpay attention to. One was a book
that was put out by the maritimeaccelerator for for resilience.
And this is, this is a verystrong group of commercial
maritime, individuals with a lotof history in the Coast Guard
and and other areas as well. Andthe book was called 0.4 how US
(12:29):
leadership in maritime willsecure America's future. And in
that book, they go through a lotof these principles that we're
talking about. And so I thinkit's a good resource, and that's
why I'm pointing towards it, andthey talk about this issue of
economic security as a nationalsecurity facet. And the other is
returning from Ebb Tide. Andthis is a book that was put out
(12:51):
by the Navy League, and it wasedited by Dr Steven wills.
Admiral James fogo did theforeword for this book. And
again, it goes through a lot ofthe history from the Cold War
era, the elimination of thesubsidies and then and then the
globalization impacts and theoutsourcing, particularly of
manufacturing operationsoffshore, and America's loss of
(13:14):
that capability. Well, not thecapability, I'd say the
capacity. So certainly, we'vealways had the capability, but
the capacity to build thenumbers that are necessary was
is certainly not the case. So toget back to your point again, I
think these are good books forfolks to delve into. But, but
the point is the economicsecurity. And why is that
(13:37):
national security? And I thinkfishing is an as an example,
shipping as an example. This thethis is just simply how a lot of
America's resources tend to comeinto the American families. So
it's, you know, as much as we wetend to try and cover as much as
(13:59):
we need in terms of chain supplyequities within the United
States borders, by necessity,all countries get export
material in and that exportmaterial is vastly controlled by
shipping on the oceans, and thatdominates a lot of global
(14:20):
economy these days, from anenergy perspective, from a
household goods perspective,from a food security
perspective, also in the contextof national security, grains,
oils, other food goods, otherfood goods that may be used from
a materials perspective. So allof these dominate most countries
(14:46):
in economic conditions to a to adegree that if you were to shut
off shipping, or shipping wasgreatly impacted, it would
affect your your nationalsecurity capability, just
because of the economic. Impactfrom some type of degradation of
inflow of materials to yourcountry. So I think that's one
(15:07):
perspective. I think the energyperspective is another. We all
import certain things that areneeded. From an energy
perspective, the US is trying togrow its provenance in terms of
being an LNG exporter, but infact, we still import oil, even
though we produce quite a bit ofoil. So I think all of these
(15:30):
things are important to considerin terms of a national security
perspective. They affect what isthe fabric of America and the
fabric of our economy, and soit's something that we have to
protect.
Dr. Guido Rossi (15:44):
And what about more directly to directly to
defense of the United States? Sonamely, the ability to build
ships for the US Navy. Yeah.
Dr. Randall W Gentry (15:56):
So I think that's that is a critical point.
So the US is, is highlydependent upon a skilled
workforce to be able to buildit's, it's, it's ships for
defense. There's been quite abit of commentary in the media
about the Navy's abilities tomeet its building demand, and an
(16:23):
inability to meet that demand iswhere we currently are now, but
improving, and part of that isworkforce, and part of it is
consistency, and in the way thecontracting works to build these
ships, which is dependent uponthe funding put forward to build
These ships. And as with allthings, how the contracts are
(16:44):
let to build these ships. So Ithink all of this goes into a
stable sector within themaritime industrial base, which
is part of the defenseindustrial base as well for the
purpose of building ships. And Ithink anytime we have a lapse in
(17:06):
capacity to do that, whether itbe on the commercial or the
defense side, it's a big impact.
Dr. Guido Rossi (17:15):
So one problem for the shipbuilding industry in
the United States has been theworkforce, namely that there
isn't nearly enough qualifiedworkforce. The United States
have sort of passed on to somehistorical allies, especially
Japan and South Korea, buildingcapacity, and they have let them
(17:37):
do the job. And meanwhile, ourcapacity here in the in the
States, has decreased over time,but that was very much
interested in the in theconnection between the
commercial side and the naval ormilitary side of shipbuilding,
because they are, they are tiedtogether, connected. There.
