An interesting summary, but I don't think the article really answered the headline. In particular, I'm left wondering which is the bigger problem: Is it that the US ship builders aren't competent and have turned what should have been a fairly straightforward modification of an existing design into a huge boondoggle, or is it that the government requirements are poorly thought out and/or overly ambitious, resulting in costly redesign efforts that aren't really necessary?
Put another way, are we spending all this time and money to fail at simply building a ship that is functionally identical to one of these ~$300m Finnish ice breakers, or are we claiming we need something more sophisticated?
> Is it that the US ship builders aren't competent
Yes, they are woefully uncompetitive. They produce single-digit numbers of commercial oceangoing ships annually, at 2-4x the cost of elsewhere. It’s an industry on life support.
Canada has the same problem with building icebreakers.
The problem with icebreakers capable of dealing with multi-year ice is that they're a very expensive and specialized kind of ship that's hard to construct, but also the sort of ship that has a very long lifetime. Only a few governments in the world have any need of such ships, and they typically only need a few in the span of many decades.
By the time Canada got around to looking for new icebreakers, not a single shipyard in the country had made one in many decades. Ordering a ship from someplace foreign that had actually made one recently would be cheaper than trying to make one domestically. However, then shipyards that haven't made an icebreaker for twenty years would become shipyards that haven't made one for forty years.
It really would make a lot of sense for close allies like Canada and the U.S. to collaborate on building icebreakers.
Well...it's reasonable for the shipyard to still employ folks with hands on experience 20 years later. I occasionally get tapped to pitch in on things I did 20 years ago (even if it's just "why the hell did you do this?"), and shipbuilding changes vastly slower than my gig. That's much less likely 40 years on.
Curious why the US does not think this is a big problem. I mean, look at the US 80 years ago. The US easily out produced the Axis. We could produce faster and cheaper. There's really no excuse that the cost of making canon shells is 10x higher than Russia. Isn't being able to manufacturing cheaply the signature of a highly developed society? Besides, expertise is not just volumes of blueprints, right? We can only keep our expertise by actively doing. If the next war breaks out, how would the US win? By sending armies of lawyers and coders?
The US outproduced the axis towards the end of the war but it was a real mess for the first few years while industries retooled and the government broke through obstacles like the aluminum cartel. It was only after Pearl Harbor and the formation of the War Production Board in 1942 that manufacturing really picked up because everyone felt the existential threat and organized against it.
The US can’t make cheap artillery shells because we don’t have much artillery manufacturing. Our armies just don’t use much artillery. We use mostly guided munitions dropped from planes and rockets fired from the ground, whereas Russian doctrine has always focused on artillery.
>There's really no excuse that the cost of making canon shells is 10x higher than Russia. Isn't being able to manufacturing cheaply the signature of a highly developed society?
We have prioritized high wages for workers in the US, a phenomenon also driven by the reserve currency status of the dollar. Russians, Chinese, and Indians work for a fraction of the price we do. We have high labor costs and have to import many components due to them being made much cheaper elsewhere.
>We can only keep our expertise by actively doing. If the next war breaks out, how would the US win? By sending armies of lawyers and coders?
You're totally right. This war is coming very fast as well, and by some accounts has already started. I worry we will all soon find out just how bad of a position we are in, the hard way.
Don't forget that RFPs for this sort of thing get massively stuffed with pork so they're doomed to be bloated even regardless of the quality of the contractor who does the implementation.
They love including requirements that all but mandates a specific vendor's product because that vendor is a key employer in the district of some rep's who's vote they need or has a good lobbyist or whatever.
> Put another way, are we spending all this time and money to fail at simply building a ship that is functionally identical to one of these ~$300m Finnish ice breakers, or are we claiming we need something more sophisticated?
It sounds like it is the former.
> If and when the ships are completed (currently 2029 for the first vessel at the earliest), they are expected to cost $1.7-1.9 billion apiece[0], roughly four to five times what a comparable ship would cost to build[1] elsewhere.
Labor is much more expensive in the US than elsewhere. That is the overwhelming burden in every industry. We need protectionist laws to guarantee that we can manufacture what we must have for strategic reasons, at minimum.
The root cause is that naval warfare has practically no role in national security and hasn’t in a long time.
Even ignoring nuclear weaponry and mutually assured destruction, ships are expensive and fragile. They are easily destroyed from above or below, which makes them only useful against nations that don’t have modern military technology. If you need a floating platform to fight Houthi rebels they’re useful, if we’re facing an actual invasion they’ll be worse than useless.
As a result there’s not much pressure to get it right. If breaking ice were an activity that our national security relied upon I have no doubt we would be building them quickly.
> ... allowing the Coast Guard to buy icebreakers from Finland would likely save over a billion dollars per ship, as well as years of construction time
How about we let Finland build the icebreakers, and we build something we're good at, like fighter planes? Then everyone gets the best and most efficiently built icebreakers and fighter planes, and all for much less money.
There is no [edit: economic] logic to economic nationalism, other than as wealth transfer from taxpayers to a few wealthy people.
> There is no logic to economic nationalism, other than as wealth transfer from taxpayers to a few wealthy people.
