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Regionalism Plagues Sustainable Naval Shipbuilding Plans

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By MarEx 2019-01-20 17:39:12

A new policy paper examining the naval shipbuilding industry in Canada and Australia cites the problems of “regionalism” the nations face in developing a successful strategy.

Overcoming ‘Boom and Bust’? Analyzing National Shipbuilding Plans in Canada and Australia by Jeffrey F. Collins, a Fellow of the Canadian Global Affairs Institute, analyzes the largest and most expensive procurement projects undertaken by the nations: Canada’s $73 billion National Shipbuilding Strategy launched in 2010 and Australia’s A$90 billion Naval Shipbuilding Plan launched in 2017.

The projects aim to create a sustainable naval shipbuilding sector, but, says Collins, old problems persist. “Determining which province or state will be home to billions in contracts over many years remains a zero-sum game no matter how arms-length the process of yard selection.”

Building domestically can carry a 30 percent to 40 percent premium, and delays can make such projects even more costly. For example, Canada's initial cost estimates for the National Shipbuilding Strategy were $37.7 billion, but they have now increased to $73 billion. 

“In this context, schedule is king and avoiding cost increases requires keeping to planned shipbuilding schedules,” says Collins. “Failure to do so opens production gaps and necessitates going with alternative options including building overseas (Australia) or converting commercial vessels for naval and coast guard use (Canada).”

Collins also notes that Australia will face an increasing number of relatively cheap anti-ship missiles in the IndoPacific region. “In this context, money spent on surface combatants may be perhaps better spent on other capabilities.”

The paper is available here.