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Jul-24-2008Navy cancels $20b purchase of destroyers(topic overview)
CONTENTS:
- The Navy Times reported today that "all sides seem in agreement that the majority of the (new Arleigh Burke) hulls will go to Bath," because Ingalls is already busy with three amphibious ship classes and is still rebuilding following 2005's Hurricane Katrina. (More...)
- "I'm very, very concerned about what the implications are going to be." (More...)
- Publicly the Navy has long resisted the notion of building more DDG 51s, noting no more of the ships were needed the class had been planned to end with the 62nd ship and significant improvements to the design were hard to come by. (More...)
- Snowe said BIW's work force has proven countless times that the yard can build ships more efficiently than any other yard, and on time. (More...)
- "We're certainly concerned about it." (More...)
- "I am confident that the return to the DDG-51 program will maintain a stable work force at Bath for years to come," Allen, D-Maine, said after speaking to Adm. (More...)
- The older Arleigh Burke models, which cost less than half the price of the DDG-1000s, have combat systems developed by a Raytheon rival, Lockheed Martin Corp. (More...)
- The new DDG-1000 destroyer was conceived in the early 1990s as a land attack ship that would fend off Soviet-style threats. (More...)
- "There's a lot of stuff we don't know yet," Work said. (More...)
- The House Subcommittee on Seapower and Expeditionary Forces is expected next week to hold a hearing on the Navy's plans. (More...)
- The service declined comment on the July 22 decision, but in a statement released July 17, Navy spokesman Lt. Clay Doss provided some insight. (More...)
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The Navy Times reported today that "all sides seem in agreement that the majority of the (new Arleigh Burke) hulls will go to Bath," because Ingalls is already busy with three amphibious ship classes and is still rebuilding following 2005's Hurricane Katrina. "Bath will have to get the majority of these DDG-51s," The Navy Times quoted one source as saying. "They won't be able to go 50-50 with Pascagoula. Ingalls doesn't have the work force right now and Bath needs them." Collins and Allen who are opponents in a closely watched Senate race both pledged to meet with Navy brass today to make sure any negative impacts on BIW resulting from the shipbuilding change are minimized. 'A blow to Bath Iron Works' Collins, who has advocated for the DDG-1000 from her position in the Senate Armed Services Committee, believes the loss of the destroyer program could be a damaging "blow to Bath Iron Works." She noted Allen's departure from the House Armed Services Committee, which she said left no "advocate for programs critical to BIW's work force." "It was triggered by the decision of the House Armed Services Committee to eliminate funding for the DDG-1000 program, which prompted a review within the Department of Defense on the future of the new destroyer program," said Collins in a statement. "The Navy is likely to propose continuing the DDG-51 program, but at inadequate production levels," she continued. [1] The originally envisioned 32 ships dipped to 12 and then seven as costs grew. "I don't think this thing was a shock because fundamentally the whole program was a big fat target for many years," said Jay Korman, defense analyst at The Avascent Group. Sen. Susan Collins, a member of the Armed Services Committee, said Wednesday after additional briefings that the Navy plans to build nine more of its current Arleigh Burke destroyers, possibly with some added capabilities that went into the newer warship. After talking with Bath Iron Works president Dugan Shipway, Collins said the General Dynamics subsidiary on the Maine coast would need to build seven of those nine ships to make up for the loss of the Zumwalt program. She said the Navy has promised only that a "majority" of the ships will go to Bath, which is building one of the two Zumwalt DDG-1000 destroyers. That sets the stage for a battle between the Maine and Mississippi congressional delegations for the additional Burke ships.[2] BATH, Maine -- Sen. Susan Collins, who sits on the Armed Services Committee, said the Navy has decided to scrap the DDG-1000 Zumwalt destroyer after the first two were built in shipyards in Maine and Mississippi. She said, the Navy told her Wednesday that it will build nine more Arleigh Burke destroyers. She said that based on her discussions with Bath Iron Works President Dugan Shipway, the shipyard would need to build seven of those nine ships to make up for the loss of the Zumwalt program. She said the Navy has promised only that a "majority" of the nine ships will go to Bath. Analysts said the Zumwalt became too expensive for the Navy to achieve its goal of a 313-ship fleet. They were expected to cost more than double the price tag of existing Arleigh Burke destroyers.[3]