It doesn’t have to be that way, and phrased a little more benevolent, economic sovereignty is a good thing. It’s for that reason the EU has invested a lot of money into Galileo instead of just using GPS. Or look at the Ariane rocket program. It mandates an absurdly complex manufacturing schedule with thousands of European companies, effectively costing a lot more than just relying on SpaceX. At the same time, though, it creates a lot of jobs and distributes wealth throughout the union.
Embezzling is a problem, and politicians funneling money to their cronies too. But it can be done differently.
> It doesn’t have to be that way, and phrased a little more benevolent, economic sovereignty is a good thing. It’s for that reason the EU has invested a lot of money into Galileo instead of just using GPS. Or look at the Ariane rocket program.
You haven't established that it's a 'good thing', but it does exist. I don't suppose Galileo is about economic sovereignty as much as strategic military independence. Modern militaries require satellite PNT systems - they are necessary to precision munitions, without which your military operates on a 1980s level. As close as the EU-US military relationship is, they perhaps don't want to give the POTUS a button to shut down, e.g., a French military operation. The POTUS might like Galileo too - they might not want the pressure to use that power. (I'll skip having another HN SpaceX discussion!)
> it creates a lot of jobs and distributes wealth throughout the union
Or it just shifts money and jobs from all people - the taxpayers (including businesses) - to a few, the ones that get those jobs and especially the business owners. It's arguably better to just give people the money and have them do something they can do efficiently. It's make-work welfare, in a way.
Having your own manufacturing and industrial base is also very, very important from a geopolitical perspective. (as european countries have come to realise after the invasion of ukraine).
you need your own industrial base to manufacture and develop the machinery you need to defend and project hard and soft power across the globe. Globalisation was supposed to
"solve this issue" by making economies so interconnected that this would be no longer needed.
Sadly, we have learned that that simply does not hold up.
> Sadly, we have learned that that simply does not hold up.
We've learned that the world now is more divided and violent than we had hoped, with the revisionist Chinese and Russians on one side and the US Republicans on the other (or sometimes on the same side as Russia!) So we depend more on the military, and also we can't depend on China's manufacturing to supply military goods.
But can the US depend on Europe's, South Korea's, Japan's, Canada's, Australia's? I think so.
Also, efficiency is everything in the competition with China: China, with ~ 4x the population of the US, can outproduce the US with just over 1/4 of the US's productivity. The US must maximize not only volume but productivity. Adding the countries listed above greatly increases volume, and the US can't afford the productivity cost of spending on inefficient manufacturers - the US needs to maximize output per dollar.
I do think the US can depend on Europe, Canada and Mexico. South Korea, Japan, and Australia are far from the USA and close to China. They have high incentive stay friendly with China.
I do think China can easily outproduce the US. But I don't know that the US needs to maximize output per dollar. The USA can print dollars, and already creates a whole bunch of dollars out of thin air every year. The inflationary effect of printing a few more billion, specifically to maintain local shipbuilding capabilities, might be worth it. Just going for dollar efficiency has led the USA to de-industrialize, perhaps too much.
The status quo can't be maintained, that's for sure.
> But can the US depend on Europe's, South Korea's, Japan's, Canada's, Australia's? I think so.
If our goal is to be robust against the risks of a great power conflict, we can't necessarily depend on manufacturing from these countries because a great power conflict might either overrun or cut off our supply lines to these countries. In fact, control over East Asian shipping lanes is the central point of the current cold war with China.
The US doesn't have too much trouble manufacturing things like aircraft carriers and submarines and 5th-gen fighter jets and missiles, and indeed builds plenty of those, even exporting some. It does have trouble building an icebreaker, but it doesn't need those very often, so it can't keep any company interested in the business when it only wants one every ~30 years or whatever. It doesn't make sense to spend a ton of money just to build one ship, when they can just buy it from Finland.
Given the close economic and cultural ties of these countries, surely some kind of knowledge transfer could happen, if not actual nearshoring the construction. Could NAFTA (or whatever it's called now) be used to get around the Jones Act somehow?
My mistake, sorry. I thought you were implying Canada wasn't a NATO member.
I agree with your economic nationalism comments. But Canada is in a special position here: the US Arctic is contiguous with Canada's much larger Arctic region and a US/Canada icebreaking partnership seems to make sense. The US nationalists might be okay with it because of NAFTA, generally close economic ties and the whole "fortress North America" thing. Canada has at least two shipyards capable of building icebreakers and the US has money.
I've always heard people say nationalism is a good thing and globalism is the solution, yet they never have an answer to what do you do when China controls every supply chain and then decides to bulldoze Taiwan and we then go to war with them? All the market advantages and globalism in the world goes out the window and you can't do much more than capitulate to a bully.
Well, there is “a logic,” whether you agree with it or not, that it’s strategically important even if commercially suboptimal for us to have a domestic shipbuilding capability.
It is strategically critical to maintain friendly relations with Finland, Canada, and South Korea, all of which would be happy to sell icebreakers. If those countries were to become unreliable, the US will have problems a whole lot than a shortage of icebreakers.
Especially since Congress needed to allocate funds for the project anyway, just pass a law that says "buy some ice breakers from Finland, notwithstanding any other laws, and here's 1 billion dollars to do it."
