Page 36: of Maritime Reporter Magazine (April 15, 1971)

Shipbuilding Executive Predicts

U.S. Entry Into World Market By 1980

Ellis B. Gardner

A Litton Industries executive said that American shipbuilding is undergoing a "renaissance" which will result in fewer but better U.S. shipyards capable of competing ef- fectively in the world market by 1980.

In a speech to senior officers on

March 17 at the Naval War Col- lege, Newport, R.I., Ellis B. Gard- ner predicted that the 1970s will be "a decade of dramatic change and strange anomalies" for U.S. shipbuilding.

Mr. Gardner, a senior vice presi- dent of Litton and head of the com- pany's Marine Group, said the 1970s will be a period when "U.S. ship contracts and appropriations will be higher than at any time since World War II . . . Nonethe- less, some shipyards may well go out of business . . . "Continued rapid advance in mili- tary weapons systems which, by their very nature, will create a con- figuration management problem of immense proportions . . . Foreign shipyards will be too full to accept orders; but the ships required, which might be ordered in the U.S., will be so large that only a handful of U.S. yards will be able to handle them, and at least two of that hand- ful will have too large a backlog to consider them . . . "The results of the contract defi- nition form of procurement to im- prove cost and schedule control won't even be seen before detrac- tors begin seeking a return to a procurement system which seemed unworkable in the past . . . "Additionally, Mr. Gardner said, "it will be a period which will re- sult in cost parity among U.S.,

European and Japanese yards, thus enabling those American shipbuild- ers who survive the decade to com- pete effectively in the world mar- ket in the 1980s."

Mr. Gardner said that American shipyards cannot compete in world markets today "principally because of the rising price we have had to pay for maintaining a high Ameri- can standard of living" and "not, as some have said, because of in- herent deficiencies or inefficiencies in American shipyards."

Mr. Gardner said American ship- builders are currently paying the highest wage rates in the world in addition to the high prices charged for U.S.-made materials required in

American ships. "Today," Mr. Gardner said, "US.- made components and other mate- rials account for more than 50 per- cent of the cost of an American ship. However, foreign shipbuild- ers can purchase similar products made elsewhere in the world at prices from 10 percent to 70 per- cent lower than those charged in the U.S. "By and large, we cannot use these lower cost non-U.S. products because, by law, the overwhelm- ing percentage of construction ma- terials needed on U.S. Navy ships must be of U.S. origin and manu- facture. At the same time, insofar as it is practical, 100 percent of what goes into Maritime Adminis- tration subsidized ships must be 'Bought American.'"

Mr. Gardner said that American shipbuilders must content them- selves with the domestic market until cost parity in world ship- building is achieved. "Happily," he said, "there are indications that cost parity for U.S., European and

Japanese shipbuilders will occur sometime in this decade, certainly by 1980."

Mr. Gardner urged American shipbuilders to concentrate efforts on upgrading existing facilities, to become specialists, and to adopt more sophisticated methods of con- struction "in order to effectively meet the near-term challenge and opportunity posed by the renais- sance we now see taking place in

American shipbuilding." "In the next 10 years," Mr. Gard- ner said, "we can expect to see the

U.S. Navy's requirements call for a variety of ships costing an average of $3 billion a year. At the same time, President Nixon's plan to re- juvenate the American merchant fleet with 300 new ships will gen- erate another $500 million a year in business. In both cases, Congress has determined that such ships will be built in the U.S. by American shipbuilders. "Those who effectively meet this challenge will also be in a very good position to meet the future and even more imposing challenge of the world market. Those who do not—and there will be some—will not be around to care."

Litton Industries, headquartered in Beverly Hills, Calif., is a major multinational corporation specializ- ing in products, systems and serv- ices for business, defense, marine, industrial and professional markets.

Midland Appoints

James P. Craig

Vice Pres., Operations

James P. Craig

James P. Craig has been named to the newly-created post of vice president of operations of the com- panies of the Midland Insurance

Group.

Mr. Craig joined the New York based firm in 1968. He was elected a director of the Midland Insurance

Company the following year, when he assumed his most recent posi- tion as vice president customers' services. Before joining Midland, he served as an assistant secretary of the North Star Reinsurance

Corp. His earlier experience en- compassed a broad range of assign- ments in company and agency ranks.

Jakobson To Double

Capacity Of Drydock

Jakobson Shipyard, Inc. of Oys- ter Bay, Long Island, N.Y. has an- nounced plans to double the capac- ity of their marine railway drydock ffom the present 500 tons to 1,000 tons. Childs Engineering Corpora- tion of Medfield, Mass., waterfront and structural engineers, is present- ly preparing working plans for the new facility, which should be in operation this summer.

According to George J. Hossfeld

Jr., president, "Our drydock, which was built in 1942, has given us ex- cellent service but is now, after al- most 30 years, in need of a major overhaul. Before proceeding with repairs, we took a close look at our present business and then tried to foresee our future. The majority of work done in this drydock is the launching and repairing of vessels which are getting heavier as new classes are developed. We looked into various types of haul-out fa- cilities and decided that since we had a sizeable portion of the dry- dock still in good condition, the most economical solution would be to enlarge our existing facilities."

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