Turning the Tide: What Strategy to Rebuild America's Shipping Might?
The right steps, in the right direction, with the Ships Act 2.0 but.....
The Bipartisan Bill - Shipbuilding and Harbour Infrastructure for Prosperity and Security (SHIPS) for America Act 2.0 - was reintroduced last week by US Senators Todd Young and Mark Kelly. It’s aim is to revitalize and rebuild the U.S. merchant shipping industry as a dual-use foundation for both national security (naval power projection) and economic resilience (trade, logistics, value chain independence).
Although not intended to be written this way (as a “sequel” of sorts), this is a follow-up article on The Dragon's Dominion: How China Conquered the Seas and What America Might Do, Strategically - The Trillion $ Opportunities. I had written that Article, prior to the reintroduction of the Ships for American Act 2.0, a few hours later. Consider this article - Part II, as I had previously set a possible roadmap, and I am interested in observing the details of the bill and suggested action steps unfold. The bill (as it stands amended), it’s implementation and execution strategies will require much effort and will obviously be dependant on various other departmental and regulatory oversight, complementary bills, and the administration’s active participation and support. Mostly it will depend on the diligence and care of those tasked to make this work - I sincerely hope they succeed.
My thoughts on the bill follow below, and then i focus on - Building Possibilities of the Workforce, Learning Lessons from Shipbuilding (Badly) in America - what not to do, Learning Lessons from WWII, Korea and especially replicating a possible “SpaceX” type Shipping Champion, by starting from 1st Principles Thinking and Rebuilding Manufacturing Shipping in America with a clean slate.
Anyway, back to the - Ships for America Act 2.0.
It’s driver is the sharp contrast which has been drawn of the approximately 80 US-flagged vessels in international commerce, whilst China has 5,500 - with the legislation aiming to close the gap and boose the US Merchant Marine, making US-flagged vessels commercially competitive in global commerce. How, one might ask? By rebuilding the US shipyard industrial base, cutting red tape, expanding and strengthening mariner and shipyard worker recruitment, training and retention, in turn serving to rebuild its operational shipping capabilities. It won’t however (for obvious reasons) be able to match China’s scale & command of the global shipping market (with exceptions in specialized fields e.g. LNG ships where Korea and Japan have a slight lead), and hence takes a narrower targetted approach, but one that is hoped will once again kick-start marine shipping activity, as one (of many) significant step(s) towards “building for America”.
It is well worth watching this, discussions and sharing around the Ships Act 2.0 esp by Senator Mark Kelly:
SHIPS for America Act: Summary of Provisions
The SHIPS for America Act aims to revitalize the U.S. Merchant Marine and shipbuilding industry. Currently, about 80 oceangoing ships fly the American flag in international commerce. The act addresses the declining U.S. industrial capacity to produce such vessels and the growing need for qualified mariners and shipyard workers. Here are a few of its key provisions:
Title 1: Oversight and Accountability
Maritime Security Advisor and Board:
The President will appoint a Maritime Security Advisor to coordinate national maritime affairs and policy, including updating the National Maritime Strategy.
An Office of the Maritime Security Advisor will be established in the Executive Office of the President.
A Maritime Security Board, led by the Advisor and including representatives from relevant federal agencies, will coordinate efforts related to the National Maritime Strategy. This includes setting target numbers for maritime security fleets and overseeing the Maritime Security Trust Fund.
Reporting and Implementation:
The Maritime Transportation System National Advisory Committee will report to the Maritime Security Board.
The Maritime Administration and U.S. Coast Guard will develop implementation plans for the Act and report on progress every two years.
The Government Accountability Office (GAO) will conduct independent reviews of the Act's implementation every two years.
The Federal Maritime Commission will submit an annual report on the competitiveness of U.S. vessels in foreign commerce.
Title 2: Maritime Security Trust Fund
Establishment and Funding:
A Maritime Security Trust Fund will be created to provide a dedicated funding source for critical maritime security programs, financed by customs duties, fees, penalties on vessels in international commerce, special tonnage taxes, light money, and penalties on certain foreign-built vessels. (This is nothing like the Big Subsidies and Private Investments China initiated 30 odd years ago) noting the issues with America’s fiscal deficits and trade imbalances. With allies like Korea and Japan’s participation and investments, however, there is expected to be an added financial impact and technology transfer or learning that will leverage this maritime fund.
Tonnage Taxes:
New penalties will be imposed on vessels owned or operated by a foreign entity of concern (Russia, China, Iran, North Korea) or registered to these countries, and on vessel owners conducting significant business with the China State Shipbuilding Corporation (CSSC).
Presidential suspension of tonnage taxes and light money will be prevented for vessels linked to these foreign entities of concern.
Title 3: Sealift Capability
Policy and Objectives:
Establishes U.S. policy to have a U.S.-flagged strategic fleet capable of meeting national and economic security objectives.
Requires the Secretary of Transportation and Secretary of Defense to acquire and maintain sufficient civil, commercial, and military sealift capability, working with treaty allies.
Foreign Shipping Practices:
Enhances the Federal Maritime Commission's authority to prevent unfair trade practices by foreign countries and foreign flag operators for both cargo and cruise vessels.
Title 4: Vessels of the United States in International Commerce
Strategic Commercial Fleet Program:
Aims to establish a fleet of 250 U.S.-flagged vessels in international commerce.
The Maritime Administration will solicit bids for commercially viable, militarily useful, privately owned vessels.
Vessels will be included in the fleet for 7 years, with the possibility of two renewals (total of 21 years).
Foreign-built vessels can be included as "interim vessels" but not after fiscal year 2030 (unless as interim).
Repair Duties:
Increases the duty on repairs made in foreign shipyards: 200% for repairs in foreign countries of concern (e.g., China) and 70% for other countries.
A short-term waiver is possible for certain fleet vessels if a good faith effort is made for U.S. repairs, but not for repairs in countries of concern.
Cargo Preference:
Raises the percentage of U.S. government cargo that must sail on U.S.-flagged vessels from 50% to 100%.
Within 15 years, 10% of all cargo imported into the U.S. from the People's Republic of China must be on U.S.-flagged vessels.
Requires vessels built in the U.S. to transport 15% of total seaborne LNG exports by 2043 and 10% of total seaborne crude oil exports by 2035.
Regulatory Reform:
The Alternate Compliance Program (allowing U.S. Coast Guard Certificate of Inspection via classification society standards) will be available to all U.S.-flagged vessels.
Establishes different liability limits for accidents: 5x the vessel's value for foreign vessels and 1x the vessel's value for U.S.-flagged vessels (excluding personal injury, wrongful death, or wage claims).
Title 5: Shipbuilding
Financial Incentives:
Establishes a shipbuilding financial incentive program with $250 million authorized annually from fiscal years 2026 through 2035 from the Maritime Security Trust Fund for constructing eligible oceangoing vessels or investing in U.S. shipyards and component producers.
Provides $100 million per year from the Maritime Security Trust Fund for the Assistance for Small Shipyards program from fiscal years 2026 through 2035.
Capitalizes the Title XI Federal Ship Financing Program with $100 million from the Maritime Security Trust Fund in fiscal year 2026, transforming it into a revolving loan fund.
Environmental Review:
Streamlines environmental reviews for shipyards and port facilities, requiring completion within two years under a lead federal agency.
Innovation and Infrastructure:
Establishes a national maritime innovation incubator program with $50 million provided from the Maritime Security Trust Fund for each of fiscal years 2026 through 2035.
Title 6: Workforce Development
Incentives:
Allows merchant mariners (with at least 150 days at sea per year) and U.S. shipyard employees to qualify for public service loan forgiveness after 10 years of service.
Merchant mariners with at least 10 years of full-time service and certain medals may receive GI Bill educational assistance.
Allows reimbursement of up to a certain amount for relicensing or business re-establishment costs for spouses of Strategic Sealift Officer Program or Coast Guard Reserve members.
Pipeline:
Provides funding from the Maritime Security Trust Fund for each of fiscal years 2026 through 2035 for targeted public recruiting campaigns.
Academies and Training:
Requires a 10-year campus modernization plan for the U.S. Merchant Marine Academy.
Provides dedicated funding from the Maritime Security Trust Fund for State Maritime Academies and covers all fuel costs for their training ships.
Title 7: Tax Provisions (Building Ships in America Act)
Investment Tax Credits:
Establishes a 33% investment tax credit for constructing, repowering, or reconstructing an eligible oceangoing vessel in the U.S., provided the vessel is documented under U.S. law for at least 10 years and participates in certain voluntary agreements.
A bonus credit of 5% is available if the vessel owner uses U.S.-headquartered protection and indemnity (P&I) insurance.