"The culprit here isn’t the Jones Act, but another protectionist shipbuilding law that requires Naval and Coast Guard ships to be built in U.S. shipyards. It’s possible to waive this requirement via presidential authorization[0], but there hasn’t appeared to be much interest in this."
Yes, it’s tragic. Even if you consider the job losses. We’d be better off paying those same shipbuilders to do Sudoku puzzles, with HALF the money we save on the ships. A billion bucks per ship would go a LONG way.
I mean, ideally we could try to not suck at building ships economically, though. But that’s a lot harder to figure out given how it’s a political problem.
> We also see the same cultural issues that we saw with American shipbuilding more broadly. There seems to be a lack of motivation to take maritime issues seriously or treat them as important.
This is the meat of the article in my mind. The US has globalized away its maritime industry in general and we now lack the institutional knowledge, infrastructure, and labor force needed to operate even semi-independently on the maritime front. Just look at our domestic shipbuilding capacity vs. China: https://www.americanmanufacturing.org/blog/chinas-shipbuildi...
WA state has the same problem trying to get ferries built for the Puget sound. Every decade the fleet gets more dilapidated and the replacements get more expensive and farther behind schedule. The legislature has ditched the requirements that the boats be built at a WA shipyard and they still can't find builders.
> The US has globalized away its maritime industry
It hasn't. Jones Act _protects_ the US maritime industry, so it stagnated and died. Nobody wants the US ships unless they have to use them, they're crap compared to ships from other countries.
> and they still can't find builders.
That's because shipyards are basically a defense industry subsidiary. So they receive a fixed amount of orders, and it's known for years in advance. The shipyards are also unionized to hell and back, with VERY cushy contracts. So shipyards can't hire temporary workforce for a given project.
I would guess the shipbuilding industry in Finland is also built on subsidy and "protectionism" just like every other successful industry too. A cursory google search shows millions that were made available to shipbuilders: https://www.businessfinland.fi/en/for-finnish-customers/serv...
I'd bet that's just scratching the surface. The only way any country has been able to develop their productive capacities is through public grants and subsidies. The history of US industry shows the same thing, research in materials, electronics, the internet, etc were all accomplished through publicly funded research.
This is a common communication problem between Americans and Europeans where we're using the same word to mean two different types of organization. In the US you should replace "union" with "cartel, likely criminal" eg the boilermakers
"A federal grand jury in Kansas returned an indictment yesterday charging seven defendants, including five current and former high-level officers of the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmith, Forgers and Helpers (Boilermakers Union) for their alleged roles in a 15-year, $20 million embezzlement scheme."
It's just free markets in action. Finland is a small country that depends on international trade. Industries must remain competitive or go out of business. Unions that harm the competitiveness too much won't survive in the long term.
US domestic market is much larger. Uncompetitive industries can survive on domestic demand. Especially with some regulations that help. It doesn't even have to be explicitly protectionist regulation. Just regulate things the way Americans consider the best, instead of adopting international standards. That can create sufficient barriers to entry to allow uncompetitive industries and uncooperative unions survive.
Unionized workers can be hired on a temporary basis. By cushy contracts this means that the amount of wealth extraction from workers is not as great as it is in other American industries.
> Unionized workers can be hired on a temporary basis
With these unions ("Boilermakers")? No chance. They can officially give their jobs to their _children_ upon retiring.
There is a waiting list for apprenticeships. You have to complete 8000 hours of apprenticeship, even if you are already qualified.
> By cushy contracts this means that the amount of wealth extraction from workers is not as great as it is in other American industries.
WA is ordering ferries at $1.5B per item. They cost 20 _times_ less if ordered from Turkey. This is not "wealth extraction from workers", this is "sucking on the teat of taxpayers".
For what it’s worth American workers as a whole make ~20x what Turkish workers do. While American shipbuilders make more than the average while Turkish ones are closer to their average countrymen, the 20x discrepancy in salaries doesn’t seem limited to shipbuilding. So not sure about the characterization of “sucking on the teat of taxpayers” per se vs overall higher regulations and salaries in the US.
And cushy contracts mean products that are considerably more expensive. Pretty much the only unionized industries left are those where they are somehow protected from competition. That's because union products cost enough more to drive them out of the market.
> The shipyards are also unionized to hell and back, with VERY cushy contracts.
The problem here isn't the unions, it's the fact that we privatized building ships. It's yet another example that privatizing all parts of the government is a fundamentally bad idea. Government goals do not align with private industry goals and private industry, particularly in a well captured market like defense and ship building, gets to command insane prices because they know the US will pony up.
The reason the US was able to make advanced navy ships right up until the 80s is because shipbuilding was done by public industry. Insanely, Clinton and Reagan started the process of privatizing our fleet capabilities and it's landed us exactly where you think it would.
The reason we don't have ice breaker ships being built is because it's a niche market and ship builders are all too happy to say "no" or to charge an exorbitant price so the US military will go away.
I see downvotes at the time I commented, which is unfortunate as ideas should be at least explored. Someone on the internet has been keeping statistics [0] that do suggest the collapse in output happened in the 1980s.
But on the other hand, the same stats show a steady decline in the number of companies from 1950 that was only stabilised after the collapse in output, so it is probably arguable that the high-production situation was unsustainable. Economics can be complex.
