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OPINION — “There seems to be management problems in all these [U.S. Navy shipbuilding] programs. Some of it is changing requirements on the ships so that the contractor suddenly is back at square one in some cases. Others are the inability of subcontractors to produce. I must say one of the jobs you [Navy Secretary Carlos Del Toro] have, and it’s a tough job, is to find out who’s responsible and to take directive actions to correct it.”
That was Sen. Jack Reed (D-R.I.), Chairman of the Senate Armed Services Committee, last Thursday, asking Navy Secretary Del Toro about shipbuilding, which became a major focus of discussion – and contention — during the near three-hour session on the Navy’s fiscal 2025 budget.
Although born in Cuba, Del Toro was a Naval Academy graduate with a Bachelor of Science degree in electrical engineering and a 22-year career as a Navy officer. He began his service as a Surface Warfare Officer, and his duty included not only commanding a guided-missile destroyer but also time in the Office of the Defense Secretary and at the White House, in the Office of Management and Budget. After retiring at the rank of Commander, he founded and ran a successful technology company with many government contracts, including several for the Navy.
Thus, unlike many of his predecessors as Navy Secretary, Del Toro was thoroughly qualified for his position and prepared to deal with details on questions such as shipbuilding, as illustrated by his answer to Chairman Reed and others that followed.
To Reed, Del Toro said, “There are a lot of challenges in the shipbuilding industry that actually date back to the 1980s when we [the U.S.] gave up commercial shipbuilding in this country and lost so much of the talent in the shipbuilding industry. That was compounded by Covid and the enormous challenges we have with the blue-collar labor workforce. That actually impacts all industry and even the Navy shipyards don’t have the people that are necessary to work in our shipyards. That’s sort of the base denominator of it.”
Also, without referring to notes, Del Toro referred to the “delay of major components for the construction of the Virginia class [submarines] as well as the [aircraft carrier USS] Eisenhower is the major reason for the delays in these programs.” He continued, “So on the Eisenhower, for example, you had Northrop Grumman that’s building the main reduction gears [large drive systems] when General Electric used to do that, and they were behind in the reduction gears.”
Later in the hearing, Sen. Mark Kelly (D-Ariz.), further explained the shipbuilding situation saying, “Right now, China, Republic of Korea, Japan – they build about 98 percent of global ship production. China, the world’s largest ship builder, controls most of the merchant ships in the world, 5,500. We [the U.S.] have about 80 or 85, I think, flying the U.S. flag. I am concerned with the size and the status of the U.S. Merchant Marine and how it is a risk to our national security.”
Kelly said that he and a bipartisan group of House and Senate members have released a report that called for a congressionally-guided national maritime strategy.
A push for shipbuilding at home
It should be noted here that Secretary Del Toro, in his prepared statement for the hearing, spent two pages describing his efforts to expand private and government shipbuilding in the U.S.
For example, Del Toro wrote, “My team and I have toured private shipyards across our nation, from Bayonne, New Jersey, and Philadelphia, Pennsylvania, to Vallejo and Richmond, California, to better understand the capacity and workforce challenges these yards face. In February, I held engagements with the leadership of major shipbuilders in Japan and South Korea to gain a better understanding and appreciation for how they construct commercial and naval vessels in modern shipyards.”
Del Toro added that he “was enormously gratified by the strong interest expressed by the leaders of these world-class shipbuilders in establishing U.S. subsidiaries and investing in shipyards in the United States — and I could not be more excited at the prospect of these companies bringing their expertise, their technology, and their cutting-edge best practices to American shores.”
I inserted the above because moments after Kelly concluded, the tenor of the hearing sharply changed.
Tough questions – tough answers
Sen. Dan Sullivan (R-Alaska) began his questioning by saying, “One of the themes of this hearing is the shipbuilding crisis we are facing,” and he quoted Congressional Research Service experts telling him prior to Thursday’s hearing, “This is the worst position the Navy has been in over the past 40 years for the designing, shipbuilding, maintaining, and crewing ships.”
A colonel in the Marine Corps Reserve, Sullivan then tried to place some blame for the shipbuilding crisis on Del Toro, based on what the Senator said was the Navy Secretary’s excess attention to climate change. “You haven’t been focused on this,” Sullivan said – “this” meaning shipbuilding. “What you have been focused on a lot is climate change.”