Dr. Randall W Gentry (18:02):
There.
There is a connection in termsof the workforce, capacity and
capability. I do have to saythat if most subject matter
experts that you will talk intothis, talk about this with,
would argue that there's adegree of separation between
what's done in terms of thecommercial ship building and
(18:23):
what's done in terms of navalship building. The argument I
posit is that there may be adegree of separation in terms of
the physical shipyard and what'soccurring in certain spaces in
the shipyard, but the combinedactivities to bring the
industrial base up to be able todo that, production is highly
(18:45):
connected, and many areas thatmay do some commercial still
probably have a market segmentdependency upon Naval ship
building or naval repair, thesustainment of those vessels in
some way, shape or fashion. So Ithink the thing to recognize is
(19:07):
it's a highly complex marketsegment that includes commercial
it includes naval ship building.
They are typically not the sameactivities. There's different
standards associated with eachtype of construction and but
(19:27):
when you when it gets, when youget down to the the worker skill
set. In order to do thatmanufacturing, it's the same
skill set. So it's the sameskill set applied to a different
specification, whether it becommercial or military. And so
when we talk about the maritimeindustrial base, we usually talk
about a combined workforce thatmay be doing commercial or naval
(19:51):
shipbuilding, but we don'tintend to say that they're doing
both at the same time, but maybethey should be doing both in
some kind of new model. Thatwould allow an exchange of
workforce between those types ofprojects. It may be part of the
solution space that we need tolook at
Dr. Guido Rossi (20:09):
so. So two things I think, I think the
value in the actions that thispresent administration has taken
have have value in revitalizingthe USF building industry
precisely because they don'tonly address the Naval Military
aspect, but also they try toaddress also the commercial side
(20:29):
of things, and at least from theperspective of funding and
workforce. They're so connectedthat cultivating, you know, the
workforce will benefitessentially both, and not just
the commercial or the militaryside. And then correct me if I'm
wrong, of course. And then thethe other thing that I think
(20:54):
it's, it's interesting, it's, orthat struck me, at least, was
that when we're talking aboutshipbuilding industry, and we're
talking about shipyards the it'ssomewhat different from other
industries, because the monetaryinvestments that need to be made
to build these capacity andbuild these infrastructures and
(21:15):
form the workforce are massive,To the point that a degree of
involvement by government, notonly on the naval side of
things, but also commercial andprivate side of things, is, is
is required to allow thisindustry to survive and thrive.
Dr. Randall W Gentry (21:35):
Yeah, yeah. I think that's absolutely
correct. Guido, I think, youknow, I think part of the issue.
And maybe how I look at it is,you know, in the US, the model
is still very much open markets,so anybody can participate in
whatever market. They seek acompetitive edge, they try to
take that competitive edge, andthat's their business model,
right? That's how they outcompete in the open market. For
(21:59):
for business capability, ourbusiness awards, and so
typically there's, there's anadvantage to being able to be
resilient in that space, bybeing able to bring in different
types of projects and to be ableto plan long term for those
projects. So I think you knowthe issue is having a stable
(22:24):
workforce that you can go towith the right skill set to be
able to do that that job,including innovative solutions.
So it's not just about theworkforce, it's also about
learning new techniques andadvanced techniques for doing
(22:45):
the same job, right? So itbecomes about productivity. So
all of these are layers, usuallyin the complex business model
for these types of operationsthat allow them to compete. But
the only way they can compete isif they know what the the
landscape of the competitionwill be over an extended period
(23:07):
of time and and how they canadjust their business models to
be economically beneficial. Andusually, if you talk to subject
matter experts in this space,they will, they will describe
the incredibly tight margins inthe ship building space, meaning
there's not a lot of latitude tolook at a disturbance in a
(23:29):
project. It's just not resilientto large scale, small scale
disturbances, at least most ofthe ones that I hear from in
this space anyway, so they tryto build that resilience through
multiple projects that they cankind of buttress up against each
other and expect a longer termbusiness operation to provide
(23:52):
that resilience. The disruptionmay come in if a platform is
discontinued, if a platformcanceled or discontinued. A
platform is altered midstream.
