The Tidewater is home to world-renowned shipyards and the largest U.S. naval base in the world. Indeed, the commonwealth has more workers employed in the shipbuilding industry than any other state in the nation. Nearly all of them are in southeast Virginia.
But these facts come with an important caveat: America’s large shipbuilders are almost entirely propelled by military spending. While there remains a healthy industry building smaller boats such as tugs and barges, the commercial production of oceangoing vessels has been mostly offshored. And our production numbers, when compared to our geopolitical rivals, are alarming.
In 2022, for example, there were only five such vessels under construction in U.S. shipyards. In China, there were 1,794.
That gap represents a real problem. Shipyard and shipbuilding capacity translates directly to a nation’s naval production, maintenance and operational capacity. And while we have a skilled workforce with lots of knowhow, it’s not very big.
In 1975, the United States employed more than 180,000 workers in shipbuilding and had orders to produce 20 commercial ships annually. Today, there are 70,000 fewer workers, and commercial orders are in the single digits each year.
That is an alarming amount of capacity loss, and none of it is by accident. The federal government in the 1980s removed crucial support that made commercial shipbuilding viable, and other countries stepped into the vacuum. Today, China dominates commercial shipbuilding, and not because of comparative advantage. It’s because China has committed significant resources to this end.
No nation should be faulted for seeking to develop maritime capabilities. But Beijing’s ambitions go well beyond that.
Barely half of China’s 100 largest shipyards are privately owned. The support the Chinese state has extended to its shipbuilding industry includes loans from state-owned banks, equity infusions and debt-for-equity swaps, the provision of steel plate from state-owned steelmakers at below-market prices, tax preferences, grants, and financing from state-owned export credit agencies.
That adds up. Chinese support for this industry was more than $130 billion between 2010 and 2018. And this flood of capital has worked: China accounted for 76% of global shipbuilding orders in April alone. It currently has roughly 5,500 flagged merchant vessels in oceangoing service. The U.S. has fewer than 185.
When a country with such economic heft trains its sights on the dominance of a manufacturing sector, the ripple effects are global. In the U.S., it has meant the market exit of 20,500 domestic shipbuilding suppliers over the past several decades.
As I said at a hearing of the House Select Committee on the Chinese Communist Party in June, a single commercial ship can require approximately 13,000 tons of structural steel, 60,000 gallons of paint, and 130 miles of electrical cable.
But when a shipyard closes and orders dry up, demand drops for those American-made materials and all the aluminum, glass, forged products, maritime engines, springs and anti-skid grating material needed to construct modern container ships and tankers. The completion of the third Ford-class carrier under construction in Newport News is already well behind schedule because of supply chain issues. And the delays further stress the suppliers that still exist.
Deindustrialization strains our military readiness, and ours is increasingly guaranteed by Chinese sources. The federal government is subsidizing the operation of Chinese-made oil tankers to supply U.S. Navy vessels. Commercial shipyards that build and maintain U.S. navy ships purchase drydocks from Chinese manufacturers.
The Biden administration’s U.S. trade representative has announced an investigation into the anticompetitive practices of the Chinese shipbuilding industry. It sprung from a petition brought by the United Steelworkers and other unions that represent workers in U.S. shipyards, which calls for a dockage fee to be assessed on Chinese-built ships entering U.S. ports. These proceeds would go to a commercial shipbuilding revitalization fund.
This is an outstanding idea, and one Washington should enact. A dynamic shipbuilding industry is the key to supply chain resiliency and sustained power projection throughout the world. And right now, for all of America’s mighty shipbuilding capabilities, dynamic is one thing our industry isn’t.
It won’t be without a presence of a commercial market. And any attempt at rebuilding one in America must begin with addressing China’s dominance in this space.
Scott Paul is president of the Alliance for American Manufacturing, with headquarters in Washington, D.C.
Correction
A correction was made on July 30, 2024: Because of incorrect information provided to The Virginian-Pilot and Daily Press, an opinion column on Sunday’s page A15 (“American security needs domestic commercial shipbuilding”) used an outdated figure when describing the number of flagged merchant marine vessels operated by the United States. The most recent figure is 185. It incorrectly stated the number of commercial ships produced annually by the United States in 1975; shipyards produced about 20 ships per year. And the federal government subsidizes the operation of Chinese-made oil tankers supplying U.S. Navy vessels, but does not directly purchase them.