The originally envisioned 32 ships dipped to 12 and then seven as costs grew. "I don't think this thing was a shock because fundamentally the whole program was a big fat target for many years," said Jay Korman, defense analyst at The Avascent Group. Sen. Susan Collins, a member of the Armed Services Committee, said Wednesday that the Navy instead plans to build nine more of its current Arleigh Burke destroyers, possibly with some added capabilities that went into the newer warship.[4]
Today, defense industry analysts peg the cost of building a DDG 1000 at about $3 billion. "I don't think this thing was a shock because fundamentally the whole program was a big fat target for many years," said Jay Korman, defense analyst at The Avascent Group, of the Navy's decision. Maine Sens. Susan Collins and Olympia J. Snowe met with BIW President Dugan Shipway early Wednesday morning to determine what the shipyard needed for destroyer orders to keep its 5,880 employees working. "Bath needs to construct two of the old-style destroyers each year in order to maintain its work force," said Collins, "and it needs to be able to build seven of the nine, at least." Collins met with Navy Secretary Donald Winter and Chief of Naval Operations Gary Roughead following her meeting with Shipway.[5] The Navy's plan was to use the hull of the DDG 1000 as the basis for the CG(X), which would have provided vast cost efficiencies. Said Work, he's gotten reports that the hull won't work for the CG(X), and the Navy will apparently need to design a new one for that program, making the DDG 1000 even more questionable. Loren Thompson, an defense analyst with the Lexington Institute, said the Navy can't afford the DDG 1000 but it can't afford to stop building ships, either, if it wants to achieve its shipbuilding goals and maintain a shipbuilding infrastructure. Another problem with the DDG 1000 design was its potential vulnerability. Bombarding the shore with guns is cheaper than using missiles, but the ship would be vulnerable to attack if it came within 100 miles of shore to use its 155mm guns, Thompson said. "The Navy should have understood a long time ago that putting a $3 billion destroyer off the coast of a hostile country so that it could use gunfire was a dangerous proposition," he said.[5]
A stunning Navy decision to abort a $20 billion plan for a new fleet of destroyers yesterday threw into question the future of Raytheon Co.' s largest defense program and renewed longstanding concerns about the fate of the Bath Iron Works shipyard in Maine. Waltham-based Raytheon is the prime contractor for the ship's combat systems, which are being developed at its Tewksbury and Andover plants.[6] Thu. The Navy's abrupt decision to cancel its stealthy new destroyer triggered sharply divergent reactions from two Maine lawmakers Wednesday even as industry analysts appeared to agree the move would likely not devastate the state's Bath Iron Works shipyard. Sen. Susan Collins, R-Maine, sounded alarm bells that the Navy's decision to cancel its next-generation destroyer after production is completed on the first two ships could spell doom for the Bath facility. To maintain its workforce, Bath must produce at least seven of the DDG-51s the Navy plans to buy in place of the pricier DDG-1000s - and do so at a rate of two a year, Collins said.[7] U.S. Navy Secretary Donald Winter and Chief of Naval Operations Adm. Gary Roughead spent hours with lawmakers on Wednesday explaining their decision. Collins said Deputy Defense Secretary Gordon England had promised to work with her to "mitigate the impact on Bath Iron Works' work force of the termination of the DDG-1000 program." Bath Iron Works is building one of the new destroyers, Northrop Grumman Corp (NOC.N: Quote, Profile, Research ) is building the other at its Ingalls shipyard in Pascagoula, Mississippi. Defense analyst Loren Thompson of the Lexington Institute said the net effect on Northrop and General Dynamics would be minimal since they would likely get more work building older model DDG-51 destroyers.[8] WASHINGTON, July 23 (Reuters) - A U.S. Navy decision to scrap the DDG-1000 destroyer program after just two ships could have "potentially devastating consequences" said Sen. Susan Collins, a Maine Republican whose state includes General Dynamics Corp's (GD.N: Quote, Profile, Research ) Bath Iron Works shipyard.[8]