Something different is specifiedfor a ship after the beginning
of the construction. These kindof things can be disruptive to
(24:14):
that practice. So you often hearcommentary about perhaps we
should look at adaptingstandards that are more
commercial into the naval shipbuilding practice. And I think
that's a complex conversation,because in the end, you have to
(24:35):
really define what you'regetting at in terms of adapting
those commercial standards inthe end you you, you have to
consider what the end effect isgoing to be in the ship being
built, and is it, is it going toaffect the survivability? Is it
just about the production rate?
(24:58):
So some optimization has to. Tooccur there, and it has to
include the business model,where the economics and the
technical economics are takeninto account for the life cycle
of the ship being built, andthen it's sustainment. After
that,
Dr. Guido Rossi (25:15):
you address the difficulties of margin
profitability. Marginprofitability from private
shipyards. So when you'retalking about the interferences
in the platforms, in the designof platforms, or changes to the
platforms, those interferences,they are mostly by the Navy.
Correct? When we're talkingabout commissioning of vessels
(25:36):
by the Navy, it's the Navy thatoftentimes delivers incomplete
projects to the shipyards andretains the right to intervene
later, to alter those models, orthen ends up canceling these
models, these, these, these,these contracts all together,
and that creates problems forthe private shipyards.
Dr. Randall W Gentry (25:56):
Yeah, and you know it's, it's not
something that I blame the Navyfor, I think it's describing the
reality of the situation wherethe Navy is trying to build or
design a force and complementedwith the correct ships for X
(26:16):
number of years out. Andsometimes that requires a
technical innovation where it'son the edge. So it's not
completely worked out, if youwill. So I think there have been
examples where some of thesetechnological innovations,
energy requirements, otherthings have impacted that, ship
(26:38):
building, production rate. Ithink that's what you would hear
from, from some of the shipyardsthat, on occasion, that can
create delays or missedopportunities in terms of
reaching certain milestones. Butin fact, it is the Navy that
puts the requirements forward.
It is the maybe that will alterthose requirements. If some new
(26:58):
platform, if some new energyrequirement comes down and needs
to be included in a new design,whether it be a destroyer, a
frigate or any other platform ofship,
Dr. Guido Rossi (27:12):
considering that there, you know, presently,
shipyards are building a numberof Navy platforms, contracts,
including, you know, frigates,second aircraft carrier, second,
four class aircraft carrier,submarine and ballistic missile
(27:33):
submarines as well, and a numberof other ships and that they're,
all you know, massively delayed.
But also the the the award forthis contract is extremely
substantial for the shipyards.
So what is the problem in termsof profitability for all these
shipyards, if, if the money thatis being awarded for this
(27:54):
contract is so is so massive?
Dr. Randall W Gentry (27:58):
Well, the the amounts may be massive by
the value that that mostAmericans would look at in terms
of the budgets for this, for theshipbuilding, because of the
scale of the ship. So theseships are enormous, right? So
you mentioned the the aircraftcarrier, the Ford aircraft
carrier, first of all, nuclearvessel, completely, the
(28:23):
propulsion system is the newtype, as they say, in terms of
nuclear propulsion, but just amassive ship in terms of its
size and capability. So so thenumbers are going to be what I'm
trying to say is the numbers aregoing to be large no matter
what, right? That doesn'tnecessarily mean that that's all
(28:45):
going into profit, right? So avery small percentage of that
typically goes into profit,right? So the company will come
in, they have to have aworkforce, they have to have
material flow, they have to havea supply chain to deliver, to
build that ship. All of thesethings factor into the
construction of that ship. Andthere may be certain so where
(29:07):
the company may tend to make itsmoney is it really doesn't
probably plus up much in termsof salaries and rates and this
kind of thing. In fact, I thinkto remain competitive, they have
to bid in such a way thatprobably all of those type of
rates are kept very close toeach other, all of the
shipyards. So the profitabilitycomes in, the incentivization to
(29:30):
get it done at certainmilestones. And so there may be
payments, and particularlyprofit based payments, to meet
those time requirement,incentives, and so those are,
those are just not huge dollarsin terms of the profit side of
the percentage versus the total.