The Jones Act only protects a very small part of US shipbuilding industry, those ships which will be used to ship goods between US ports.
Somehow the magical thinking here is that, if you allowed everyone to buy ships from anywhere they would buy more American made ships but because it is mandated that you buy American made ships for certain tasks, suddenly the industry is noncompetitive.
The reality of the situation is that the Jones Act is the only thing keeping the last vestigial of the shipbuilding industry alive. There are some inefficiencies in the industry it's self but for the most part, the primary drivers for the increased costs were related to the regulatory environment of the US(environmental, worker protection, etc), now there are even greater costs due to network effects of related industries having shrunk or died out.
Similar to posts about machine tools or electronic design, everyone talks about how in China its so much easier to get stuff done because the Fab shops are all next door and nothing like that exists in the US, you used to have more steel mills, fabricators and machine shops. Now there are fewer and further apart.
The decline in quality of out Boeing has coincided with a collapse of the regulatory framework that kept profit extraction limited since the 70's and 80's. Now you've got the worst of both worlds, where the industry is protected and subsidized, production gets off-shored and outsourced anyway while massive profits flow into shareholders pockets in the form of stock buybacks. It's funny that you look at this and blame the protectionist aspect when "protectionism" literally built the industry in the first place.
Every country who isn't just getting exploited for their natural resources or labor has built their industry by protecting it.
Yeah, it's a tough pill to swallow but honestly, the workforce as a whole is kinda coddled at this point. Most people don’t even realize they're being paid more than what they're actually worth. Like, we’re not really creating enough value or building enough stuff that justifies what we think we should be getting. The only reason our value holds up right now is probably cuz of the defense industry flexing its muscle to keep things stable.
But let’s be real, as other countries rise up and we start losing our grip as the top dog, we're gonna feel the pain. It could be a slow burn or maybe a faster crash, but either way, it's gonna suck. We’re gonna have to go through some serious hardship to get back to where we think we should be. Not based on what we think we deserve, but what we actually do.
And it’s kinda mixed messaging too, right? We somehow believe our labor is more valuable than others, but at the end of the day, it’s gonna come down to working harder. Longer hours, more back-breaking labor, real work, not just sitting in an office chair all day. We’re not entitled to cushy jobs forever, and things are gonna get a lot harder before they get better.
What do you think globalizing means?
Ships are too expensive to be built to a given level of quality in the US. This means we outsource the expertise, and in this case, even the expertise necessary to tell what a good deal is.
They've created a market in which a US based company cannot compete economically, because the cost of production elsewhere will be less. There is no margin by which any competition can take place, whether or not the government throws a ton of money and stopgap incentives into the mix.
You can't manufacture chips, small household goods, general purpose clothing, electronics, or a whole slew of other things in the US because our legal regime fundamentally disallows any American participation in those markets through economic disincentivization. If you can't make any profit because you have to pay higher wages or taxes if you manufacture in the US, then you're not going to manufacture in the US, even if you're a patriot.
The US doesn't have a rational system designed to maximize value to citizens, it's a hodgepodge of conflicting regulatory grifts designed to maximally benefit the corporations who paid for the lobby.
> they're crap compared to ships from other countries.
That's exactly what "globalizing" is. You literally cannot, under the current regulatory regime, create a ship building company that can compete with other established interests and competition from other countries. You'd have to relax the arbitrary labor and wage constraints, fix taxes and tariffs for sufficiently long term outlooks that anyone would bother investing. To achieve that, you'd need good faith operators throughout the government willing to rock the boat, and if you think that will ever happen, I've got a bridge in Brooklyn for ya - I'll sell it cheap.
Other industries seem to be fine competing with other countries. Would there be some greater investment in manufacturing in the US if there were no labor (or environmental) constraints? Sure, but the fact that other industries compete just fine makes me believe it's simply not an economically efficient allocation of resources for labor heavy manufacturing to be done in the US.
China is winning because they are intentionally and directly investing in tech regardless of the financial circumstances. They don’t care about the profits, they are focused on the outcomes. They are doing what developed countries should be doing.
Winning is winning. History is written by the victors. Important to know who you’re playing against, and whether you’re playing by the same rules, and if the rules matter. It’s not great, but it is what it is. We must operate in a way based upon how the world is, not the way that we wish it was.
At this point, China is outdoing the West in so many ways, and rapidly catching up in the areas where it still lags. I’m not one to eagerly praise the CCP, but it’s hard to not see how China is progressing while the West lags more and more.
The West plays nice as much as possible. China is playing to win.
>China is outdoing the West in so many ways, and rapidly catching up in the areas where it still lags.
I'm not seeing it. Chinese economic power and tech capacity might exceed US capacity in time, but I give it only p = .25 or so. China's descending into some sort of political chaos seems more likely.
> Our research reveals that China has built the foundations to position itself as the world’s leading science and technology superpower, by establishing a sometimes stunning lead in high-impact research across the majority of critical and emerging technology domains.