Sullivan referred to Title 10 of the U.S. Code and Section [8013 (b)] that specifies the authority the Secretary of the Navy has over 12 specific functions. He said that one involved “Direction to oversee the construction and outfitting and repairing of naval ships in effective and timely manner.”
Sullivan then asked, “Can you point to your Title 10 responsibilities for climate change Mr. Secretary?”
Del Toro shot back, saying, “I spend 75 percent of my time on shipbuilding, so I don’t agree with your characterization.” When Sullivan persisted in asking for his Title 10 responsibilities on climate change, Del Toro responded, “It actually impacts everything…Manning, equipment, training.”
The two then argued over what Title 10 authorities were specified for the Navy Secretary.
In fact, Title 10 functions listed for the Navy Secretary does mention “equipping” and “training,” but does not specifically mention shipbuilding at all. It does list authority for “the construction, outfitting, and repair of military equipment.”
Sullivan then turned to a chart which he said showed that “our main adversary [China] is building ships at a rapid rate” and that “by 2030 they will have 435, 141 more ships than we [the U.S.] have. Our fleet is shrinking.”
Sullivan hammered his point, and kept after Del Toro. “Should the Secretary of the Navy be relieved or resign for failing on his number one mission, shipbuilding, particularly when he is spending so much time on issues that are not even part of his Title 10 responsibilities?”
Del Toro responded, “You know well, Senator, that the acquisitions issues that exist go well back decades. What I’m trying to do and have been doing from the day I became Secretary is to be honest, transparent, and deeply committed to turning things around – and that’s exactly what I’ve done.”
An hour later, Sen. Rick Scott (R-Fla.) opened by saying, “As a former enlisted sailor, a U.S. Senator and an American I am truly concerned about the accountability of the Navy.”
Scott went on to describe the Navy’s recruiting problems and then gave his view of the shipbuilding issues.
“The first Columbia Class [ballistic missile] submarine is 12-to-16 months late. The fourth and fifth bloc of the Virginia class [attack] submarines is between six and 24 months late. The first Constellation class frigate is 36 months late. The future aircraft carrier Enterprise is 18-to-26 months late. The Navy is retiring ships faster than it’s replacing them, and has a terrible record of getting them – [their] maintenance done on time.”
Like Sen. Sullivan, Sen. Scott pressed his point. “Here is my concern. We’ve got delays in yards [meaning shipyards], we’ve got maintenance, we’ve got over-budget delays, we’ve got major shipbuilding delays, we’ve got recruiting failures – and my concern is I’ve not heard anybody being held accountable…Has anybody been held accountable?”
Once again, Del Toro pushed back. “Different people have been held accountable for different things…I’m not going to invade people’s privacy, but individuals have been held accountable for different problems in the Navy…I have a record of even holding senior leaders accountable when they’ve faulted in the United States Navy, and my track record shows that.”
The shipbuilding plan
In his five-minute opening statement, De Toro said, “We’re investing billions of dollars in the industrial base that supports us, while encouraging them to invest more resources themselves at the same time.”
The Navy Secretary was talking in part about a $2.8 billion allocation in the fiscal 2025 Navy budget to be invested in the Navy’s four public shipyards under the Shipyard Infrastructure Optimization Program. As explained in his prepared statement, these funds are to provide “modernized facilities, infrastructure, and equipment that will undoubtedly increase our shipyards’ capacity and capabilities to complete maintenance availabilities.”
At one point, however, Del Toro explained to Chairman Reed that the Navy had also provided $100 million dollars this fiscal year “to the shipyards so they can provide $5,000 bonuses to their shipyard workers for the first year in place, and another $5,000 if they stay in place throughout construction of the ship itself.
“So we are doing everything we possibly can to actually help industry and work with industry,” Del Toro said, but he added, “We’re investing $14 billion dollars in industry and we’ve got billions of dollars going out the other side of the door to stockholders. We’ve got to put more of this on the stockholders too.”
Reed responded, “I concur with your final comment there. We’re looking at companies that are not performing, but still being rewarded. As you point out, with the contraction of the defense industrial base in shipbuilding, competition is not really there as it was 20 or 30 years ago.”
Reed’s answer raised yet another general problem with the U.S defense industry – a problem which needs further investigation.
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