So when you look at the numberand that you're looking at these
(29:53):
things, a submarine or aircraftcarrier, and you're looking at
numbers that are in the billionsof dollars, you. Like, wow, that
just must be a massive amount ofmoney that the shipyard is going
to make to do that. And in fact,I think it's the business of
business that the shipyard ismaking profit on, which means,
you know, some relatively smallpercentage of that flow of
(30:16):
opportunity is what they're ableto turn into what the business
can reinvest in terms ofprofits. The rest of it goes to
labor and materials. And sothat's, I think that's just the
reality of it. Very little ofthat is plussed up and in terms
of some kind of profit margin.
Dr. Guido Rossi (30:37):
So, so the would you say that the solution
would be to increase the amountof these awards for military
contracts for naval vessels orother solutions should be
instead looked at andimplemented.
Dr. Randall W Gentry (30:53):
Yeah, I think people you know in the
community have put forward someideas that would be helpful in
this space. So I think lookingat multi ship awards so
contracts for for more than oneship in place at a time, would
allow a much more stablebusiness model for these
shipyards to be able to to makea sustained profit on that way
(31:19):
they can negotiate moremeaningful agreements with
collective bargaining units,with the labor they can sustain
more resilient contracts for thesupply side of their business.
So I think that's, that's oneaspect,
Dr. Guido Rossi (31:34):
and that's, that's, for instance, how
companies that also contractors,contracting companies like
General, General Dynamics, forinstance, they have those type
of contracts in place for someplatforms, for the US
government, for instance, theupgraded Abrams tanks, but they
(31:55):
don't Have for theirsubdivision, the General
Dynamics, electric submarine inright now in Groton, Groton,
Groton, yeah, despite being thesame contracting industry, they
don't have similar contracts inplace when it comes to vessels,
(32:16):
even if they have it for othertypes of platforms.
Dr. Randall W Gentry (32:20):
Yeah, that Well, that's true. I think they
probably have it in place for avessel. Maybe they have it
before two vessels. And you haveto look at the period of time it
takes to produce some of theseships, right? So certain ships
may take seven years, you know,from from initial construction
activities to launching theship. So, you know, that's
(32:41):
that's a long period of time,right? So being able to balance
a workforce and all of thesupply chain logistics around
that really becomes the issue.
If you have multiple ships whereyou can partner in the right way
for those supply chain logisticsand labor markets, then it's
just going to make the situationbetter. And I think that's what
the shipyards and others haveargued, is that the multi ship
(33:03):
contracts probably would be ofmost benefit. Then I think
there's other things that, youknow, the Navy and others could
do in terms of looking at whatare the right incentives to one,
to keep these companies moststable, because they are a part
of your defense industrial base.
(33:26):
And you know, what are the typeof incentives that we can we can
use as a tool to, one,strengthen the companies so that
we have a better industrialbase. But two, improve
performance, at least in thecontext of what the customer
needs,
Dr. Guido Rossi (33:43):
how? So exactly,
Dr. Randall W Gentry (33:46):
well, so I don't think there's a simple
answer there. You know, youcould, you could talk about
payment structures. You couldtalk about keeping the margins
on, say, Hold back of paymentsto the lowest level possible, so
that the shipyards are are nothaving to wait till the delivery
of the ship to get certainfunding sources. Some of that is
(34:10):
just routine in terms oftraditional contracting, and
you're always going to have somekind of verification process in
terms of of how funds are heldback just in terms of final
delivery. But there can beunique ways to structure that,
such that it's it's notnecessarily an impediment to the
company in terms of theirworkforce and supply chain
(34:32):
stability,
Dr. Guido Rossi (34:34):
and then perhaps limiting the, you know,
to to a to a reasonable degree,so not eliminate completely the
say that the Navy has in theconstruction of the vessels, but
perhaps limiting somewhat andeasing that way, the work of
shipyards in building militaryvessels, and also the
(34:54):
interference also in part ofCongress as well through the
National Defense Authorization.