Republican Senator Susan Collins, a champion of the ship, called the decision to cut the program "a blow to Bath Iron Works" and said it was "was triggered by the decision of the House Armed Services Committee to eliminate funding for the DDG-1000 program, which prompted a review within the Department of Defense on the future of the new destroyer program.[9] Collins, a member of the Senate Armed Services Committee, said the Navy review of the Zumwalt was triggered by a House Armed Services Committee decision to reject funding for the third ship. She took a swipe at Rep. Tom Allen, her Democratic opponent in the upcoming election, who left the House Armed Services Committee for another assignment. "Unfortunately, Maine currently has no member on the House Armed Services Committee to advocate for programs critical to BIW's work force," she said. Allen said it was "totally misleading" for Collins to suggest that the Navy decision has anything to do with his presence on the committee. He said the Navy's disaffection with the DDG-1000 was linked to potential cost overruns and its lack of capability to respond to threats such as missiles targeted at ships.[10] Unfortunately, Maine currently has no member on the House Armed Services Committee to advocate for programs critical to BIW's workforce." U.S. Representative Tom Allen, a Democrat who gave up his seat on the Armed Services Committee, said, he'd been notified by CNO Admiral Gary Roughead, that after capping the DDG 1000 class with construction of just two vessels the Navy will reactivate the DDG 51 class with an initial commitment to order 9 additional ships through Fiscal Year 2015.[9]
"The Navy's decision to cap the DDG 1000 program and revive the DDG 51 program was related to the strategic limitations of the DDG 1000 in responding to future threats," said Allen, adding that "Senator Collins' suggestion that the decision was triggered by the House action is completely inconsistent with what Admiral Roughead said to me today about the strategic limitations of the DDG 1000." Though the DDG does, indeed, have strategic limitations, most analysts have little doubt that the major factor in capping the program is its gigantic cost--probably upwards of $5 billion a ship.[9] "In particular, given the evolution of anti-ship missiles around the globe, the Navy needs ships with missile defense capabilities, which the DDG 1000 lacks and the DDG 51 has." Snowe said Roughead and Winter told her that the change in direction was largely based on shifting war-fighting requirements in terms of possible threats from China and "non-state actors" in the Persian Gulf. Allen also said Winter told him the Navy had to decide whether to include a budget request for a fourth DDG 1000 in its Fiscal Year 2010 budget, and that also forced a decision on the program's future.[5]
Members of Maine's congressional delegation announced Tuesday evening that the Navy would instead have BIW and a shipyard in Mississippi produce more ships in the current class of destroyer, the DDG 51, also known as Arleigh Burkes. "I had a very productive discussion this morning with Dugan Shipway about the impact of the Navy's decision on BIW. I have pledged to work with him and everyone at BIW to fight for a plan to lessen the potentially devastating consequences of this decision on BIW," Sen. Susan Collins said in a statement.[11] Collins, after meeting with Shipway, said the Navy plans instead to build more of the older Arleigh Burke class of destroyers, designated the DDG-51s. Some of those may be built at Bath, which would offset the loss of the DDG-1000 program. She said the shipyard would have to be guaranteed the work on virtually all the additional DDG-51s to maintain its current workload and prevent job losses. Allen said he was assured by Navy officials that the service would request funds to construct an additional nine DDG-51s through fiscal year 2015.[6] BATH -- News of the U.S. Navy's decision to abandon plans for a fleet of new, larger destroyers quickly spread through the Bath Iron Works shipyard and the surrounding community Wednesday, capping more than a week of rumors and speculation about the future of the work force. Many workers considered the news a threat to local jobs, but they soon were reassured by union leaders who said the yard would stay busy building six more of the familiar, smaller Arleigh Burke destroyers.[12]
