New IMA Report Available Analyzing U.S. Navy Overhaul Market

The U.S. Navy has budgeted over $6 billion for ship repair and alteration in 1985. Between 30—40 percent of this budget will flow through commercial shipyards. This is an obviously interesting market.

It offers many business opportunities to shipyards and equipment manufacturers. It is also a complex, dynamic market.

Current Players—Navy owns and operates eight naval shipyards, three ship repair facilities and a variety of specialized repair depots. These facilities employ about 100,000 workers and perform about 65 percent of the ship maintenance. The remaining 35 percent is shared by about 30 commercial shipyards. Numerous firms are involved in refurbishing equipment and supplying new components.

Projected Market—The projected 1985 budget for Navy ship maintenance is an increase of 45 percent over 1982. Overhauls decrease from 63 to 56, but projected selected restricted availabilities and phased maintenance availabilities greatly increase.

MSC's maintenance and alteration budget has grown from $240 million in 1983, to a proposed $319 million in 1985. Over 35 ship ovhauls are planned over the next 12-18 months.

Maintenance Strategy—The traditional practice of taking a ship out of service for a 5-20 month overhaul every 3-5 years has changed. In its place are three new maintenance approaches: • engineered/extended operating cycle—which provides for extending overhaul intervals to 5-8 years, with short depot availabilities scheduled between overhauls • progressive maintenance— which essentially aims to eliminate the need for onboard maintenance and regular overhauls by scheduling frequent servicing at specialized maintenance facilities • phased maintenance—a newly introduced concept which uses maintenance approaches found in commercial shipping firms Market size, its composition, and geographical distribution of opportunities have greatly altered as a result of these new maintenance approaches.

Managing An Overhaul—It is a very complex activity with many players. The planning process begins 18—24 months before the overhaul is to start. Numerous organizations within Navy get involved.

The Office of Naval Operations coordinates the planning.

Fleet Type Commanders determine repair requirements for specific ships. Ship modernization is managed by the Naval Sea Systems Command. Eight naval shipyards, sixteen SUPSHIP offices, and five specialized repair planning offices provide the engineering support.

MSC's ship maintenance planning is much less complex. Its approach is similar to commercial practice. Planning starts 2-4 months before the overhaul is scheduled.

Contracting Policies—Decisions concerning homeport policy, private sector allocation, small business set-asides impact heavily on the size of potential market.

They determine the amount of work available to prospective bidders, and who will be eligible to bid.

Qualification—To repair Navy ships a firm must execute a master ship repair agreement. More than 140 firms have such an agreement with NAVSEA, and over 200 have agreements with MSC. Eight firms have master ordnance repair contracts.

Foreign Firms—There is no prohibition against foreign firms repairing Navy ships. Certain technical requirements create obstacles, and special restrictions have been applied to specific situations.

Among the top contractors to MSC are several foreign firms.

A complete review of this complex, interesting market is contained in a July 1984 report by International Maritime Associates (IMA). The entire subject is covered in a tightly written, factual marketing guide. The report is 175 pages. It contains numerous tabulations, explains contracting procedures and recommends contacts to follow up for marketing.

The report is available for $480.

This price includes a subscription to four quarterly updates to be published over the next 12 months.

For more information contact James R. McCaul, International Maritime Associates, Inc., 1800 K Street, N.W., Washington, D.C.

20006.

Maritime Reporter Magazine, page 55, Aug 1984

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