> China’s global lead extends to 37 out of 44 technologies that ASPI is now tracking, covering a range of crucial technology fields spanning defence, space, robotics, energy, the environment, biotechnology, artificial intelligence (AI), advanced materials and key quantum technology areas. The Critical Technology Tracker shows that, for some technologies, all of the world’s top 10 leading research institutions are based in China and are collectively generating nine times more high-impact research papers than the second-ranked country (most often the US). Notably, the Chinese Academy of Sciences ranks highly (and often first or second) across many of the 44 technologies included in the Critical Technology Tracker. We also see China’s efforts being bolstered through talent and knowledge import: one-fifth of its high-impact papers are being authored by researchers with postgraduate training in a Five-Eyes country. China’s lead is the product of deliberate design and long-term policy planning, as repeatedly outlined by Xi Jinping and his predecessors.
> China's descending into some sort of political chaos seems more likely, like it has done over and over thru history.
And the West isn’t? I honestly am not sure whether I prefer Xi Jinping over one of the candidates in the upcoming US elections.
There are still thankfully some checks and balances in place, but if the loudest elements of one of the two major US parties has everything their way, I’d honestly prefer to live in the PRC.
> China is winning because they are intensely, directly investing in tech regardless of the financial circumstances.
Investment can (and often is) different from protectionism. Typically, investment provides time-limited grants or other forms of support. If a company misuses them, a global (or local) competitor will outpace it.
Protectionism ensures that companies are indefinitely protected from global competition, so they don't feel as pressed to improve.
The developed world is unable to compete on a level playing field against other countries when taking into consideration potentially enormous subsidies or developing world labor costs. Protectionism, when implemented strategically, can reduce these counterparty advantages. Investment is also a component, but they both work in concert to arrive at a desired outcome. And I think that’s really where this problem lies, that we’re arguing about protectionism versus investment, when we should be identifying what the desired outcome is and then, based on an inventory of all of the policy and capital allocation tools that we have available to us, implement what is needed to arrive at the desired outcome. We don’t want to sacrifice innovation (which calls for mechanisms to prevent companies from leaning too far towards entrenched interests vs innovators), but we also don’t want to run a race we cannot win because we unnecessarily handicap ourselves in an inherently unfair and unequal global market.
I am not a terribly smart person, and I don’t have all the answers, but I would argue it’s clear what we’ve done so far isn’t working, based on all available evidence.
Which are non critical and can be shed without much harm. Critical industries are, by definition, critical and require sacrificing efficiency to preserve.
If you want to be able to build and retain the capability, you have to protect the machine that does the building: people, institutional knowledge and domain expertise, equipment, etc. Otherwise, you forget how to build, the machine evaporates. And here we are.
The American shipbuilding industry has been allowed to atrophy in an idea that protectionism would lead to good commercial the results.
What little gets built in the US is way behind the global peers in terms of economics and quality.
As usual the end results are that the entire shipping industry works around the Jones act, for example cruise ships from Florida docking in the Bahamas, and for the regions that can’t do it they are tough out of luck.
Why can’t the US build offshore wind? Because there are no jones act compliant vessels and the proposed workaround is staging all the materials in Canada and adding an enormous time waste to the projects.
Congress has been pushed not to eliminate would completely wipe out tiny remaining American Merchant Marine fleet. Most people who want to get rid of Jones Act are economists and other types who sole concern is "How much more money can we make from cheap shipping" while ignoring any national security concerns.
We could talk about modify it maybe allowing purchase of specialized ships from overseas friendly countries, like icebreakers from Finland.
You are saying that as if sacrificing a tiny industry to benefit the entire rest of the economy is somehow a bad thing. And the merchant marine isn't really big enough to contribute much to a hypothetical war either.
Of course there have to be considerations to maintain the capability to build warships. But other than that the Jones Act seems to do a lot of damage for very little benefit. Though ripping off the bandaid would be painful in that moment
What starts with good intentions ends with a bandaid that someday will have to be ripped off at the cost of the people who made a subsidized living based on it.
Except if you can't move stuff around without support of 3rd party nations, that's defense crippling.
If you want to be a global power, you require great navy, both civilian and military. That's been true since 1500s and will likely remain true for many years to come.
So question is, do we throw out Jones Act and slowly stop being World Superpower or leave it and pay higher upfront costs in certain places? That's political answer obviously.
What you’re missing is that our ability to move stuff around has already deteriorated to almost nil, precisely due to Jones Act and shipbuilding workforce unionization. We already cannot build vessels we need at quantities we need. This is already reality today. Repealing Jones Act cannot make our situation much worse.
It can, however, make us much better off, by for example allowing US companies to buy foreign ships to do tasks that currently are covered by Jones Act, and as a result are not done at all.
For example, we’d be able to ship gas from American oil fields in the South to consumers in the North, where there missing or insufficient pipeline capacity. Right now, Jones Act forces US consumers in the North to buy foreign gas.
Couple years back, before the Russia-Ukraine war, Russian Gazprom was making nice profit on the following run: 1) sail to Northeastern US, sell it Russian LNG 2) sail to Gulf of Mexico to buy American LNG for cheaper than it sold Russian gas to Americans in the North 3) sail elsewhere in the world to sell them American gas, eg to Europe or Africa.
This was only possible because Jones Act makes it impossible to ship LNG from Southern US to North. There are literally no vessels that can do it. It already cripples our ability to move things around.