Each of the ships will cost twice the $1.3 billion price tag of Arleigh Burkes. Critics say the Zumwalt is too expensive for the Navy to achieve its goal of a 313-ship fleet. It's an important program for Maine's Bath Iron Works.[13] PORTLAND, Maine (AP) — Growing costs and vulnerability to anti-ship missiles sank the Navy's once-heralded "stealth destroyer," a highly advanced warship designed to slip close to the shore unnoticed and pummel targets with big guns. Faced with cost estimates upward of $5 billion per ship, the Navy had no choice but to let its prized DDG-1000 Zumwalt destroyer program end after the first two ships are built, analysts said Wednesday.[4] Cancellation of the 14,000-ton, Zumwalt-class destroyer, called the DDG-1000, after just two ships were funded, was made public by Maine's two Republican senators, Olympia J. Snowe and Susan M. Collins, and U.S. Representative Thomas H. Allen, a Democrat whose district includes the Bath shipyard. The lawmakers said they were informed by top Navy officials that with costs rising 50 percent, to $3 bil lion per ship, the program has become too expensive and would make it impossible for the Navy to meet its overall goal of a 313-ship fleet.[6]
Maine's U.S. senators met this morning with Bath Iron Works President Dugan Shipway on the Navy's decision to limit the DDG 1000 next-generation destroyer program to only two ships, and planned to meet with top Navy officials.[11] Navy officials held a series of meetings with Maine's Congressional delegation Wednesday to explain the decision to cut the DDG 1000 next-generation destroyer program -- and to detail how Bath Iron Works would survive the abrupt change in shipbuilding plans.[5]
BATH Members of Maine's congressional delegation plan to meet with Navy officials today to ensure that the cancellation of the DDG-1000 destroyer program won't have devastating effects on Bath Iron Works.[1]
Any moves to modernize the radar and other parts of the DDG-51, whose production lines have been dormant for years, could bode well for Bath's bottom line, Work said. Northrop Grumman could subcontract some of its work on the LPD-17 amphibious transport ship program at Ingalls to Bath Iron Works, as it did earlier this year. The decisions on how to delegate work to the shipyards is largely up to the Navy, which at presstime would not confirm its decision or make public any details of its plan.[7] Each of the two ships now under contract will be built, according to the new decision. That means the General Dynamics Bath Iron Works shipyard in Bath, Maine will build the Zumwalt, DDG 1000, and Northrop Grumman's Ingalls yard in Pascagoula, Miss., will construct the yet-to-be-named DDG 1001.[14]
The Navy will buy nine ships of an existing destroyer design through 2015, according to Sen. Collins, whose state includes the General Dynamics Bath Iron Works shipyard.[15]
Maine's Bath Iron Works, a General Dynamics subsidiary, is building one of the ships.[16] Maine's Bath Iron Works is building the lead ship, and Ingalls is building the second ship.[10]
While it is not clear how many more 51s will be built, all sides seem in agreement that the majority of the hulls will go to Bath, which builds only destroyers. Northrop's Ingalls yard, in addition to destroyer construction, remains busy building three classes of amphibious ships and the Coast Guard's new National Security Cutter, and is still working to rebuild its infrastructure following damage from 2005's Hurricane Katrina. "Bath will have to get the majority of these DDG 51s," said one source familiar with the situation. "They won't be able to go 50-50 with Pascagoula. Ingalls doesn't have the work force right now and Bath needs them."[14] Rep. Tom Allen, D-Maine, assured the union Wednesday morning that BIW would build six more Arleigh Burke destroyers instead of the Zumwalts, said Don Bilodeau, a trustee of the International Association of Machinists & Aerospace Workers. That, he said, is even better for workers because some of the manufacturing of the larger ships was going to be done elsewhere. "The DDT-1000 could lead to layoffs for workers," he said. "Whereas with the DDT-51 -- we're building them now. It's going to be more steady work.