An Act, yeah.
Dr. Randall W Gentry (35:02):
So the one thing we all have to recognize
is that there always is going tobe oversight, right? And if
you're spending billions ofdollars, you have to have
oversight, right? So somebodyhas to look out for the the
American citizen as a consumertoo, right? So we, you know, in
order for the citizen to paytheir taxes and then that be
used for the national defense.
There does need to be oversight,but I think that oversight has
(35:25):
to be balanced in such a waythat it does not prevent, in
terms of the relationship to thecorporate entity, the production
of these ships. I think the Navythen has to go back and look at
its processes, and I think it'sdoing that. I think it's going
back and and doing some rootcause analysis. Where did things
go wrong? What do we need tofix? We don't need to be
(35:49):
changing requirements andspecifications early on in the
shipbuilding process or evenlater in the shipbuilding
process. That could, in fact,delay delivery, if they're you
know. So somehow, you know,there could be new ship designs
that would accommodate themodularity of the requirement of
(36:12):
some of these changes that arebeing requested that could be
built into the early design. Solook at a modularity concept
where you've kind of got a bringthe package on of this type
energy requirement, this type ofweight and size, and, you know,
sort of reconceptualize how thattraditionally occurs, as opposed
(36:36):
to building nothing butunicorns, where it's, you know,
such an extremely unique type ofvessel. The uniqueness can come
in the form of the of themodularity. And I think others
have proposed this as well, interms of looking at a new way of
doing ship design. Part of italso is we need new designs. I
(37:00):
think that the actual design ofthe ship, in terms of its hull,
in addition to its mechanicaland electrical there's probably
some innovation space there thatcould be looked at, and new
approaches to that design whichprobably haven't been looked at
and quite a few years.
Dr. Guido Rossi (37:23):
And maybe these may be a question with an answer
kind of above your expertise,perhaps or but do you think
those change? Because I thinkit's really interesting what you
just talked about, implementingchanges in the structure of
ships. Do you think thesechanges could maybe marry well
with also greater adaptation ofof the standards, military
(37:47):
standards for ship closerperhaps to commercial vessels.
Or would that would beproblematic?
Dr. Randall W Gentry (37:54):
Yeah, and you know, there's a possibility
to look at some way to adaptcommercial standards into
military ship building. I thinkthere are experts that need to
come together in thatconversation. Again, the you
know, the optimization there isgoing to need to look at both
cost constructability, but alsosurvivability, that once that
(38:17):
ship is in a congested,contested logistics scenario
that it has the appropriatesurvivability that's intended.
So I think all of these thingsare possibilities. I think there
are certain commercial standardsthat could be looked at in terms
of the construction andconstruction approaches. The
(38:40):
other part that is probablyaround design is probably going
to be a little bit morestringent and always military
like, because that that gets tothe survivability issues. But
when it comes to how wires run,if a wire needs to be patched,
how welds are inspected oncommercial ships versus military
ships, those kind of things,those kind of standards probably
(39:01):
are the more low hanging fruit,okay?
Dr. Guido Rossi (39:04):
And alongside with, I just thought about
these, this question is, alongwith perhaps the potential, the
possibility of somewhat loweringslightly the military standards,
is there a hope, a possibilityof maybe raising the commercial
standards a bit to sort of, youknow, having the two types of
(39:28):
standards made halfway, or youthink it would cut too much into
in the profitability,profitability of the building of
commercial vessels for thecommercial industry, and it
would make it, you know, itwould kill essentially, what
we're trying to achieve here.