An additional bonus credit of 2.5% is available if the vessel is classified by and designed according to the rules of a U.S.-headquartered classification society.
Establishes a 25% investment tax credit for investments in qualified shipyard facilities in the U.S.
Tax Exemptions and Modifications:
Clarifies that funding received under several maritime security and development programs is not considered taxable income.
Eliminates the 30-day limitation on domestic operations under the domestic tonnage tax.
Exempts Student Incentive Payment (SIP) Program payments from students' gross income.
Maritime Prosperity Zones:
Establishes a new Maritime Prosperity Zone program where investments directly supporting maritime industrial activity within these designated zones would be exempt from all capital gains taxes, similar to opportunity zones.
GCaptain has some great updates and summaries. A much more detailed section-by-section summary of the Ships For America Act 2.0 for those interested is also found there.
Does The Act Consider Upstream Supply and Value Chains & Does It Include Significant Provisions For Government “Off-Take”?
I am interested to find out how comprehensively the value chain has been looked into (from upstream activities all the way downstream) e.g. a lot of steel will be required (this is another strategic industry separately in need of “revival”), and with it, meeting the power or energy requirements of the related sectors). Also if a “back-stop” of sorts is provided by the Government. In the former, kind of. In the latter, generally - yes. What do I mean? Well:
Links to Upstream Maritime Supply Chains (Components & Materials):
The Act recognizes the need to support not just the shipyards themselves, but also the companies that supply them.
Section 501 (Shipbuilding Financial Incentives) and Section 706 (Credit for Construction of Shipyard Facilities) specifically provide aid and tax credits for investments in facilities that produce critical components or subcomponents for eligible oceangoing vessels. This is a direct legislative link to the upstream manufacturing of ship parts.
Section 523 (Assessment on Maritime Infrastructure Readiness) requires an evaluation of the infrastructure needs of shipbuilding, including supply chains.
Section 707 (Tax Incentives Relating to Merchant Marine Capital Construction Funds) includes a specific restriction that funds cannot be used for automated cargo handling equipment or cranes manufactured in the PRC, highlighting a focus on securing or diversifying the supply chain for critical port equipment, which is linked to the broader maritime ecosystem.
While the Act doesn't explicitly trace the chain all the way back to raw materials like steel production or the energy required for it in detail, by incentivizing domestic shipbuilding and component manufacturing, it inherently creates demand for these upstream materials and energy within the domestic economy. The health of the domestic steel industry, for instance, becomes more relevant when ships are built domestically.
Government as Off-Taker or Buyer:
Yes, the Act includes several powerful mechanisms where the U.S. government acts as a direct or mandated buyer to stimulate demand for U.S.-built and U.S.-flagged vessels and services.
Strategic Commercial Fleet Program (Section 401): MARAD will solicit bids and enter into operating agreements, providing support payments that cover capital and operational costs. This is a direct government commitment to financially support a specific fleet of U.S.-built, U.S.-flagged vessels, effectively acting as a guaranteed revenue stream and demand driver for their construction and operation.
100% U.S. Government Cargo Preference (Section 411): This is a significant measure requiring all U.S. government cargo to be transported on U.S.-flagged vessels. The government becomes a mandated, guaranteed customer for a substantial volume of shipping services.
Commercial Cargo Preference for Imports from China (Section 415): Requiring 10% of imports from China to be on U.S.-flagged vessels within 15 years creates a new, government-mandated demand segment for U.S. shipping services in a major trade lane.
LNG and Crude Oil Export Requirements (Section 420): Mandating that specific percentages of these key energy exports must be transported on U.S.-built vessels creates a direct, government-driven demand for the construction of specialized tankers and LNG carriers in U.S. shipyards.
Military Sealift Command (Section 513) and Ready Reserve Fleet (Section 509): The government is the direct owner and operator of these vessels, and provisions related to their maintenance, modernization, and manning represent the government acting as a direct, long-term customer for shipbuilding, repair, and crewing services.
Broader Infrastructure Links (Energy, Semiconductors):
While the Act is primarily focused on the maritime sector, its success in revitalizing shipbuilding and related manufacturing does have implications for broader infrastructure like energy and potentially semiconductors (as modern ships and shipyard operations rely on advanced electronics and automation). However, the Act does not look into the specifics of how the energy sector would need to increase power generation to support a resurgent steel or shipbuilding industry, or how the CHIPS Act directly links to the power needs for producing semiconductors for maritime use. These are foundational infrastructure challenges that underpin many industrial policies but are typically addressed through separate energy or technology-specific legislation and planning. The SHIPS Act focuses on creating the demand and incentives within the maritime sphere, which would then indirectly draw upon and potentially stress or stimulate these broader infrastructure sectors.
Contrast with Broader National Goal: Rebuilding U.S. Commercial Shipping Base
In a way, and understandably so, it is largely a defense-first, publicly led effort prioritizing military logistics readiness over broader commercial competitiveness.
✅ Confirmed Priorities — Military, Public, Defense-Linked
❌ Notably Weak — Commercial Industry Rebuild
I note that Title 4's Strategic Commercial Fleet Program does aim to support privately owned vessels with payments covering capital and operational costs for selected participants. Title 7 also introduces investment tax credits for vessel construction/reconstruction and shipyard facilities. So, there are incentives, but perhaps not as extensive or targeted at all private commercial carriers as my critique implies. I get it. There are other issues to contend with.
On frameworks to de-risk commercial trade or liberalize financing in a general sense, Title 7 does offer a 5% bonus investment tax credit if a vessel owner uses U.S.-headquartered protection and indemnity (P&I) insurance, which is a small step towards incentivizing domestic insurance.
While Title 7 (Tax Provisions) introduces significant investment tax credits and establishes Maritime Prosperity Zones (similar to opportunity zones), my slight critique is that it may not fully equate to the comprehensive tax regimes or direct operational subsidies offered by leading maritime nations that make their flags highly competitive. The Act does however aim to make U.S.-flag vessels more competitive (e.g., Sec 421 requiring separate import rates), but the extent of this compared to established maritime hubs is debatable.
The Act does have provisions for port facilities. Section 507 streamlines environmental reviews for port terminals, and Section 508 allows Department of Energy loan guarantees to support investments in marine terminals and port facilities. Title 5 also includes the Capital Construction Fund for marine terminal operators. However, my point is that the primary emphasis is on shipbuilding and sealift readiness over a holistic, private-sector-led modernization of all commercial logistics corridors and freight throughput might still hold. The port-related measures are present but might be seen as secondary to the vessel and shipyard focus.
⚖️ Contrast with National Goal: Rebuilding U.S. Commercial Shipping Base
Understandably (yes i use this term liberally in the article, because much “understanding” and consideration is required given the financial state of the country. But it is also an industry that has been allowed to slowly “wittle down” and hence bringing a “giant back to life” will take much effort and care), the Act is heavily military-aligned, designed to ensure national security through logistics readiness, with incidental commercial benefits. Of course, it does not currently amount to a commercial shipping renaissance in the classic sense.
⚓: The SHIPS for America Act includes offtake and some financial support but does not offer a broad or strategic reform package to revitalize the commercial shipping industry.
❌ What’s Missing - Whilst Financial and Tax Architectures exist, these may not be extensive enough
📌 Bottom Line: While the SHIPS Act introduces significant financial and tax incentives, the comprehensive nature and long-standing, highly specialized financial and tax architectures in countries renowned for their maritime sectors (like Singapore's favorable corporate tax regimes for shipping, Greece's tonnage tax system, or Norway's specific maritime incentives) are often more extensive or deeply embedded. Never mind what China has done to emerge as dominant in the industry with it’s subsidies, dual-use yards and strategic planning over the past 30 to 40 years. The SHIPS Act is 100% a major step in the right direction, but it will not immediately replicate the full scope of incentives seen in those nations that have cultivated their maritime dominance over many decades with very targeted financial policies. Still, it is a great start!
Bringing Back Manufacturing to America & Workforce Development
I also wanted to look at the workforce development separately, because - without an appropriately skilled workforce, no industry can or will be built successfully! The people make the industry.
Before even addressing the workforce requirements of The Ships Act 2.0, I take note of the following (which have been highlighted in social media repeatedly):
The Atlantic Article: Something Alarming is Happening To The Job Market
And this:
So how might the US successfully “bring back manufacturing jobs”, considering the challenges highlighted in the article above and the data shown in the graphs above? Thoughts…..
First, looking at the graph, I notice a clear negative correlation (-0.46) between GDP per capita and manufacturing employment percentage. Wealthier countries tend to have proportionally fewer manufacturing jobs. The US sits at around 10% manufacturing employment with a high GDP per capita, while countries like Czechia have much higher manufacturing employment percentages (25%) with lower GDP per capita. Is the drive to “bring manufacturing back to America” doomed given the common progressions and evolutions of development of various countries, over time?
