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LCS Cuts Could Strain Shipbuilding Industry

By Allyson Versprille

March 2016

...The directive in Carter’s memo to downselect from two vendors to one in fiscal year 2019 is “perhaps the most disruptive aspect of the decision,” [Bryan] Clark said.

Technically, both shipyards could bid on the single variant for the frigate design, and the Navy could award the ship to both shipyards at about one per year, he said. But that scenario is unlikely. “The two LCS variants are so dramatically different — one is a steel monohull and the other an aluminum trimaran — that either builder would have to invest tens of millions of dollars to retool to construct the other builder’s ship,” he said. “Both yards have already invested $30 million to $70 million in their infrastructure to become more efficient, much of it not recouped. It is unlikely they will want to make another large investment just for a chance to build three to four ships without a potential for a follow-on ship.”

Only one builder will be able to realistically bid a reasonable price on the 11 LCS-derived frigates, which will give one of the yards a reprieve until the frigate program ends, Clark said. The other will have to come up with alternative projects.

“I believe both would vie for some other government projects such as Coast Guard patrol vessels, Army and Navy lighterage and ship-to-shore connectors, and special warfare boats,” Clark said. They could also pursue commercial construction projects, he noted. “In particular, the continued oil production in the upper plains and Ohio Valley has created a big business for barges to carry petroleum down to refineries in the Gulf of Mexico. The energy industry also continues to want offshore support vessels.”

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