I think there could be some discussion of modify the Jones Act to allow non US made ships to be use in Merchant Fleet. However, key provision of Jones Act around only US flagged ships may transport two US ports. If you eliminate that, forget it, US Merchant Marine fleet will go poof. Since it's a global industry, workers from other countries are obviously much cheaper than any US salaries.
I think the argument among the anti-Jones contingent is that our only real hope of having a globally competitive shipbuilding industry is to repeal it and all the other things preventing our shipyards and merchant marine from having incentive to compete globally. As it is, there is a slow trickle of work for domestic shipyards that is based solely on policy (ships that legally HAVE to be US-made, whether for Jones Act reasons or military reasons). Without that protectionism, they would have to build ships at a quality, price, and timetable that is competitive with the rest of the world.
I'm not super sympathetic to arguments that presuppose the absolute requirement that US hegemony continue indefinitely, but certainly if you are trying to make sure your shipbuilders will be roughly as good as foreign ones or better (a reasonable policy goal, even leaving out military reasoning), cutting them off from competition with those foreign shipyards is not going to result in what you want. If there is a ready market for expensive, poor quality ships that take years longer to build than they do abroad, why would I as a shipbuilding executive invest to improve on any of those metrics? It would be wasted money, because my existing capital and workforce are already 100% utilized in high-margin activities, with orders stretching out years into the future.
More realistically without the Jones act, ships wouldn't be built or operated by the US at all. International vendors can do this cheaper.
You'd instead see all domestic shipping be entirely dependant on third-party international operators paying third-world wages to third-world crews, and you'd have next to zero recourse against them if they, say, run one of their ships into a bridge, or spill a few million litres of oil.
They already are not built in the US at all. This is already true today. We already build less than one oceangoing Jones Act compliant ship a year. The US shipbuilding industry can hardly get any worse than it already is today.
My point is that it wouldn't get any better. Anyone blaming the Jones Act for this completely misidentified the root cause.
There are a few good reasons to repeal the Jones Act (reduce shipping and trade costs in Hawaii, Alaska, and Puerto Rico) and a lot of really bad ones (the domestic shipping industry will be completely killed, and you're inviting unbounded liability from unregulated, fly-by-night international actors who don't give two craps about our laws.)
The way ocean shipping currently works is entirely incompatible with any national rule of law. Flags of convenience and corporations with non-existent liability mean that nobody in the international industry is actually following any of the rules.
The domestic industry has to follow them, which is the reason why it's not cost competitive.
I think you have a cursory understanding and are then pulling that to the extreme without actually knowing how the industry operates.
The problem stemming from flags of convenience is well known and the Port State Control system [1] was created to manage it.
In other words: live up to our requirements or we will detain your vessel.
The US is not a signatory to any international port state control scheme but as is usual the US runs its own nearly equivalent scheme through the coast guard. [2]
> "How much more money can we make from cheap shipping" while ignoring any national security concerns.
But isn't it the case that national security concerns are being reached, presently, under the effect of the Jones Act? We just don't have the capacity to build the naval vessels that we need for national security.
>But isn't it the case that national security concerns are being reached
It's not being fully met. Likely with elimination of Jones Act, it would disappear entirely. So it's one of those, it's bad now, do you want to eliminate it completely?
Only way I could see Jones Act disappearing but Merchant Marine Fleet to remain intact is announce that US is done playing world Navy Police. If it's not US Flagged, US is done giving a shit. Economic worldwide collapse to follow.
> Most people who want to get rid of Jones Act are economists and other types who sole concern is "How much more money can we make from cheap shipping" while ignoring any national security concerns.
I read "economists and other types" as people who understand basic economics. People oppose the Jones Act because it has devastated the US shipping industry, which is obviously bad for national security. It's not just about cheap shipping.
People here keep blaming the Jones Act but the US has lost manufacturing capability across so many sectors so I don't really get how shipbuilding would be much better without the Jones Act. (Not that I like the Jones Act, I really don't, I'm just skeptical our shipbuilding would be much better without it. We were screwed either way)
We may have lost the capability to manufacture specific things but our capacity for manufacturing has only increased (https://fred.stlouisfed.org/series/INDPRO). You can run per capita numbers as well and see it’s very similar.
So if we haven’t lost capacity but have lost capability doesn’t that imply something about the industries we’ve lost?
I’m not a ship industry expert but the US can make as much stuff as anyone in the world besides China and on a per person basis we are top tier. If ship building is a problem it’s not because of some generalized failing.
Isn't part of this that US vessels are not competitive on a global market because of taxation?
if you built and registered a ship in the US, wouldn't taxes be much more than say a ship registered in a small tax-advantageous country? (for a ship that basically wasn't in US 99.9% of the time)
Retirees do this with motorhomes - why register in california and pay all those taxes when you will be out of the state traveling all the time. Register in North Dakota or something and still drive the same route.
(note taxes could be state income taxes because of residency, or vehicle registration taxes which are a % of vehicle value)
I’m sure that’s definitely part of it, but there’s lots more stuff to it.
I’d say the “where to register your ship” question is the category of “complicated” - since obviously if we lowered our taxes to be as low as Panama then we’d get more registrations which sounds good - and “low tax” is better than the “zero” taxes we get from them now, but then the other country would just undercut that, and so on, and now nobody can get any tax revenue anymore.