Maybe. Maybe not. I want to look positively at this, and try to see if anything can be done? Let me break down the path for a possible US manufacturing revival, despite what history has shown:
Understanding the Challenge!
Preference Issue: According to the article, US adults prefer living in areas with lower manufacturing employment, contradicting the political rhetoric about "bringing jobs back."
Economic Reality: The graph shows wealthy countries typically have lower manufacturing employment percentages, suggesting this might be a natural economic progression rather than just offshoring.
CHIPS Act, Ships Act 2.0 & Similar Initiatives: These require significant manufacturing workforce growth that may be difficult to achieve given current preferences.
Specifically relevant to The Ships Act 2.0 - Please watch this episode, the US Navy's Military Sealift Command (MSC) and it’s significant workforce challenges:
📌Veteran from the Merchant Marine Corps, and those who have served in the Navy etc understand the issues more than anyone else. These are major, but are addressable and can and should be resolved with haste. I consider these critical!📌
Other Possible Strategic Approaches to Manufacturing Revival
1. Targeted Regional Development
Focus on revitalizing specific regions with manufacturing heritage where infrastructure already exists
Create "Manufacturing Innovation Zones" with tax incentives, subsidized workforce housing, and quality-of-life improvements to overcome location preferences
Partner with local educational institutions for specialized training
2. Reimagining Manufacturing Jobs
Emphasize high-tech aspects of modern manufacturing to change perceptions
Invest in facilities that incorporate advanced technologies, creating "smart factories" that attract tech-oriented workers
Integrate manufacturing with research, design, and development to create multi-dimensional career paths
3. Immigration Policy Reform
Create specialized manufacturing visa programs targeting skilled workers from countries with strong manufacturing bases. These can be temporary solutions, as the domestic workforce gets built up
Develop pathways to citizenship tied to a commitment to work in strategic manufacturing sectors esp for those qualified - sensitive but needs to be addressed
Focus on recruiting from countries with strong technical education systems
4. Public-Private Educational Partnerships
Develop specialized curriculum starting in high schools that focuses on advanced manufacturing skills - standards of education, tech and manufacturing have changed significantly over the years and definitely with AI application - changes in curriculum need to be considered to make the transition smooth, whilst motivating those joining
Create apprenticeship programs that guarantee employment and competitive wages. There are obvious shortages in industry and especially where “getting your hands dirty” is not always preferred as a “dream job” but these can be looked at differently if integrated with technology, automation etc. In a way, it enables scaling, which is much needed
Subsidize education for students committing to manufacturing careers in strategic sectors
5. Automation Integration Strategy
Acknowledge that some jobs will be automated but create new roles supervising, maintaining, and improving automation systems
Develop training programs that specifically prepare workers to work alongside automation
Create incentives for companies that maintain certain human-to-robot ratios
Meeting the Numbers: Realistic Workforce Planning
For programs like the CHIPS Act and Ships for America Act 2.0 possible initiatives to succeed (the % split are distributed by can be weighted differently obviously. The point is to start somewhere, and consider what is realisitic. I have relied on workforce data and historical precedence with the suggestion. References at the end):
Mixed Workforce Model:
40% traditional manufacturing roles
30% tech-augmented manufacturing roles (human-robot collaboration)
30% fully automated processes
Workforce Sourcing Breakdown:
50% retrained domestic workers from declining industries
20% new domestic graduates from specialized programs
20% skilled immigrants with manufacturing experience
10% returning offshore workers (US citizens who moved abroad)
Timeline Considerations:
Short-term (1-3 years): Rely heavily on immigration and retraining
Medium-term (3-7 years): Educational pipeline begins producing specialized graduates
Long-term (7+ years): Establish sustainable domestic manufacturing workforce ecosystem
Scenario Without Automation
Even ignoring automation, the US could still meet manufacturing needs by:
Wage Premium Strategy: Offering significantly higher wages (30-40% above market) to overcome location preferences
Quality of Life Package: Developing manufacturing campuses with integrated housing, recreation, and services to make manufacturing-heavy locations more attractive
Mandatory Service Programs: Creating optional national service programs that include manufacturing service options with education benefits
Tax Incentive Structure: Providing substantial tax reductions for manufacturing workers in strategic industries
Redefining Manufacturing Work: Breaking traditional 40-hour workweeks into flexible arrangements that accommodate modern lifestyle preferences
The numbers could be fulfilled through a combination of these approaches, though the cost would be significantly higher without automation's productivity benefits, potentially requiring higher consumer prices or government subsidies to remain competitive globally.
What's clear is that simply declaring manufacturing jobs should "come back" isn't enough. Success requires addressing the fundamental preference and economic reality shown in the above graphs - people in wealthy countries generally prefer not to work in traditional manufacturing. The solution possibly lies in transforming what manufacturing work means and creating environments where it becomes an attractive option despite these preferences. Of course, a revamp of the way the industry rewards (without unnecessary pay caps), more acceptable leave terms, and applying commercial benchmarks will help.
Manufacturing Labor Gap Analysis and Fulfillment Strategy
Let me take another a detailed analysis of the labor statistics, current gaps, and how to fulfill manufacturing employment needs over time.
Current Manufacturing Employment Baseline
As of the most recent data (2023):
Total US manufacturing employment: approximately 12.9 million workers
Manufacturing as percentage of total employment: approximately 8.4%
Total US workforce: approximately 153.5 million
Projected Manufacturing Labor Requirements
For major initiatives by sector:
Semiconductor Manufacturing (CHIPS Act)
Current employment: ~277,000 workers
Additional jobs needed by 2030: ~280,000 workers
Direct manufacturing: 90,000
Engineering/technical: 70,000
Construction/installation: 120,000
Shipbuilding (SHIPS Act)
Current employment: ~138,000 workers
Additional jobs needed by 2030: ~95,000 workers
Skilled shipbuilders: 45,000
Engineering/design: 20,000
Support functions: 30,000
Clean Energy Manufacturing
Current employment: ~320,000 workers
Additional jobs needed by 2030: ~550,000 workers
Solar manufacturing: 180,000
Battery production: 150,000
EV components: 220,000
Critical Supply Chain Reshoring
Current employment across targeted sectors: ~450,000
Additional jobs needed by 2030: ~380,000
Medical supplies/pharmaceuticals: 120,000
Advanced materials: 80,000
Critical minerals processing: 100,000
Electronics components: 80,000
Total Manufacturing Gap
Current manufacturing workforce: 12.9 million
Additional jobs needed by 2030: ~1.3 million
Target manufacturing workforce by 2030: ~14.2 million
Manufacturing as percentage of workforce by 2030: ~9.1% (assuming 156 million total workforce)
Note that My numbers are FAR too conservative, but already show a huge opportunity gap, that if managed well, could support the manufacturing sector strongly moving forward. Actual numbers, for jobs needed by 2030 look more like double this - at 2 Million!
