Shipbuilding Consolidation Did Not Save the Government Money

800-ton bow section of the USS George HW Bush (CVN 77) being put into place in 2006.

800-ton bow section of the USS George HW Bush (CVN 77) being put into place in 2006.

That sound you just heard was my jaw not hitting the floor in surprise.

Report: Shipbuilding consolidation for naught

“The ship sector followed the behavior and outcome of the aircraft industry more closely than that of the missile industry,” IDA said. “There appears to have been little consolidation-driven rationalization savings to the government in either case.”

It’s hard to know where to point the finger on this one. On the one hand, the two remaining major players, General Dynamics and Northrop Grumman, can’t just shut down some of the yards they acquire and truly consolidate. Northrop Grumman, for instance, can’t just decide to build aircraft carriers at Ingalls in Pascagoula instead of at Newport News.

On the other hand, the fact that there are only two major shipbuilders vying for big contracts means that whatever competition existed has mostly evaporated.

For more info on the Bush’s bow section being put into place, see CVN 77 takes a bow.

Fewer ships built by fewer competitors will never mean cost savings.

Comments

  1. “That sound you just heard was my jaw not hitting the floor in surprise.”

    Wait, if it didn’t hit the floor, what was that sound I heard? =)

    I have this hazy recollection from high school history class about monopolies and oligopolies being bad for the consumer, and that given the chance, big corporations tend to consolidate into bigger and bigger ones. They always use the terms of vertical integration and economies of scale, which are both benefits to them. But somehow the savings doesn’t always get passed onto the buyer once they have no one to keep them honest any more.

    Was it here that I read a link to a libertarian critique of what stands for modern corporate “free market?” They were quite right to point out that what we have in this country is in a lot of ways far from a true free market, and that corporations are not interested in making it so. They are interested in increasing their bottom line, even at the expense of the free market system that makes it possible to succeed. Take a look at the modern corporate media, owned by a small handful of large corporations. I don’t buy the charge that they are all bought and payed for, but I also don’t think their oligopoly is good for us, the media consumers.

    There was a time when it was OK to break apart monopolies and yet still be in favor of the free market. There’s no reason that time can’t come again. And with every corporation reaching out for a piece of the taxpayer prize, this seems like a pretty good time to do it.

    But then, I have no idea how.

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