Dr. Randall W Gentry (39:47):
Yeah, I think that's a very strong
possibility. And I think you youraise a very good point. Guido,
I think there is the potentialthat if you bring the commercial
standard closer to an alignmentwith the military standard, then
you're looking at. Cost issuesand profit loss potential. But I
think the right people in termsof naval architecture need to
have that conversation aboutwhat the possible is. I think
(40:11):
where the two parts of theindustry could learn from each
other, and particularly themilitary, could learn from some
of the commercial is some of thenew aspects of robotics and
automation and the constructionpractices, and applying that to
sort of the militaryconstruction side as well. So I
think there's, I think there arethings that could be done. And
(40:33):
we tend to use the thephraseology of adopting
commercial standards, butunderstanding what that really
means in terms of theconstruction piece of it, the
design piece of it, and then theevaluation piece of it, post
construction or duringconstruction, to certify the
vessel or certify theconstruction. I think all of
(40:53):
those are pieces that that haveto be weighed independently, but
they all lead towards standardsand standards adaptation that
could be useful.
Dr. Guido Rossi (41:04):
So during during this interview, we
mentioned a few times SouthKorea, or also Japan, as being
greater manufacturers of shipsthan the US are. And although
the objective, the goal is torevitalize us shipbuilding. You
know, the My understanding isthat the growth, the very rapid
(41:27):
growth of the Chinese fleet, isthreatening, and it's not. It's
not slowing down much. And whilethe capacity for building ships
here in the United States isbeing rebuilt. Would the
(41:49):
possibility of having somevessels sorely needed to fill
urgent gaps in the US Navy fleetbuilt instead by these partners.
Would that be? Could that be a,you know, a viable interim
solution, that I understand,that it would require changes in
(42:10):
the US procurement law. Butshould, should those like legal
changes be made to allow forthis to happen to just as an
interim solution? Do you thinkit would be a viable short term
fix.
Dr. Randall W Gentry (42:26):
I think, Well, I think we have to talk
about it, and I think we have tounderstand what it means. And,
you know, the way the law iscurrently constructed. You know,
foreign entities cannotconstruct US military ships. And
so I think the you know, theissue becomes, if you look at
(42:48):
what the government, USgovernment, was attempting to
and not only the US government,actually Australia and the UK
were attempting to do with theaukus agreement, and looking at
shared shipbuilding of thesubmarine fleet, the appropriate
submarine marine fleet. Youcould look at similar models for
(43:09):
where shipbuilding of surfacewarfare combatants, particularly
where Centers of Excellenceexist in shipbuilding. So South
Korea is, is very well known inthis space Japan, very well
known as space, certainly forcommercial vehicles, but but
also for military vehicles. So Ithink it is something we have to
(43:30):
talk about, and we have tounderstand what it would take to
get there.
Dr. Guido Rossi (43:35):
So these would be, these would be all, I think,
short term solutions in terms oflonger term solutions that are
the I my mind, they're alwaysthe real solutions to the
problem, right? They're nottemporary fixes, but they are
actually addressing the rootcause of this type of issues. So
do you think, for instance,that, or would you agree that a
(43:59):
basis and a root of thedifficulties that the US
shipbuilding industry isencountering is also due to the
fact that it's rooted in thevery traditionalistic view,
capitalistic view, that theprivate sector is private And
that US government has orshouldn't have, shouldn't
(44:22):
interfere with it, and ininstead that a possible solution
would be greater intervention bythe government with funding,
either in terms of loan orincentives to the private
shipyards To to encourage themto build, rebuild this capacity
and and restart the productionthat way. Do you think that's,
(44:50):
that's a fair, that's a fairpoint to be addressed?