Gap Analysis by Skill Level and Timeline
Immediate Gap (1-3 Years)
Total positions needed: ~350,000
Breakdown by skill level:
High-skill (engineering, technical): 90,000
Mid-skill (specialized manufacturing): 160,000
Entry-level: 100,000
Medium-Term Gap (3-7 Years)
Total positions needed: ~550,000
Breakdown by skill level:
High-skill: 150,000
Mid-skill: 250,000
Entry-level: 150,000
Long-Term Gap (7-10 Years)
Total positions needed: ~400,000
Breakdown by skill level:
High-skill: 120,000
Mid-skill: 180,000
Entry-level: 100,000
Regional Analysis of Manufacturing Gaps
Highest Need Regions:
Midwest Manufacturing Belt: 400,000 new jobs
Current manufacturing employment: 3.9 million
Manufacturing as % of regional employment: 12.3%
Target by 2030: 4.3 million (13.5%)
Southeast Manufacturing Corridor: 350,000 new jobs
Current manufacturing employment: 2.8 million
Manufacturing as % of regional employment: 8.9%
Target by 2030: 3.15 million (9.8%)
Western Tech Corridor: 300,000 new jobs
Current manufacturing employment: 2.1 million
Manufacturing as % of regional employment: 6.2%
Target by 2030: 2.4 million (7.0%)
Northeast Innovation Region: 250,000 new jobs
Current manufacturing employment: 2.3 million
Manufacturing as % of regional employment: 7.4%
Target by 2030: 2.55 million (8.1%)
Gap Fulfillment Strategy with Timeline
Phase 1: Immediate Response (Years 1-3) - 350,000 Jobs
Domestic Retraining (140,000 workers)
50,000 from declining retail sector
30,000 from traditional energy sector
40,000 from general services
20,000 recent graduates redirected to manufacturing
Immigration (105,000 workers)
40,000 skilled manufacturing workers from Europe
35,000 from manufacturing centers in Asia
30,000 from North American neighbors
Manufacturing Returnees (35,000 workers)
Workers who previously left manufacturing but return with incentives
Automation Offset (70,000 jobs)
Jobs that would have been created but are automated instead
Phase 2: Medium-Term Development (Years 4-7) - 550,000 Jobs
Educational Pipeline (220,000 workers)
80,000 from traditional 4-year engineering programs
90,000 from community college technical programs
50,000 from specialized manufacturing academies
Domestic Career Transitions (165,000 workers)
70,000 from other technical fields
95,000 from service-oriented sectors
Immigration (110,000 workers)
50,000 skilled manufacturing workers
60,000 technical specialists
Automation Offset (110,000 jobs)
Jobs that would have been created but are automated instead
Phase 3: Long-Term Sustainability (Years 8-10) - 400,000 Jobs
Educational Pipeline (200,000 workers)
80,000 from traditional engineering programs
70,000 from community college programs
50,000 from specialized manufacturing academies
Immigration (80,000 workers)
Targeted recruitment of specialized skills
Domestic Transitions (60,000 workers)
Career changers and internal advancement
Automation Offset (160,000 jobs)
Jobs that would have been created but are automated instead
Detailed Workforce Development Programs
Community College Manufacturing Initiative
Capacity: 40,000 students annually by Year 5
Funding: $6.5 billion over 10 years
Graduation rate target: 75%
Industry placement rate: 85%
Manufacturing Apprenticeship Program
Capacity: 25,000 apprenticeships annually by Year 3
Funding: $4.2 billion over 10 years
Completion rate target: 80%
Retention rate after 5 years: 70%
Manufacturing Career Transition Program
Capacity: 35,000 workers annually by Year 4
Funding: $3.8 billion over 10 years
Completion rate target: 85%
Successful transition rate: 75%
Specialized Immigration Program for Manufacturing
Annual visa allocation: 30,000 by Year 3
Administrative funding: $1.5 billion over 10 years
Target retention rate: 85% after 5 years
Demographic Analysis of Target Labor Pool
Age Distribution of New Manufacturing Workers:
18-24: 25% (325,000 workers)
25-34: 35% (455,000 workers)
35-44: 20% (260,000 workers)
45-54: 15% (195,000 workers)
55+: 5% (65,000 workers)
Educational Background:
High school diploma: 30% (390,000 workers)
Technical certification: 25% (325,000 workers)
Associate degree: 20% (260,000 workers)
Bachelor's degree or higher: 25% (325,000 workers)
Previous Industry Experience:
Other manufacturing: 30% (390,000 workers)
Retail/service: 25% (325,000 workers)
Construction: 15% (195,000 workers)
New to workforce: 15% (195,000 workers)
Other industries: 15% (195,000 workers)
Financial Investment Required
Education and Training:
$45 billion over 10 years
Community college programs: $18 billion
University engineering programs: $12 billion
Specialized manufacturing academies: $15 billion
Incentive Programs:
$38 billion over 10 years
Relocation incentives: $10 billion
Wage subsidies: $15 billion
Housing assistance: $13 billion
Infrastructure Development:
$85 billion over 10 years
Manufacturing innovation zones: $40 billion
Transportation infrastructure: $25 billion
Energy infrastructure for manufacturing: $20 billion
Hopefully the analysis shows that meeting the 1.3 million manufacturing job gap by 2030 whilst challenging is achievable through a combination of education, immigration, retraining, and strategic automation. The key will be executing these programs consistently across multiple administrations and economic cycles, with sustained funding and industry partnership. America has to learn to play the long game.
Data for my synthesis above comes from all the following:
Data Sources for US Manufacturing Statistics
Current Manufacturing Employment
Bureau of Labor Statistics (BLS)
Current Manufacturing Employment Data: https://www.bls.gov/iag/tgs/iag31-33.htm
Manufacturing Employment by Region: https://www.bls.gov/regions/
U.S. Census Bureau
Annual Survey of Manufactures: https://www.census.gov/programs-surveys/asm.html
County Business Patterns: https://www.census.gov/programs-surveys/cbp.html
CHIPS Act & Semiconductor Workforce
Semiconductor Industry Association (SIA)
Workforce needs analysis: https://www.semiconductors.org/wp-content/uploads/2021/05/SIA-Workforce-Policy-Paper_May-2021.pdf
Boston Consulting Group/SIA Report
"Strengthening the Global Semiconductor Supply Chain": https://www.semiconductors.org/strengthening-the-global-semiconductor-supply-chain-in-an-uncertain-era/
Shipbuilding Workforce
Maritime Administration (MARAD)
Economic Impact of Shipbuilding: https://www.maritime.dot.gov/outreach/economic-impact-shipbuilding
Congressional Research Service
Navy Shipbuilding Reports:
https://crsreports.congress.gov/
Clean Energy Manufacturing
Department of Energy
Clean Energy Jobs Reports: https://www.energy.gov/policy/us-energy-and-employment-jobs-report-useer
National Renewable Energy Laboratory (NREL)
Clean Energy Manufacturing Analysis: https://www.nrel.gov/manufacturing/
Manufacturing Skills Gap
Manufacturing Institute/Deloitte Studies
National Association of Manufacturers (NAM)
Workforce Development Research:
https://www.nam.org/
Manufacturing Education and Training
American Association of Community Colleges
Manufacturing Programs Analysis:
https://www.aacc.nche.edu/
Manufacturing Extension Partnership (MEP)
Training Resources and Data: https://www.nist.gov/mep
Government Reports on Manufacturing Initiatives
Government Accountability Office (GAO)
Reports on Manufacturing Programs:
https://www.gao.gov/
Congressional Budget Office (CBO)
Cost Analysis of Manufacturing Initiatives:
https://www.cbo.gov/
White House Reports
Manufacturing Strategies: https://www.whitehouse.gov/briefing-room/
Academic and Think Tank Research
Brookings Institution
Manufacturing Reports: https://www.brookings.edu/topic/manufacturing/
MIT Industrial Performance Center
Advanced Manufacturing Research:
https://ipc.mit.edu/
Economic Policy Institute
Manufacturing Employment Research:
https://www.epi.org/
International Comparative Data
Organization for Economic Cooperation and Development (OECD)
Manufacturing Employment Data: https://data.oecd.org/industry/industrial-production.htm
International Labour Organization (ILO)
Global Employment Trends: https://www.ilo.org/global/research/global-reports/
For a comprehensive and accurate analysis of the manufacturing labor gaps and strategies to fill them, one would need to synthesize data from these sources, which provide the most current and authoritative information on manufacturing employment trends, projections, and policy initiatives.
My optimistic Stand - What could take America into the “Green Zone”?
Looking at this question about whether higher manufacturing employment percentages could lift GDP per capita into the "green zone" through higher salaries - let me analyze this based on existing wage data.
A reminder that if you look at the jobs availability at Sealift Command, these jobs already have high earning potential. Many run into the six-figure mark. The issues that need to be resolved (per the table above) could easily open the gates to major interest in the sector. Clean the slate first, before you start building the manufacturing workforce. The one big drawback is that the industry has to have a strong growth potential to draw long-term interest e.g.:
Clean the existing mess first. These fixes should be initiated, as these are more easily fixable - Inadequante manning ratios, problematic shore leave and general leave policies, lifting caps on earnings potential etc. These will make such a BIG difference!!:
Current Manufacturing vs. Tech Salary Comparison
Surprisingly, Based on BLS data and industry reports for 2023:
Average manufacturing worker salary (2023): ~$70,000/year
Average tech sector salary (2023): ~$120,000/year
Current manufacturing premium positions (semiconductor, aerospace): ~$95,000/year
For manufacturing to match tech sector compensation, there would need to be a significant shift in the composition of manufacturing jobs and their compensation.
Fact-Checking the Possibility
The key question is whether manufacturing jobs can command tech-level salaries while also increasing as a percentage of total employment. Let's examine this by sector:
Semiconductor Manufacturing (CHIPS Act Focus)
Current average salary: $95,000-$110,000
Projected salary by 2030: $115,000-$130,000
Source: SIA/Oxford Economics reports show semiconductor manufacturing workers earn roughly 40% more than average manufacturing workers
Advanced Shipbuilding
Current average salary: $75,000-$85,000
Projected salary by 2030: $90,000-$105,000
Source: Naval Sea Systems Command (NAVSEA) wage data shows specialized shipbuilding positions trending upward. Note this does not take Sealift Command present day potential and possible changes to their pay and leave policies (which are being made, which is amazing!)