It’s why the global economy doesn’t lend itself to simple sound bite answers like “just build American ships” or “just raise/lower tariffs” etc.
It’s too bad no one on any ballot seems to do anything but useless grandstanding, when it comes to actual problems like this.
The problem in the US is not just protectionism against other countries, is that it doesn't incentivize internal competition. Instead, the US gov will throw more money at existing big corporations which from that point on have no fear of smaller companies innovating.
Also, the US commercial shipbuilding industry has always been small. WW2 was the exception where built lots of ships mostly in temporary yards. Since WW2, it has struggled. Naval shipbuilding has been the big part.
It is a lot of pain for reset of economy for protecting a small industry. If US wants more naval shipyards, then should incentivize building them. I get the impression that there has been much reason for yards to improve protected from competition.
I don't find this explanation satisfying. If the Jones Act of 1920 is at fault, how do we explain the timeline? The U.S. was a ship-building powerhouse at least through the 50s, if not through the 70s. Why was there a multi-generation lag between the Jones Act and its effects?
The rest of the world was in total shambles until 1960s. Europe was destroyed by two world wars. East Asia was an economic backwaters. Same was true about most of South America, and its advanced regions were underpopulated compared to US. Africa was and is Africa. There was simply no other place that could build stuff at scale.
Basically the US wasn’t great at shipbuilding post civil war due to high costs. WWII was an existential threat so cost was no object, and we coasted on that capacity for a long time.
For other high income nations the ship building industry has specialized on higher tech vessels while leaving the enormous labor intensive container ships to South Korea and now lately China.
The goal was to have a globally competitive merchant marine based on a home grown ship building industry to call on in case of war. Trying to balance both sides.
The end result is that that home grown ship building industry has all but disappeared together with the educated population required to crew it.
Your argument is post hoc ergo propter hoc. But as with car import tariffs and quotas, nobody doubts that removing all import obstacles would lead to the offshoring of most remaining car manufacturing.
What economists argue that the Jones Act is suppressing is greater use of domestic sea transport, which could be much cheaper than trains and trucks. Without the Jones Act sea transport would grow, but undoubtedly using foreign ships, perhaps relying on a primarily foreign crew. OTOH, a much larger domestic shipping industry would likely spur demand for downstream services, as well as open up opportunities for growth elsewhere in the economy, so overall jobs for Americans might grow. But deregulation grow the ship building industry domestically? Nobody expects that.
Passenger rail systems require the procurement of immense amounts of very pricey land, or the transfer of ownership of existing rail lines. I don’t see that as a similar cultural issue.
Boat building can be solved by spending money to build boats (and perhaps waiting a couple decades for expertise to be built up).
Using eminent domain or changing the view of the public on land rights is a much higher barrier.
> Boat building can be solved by spending money to build boats (and perhaps waiting a couple decades for expertise to be built up).
I actually don't take it for granted that enough money thrown at a problem can automatically solve it. There's a critical mass of underlying assumptions without which the marginal output of each additional dollar supplied becomes so limited that it just doesn't make sense, even with the government money printer.
The US doesn't have effective passenger rail systems for the same reason that Europe and Japan don't have effective freight rail systems: you have to optimize for one use case or the other or else have two completely separate systems, which takes up a lot of extra land.
There is also another reason, which is that passenger rail makes sense only in specific geographic and economic circumstances, and outside of Northeastern corridor, these are very few. Commuter rail requires urban population densities that do not exist in most US metros. Intercity passenger rail only makes sense at a very limited scope until air travel beats it on both speed and cost. Europe and Asia just have different patterns of development.
Even Whatcom County is having difficulty replacing the Whatcom Chief on budget, with the latest cost estimate being more than twice the federal grant they were given. This is all critical infrastructure in Washington but nobody knows how to build them in the US anymore.
According to the article he references that talks about the problems with shipbuilding more generally[0], the US has never been competitive in shipbuilding at any point in the post-wooden ships period, long before globalization was the issue.
I think that's the sentiment that think-tanks have been pushing recently. But outside a very "us-vs-them" viewpoint with China, I don't think it holds true. America's Navy does it's job pretty much perfectly for defending US interests at home and abroad. We have the tactical elements that we want to field, and we maintain them in a condition so they can provide the desired effect at any time. Building more ships isn't a panacea, and in many cases it's a great way to end up having billions of dollars in rusting assets sitting in dry-dock.
It's worth flipping the question on it's head. China's ambitions are very clearly best carried-out by a Navy that can harass Taiwan and expand their territorial claims in the waters surrounding Japan and eventually even threatening Australia. This is a smart move on their behalf, but they will be contending with unfriendly airspace and ground-based anti-shipping weapons. If you want to look at it from a purely military materiel perspective, I would argue the US has weighed their options and taken a less Naval-dependent route.
Why can't we just have a technology transfer agreement? Purchase the ships from Finland but make them at a US shipyard? Other countries do that with US defense manufacturers all the time. Purchase items, but with the condition that it will be manufactured in that country.
So in short the US only builds a tiny number of them once every two to three decades, so nobody has any experience. And letting someone with experience build them is out of the question because then it wouldn't be built in the US.
This seems like a reoccurring story when talking about anything vaguely infrastructure related in the US.