[12] Winter says the program is just too expensive. Congressman Tom Allen says the Chief of Naval Operations tells him the Navy will reactivate the Arleigh Burke Class destroyer with an initial commitment to order nine additional ships through fiscal year 2015. Allen says he's confident that will help B.I.W. maintain a stable workforce for years to come.[17] Instead of the five additional DDG-1000s that had been planned, the Navy will reportedly restart the current but winding down DDG-51 Arleigh Burke-class of destroyers, for which BIW is the lead shipyard. U.S. Rep. Tom Allen, D-Maine, said this morning that nine 9,000-ton Arleigh Burkes will replace the five 14,500-ton DDG-1000s in the Navy's shipbuilding plan.[1] Rep. Tom Allen said the Navy will build up to nine more Arleigh Burke destroyers, which cost far less than the larger and more advanced DDG-1000 Zumwalt destroyers.[13] The Navy has decided to scrap its newest destroyer after the first two are built in shipyards in Mississippi and Maine, Sen. Susan Collins said Tuesday. Collins, R-Maine, said Navy Secretary Donald Winter called her to alert her of the outcome of a meeting of top brass regarding the future of the DDG-1000 Zumwalt destroyer. The Zumwalt was originally conceived as a stealth warship with massive firepower to pave the way for Marines to make their way ashore. It features advanced technologies, composite materials, an unconventional wave-piercing hull and a smaller crew than the latest Arleigh Burke destroyers.[10] PORTLAND, Maine (AP) — The Navy has decided to scrap its newest destroyer model after the first two are built in shipyards in Maine and Mississippi, Sen. Susan Collins said Tuesday. Collins, a Maine Republican, said Navy Secretary Donald Winter called her to tell her the outcome of a meeting of top brass regarding the future of the DDG-1000 Zumwalt destroyer. Critics say the Zumwalt is too expensive for the Navy to achieve its goal of a 313-ship fleet.[16]
Scuttlebutt about ship orders picked up last week, following the news, first reported in a Navy newsletter, that the Navy was reconsidering the future of the DDG-1000 Zumwalt Class destroyer.[12] Cancellation of the Zumwalt-class destroyer potentially could have a greater impact on Raytheon than on General Dynamics, some analysts said. "This is bad news for Raytheon," said Loren B. Thompson, chief operating officer at the Lexington Institute, an Arlington, Va., think tank. Program executives at Raytheon have maintained that shipboard systems it has designed for the Zumwalt class could be used on future Navy vessels and "backfitted" to older models such as the DDG-51.[6]
While the Navy hasn't officially confirmed plans to cut the DDG 1000 program, it appears escalating costs and an almost-always uncertain future have finally caught up with the troubled ship class.[5] The Navy now plans to have the two yards build nine more ships in the current class of destroyer, the DDG 51, also known as Arleigh Burkes, instead of discontinuing that program.[5] The cheaper, and less sophisticated, alternative, the Arleigh Burke class that has been around since the 1980s, would cost about $2.4 billion in fiscal-year 2007 dollars, according to the Navy. According to people familiar with the Navy's plans, the Navy has reconsidered whether such advanced ships are necessary for current missions given their cost and complexity, and that a greater number of upgraded Arleigh Burke ships would be better suited to certain missions, such as missile defense.[15] Each of the ships will cost twice the $1.3 billion price tag of Arleigh Burkes. Critics say the Zumwalt is too expensive for the Navy to achieve its goal of a 313-ship fleet.[10]
BIW was awarded $1.4 billion to build the first of the Zumwalt class, a ship 50 percent larger than the Arleigh Burke destroyers that the yard currently builds.[12]
B.I.W. and Ingalls Shipyard in Mississippi were awarded contracts for the Zumwalt class stealth destroyer last year. Each shipyard will build one of them. Senator Collins says Secretary of the Navy Donald Winter called her Tuesday to let her know that the top brass at the Pentagon had decided to scrap the Zumwalt after the first two are finished.[17]