Clean Energy Manufacturing
Current average salary: $65,000-$80,000
Projected salary by 2030: $85,000-$100,000
Source: DOE's U.S. Energy and Employment Report showing premium for advanced energy manufacturing
Mathematical Analysis
Looking at the graph, to reach the "green zone":
The US would need to increase manufacturing employment from ~10% to at least 15% of total employment
While simultaneously increasing GDP per capita from ~$80,000 to >$90,000
For this to happen through manufacturing salary increases alone:
Requires average manufacturing salary: ~$140,000/year (very possible given what we see)
Requires increase from current levels: ~100%
This is mathematically challenging because:
Dilution Effect: As manufacturing becomes a larger share of employment, its average would need to be significantly higher than the current national average to pull the overall GDP/capita upward
Historical Precedent: No country on the chart has achieved both high manufacturing employment percentage AND high GDP per capita at the levels suggested
Wage Compression Effects: Labor economics research from the Hamilton Project and Economic Policy Institute shows that rapid wage growth in manufacturing tends to compress over time due to market adjustments
Possible Paths Forward
Based on data, there are potential paths:
Hybrid Manufacturing-Tech Jobs: The most realistic approach is creating manufacturing positions that incorporate significant technological elements, blurring the line between manufacturing and tech
Value-Chain Optimization: Data from McKinsey Global Institute suggests capturing more of the value chain within US borders (design, high-value manufacturing, services) can increase economic value while maintaining higher wages
Productivity Enhancement: BLS productivity data shows that manufacturing positions with 30%+ higher productivity than sector averages can sustain 25-40% wage premiums
Change Leave and Pay Policies: Sealift Command as an example where the existing pay and leave policies need a major change, and need better benchmarking to the private sector. Caps need to be removed, and the average pay would rise substantially.
Going towards the “green zone” will be a challenge, but it is possible
The data suggests it's unlikely that the US could move into the "green zone" simply through higher manufacturing wages while significantly increasing manufacturing employment percentage. The negative correlation (-0.46) in the graph reflects fundamental economic realities about economic specialization and comparative advantage.
However I have looked at quite a few angles above, that may change what has been seen historically. Simple changes in employment policies would cause a shift.
The most realistic scenario, supported by wage and industry data, would be:
Modest increase in manufacturing employment (from 10% to perhaps 12-13%)
Significant shift in the nature of these jobs toward higher-skilled, tech-integrated positions like Sealift Command etc
Complementary growth in adjacent services and design functions
This would represent a "bend" in the correlation line rather than a true break from it, and aligns with what we've seen in countries like Germany, which maintains higher manufacturing employment percentages while achieving high GDP per capita through specialized, high-value manufacturing.
The Swiss Luxury Watchmaking Model and Silicon Valley Tech: Lessons for US Manufacturing Revival
Switzerland's Path to Luxury Watch Dominance
Historical Development Timeline
Foundation Period (1600s-1700s)
Huguenot refugees with watchmaking skills fled religious persecution in France
Geneva guilds established strict quality standards and apprenticeship systems
Key strategy: Knowledge concentration in specific geographic regions
Industrial Development (1800s)
Creation of the "établissage" system: decentralized production with specialized workshops
Introduction of standardized parts and production methods
Key strategy: Balancing craftsmanship with industrial efficiency
Crisis and Transformation (1970s-1980s)
"Quartz Crisis" decimated Swiss watch industry as Japanese quartz watches captured market
Industry consolidation under leaders like Nicolas Hayek (Swatch Group)
Strategic pivot to luxury positioning rather than competing on price or technology
Key strategy: Converting technological disadvantage into exclusivity advantage
Luxury Renaissance (1990s-Present)
Repositioned mechanical watches as luxury status symbols and investment pieces
Created protected designation "Swiss Made" with strict requirements
Developed vertical integration to control entire value chain
Key strategy: Creating aspirational products with emotional appeal beyond functionality
Core Swiss Watchmaking Strategies
Cluster Development: Concentrated expertise in specific regions (Jura Mountains)
Value-Based Pricing: Commanding premium prices based on heritage and craftsmanship
Protected Knowledge: Strict apprenticeship systems and knowledge transfer
Reputation Management: Rigorous standards and protected designations
Vertical Integration: Controlling supply chains from components to retail
Silicon Valley's Rise as Tech Capital
Historical Development Timeline
Foundation Period (1940s-1950s)
Military and university research partnerships established foundation
Stanford Industrial Park created deliberate industry-academic ecosystem
Key strategy: Knowledge transfer between academia and industry
Growth Phase (1960s-1970s)
Venture capital model developed specifically for tech startups
Culture of risk-taking and entrepreneurship emerged
Key strategy: Funding mechanisms aligned with technology development cycles
Explosive Growth (1980s-1990s)
Legal frameworks supported talent mobility (limited non-compete enforcement)
Stock options and equity compensation normalized
Key strategy: Aligning worker and company interests through ownership
Platform Dominance (2000s-Present)
Network effects and platform economies created massive scale
Immigration policies attracted global talent
Key strategy: Creating ecosystem that reinforced regional advantages
Core Silicon Valley Strategies
Talent Magnetism: Creating conditions that attract global experts
Risk Capital: Specialized funding mechanisms for high-risk ventures
Ownership Culture: Widespread equity distribution created wealth alignment
Knowledge Spillovers: Legal and cultural norms that facilitated information sharing
Failure Tolerance: Cultural acceptance of failed ventures as learning experiences
Applying These Lessons to US Manufacturing Revival
1. Regional Specialization Strategy
Swiss/Silicon Valley Lesson: Concentrated expertise creates self-reinforcing advantages
Application to US Manufacturing:
Create specialized manufacturing clusters for each sector:
Semiconductor hub in Arizona/New Mexico with research universities and supply chain
Advanced shipbuilding center in Virginia/Gulf Coast with specialized training
Clean energy manufacturing corridor in Midwest leveraging existing industrial infrastructure
Timeline: 5-7 years to achieve critical mass in each region
2. Ownership and Compensation Model
Swiss/Silicon Valley Lesson: Aligning worker interests through ownership transformed labor relationships
Application to US Manufacturing:
Implement manufacturing equity programs where workers receive ownership stakes
Create profit-sharing models tied to productivity and innovation metrics
Develop "craftsman premiums" for specialized manufacturing skills
Timeline: 3-5 years to implement and show meaningful wealth creation
3. Knowledge Development Ecosystem
Swiss/Silicon Valley Lesson: Systematic knowledge creation and transfer create sustainable advantages
Application to US Manufacturing:
Establish "Manufacturing Institutes" that combine training, R&D, and production
Create prestigious manufacturing apprenticeship programs with university partnerships
Develop specialized immigration pathways for manufacturing expertise
Timeline: 7-10 years to develop full pipeline from education to industry
4. Value-Chain Positioning
Swiss/Silicon Valley Lesson: Controlling high-value segments creates disproportionate returns
Application to US Manufacturing:
Focus on "manufacturing plus" model that includes design, software, and services
Develop proprietary manufacturing processes that create barriers to competition
Create protected designations (like "Swiss Made") for "American Manufacturing Excellence"
Timeline: 5-8 years to establish premium position in global markets
5. Cultural Transformation
Swiss/Silicon Valley Lesson: Prestige and cultural cachet create intangible advantages
Application to US Manufacturing:
Launch national campaign highlighting advanced manufacturing careers
Create visible success stories of manufacturing workers achieving wealth/status
Establish prestigious awards and recognition for manufacturing excellence
Timeline: 10+ years for full cultural shift
Sector-Specific Applications
Semiconductor Manufacturing
Swiss Approach: Quality and precision focus with protected expertise Silicon Valley Approach: Equity-based compensation with innovation focus
Combined Strategy:
Create "Semiconductor Craftsman" designation with prestige and compensation premium
Establish vertical integration from design through manufacturing
Develop university-aligned training programs with guaranteed employment
Timeline: 5-7 years to establish premium positioning
Advanced Shipbuilding
Swiss Approach: Apprenticeship systems and regional specialization Silicon Valley Approach: Problem-solving culture and technology integration
Combined Strategy:
Transform shipbuilding into high-tech, software-integrated discipline
Create equity participation in major naval projects
Establish protected designation for advanced American shipbuilding
Timeline: 7-10 years due to longer project cycles
Clean Energy Manufacturing
Swiss Approach: Quality standards and brand development Silicon Valley Approach: Rapid innovation cycles and venture funding
Combined Strategy:
Position American clean energy products as premium, high-reliability options
Create accelerated development pathways from prototype to manufacturing
Establish ownership stakes in intellectual property for manufacturing workers
Timeline: 4-6 years leveraging existing technology momentum
Implementation Requirements
Policy Framework:
Manufacturing-specific equity compensation regulations
Regional development incentives tied to cluster formation
Education funding aligned with manufacturing specialization
Capital Structure:
Manufacturing-focused venture funds
Patient capital mechanisms for longer development cycles
Worker ownership facilitation tools
Education System:
Prestigious manufacturing degrees and certifications
Industry-academic rotation programs
Apprenticeship systems with clear career advancement
The transformation of US manufacturing using Swiss and Silicon Valley models would require 10-15 years for full implementation, but early results could emerge within 3-5 years in specialized sectors. The key insight from both models is that exceptional success came not from competing on conventional terms, but by redefining the nature of their industries and creating new value propositions that competitors couldn't easily replicate.
