Page 23: of Maritime Reporter Magazine (May 1998)

Future Business Opportunities In Navy Ship Procurement,

Ship Maintenance And Navy Technology Development

By Dr. James R. McCaul, President

International Maritime Associates, Inc.

International Maritime Asso- ciates, Inc. (IMA) prepares detailed business reports covering the U.S.

Navy market. They deal with future business opportunities available to shipyards, manufacturers, engineer- ing firms and other marine sup- pliers. This article is based on infor- mation contained in recent reports.

Overview

The U.S. Navy is the major gener- ator of work for shipyards and ma- rine equipment manufacturers in this country. Total spending on new ship procurement has averaged $10.8 billion per year over the past 10 years. This includes spending for ships systems and weapons, as well as the ship. Spending on ship main- tenance and modernization has av- eraged $4.7 billion per year this period. Spending on new naval tech- nology development has averaged $7.6 billion. Details are shown in

Exhibit 1.

Ship Procurement

As of early March, 90 naval ships were on order in 17 shipyards. Ma- jor players include Newport News (aircraft carriers and attack subma- rines), General Dynamics-Electric

Boat (Trident and attack subma- rines), Ingalls (Aegis combatants and LHDs), Bath Iron Works (Aegis combatants) and Avondale (fleet oilers and LSDs). These and other shipyards currently building naval ships are shown in Exhibit 2.

The Navy plans to spend more than $25 billion on ship construc- tion over the next two years. This year's budget is $16.2 billion—a ma- jor portion of which is represented by funding for two new aircraft car- riers, three attack submarines, one

Trident submarine and five Aegis cruisers. The FY 1989 budget re- quest is $9.1 billion. Details for ship construction planned over the next five years are shown in Exhibit 3.

Continuing coverage of this area is provided in IMA's quarterly busi- (continued)

Exhibit 1-—Trend in Navy Spending (billions of $)

Ship Navy

Fiscal Ship Maintenance and Technology

Year Procurement Modernization Development 1980 $6.5 $3.0 $4.6 1981 7.6 3.7 5.0 1982 8.6 4.4 5.8 1983 16.0 5.0 6.1 1984 11.5 5.0 7.6 1985 11.0 5.9 9.2 1986 9.6 5.2 9.6 1987 11.7 5.6 9.4 1988 14.9 4.7 9.5 1989 10.2 4.8 9.2

Source: Department of the Navy

May, 1988 25