130320-N-FG395-031-slider-1024x477Did you know that US shipyards built 1260 ships in 2012? And that 99% of the units were commercial while 60% of the revenue seen by the builders was from the military? Me neither — I had suspected but had no idea it was this imbalanced. I also didn’t know that the US shipbuilding industry operated at a trade surplus in 2012, and has for 6 of the last 10 years. That’s a lot better than I had thought.

Last week I attended the American Society of Naval Engineers (ASNE) annual meeting to learn how much has changed in the (ahem) years since I last worked in the industry. It’s still true that the military and commercial worlds in the US industry don’t often overlap, creating a tiered builder and supplier ecosystem. At the huge end (aircraft carriers, submarines), that’s understandable. No one can sustain the infrastructure needed to build a carrier without certain knowledge of getting that contract. But the industry can’t survive if more contracts aren’t made accessible to the tier 2 and tier 3 yards, on their own or, more likely, under teaming arrangements.

The US military still controls much of the momentum in the industry. It, in turn, is at the whim of legislators in Washington who play with budgets as if they were merely paper things with no consequences. Executives of Bath Iron Works and Ingalls Shipbuilding said that they can’t invest in their facilities, the way a car manufacturer upgrades a production line every couple of years. They can’t assure continued employment to their workers, so have a hard time keeping training levels high. They also don’t see the efficiencies other industries see when they build more than one of something.

“Affordability” was a key theme of the event, as Navy and Coast Guard officers all spoke about maximizing value for taxpayers. A new focus is looking at vessels from the perspective of total cost of ownership, and making decisions early in design to minimize cost over the long term. Over a 50 year life, a ship is planned and designed for 10. She’s under construction for another 3-5 (much longer for aircraft carriers). For 35 years, then, she sails. She’s on a periodic maintenance plan, which may be carried out in a Navy or commercial yard, in the US or overseas. Missions change, as do staffing and many of the onboard systems. The Navy is gathering data required for future tradeoffs, but it’ll be years before their procurement teams can make ship-wide analyses.

Cost is important but, bottom line, each vessel must meet its mission objective — and that’s getting harder to define. Troop carrier today, deliverer of humanitarian aid tomorrow, America’s military muscle someday … The Navy and Coast Guard are looking at building flexible platforms that can be customized to suit changing mission parameters. This modularization affects all phases of design, procurement, construction and maintenance during a ship’s potential 50-year life. Try to think through what you’d want your car to be and do in 50 years, and you get a sense of the problem: too much is completely unknowable, yet these Rear Admirals are charged with giving their command exactly what’s needed, when needed. Mind-boggling.

For the last couple of years Siemens PLM has hosted the Global Shipbuilding Executive Summit (GSES) as an adjunct track to the main ASNE meeting. GSES brings together the military, commercial shipbuilders, equipment suppliers and others to brainstorm about the biggest issues facing the industry. My table included shipbuilders, the US Navy, the US Army (yup) and suppliers. Our challenge was to look at shipyard production from the perspective of material flow optimization and simulation, and tie this to operations and the supply chain. We didn’t solve any problems in the couple of hours we spent together, but suggested areas for further investigation.

Siemens PLM kicked off the GSES with a presentation by Hein van Ameijden, the Managing Director of Damen Schelde Naval Shipbuilding in Holland, who shared his perspective on how the US industry could, and needs to, do better. Mr. van Ameijden told us that the he can build a destroyer for 1/3 of what it costs in the US because Damen Schelde has been investing to lower its price per ton (one measure of efficiency) since the 1990s. Advanced manufacturing methods, parts commonality –even across hulls for different buyers– and a highly trained workforce enable Damen Schelde to be competitive without the government subsidies that prop up the US industry. Mr. van Ameijden encouraged the audience to do cost-based trade-offs as early as possible in the design; look at teaming arrangements to remove a competitive dynamic that can raise prices; consider changing from military standards to commercial class standards for ready availability of everything from steel to spare parts; and streamline military acquisition to remove the burdensome requirements. If you’re not in the industry, it’s probably not obvious, but these are very controversial statements that get at the heart of what may be wrong with how it’s currently done here.

In all, it was a fascinating couple of days. I met with builders, contractors, the Navy, specialist software providers and many others. I’m still trying to process it all but have to highlight two things: First, this budget idiocy has to stop. A continuing resolution means that nothing can cost more than the year before; if a ship needs more repair or refit than the one last year, work stops. With sequestration, when the money runs out, work stops. The president of Ingalls Shipbuilding says he needs to hire 1,000 electricians; who’s going to want that job today, if it could be gone in October with the next budget negotiation?

Second, today’s Navy and Coast Guard rely on sophisticated systems to operate every aspect of their ships. You want mechatronics? Think aircraft carrier. The $15 billion USS Gerald Ford is under construction now at Newport News: 1,100 feet long, 250 feet tall with 25 decks, all powered by a nuclear reactor. Many of the issues are the same as in other industries: getting one system to talk to another without human intervention; keeping it all open enough for government agencies and contractors to work on, yet protected from hackers and espionage; managing software versions across a fleet at different maintenance levels. But then add in the fact that it’s a warship that must keep going even when damaged, powered by a nuclear reactor so the consequences of a failure could be enormous … This complexity dwarfs many others in our PLMish world.

Make no mistake; American shipbuilding is in dire straits. But there do seem to be glimmers of hope that technology can improve its competitiveness on the world stage. Most troubling is that we may have already lost the battle for skilled workers. If Congressionally-mandated, un-economic building can’t keep a critical mass of naval architects, engineers and designers employed, the industry will source designs elsewhere, and that’s what’s happening more and more often. More about that and the commercial side of North American shipbuilding in a post sometime soon.

Note: Siemens PLM graciously covered some of the expenses associated with my participation at the event but did not in any way influence the content of this post.

Image is courtesy of the US Navy: U.S. Navy photo by Mass Communication Specialist 1st Class James Kimber/Released.