Dr. Randall W Gentry (44:56):
Yeah, I do. I do think it is a fair
point. I you. So one of the jobsof government, and it's it's the
only thing that government cando that industry can't do, and
it is de risking the marketspace. So part of the issue is
that the government does have tocome in and de risk it so that
(45:19):
shipyards can build up, thatthey can build up the workforce
programs and the labor programs,and that they can look at the
types of models that can be putin place to accomplish both the
commercial and the military shipbuilding. So part of that
requires de risking, meaning thegovernment coming in,
(45:41):
identifying where the barriersexist in the marketplace, for US
companies to be able to do this,and then lowering those
barriers, whether that means taxincentives, whether that means
real estate, type ofincentivization for shipyards,
there's A host of tools that thegovernment can come in and de
(46:03):
risk that space. Some of ittraditionally has been in the
form of subsidies, and those canalways be used as well so and
part of it is changes in lawthat may be part of the barrier
that prevent the types ofshipbuilding across different
spaces that may be necessary,particularly with friends and
(46:27):
allies.
Dr. Guido Rossi (46:28):
Well, these are very complex, complex topic of
no easy of no easy solution,like you said, experts and and
people at high levels reallyneed to have in depth and good
conversation to try to addresssome of the base difficulties,
(46:50):
from like like I mentioned, fromfrom the design of ships itself,
to the relationship that existsbetween the government and
private industry, and but thisis, it is, I think it is
encouraging that finally, atleast it's gotten back in the
center of attention and it's atleast being addressed.
Dr. Randall W Gentry (47:13):
Yes, I would agree with that. And I
think, and I would hope, thatmost Americans would go out and
take a look at the ships forAmerica Act. Understand what's
being proposed, understand thetype of government
infrastructure being put inplace or proposed to be put in
place, and if they're able tosupport the passage of that
(47:37):
bill, so that they can moveforward to support the industry.
Dr. Guido Rossi (47:42):
Randy, thank you. Thank you so much for
taking some time to talk to meabout this very important topic.
Dr. Randall W Gentry (47:48):
Yeah, absolutely. Thank you, Guido
again. Thank you for theinvitation and thank you for the
conversation. Thank you for theintellectual engagement on this
topic in terms of the decision.
Brief, much appreciated. Mypleasure. You
Jim Cardoso (48:03):
a special thanks to our guests today, Drs Randall
gentry and Guido Rossi, fortheir in depth examination of
the US shipbuilding industry andtheir recently published
decision brief on that sametopic. Dr Gentry will also be a
featured guest speaker at ourupcoming Florida security forum
conference on November 4 at PortTampa Bay, next week on at the
(48:24):
boundary, we're going to explorea fascinating topic many of you
probably have never heard ofPNT. However, even if you've
never heard of PNT, if yourphone GPS has ever navigated you
to say that popular newrestaurant you've never been to,
you appreciate it. P and Tstands for positioning,
navigation and timing, as youcan imagine, beyond finding the
(48:48):
best cumin sandwiches, P and Tis critical to many facets of
the US, military, and even morebroadly, to many six sectors of
society. It's especially topicfor the newest member of our
GNSI team. Air Force LieutenantColonel Jay Patrich, he joined
us a few weeks ago as the veryfirst member of GNSI National
Security Research Fellowship. Hesat down recently with fellow
(49:11):
Air Force officer, major Jessehumpal to discuss PMT more
specifically, what happens if anadversary like China, for
instance, takes out all of thesatellites that are vital to GPS
operations. That's next week onthe show. Thanks for listening
today. If you like the podcast,please subscribe and let your
friends and colleagues know.
Follow along with GNSI and ourLinkedIn and X accounts at USF,
(49:33):
underscore GNSI And check outour website as well at
usf.edu/gnsi, gnsf.edu/gnsi,while you're there, don't forget
to subscribe to our monthlynewsletter
that's going to wrap up thisepisode of at the boundary. Each
(49:55):
new episode will feature globaland national security issues we
found to be inside. Helpful,intriguing, maybe controversial,
but overall, just worth talkingabout. I'm Jim Cardoso, and
we'll see you at the boundary.
You.
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