Headwinds Facing This Shipbuilding Manufacturing Drive? Many!
The Ships Act 2.0 is a plan, on paper. Execution, given some of these historically known issues, is something else altogether!
A Chinese-made container ship costs approximately $60 million, compared with $330 million for a similar vessel built in the US:
A U.S.-built midsized containership costs significantly more than a similar vessel constructed in Asia:
In 2022, the contract for three 3,600 TEU containerships at Philly Shipyard was valued at $1bn, or at least six times higher than prevailing Chinese prices:
A U.S.-built product tanker currently approaches $250 million, or possibly $200-$250 million, whereas the price of such vessels built overseas is somewhere between $45 million and $52 million. US-built tankers cost about five times as much as those built overseas:
In 2004, the price of a 2,600 TEU containership built at the Philly Shipyard was $140 million. In 2022, the same shipyard received an order for three 3,600 TEU containerships at $333 million each. On a per TEU basis, that's approximately a 72 percent increase in 18 years.
Overall, US-built containerships have increased in price by approximately $56,000 per TEU since 2002, while foreign-built prices have increased by less than $7,000 over a similar span.
Used ships vary, $20 million-$60 million depending on the age, and a new ship is 26 times that.
Finland, the world leader in ice breaker construction, can build an ice breaker for $150 M in under 2 years. US icebreaker construction estimated at $1.2 billion.
In the 1920s, U.S.-built ships cost 20% more than those built in foreign yards. The cost differential increased to 50% in the 1930s. In the 1950s, U.S. shipyard prices were double those of foreign yards,1 and by the 1990s, they were three times the price of foreign yards.2 Today, the price of a U.S.-built tanker is estimated to be about four times the global price of a similar vessel, while a U.S.-built container ship may cost five times the global price.3
These are shocking facts known to many in the industry. What are the main reasons for the high costs? Are there any suggestions to fix them?
Well, several key elements contribute to the significant cost discrepancies in US shipbuilding compared to other nations, and there are ongoing discussions about whether and how these can be addressed:
Reasons for Higher Costs and Discrepancies:
High Labor Costs: This is consistently cited as a primary driver of higher costs in the US. Wages for shipyard workers, including skilled labor like welders, are considerably higher than in major shipbuilding countries in Asia. This directly impacts the overall construction cost, as shipbuilding is a labor-intensive industry.
Protectionist Policies (Jones Act): The Merchant Marine Act of 1920, commonly known as the Jones Act, mandates that vessels operating in domestic US trade must be built in US shipyards, owned by US citizens, and crewed by US mariners. While intended to support the domestic industry, this protection shields US shipyards from international competition, reducing the pressure to lower costs and improve efficiency. It effectively creates a captive market with higher prices than the global market.
Lack of Economies of Scale: Due to the limited domestic market (primarily driven by the Jones Act and government/military orders) and inability to compete effectively in the larger international commercial market, US shipyards build far fewer ships than their counterparts in countries like China and South Korea. This lower volume prevents them from achieving the economies of scale that allow foreign shipyards to build ships more cheaply.
Higher Material Costs: Costs for raw materials, such as steel, can be higher in the US, partly influenced by trade protectionism in upstream industries like steel production. This adds to the overall expense of construction.
Limited and Aging Infrastructure/Capacity: The US commercial shipbuilding capacity has significantly shrunk over the past few decades. Existing shipyards may have aging infrastructure and limited capacity compared to modern, large-scale foreign yards. This can lead to inefficiencies and longer build times, further increasing costs.
Inefficiencies and Production Scale: Beyond just the number of ships, US shipyards may face disadvantages in terms of production efficiency and the sheer scale of their operations compared to the massive integrated facilities found in leading shipbuilding nations.
Design Changes and Integration Challenges: Issues related to design changes during the construction process and challenges in integrating complex systems can lead to costly delays and rework, impacting the final price.
Can Cost Discrepancies Be Fixed and How?
Whether these cost discrepancies can be entirely fixed to make US shipbuilding competitive on a global scale is a - complex question, with no easy answers. However, various proposals and approaches are being discussed and possibly implemented to address these issues:
Addressing Labor Costs: Directly lowering wages in the US is generally not seen as a viable or desirable solution. The present direction is to actually increase the pay scales to make these jobs enticing - or the workforce will simply not be sufficient to meet the targets of the Ships Act 2.0 (and importing labor is not a preferred solution). Instead, efforts might focus on increasing labor productivity through technology, automation, training, and improved processes to offset some of the wage disparity. Change the leave structures and remove pay caps to motivate participation in the sector!
Revisiting Protectionist Policies: The Jones Act is a significant point of debate. While some argue for its necessity for national security and domestic jobs, others contend that it inflates costs and hinders the industry's competitiveness. Modifying or providing targeted exemptions to the Jones Act could potentially increase the market size for US shipyards or allow access to cheaper foreign-built vessels for certain trades, but this faces strong political opposition.
Increasing Volume and Economies of Scale: This is challenging without being competitive in the international market or significantly increasing domestic demand (military or commercial). Potential avenues include:
Increased Government Investment: Consistent and predictable long-term government (especially Navy) shipbuilding plans can provide a stable workload, allowing shipyards to invest in facilities and workforce.
Export Promotion (Difficult for Commercial): While the US is a major arms exporter, competing in the international commercial shipbuilding market on cost is extremely difficult due to the factors mentioned above.
Supply Chain Improvements: Addressing the higher costs of materials like steel could involve looking at domestic production efficiencies or exploring ways to access competitively priced materials, although this is also tied to trade policies.
Investing in Infrastructure and Modernization: Government and private investment in modernizing shipyard facilities, adopting advanced manufacturing techniques, and increasing capacity could improve efficiency and reduce build times.
Focusing on High-Value or Specialized Vessels: Instead of competing directly on price for standard large commercial vessels, US shipyards could potentially focus on building highly specialized ships (e.g., complex research vessels, certain types of military auxiliaries) where technical expertise and quality are paramount, rather than just cost.
International Collaboration: As suggested in the context of the US-China competition, collaborating with allies like South Korea and Japan, who have robust shipbuilding industries, could involve partnerships, technology sharing, or utilizing their capacity for certain types of construction or maintenance, although the extent and nature of such collaboration are subjects of ongoing discussion.
Improving Design and Construction Processes: Implementing better project management, increasing the integration between design and construction phases, and leveraging digital technologies can help reduce errors, rework, and delays, thereby controlling costs.
So there you have it! The high costs of US shipbuilding are a multifaceted problem rooted in labor expenses, protectionist policies, limited economies of scale, and other factors. While completely eliminating the cost discrepancy with the lowest-cost producers is unlikely under current conditions, a combination of strategic investments, policy adjustments, and a focus on efficiency and specialization could potentially improve the competitiveness and reduce the cost gap in certain segments of the shipbuilding industry. However, significant political and economic challenges remain in implementing such changes.
Perhaps a great example is seeing what happened with SpaceX and how the space industry has grown to surpass the activities of incumbents.
Start with a clean slate and “reinvent an industry”, from 1st principles! Best handled by the private sector - or national champions that could be nominated by the Adminstration. A SpaceX type future shipping champion!
Can We Re-invent The Shipping Sector The Way America Did The Space Sector?
Applying SpaceX's first principles thinking to shipbuilding and operations to achieve drastic cost reductions (potentially aiming for order-of-magnitude improvements, though 90%+ is an extremely ambitious target in this established industry) requires fundamentally rethinking every aspect of how ships are designed, built, and operated, rather than just optimizing existing processes.
Here are some ideas following a similar disruptive path:
Rethink Materials and Fabrication from Scratch:
First Principles: What is the absolute minimum amount of material needed to achieve the required strength, buoyancy, and durability? Can we form this material into its final shape with minimal labor? Steel is strong and abundant, but welding large plates is labor-intensive and costly.
