Welcome back to America at Sea: Voices That Matter. Today we hear from Commander Jim McLaughlin, U.S. Navy. He is a graduate of the California Maritime Academy, worked as a junior project manager at General Dynamics NASSCO, sailed as a licensed merchant mariner on offshore supply vessels in the Gulf, and now serves as an active-duty Navy commander. His views are his own and not those of the U.S. Navy, the Department of War or the U.S. government. Same three questions as everyone: what’s working, what’s in the way, and what he’d fix first.
What we heard
Why it matters: “The health of the merchant marine and the United States Navy are indissolubly linked.” A strong merchant fleet and shipbuilding base are what make a strong, affordable Navy possible, and what keep the country supplied in a crisis.
What’s working: The push to re-industrialize America, and joint ventures between American and foreign shipbuilders, like Hanwha and Philly Shipyard. “American shipbuilding still uses 1980s know-how and 1940s infrastructure.”
The biggest barrier: Economic competitiveness. Most of the world’s merchant fleets, he says, are not free-market businesses but state-run cartels that depend on subsidies.
Fix first: Consistent demand for ships. He lays out a detailed plan: a 10-year build plan funded up front, starting with Military Sealift Command, whose ships average more than 40 years old; training pipelines for mariners and shipbuilders; a 20-year average fleet age; and fixed-price contracts instead of cost-plus.
“Steady, predictable orders are the lifeblood of the industry.”
Full transcript
Lightly edited for clarity.
Bill Cullifer: Bill Cullifer here with Americans for a Stronger Navy. Welcome back to America at Sea: Voices That Matter. We’ve got a great lineup this week, and a big thank you and a shout-out to everyone who’s taking part. Today we hear from Commander Jim McLaughlin, a Cal Maritime grad who has worked in a shipyard, sailed as a merchant mariner, and now serves as an active-duty Navy commander. His views are his own. If you find this worthwhile, please like and share it. Commander Jim McLaughlin, over to you.
Introduction
Jim McLaughlin: Hello, my name is Jim McLaughlin. I’m a commander in the United States Navy. I previously had command of USS Canberra (LCS 30), where I participated in Operation Epic Fury and the ensuing blockade. I’m currently in command of USS Jackson (LCS 6), and I hold a B.S. in Marine Engineering Technology from the California Maritime Academy. Before my naval service, I worked as a junior project manager at General Dynamics NASSCO and as a licensed merchant mariner aboard offshore support vessels in the Gulf of America. The opinions expressed here are my own and not the opinions of the United States Navy, the Department of War or the government of the United States.
For the general public, I think the main question we need to ask and answer is: why does America need to grow the merchant marine and shipbuilding sectors? We need to grow them to ensure we have, and can afford, the world’s strongest Navy, and that in times of war or crisis we can move the materials required to sustain our armed forces and our economy. The health of the merchant marine and the United States Navy are indissolubly linked. It’s very hard to have a healthy Navy without a healthy merchant fleet and shipbuilding industry.
Question 1: What’s working right now that we should do more of?
Jim McLaughlin: At a macro level, the push to re-industrialize America is probably the most important thing required to expand the merchant and naval fleets. As we’ve seen with the Chinese, you can’t be competent in naval construction unless you’re competent in commercial construction, and you can’t be competent in commercial construction unless your nation has a large and competent manufacturing base.
At a micro level, joint ventures such as the one between the Hanwha Group and Philly Shipyard must be expanded. To a large degree, American shipbuilding still uses 1980s know-how and 1940s infrastructure. The only way we’re going to modernize quickly is by partnering with firms that excel at modern ship construction, and by offering monetary incentives to expand and upgrade shipbuilding infrastructure.
“American shipbuilding still uses 1980s know-how and 1940s infrastructure.”
Question 2: What’s the biggest barrier to rebuilding America at sea?
Jim McLaughlin: The single largest barrier is economic competitiveness. Unfortunately, most of the world’s merchant fleets are not true private, free-market enterprises. They’re state-run cartels. They’re not inherently profitable, and they rely heavily on state subsidies to build and operate ships. The American government will have to provide some degree of subsidy to incentivize investment in the industry.