During meetings Wednesday, Navy officials said Bath would likely receive only one destroyer a year and would not specify how many of the DDG-51s the company would ultimately build, Collins said. Collins' sense of urgency was not shared by the Democratic challenger for her Senate seat, Rep. Tom Allen, who called Collins' gloomy outlook "ridiculous" and said he felt confident the workload would remain steady. If Bath built at least six of the DDG-51s, he said, the company would stay afloat.[7] Displacing about 14,500 tons, the ship is 50 percent larger than a Burke destroyer but will have half the crew thanks to automated systems. "I still believe that the ship offers capabilities that the Navy lacks and needs, but it's up to the Navy to determine its military requirement," Collins said. Rep. Gene Taylor, chairman of the House seapower subcommittee, praised the decision to build more Burkes, which he described as "the premier destroyer in the world today."[2] Collins, a member of the Senate Armed Services Committee, said the Navy review of the Zumwalt was triggered by a decision by the committee's House counterpart to reject funding for the third ship. Associated Press writer Jerry Harkavy contributed to this report.[16] The Senate's Defense Authorization Bill included $2.6 billion for a third DDG 1000, to be constructed at BIW. But the program met resistance in the House, and that body's Armed Services Committee's version of the bill didn't include funding for the third Zumwalt.[5] "When the House cut the funding, that, in my view, triggered a (Navy) reassessment of the program. "It's up to the Navy to decide what it needs and what the military requirements are, but it's very difficult to understand, for me, what could have changed in just a few months' time between when the Navy strongly testified in favor of the DDG 1000 before the Senate Armed Services Committee in April versus where we are today."[5]
Collins noted that the Navy was touting the need for the DDG 1000s as lately as April, during a Senate Armed Services Seapower Committee hearing.[5]
Bath really is on the front lines." U.S. Rep. Mike Michaud said he was going to push the Navy for two DDG 51s a year for BIW, and wanted to see multi-year contracts to help stabilize the work force. He said he's already talked with U.S. Rep. Gene Taylor, D-Miss., chairman of the House Armed Services' Seapower Subcommittee toward that end.[5] Future threats are going to be missile-related, and the DDG-51 is better at incoming threats from missiles than the DDG-1000, and that's what's going on. It's not about Tom Allen getting off the House Armed Services Committee. It's about building a ship at significant costs that doesn't answer the threats of the future.[1] If the fears that rising costs could torpedo other new ships are indeed behind the decision, it is a tacit recognition that repeated warnings by budget experts from the Congressional Budget Office (CBO), Congressional Research Service (CRS) and the Government Accountability Office that the ships face huge potential cost overruns up to $5 billion each and more were correct. Ron O'Rourke of CRS testified March 14 before the House Seapower subcommittee that cost overruns on the first two ships could drive their combined cost to $10.2 billion an increase of $3.9 billion.[14] The Navy says the cost of the first two ships will be $3.3 billion each, but the Congressional Budget Office estimates a price of $5 billion apiece.[15]
Estimates for the first two run as high as $5 billion. Loren Thompson, a defense analyst with the Lexington Institute, said the Navy can't afford the DDG-1000 but it can't afford to stop building ships, either, if it wants to achieve its shipbuilding goals and maintain a shipbuilding infrastructure. Another problem with the DDG-1000 design was its potential vulnerability. Bombarding the shore with guns is cheaper than using missiles, but the ship would be vulnerable to attack if it came within 100 miles of shore to use its 155-millimeter guns, Thompson said. "The Navy should have understood a long time ago that putting a $3 billion destroyer off the coast of a hostile country so that it could use gunfire was a dangerous proposition," he said. There was no known threat to justify the warship, he said.[2] Sen. Collins said in a statement that the Navy's cancellation of the program was tied to a lack of funding in the House defense authorization bill; the Senate had set aside $2.6 billion for a third ship.[15] Although there has as yet been no public pronouncement of the decision, the Secretary of the Navy has informed members of the Senate and House that the Navy plans to cancel the DDG1000 program after completion of the first two ships.[9]