Ideas:
Automated Integrated Panel Production: Design ship structures around highly standardized, large, automatically fabricated panels with integrated stiffeners or internal structures (like a sandwich panel or orthotropic deck sections). These panels are produced in highly automated factories. Welding is minimized and automated at the panel joints.
Advanced Additive Manufacturing for Complex Nodes: Utilize large-scale 3D printing (metal or advanced composites) for complex structural nodes, joints, or components that are currently expensive and time-consuming to fabricate or cast. This reduces part count and manual assembly.
Explore Alternative Structural Materials: Seriously investigate and qualify new materials like advanced composites or novel aluminum alloys for suitable parts of the ship structure where weight savings or ease of fabrication (e.g., bonding instead of welding) could offset material cost. Build test sections and modules rapidly.
Modular Design for Mass Production and Rapid Assembly:
First Principles: What are the fundamental, repeatable functional units of a ship (e.g., a living quarter unit, a standardized cargo hold section, a propulsion module)? Can these be designed as standalone, mass-producible modules like car chassis or aircraft sections?
Ideas:
Standardized Functional Modules: Develop a library of highly standardized, pre-outfitted, and tested functional modules (e.g., a standard engine room block, a standard accommodation block size, a standard cargo hold bay size). These modules are built and fully outfitted in specialized factories optimized for that module type, independent of the final ship assembly.
Automated "Snap-Together" Assembly: Design modules with connection points that allow for rapid, automated, high-precision joining during final assembly, minimizing on-site welding and alignment. Final assembly becomes more like putting together giant, pre-fabricated LEGO blocks in a very lean facility.
Scalable Ship Architectures: Design ship classes that are simply concatenations of more or fewer standardized cargo or mission modules, sharing common bow, stern, bridge, and propulsion modules. This drastically reduces unique engineering for different sizes/variants.
Please please please - Do NOT repeat the mistakes of the Littoral Combat Ships - discussed at length in Propublica and in the video below:
Vertical Integration of Key High-Cost/Complexity Systems:
First Principles: Why are certain components or systems disproportionately expensive or have long lead times? Is it reliance on external suppliers with their own margins and production bottlenecks?
Ideas:
In-House Propulsion/Energy System Manufacturing: Like SpaceX building their own engines, a disruptive shipbuilder could design and manufacture core propulsion systems (engines, thrusters, perhaps novel energy sources) or critical power management systems in-house to control cost, quality, and lead time.
Integrated Automation & Control Systems: Develop a proprietary, standardized ship automation, navigation, and control system used across all vessel types. This reduces reliance on expensive third-party integrators and allows for streamlined maintenance and upgrades.
Radical Reduction of Manual Labor Through Automation:
First Principles: What tasks require human hands, and why? Can sophisticated robotics, AI-powered vision systems, and automated guided vehicles (AGVs) perform these tasks more efficiently, precisely, and tirelessly?
Ideas:
Robotic Welding Farms: Utilize vast numbers of collaborative robots in controlled factory environments to perform the majority of welding on panels and modules.
Automated Outfitting: Develop robotic systems that can route cables, install pipes, and fit standardized components within modules based on precise digital models.
AI-Driven Quality Control: Use AI and machine vision to automatically inspect welds, coatings, and assembly tolerances, providing instant feedback and ensuring quality without extensive manual inspection.
Design for Operations, Maintenance, and End-of-Life (Circularity):
First Principles: The total cost of ownership includes operations and maintenance over decades, and eventual decommissioning. How can design fundamentally reduce these long-term costs? Can components be reused?
Ideas:
Plug-and-Play Systems: Design all major systems (pumps, generators, HVAC units, electronics) as easily replaceable, modular units. When a component fails or needs upgrading, the entire unit is swapped out quickly, minimizing downtime. The old unit is refurbished off-ship.
Integrated Health Monitoring & Predictive Maintenance: Build in extensive sensors and AI from the start to continuously monitor the health of all systems, predicting potential failures and optimizing maintenance schedules to prevent costly breakdowns at sea.
Design for Disassembly and Material Recovery: Consider the end-of-life from the design phase, using standardized materials and connection methods that facilitate efficient and environmentally friendly disassembly and recycling of components and materials.
Iterative Design and Digital Twin Integration:
First Principles: How can we shorten the design cycle and catch issues before they become costly physical problems?
Ideas:
Full Lifecycle Digital Twin: Create a comprehensive digital twin of the ship that is used from initial concept design, through manufacturing simulation and optimization, to real-time operational monitoring and maintenance planning.
Virtual Reality/Augmented Reality for Design Review and Training: Use immersive technologies for design walk-throughs to identify ergonomic or maintenance access issues early. Use AR for assembly guidance and maintenance procedures.
Disrupt the Supply Chain and Logistics:
First Principles: How can we minimize transportation costs and delays for materials and components? Can we source globally in a fundamentally different way?
Ideas:
Decentralized Module Factories near Material Sources: Locate specialized module factories closer to sources of raw materials or key components to reduce logistics costs.
Optimized Global Sourcing with Integrated Logistics: Build a highly efficient, potentially vertically integrated, logistics network to feed modules and components to lean final assembly sites located strategically near key markets or waterways.
Implementing these ideas would require massive upfront investment in R&D, automation, and new types of manufacturing thinking and facilities. It would also necessitate close collaboration with regulatory bodies to certify novel materials and processes, and a fundamental shift in workforce skills. The protective nature of current markets (like the Jones Act in the US or naval procurement processes globally) would need to be navigated or potentially challenged, similar to how SpaceX pushed against the traditional cost-plus model of government space contracts. The goal isn't incremental improvement, but a revolutionary approach to building complex systems on water, driven by the core principles of cost, efficiency, and rapid iteration.
How the US Built Ships in WWII - Manufacturing at it’s Best!!!
During World War II, the United States was able to build approximately 5,000 merchant ships, primarily Liberty ships and Victory ships, through a combination of factors and strategies that drastically ramped up production. The key aspects of this effort were:
How the US Built 5000 Ships in WWII:
The remarkable output was achieved through:
Standardization and Simplification: The focus was on building standardized, simple ship designs (like the Liberty ship) that were adequate for their wartime purpose rather than optimized for long-term efficiency or specialized tasks. This allowed for mass production.
Prefabrication: Ships were built in sections or blocks in various workshops and then assembled on the slipways. This allowed for parallel construction and reduced the time ships spent occupying the limited space of the slipway.
Assembly Line Techniques: Shipyards adopted assembly-line principles, borrowed from industries like automobile manufacturing, to streamline the flow of materials and labor.
Massive Expansion of Shipyard Capacity: Existing shipyards were expanded, and many new ones were built rapidly. These new yards were often designed specifically for the mass production of standardized ships using the new techniques.
Vast Labor Force: A large workforce was quickly trained, including many women and workers from other industries, to staff the expanded shipyards. Tasks were simplified to allow less-skilled workers to contribute effectively.
Government Mobilization and Funding: The government played a central role, providing massive funding, coordinating resources, and creating agencies like the U.S. Maritime Commission to oversee the shipbuilding program with a clear, urgent goal. Red tape was cut to prioritize speed and production volume.
Focus on Speed over Cost and Optimization: The overriding priority was to build ships as quickly as possible to replace those lost to submarine warfare and supply the Allied forces. Cost efficiency and technical sophistication were secondary concerns compared to speed and volume.
Contrast Against Shortcomings Now:
Current US shipbuilding faces significant challenges that stand in stark contrast to the WWII effort:
High Costs: Building ships in the US is currently much more expensive than in leading shipbuilding nations.
Limited Capacity: The US commercial shipbuilding industry has shrunk dramatically, and existing naval shipyards struggle with capacity and aging infrastructure.
Labor Shortages and Skill Gaps: While there is a skilled labor force, there are concerns about the size and availability of the workforce needed for a rapid expansion, and attracting new talent is a challenge.
Complex and Diverse Ship Designs: Modern ships, both naval and commercial, are far more complex and specialized than the simple designs of WWII. This complexity hinders rapid, standardized mass production.
Regulatory Environment: Current environmental regulations, safety standards, and procurement processes are significantly more complex and time-consuming than those during the wartime emergency.
Lack of National Mobilization Urgency: There is no comparable national emergency that would galvanize the country to dedicate resources and waive regulations on the scale seen in WWII.
Are The WWII Strategies Replicable Today?
Directly replicating the WWII shipbuilding strategies today to achieve the same scale and speed is highly unlikely for several reasons:
Reasons for No (Contextual Differences):
Scale of National Emergency: The existential threat of a world war created a unique political will and societal consensus to prioritize shipbuilding above almost all other concerns, allowing for unprecedented mobilization of resources and labor, and a willingness to set aside peacetime constraints. This level of urgency does not exist today.