Question 3: If you could fix one thing first, what would it be?
Jim McLaughlin: There’s a lot more than one thing that needs to be fixed, but the main thing I would do is ensure consistent demand for ships, to achieve consistent investment in shipbuilding. The government is the only customer capable of doing this. If Congress were to commit to and fund a set number of orders over the next decade, it would result in a healthy shipbuilding ecosystem.
As always, the devil’s in the details. Here’s how I would lay out my plan.
Congress should commit to a 10-year build plan. Congress should also appropriate all the funds required to execute that plan in year one, meaning all the money is allocated and sitting in an account, ready to be spent over the course of 10 years. That ensures a steady flow of orders that aren’t subject to annual wrangling over funding.
I would start by expanding the Military Sealift Command fleet. The average age of MSC ships is over 40 years, and the fleet is far too small for a major peer-on-peer conflict. Logistics ships are also generally easier to build than warships. As the industry gains proficiency building logistics ships, it can apply that proficiency to building warships.
I would incentivize private construction of commercial vessels through favorable government lending or construction subsidies.
We also need to address the personnel side, because without sailors and welders, a ship and a shipyard are pretty useless. I would start a reserve officer training corps for Military Sealift Command. To grow the cadre of merchant mariners, MSC or the Maritime Administration should offer scholarships to students at maritime colleges, on the condition that once they’re licensed, they work four years for MSC or aboard another privately operated American vessel. Kings Point, the federal maritime academy, already works this way, and it could be expanded to the state maritime academies.
I would also streamline the process for upgrading a merchant mariner’s license and eliminate unneeded requirements. On a personal note, I let my own license expire some years ago. I reported a minor case of sleep apnea to the Coast Guard, and they sent mountains of paperwork requesting sleep studies and physicals. At the time I was on active duty and fully fit for the Navy, and I simply didn’t have time to deal with it, so I let my license lapse.
I would also grow the cadre of shipbuilders by offering similar scholarships for students to attend trade schools, with an obligation to work a set number of years at a public or private shipyard.
I would commit to maintaining a set fleet size for the Navy, MSC and the merchant fleet. And I would commit in law to maintaining a 20-year average fleet age for both MSC and the Navy. Those two steps would ensure the construction of new vessels and a steady improvement in shipbuilding infrastructure. Steady, predictable orders are the lifeblood of the industry. We must avoid a feast-and-famine environment like the 1940s, when we crash-built thousands of ships in a few short years and then sharply cut orders for decades afterward.
“We must avoid a feast-and-famine environment like the 1940s.”
Finally, the vast majority of government ship purchases need to be fixed-price contracts instead of cost-plus contracts. Under cost-plus, contractors bill the government for their costs and then get an agreed profit based on a set percentage of those costs. The higher the costs, the higher the profit. That’s exactly the kind of incentive we don’t want. We want builders to be efficient and to keep improving their infrastructure and skills, and the way to do that is consistent orders over a long period at fixed unit prices. A fixed-price contract sets what the customer will pay per unit, and the contractor has to build below that price to make a profit. Fixed prices plus the certainty of steady orders push contractors to innovate, upgrade equipment and upskill employees to increase their margins. Over time, that results in a healthy, competent shipbuilding sector that produces more ships of higher quality, and eventually at a lower unit cost.
Once again, the opinions expressed are my own, not the opinions of the United States Navy, the Department of War or the government of the United States. Thank you.
About America at Sea: Voices That Matter
America at Sea: Voices That Matter is a conversation hosted by Americans for a Stronger Navy with U.S. Maritime Action and moderated by Capt. Brent Sadler, USN (Ret.). Shipbuilders, mariners, industry, the Navy community and policy experts answer the same three questions about rebuilding America at sea. Views expressed are the speaker’s own and do not represent the U.S. Navy or the Department of War. Featuring a view is not an endorsement.
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