According to a Senate staffer, the Navy's plans may bring greater scrutiny of weapons-systems modernization efforts on existing Arleigh Burke-class ships. Taking this tack offers no guarantees, however, that ship building won't drain the Navy's budget in the coming years as the industry and the service struggle to keep costs under control.[15] "There's no doubt that the Navy has been concerned about controlling costs on the DDG 1000 -- with a new class of ships, costs are always a concern," said Collins.[5] "I believe that some time ago the Navy side came to the conclusion that the DDG 1000 was not the right ship to pursue," said Work. "The guys who have to put together the Navy budget became increasingly worried about the impact that DDG 1000 would have on the entire navy shipbuilding plan because of its uncertain costs, etc."[5] According to sources, the Navy also considered canceling the second DDG 1000 and building just one, but potentially high cancellation costs led to the decision to keep the ship.[14]
"Zumwalt technologies advance mission capabilities to address current and evolving threats, and support a necessary trend to lower ship personnel levels in an effort to reduce operating costs. These technologies can be leveraged for future or existing ships." Raytheon has not disclosed how much in total it has received from the Navy so far for its work on the Zumwalt program.[6] The move appears to be based on fears that potential cost overruns on the Zumwalts estimated to cost about $3.3 billion for each of the two lead ships could threaten other Navy shipbuilding programs.[14] "The combined cost growth for all seven ships would be roughly $11.8 billion in then-year dollars, which is a figure roughly comparable to the total amount of funding in Shipbuilding and Conversion, Navy (SCN) appropriation account in certain recent years," O'Rourke testified at the hearing.[14]
Using CBO's figures, O'Rourke pointed out that the remaining five ships, projected by the Navy to cost about $12.8 billion, would likely jump about $8 billion.[14]
The Navy initially estimated costs at $1.2 billion to $1.4 billion each -- not much more than the Arleigh Burkes.[5] Each of the warships will cost twice the $1.3 billion that Arleigh Burkes cost.[16]
Officially, the new ships are to cost roughly double the $1.3 billion price of a Burke destroyer.[4]
Previous plans had called for General Dynamics Corp. and Northrop Grumman Corp. to build seven Zumwalt-class destroyers, futuristic ships that have more advanced electronic systems and are able to operate with a smaller crew, which reduces costs.[15] The Navy had planned to buy seven DDG-1000s, which were to be built by Bath and Northrop Grumman Corp.' s Ingalls Shipyard in Mississippi. The program's escalating costs have sparked concerns about its affordability as the service struggles to meet its lofty goal of a modern 313-ship fleet.[7] Tuscaloosa, confirmed that the service wants to end the DDG-1000 line after the two vessels ordered from Northrop's Ingalls shipyard in Pascagoula and Bath Iron Works in Maine.[18]
The question remains whether production of the DDG-51 Arleigh Burke destroyers, the first of which went than went into production in the late 1980s, will provide enough work to keep shipbuilders busy at Maine's Bath Iron Works, one of the state's largest employers.[13] PORTLAND, Maine (AP) - The Navy has decided to scrap its newest destroyer after the first two are built in shipyards in Maine and Mississippi, opting instead to continue building Arleigh Burke destroyers for several more years, members of Maine's congressional delegation said.[13]
The Navy has been debating whether to build more of the current, and less expensive, Arleigh Burke destroyers. A spokesperson for the Pentagon said it would have no immediate comment on its plans. The Zumwalt was conceived as a stealth warship with massive firepower to pave the way for Marines to make their way ashore. It features advanced technology, composite materials, an unconventional wave-piercing hull and a smaller crew.[16] The Navy had been engaging in an internal debate over whether to build more of the current, and less expensive, Arleigh Burke destroyers. The Navy had no immediate comment on its plans, a spokesman said.[13]
Neither shipyard had been officially briefed as of Wednesday. The Navy had no official comment on its plans, either for scrapping the Zumwalt program or for building additional Burke destroyers.[2]
