The United States shipbuilding industry could benefit from foreign investment, Navy Secretary Carlos Del Toro said today, indicating a "cash infusion" from an international shipbuilder could boost production capacity, drive down prices and inject competition into the domestic market.
“I think there are several smaller U.S. shipyards that have gone dormant and perhaps are struggling that could benefit from a cash infusion from an international investor here in the United States, the way that Austal, the way that BAE [Systems], the way that Fincantieri has in Wisconsin, for example,” Del Toro said during the annual Washington defense conference hosted by McAleese and Associates.
Though the Navy secretary didn't name specific “dormant” domestic builders or the prospective international investors, his remarks follow a trip to the Indo-Pacific region that included tours of Japanese and South Korean shipyards.
While in Japan, Del Toro met with executives from shipbuilders Namura Shipbuilding, Mitsubishi Heavy Industries and Japan Marine United, according to a March 3 Navy announcement.
“Discussions were productive and centered on attracting Japanese investment in integrated commercial and naval shipbuilding facilities in the United States,” the notice states.
A capital investment into U.S. shipbuilding is “a conversation that's been happening between the shipyards that I visited and any others that want to participate as well too,” Del Toro said today. Such an investment could benefit U.S. commercial shipbuilding in addition to naval programs, he added.
“In this country right now, we can't even build a [liquefied natural gas] ship that transports LNG within our own borders,” he said. “So why not have a foreign investor come in who does know how to build those LNG ships, for example, build something in the domestic marketplace, and through that commercial shipbuilding, eventually, naval shipbuilding will benefit through more competition and hopefully through prices going down.”
The SECNAV also criticized domestic industry, doubling down on a sharp rebuke delivered last month, in which he suggested some unnamed companies are prioritizing stock prices and executive compensation over necessary capital investments.
“Invest more, you’re not where you need to be,” he said today. While acknowledging the external labor and supply chain challenges, Del Toro argued: “Industry needs to invest more in their own companies to get their production rates up to where they need to be, so that we can get a better place and they can also retain more of their people too.”
According to the secretary, the Navy has done its part to provide open communication and a “robust pipeline” of work for industry. Now, “you've got to be able to demonstrate that you can deliver those products on time and on schedule, because I shouldn't be budgeting for things that can't be delivered,” he said.