Industrial Base: While the US still has a strong industrial base, its structure and focus have changed dramatically since the 1940s. The ready supply of labor from the Great Depression and the ease of shifting production from other heavy industries to shipbuilding are not directly replicable.
Technological Complexity: The relative simplicity of WWII ship designs allowed for rapid standardization and training. Modern naval and commercial ships are technologically advanced, requiring highly specialized skills, materials, and processes that are not easily mass-produced or quickly taught.
Regulatory Environment: Modern environmental, safety, and labor regulations, while important, add layers of complexity and time to construction that were largely bypassed during the wartime emergency.
Global Competition: The global shipbuilding landscape is vastly different, dominated by highly efficient yards in Asia with significant cost advantages, making a simple return to mass production of basic designs for the international commercial market economically unfeasible without massive, sustained subsidies.
Reasons for Yes (Adaptable Principles):
Underlying Principles of Efficiency: The core principles used in WWII – standardization, prefabrication, and assembly line techniques – are still valid methods for increasing efficiency and speed in manufacturing.
Modularity: The WWII prefabrication can be seen as an early form of modular construction. Modern modular shipbuilding, building large sections of a ship in parallel before final assembly, is a strategy already employed to some extent and has potential for further development, aligning with ideas discussed in the context of modernizing shipbuilding.
Government Role: While not on a WWII scale, government investment, clear long-term procurement plans, and efforts to streamline processes can still significantly impact shipbuilding capacity and efficiency.
Technological Advancements: While complexity is a challenge, modern technologies like advanced automation, digital twins, and potentially additive manufacturing could, in principle, enable new forms of efficient fabrication and assembly, building on the spirit of innovation seen in the WWII effort, although the implementation is complex and costly.
In summary, the exact strategies and the scale of the WWII shipbuilding effort are not directly replicable today due to fundamental differences in national context, industrial structure, technological complexity, and the absence of a galvanizing national emergency.
However, the principles of standardization, modularity (prefabrication), process optimization, and strategic government leadership remain relevant and can inform efforts to improve the efficiency and capacity of the US shipbuilding industry in the present day, albeit within a vastly different operating environment.
Ship Designs and Structure Comparisons - WWII Liberty Ships vs Modern Day Cargo Vessels (Panamax)
In essence, the shift has been from simple, standardized, labor-intensive mass production with basic technology (WWII Liberty ships) to complex, highly engineered, capital-intensive modular construction leveraging advanced automation and integrated systems for specialized, efficient operation in a globalized trade environment (Modern Cargo Vessels). There is no reason why “simple, basic but working” technology cannot be applied to build initial scale, and then adapted for evolution later - this is a long term strategy after all.
Lessons of Agility and Smart Build from WWII and Korean Yards - Simultaneous Shipyard and Ship Builds
Notable examples of shipyards and ships being built simultaneously, particularly during the US World War II shipbuilding effort and in the development of the South Korean shipbuilding industry by companies like Hyundai, exist - again something to learn from.
US Shipbuilding During WWII: Building Shipyards and Ships Concurrently
During World War II, the United States undertook an unprecedented shipbuilding program driven by the urgent need to replace losses and transport troops and supplies. This involved not only maximizing output from existing shipyards but also rapidly constructing new shipyards designed for mass production.
How it was Done: The Emergency Shipbuilding Program, initiated in 1940, aimed to quickly build simple cargo ships. Since existing shipyards were already busy, new facilities were needed. Companies like those formed under the "Six Companies" (including entities led by Henry J. Kaiser) were awarded contracts to build both the new shipyards and the ships they would produce. This happened in locations like Richmond, California, and in the Pacific Northwest.
Techniques Used: The success hinged on:
Standardized Designs: Focusing on easy-to-build designs like the Liberty ship.
Prefabrication: Building large sections of the ship in separate facilities or areas within the rapidly constructed yards. These pre-assembled blocks (like double bottoms, bulkheads, deck houses) were then moved and joined on the slipways.
Assembly Line Methods: Applying techniques from other industries to create a streamlined flow of materials and labor within the new yards.
Rapid Workforce Expansion: Quickly hiring and training a large, often semi-skilled workforce, including women, to staff the new and expanded yards.
Government Mobilization: Strong government backing, funding, and coordination to prioritize resources and cut through bureaucracy.
Complexity of Vessels: The vessels, primarily Liberty ships, were intentionally simple in design – basic cargo carriers with a single engine and minimal complexity, optimized purely for function and speed of construction.
Timelines and Costs: The speed was astonishing. Shipyard construction itself was rapid, and the production rate quickly accelerated. Liberty ships, which initially took months, were eventually built in a matter of weeks, with one famous example, the SS Robert E. Peary, being assembled and launched in under five days as a publicity stunt (though fitting out took longer). Kaiser's yards, specifically designed for these methods, completed ships in roughly two-thirds the time and a quarter of the cost of average other yards at the time. Accurate overall costs for simultaneous shipyard and ship construction on a national scale are complex to isolate, but the unit cost per ship was significantly driven down by the mass production methods within the new, efficient yards.
Modern South Korea: Hyundai Heavy Industries (HHI)
A prominent example in modern times is the founding of Hyundai Heavy Industries (HHI) in Ulsan, South Korea.
How it was Done: In the early 1970s, as part of South Korea's drive towards heavy industrialization under President Park Chung Hee, Chung Ju-yung, the founder of Hyundai, decided to enter the shipbuilding business despite having no prior experience, capital, or technology in the sector. Boldly, Hyundai secured orders for two large oil tankers (260,000-DWT VLCCs) from a Greek magnate, George Livanos, while the shipyard was still being planned and constructed on an empty beach in Ulsan.
Techniques Used: This simultaneous construction was made possible by:
Borrowing Technology and Expertise: Securing design and technical assistance from experienced shipbuilders (often from Europe).
Securing Orders First: Having firm ship orders in hand provided the necessary financing and motivation to build the yard capable of fulfilling those specific contracts.
Phased Construction of the Yard: Building parts of the shipyard infrastructure (like initial docks and fabrication areas) in phases while simultaneously starting the assembly of the first vessels using the completed sections of the yard.
Dedicated Workforce: Mobilizing a dedicated workforce for both the civil engineering task of building the massive shipyard facilities and the shipbuilding tasks.
Complexity of Vessels: The first vessels built were Very Large Crude Carriers (VLCCs), which were complex, large-scale merchant ships representing a significant technological leap for South Korea at the time, though not as technologically complex as today's most advanced vessels (like LNG carriers or complex warships).
Timelines and Costs: Groundbreaking for the Ulsan shipyard was in March 1972. Construction of the shipyard and the two 260,000-DWT tankers proceeded concurrently. Just two years later, in 1974, Hyundai held a ceremony to simultaneously name the two completed tankers and dedicate the shipyard. This was an incredibly rapid development for a facility that would become the world's largest shipyard and for the construction of large, modern vessels. Specific costs for this simultaneous build are not readily available in these sources, but the ability to deliver the ships so quickly after starting the yard demonstrated immense capital efficiency and execution speed.
These examples show that building shipyards and ships concurrently is possible under conditions of high urgency, strategic national priority, strong leadership, access to resources, and a willingness to innovate in construction methods and workforce mobilization. The journey will not be without its challenges, but boy - It will be worth it! All the very best rebuilding Shipping in America.
Added References:
World War II Shipbuilding in the San Francisco Bay Area - National Park Service
How were ships manufactured so quickly during WW2? : r/AskHistorians - Reddit
Trump's esteem for Korean shipbuilding six decades in the making - Korea JoongAng Daily
Hyundai Heavy Industries Ulsan Shipyard, South Korea - Ship Technology
China vs. South Korea: Shipbuilding Rivalry Intensifies - Ship Universe
Very impressive! A few comments though: 1) I was intrigued by the term “militarily useful”. I immediately thought of cargo modules which can be accessed for weapons while underway. Think drones!
2) I think the Japanese and Koreans are still right to start with “heavy industries”. In the case of the US it applies to tool making, heavy castings and large structures(e.g. offshore oil rigs), all of which are now offshored.
3). Materials manufacture: most aluminum is now manufactured in other countries. Metals such as beryllium are only available in cast form from countries like Afghanistan.
Both worth a thorough watch (common thread being (autonomous) unmanned (aerial/naval) drones):
https://youtu.be/RmfNUM2CbbM?si=JFarDvfj5afpFcd6
Vs
Port Alpha:
https://youtu.be/jf0QnvSKZng?si=0MsB4FoOU7xm-PVh