Infrastructure Rationalization in the U.S. Naval Ship Industrial Base

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Infrastructure Rationalization in the U.S. Naval Ship Industrial Base

S. A. Arnold / P. F. Bronson / K. W. Tyson

Because of decreased demand for new ship construction the number of U.S. shipyards capable of handling new construction and conversion programs for the U.S. Navy decreased through the 1970s and 1980s. In 1993 the Defense Department established a policy to consolidate and rationalize (reduce infrastructure) within the defense industry in the face of the lower demand experienced following the end of the cold war. IDA looked at infrastructure rationalization in the major ship industrial base. Before the 1993 consolidation wave the six major shipyards were owned by five independent companies. After the last major acquisition in 2001 the same six shipyards were owned by just two companies. We examined the financial and economic implications of the ownership consolidations since 1993. In particular we measured the extent of infrastructure rationalization that has occurred as a direct result of industry restructuring. We also explored factors and barriers that encourage or discourage rationalization of the defense industrial base generally by comparing the results of the ship industry consolidation with consolidations in the aircraft and missile industries.