Seems so, TSMC had issues with keeping costs under control while building their fab in Arizona. The military is having trouble building submarines and ships at the same rate as China is capable of. Nuclear plants are being built way over cost.
I'm reminded of this article which explains why elevators cost so much more here in the USA than the rest of the world:
> And plumbing codes in America require an entire network of ventilation piping that has been deemed largely unnecessary in much of the world.
There’s a lot of surprising info in that article. This one section that I actually have passing knowledge of is just blatantly false. The majority of US states use and heavily contribute to the international plumbing code which allows for single stack ventilation as described in their linked article. My house from 1958 has single stack ventilation…
Sections like that with easily verifiable falsehoods bring the rest of the facts presented by the article into question for me.
Now that Finland is a member of NATO, it would make sense to outsource icebreakers to Finland. Finland has 64 F-35 jets on order from the US, costing more than a few icebreakers.
VT Halter Marine, the troubled US contractor, went bust and was sold in 2022.
Of course, but then Congress couldn't create a jobs program to scare up a few more votes for the incumbent in certain districts. And so job security triumphs over national security.
As with Healy's fire leaving the US without an icebreaker this summer, this week a grounding apparently left the US Navy without an oiler in the Middle East[1]. Similar systemic shipbuilding challenges and fragility.
It's not a stupid question, but ice is remarkably durable and has 'self healing properties', to describe ice-cubes sticking together in the most pretentious way possible. There have been projects to make battleships out of ice.
I can recommend The Terror first season series, despite its shortcomings, for a beautiful depiction of the struggle of breaking through the north passage in the mid 1800s.
My thought when I read things outlining American industrial and infrastructural woes is "What in the world is to be done about this?" As far as I can tell, protectionism doesn't seem to work, and globalism doesn't seem to work. I'd just like to hear a coherent plan on how a country should get out of this situation.
We can, but we just won't invest the funds, meanwhile Russia and China will dominate as the ice melts. This is a lack of will and not lack of ability, I hate it when people act like the USA is a POS in blog articles.
> The culprit here isn’t the Jones Act, but another protectionist shipbuilding law that requires Naval and Coast Guard ships to be built in U.S. shipyards.
Now this is a surprise! As soon as I read the headline, I thought "Jones Act."
When I describe the Jones Act to people, the usual response is "That can't be right," or even "I don't believe you," but these days there's usually another person around that can say "Yes, that's actually right!" to back me up.
It's a good example of protectionism, like tariffs, that is completely ineffective. The industrial policy of the IRA and CHIPS acts are in contrast quite effective.
I'm sure the Jones Act still plays a part, leading our domestic shipbuilding capabilities (including military and icebreakers) to atrophy in competitiveness.
Honestly, with how quickly sea ice and glaciers are melting away, I don't think icebreakers will be something we would necessarily need in the near future.
The article didn’t mention Canada’s role in the Arctic. While the American icebreaker fleet has been diminished, Canada’s is relatively strong. Our coast guard currently has a fleet of twenty, and tenders were just awarded for two polar icebreakers.
So it’s not like the Arctic is totally empty - a NATO partner has a bigger presence.
Because it considers manufacturing to be something poor nations do, and prefers to extract wealth through printing reserve currency and other forms of financial trickery.
I think the USA is overdue an ideological renewal. Free market, neoliberal capitalism isn't cutting it. The profit incentive isn't cutting it. Supply chains where it takes hundreds of contractors and subcontractors to build anything aren't cutting it.
We see this in Boeing, where management with an ideology of profit maximization and a structure dependent on a bunch of suppliers has led to a crisis. On the other side of the Pacific, BYD has vertically integrated critical parts of car manufacturing and now is moving extremely quickly and affordably.
Another example; the Federal Government invested billions on banks in 2008, billions into the auto industry in 2009, is now investing billions into Intel, but refuses to take any shares for some reason. It has this ideology of investing billions in the private sector to save industries key to national interest, but "state owning shares is spooky so we want nothing in return". It seems so backwards to me.
If the industry is that important to the country, maybe at least have a seat at the board of directors? You don't have no nationalize anything, but at least be in the same room. Other countries, from China to France, have demonstrated there's a lot of value in this state-private sector joint ownership.
I don't know what the right answer is, but the current status quo seemingly ain't it— not just in execution, but in ideology. Something fundamental is non-ideal.
You don't like free markets and you cite semi-governmental-department Boeing and too-big-to-fail-gets-bailed-out-every-time banks and auto companies as an example?
You'll find free marketeers everywhere complain about these exact companies, for the same reasons.
I like free markets. I just don't like that China is eating the West's lunch. They just seem better at playing the "free markets" game than anyone on this side of the globe and I think the USA is doubling down on the ideas that defined it in the 1970's, rather than saying— "it's a new world, let's see what we can learn from it to up our game".
China has definitely learned plenty from the world, and fundamentally changed the way it does things from 1970 to today. Deng Xiaoping in the 80s marks a stark ideological change that transformed China to the core. Who is the last US president one can say that of?
Put another way, are we spending all this time and money to fail at simply building a ship that is functionally identical to one of these ~$300m Finnish ice breakers, or are we claiming we need something more sophisticated?
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