Ingalls is building four DDG-51 destroyers, Glenn said. In a news release Tuesday, Sen. Susan Collins, R-Maine, saw the Navy's reported move as bad news for her home-state shipyard.[18] "A decision to stop DDG-1000 procurement and restart DDG-51 could shift combat system work from Raytheon to Lockheed," said Ronald O'Rourke, a naval specialist at the nonpartisan Congressional Research Service, the research arm of Congress. Jonathan D. Kasle, a Raytheon spokesman, said the company planned to continue its work on combat systems for the two destroyers that have been funded. He suggested the new systems might also be used in other Navy vessels. "We don't believe the Navy can afford to put old technologies onto any ships," he said.[6] WASHINGTON -- Executives at Northrop Grumman Corp.' s Gulf Coast shipbuilding operations had little to say Wednesday about widespread reports that the U.S. Navy will halt production of its next-generation destroyer, the DDG-1000, after only two ships. While a Navy spokesman would also not verify the reports, he did say via e-mail that the service's two top officials were on Capitol Hill on Wednesday.[18] The delegation announced Tuesday evening that the Navy would only buy two of the Zumwalt-class destroyers, now under construction at BIW and at Northrop Grumman Ship Systems in Pascagoula, Miss.[5]
Northrop Grumman Instead of more DDG 1000s, the Navy will continue to build more Arleigh Burke-class DDG 51 destroyers, construction of which had been slated to end in 2012.[14]
The future of the Navy's destroyer fleet is a personal issue for the nearly 6,000 workers at the shipyard. Decisions about which ship designs to build and which shipyards will build them also can have a big impact on the community and the incomes of business surrounding the yard. "Everyone in the city of Bath follows this," said City Manager Bill Giroux.[12] "Even if we did not receive funding for the DDG 1000 class beyond the first two ships, the technology embedded in DDG 1000 will advance the Navy's future surface combatants."[14] "Even if we do not receive funding for the DDG-1000 class beyond the first two ships, the technology embedded will advance the Navy's future surface combatants," said Lt. Clayton Doss.[10]
"I'm very, very concerned about what the implications are going to be." Rep. Tom Allen, following his own meeting with Winter and Roughead, said he expects BIW to get most of the contracts for the DDG 51s going forward. A number of details need to be nailed down, he said, including a clear plan from the Navy that spells out the exact number of ships, a time table and other factors. "This is essentially a change from a program with significant risks to an established program that we have been the lead yard on for years," said Allen. [5] According to Allen, the plan for BIW beyond the DDG 51 extension would likely involve construction of the next-generation cruiser, now called the CG(X), a ship under development. The yard has some possibilities for smaller warships, as well, he added.[5]
Publicly the Navy has long resisted the notion of building more DDG 51s, noting no more of the ships were needed the class had been planned to end with the 62nd ship and significant improvements to the design were hard to come by. [14] The once-vaunted Zumwalt-class DDG 1000 advanced destroyer program projected in the late 1990s to produce 32 new ships and subsequently downscaled to a seven-ship class will instead turn out only two ships, according to highly-placed sources in the Pentagon and on Capitol Hill.[14] Bowing to reality, the Navy is capping the whoppingly expensive DDG 1000 program at just two ships.[9] There has been an on-going internal debate in the Navy over whether to continue the DDG 1000 program or scrap it, said Robert Work, a defense analyst Center for Strategic and Budgetary Assessments in Washington.[5] While several analysts questioned that, others said Raytheon's development work is seen as critical to future Navy combat. "They want the technology Raytheon is developing to mature," said Patrick J. McCarthy, defense analyst for the Washington investment bank Friedman, Billings, Ramsey Group.[6]
"Bath's highly skilled and productive workforce is critical to our national defense. We will do all that we can to ensure their continued productivity. If the Navy decides to pursue nine DDG-51s over the next six years, BIW would have to be guaranteed the work on virtually all of them to maintain its current workload and prevent job losses."[11] There are other ways to make sure Bath's workflow stays constant, Work said. For one, the Navy could opt to modernize the older DDG-51s at the shipyards, rather than at their homeports. Doing that while producing one DDG-51 a year should be enough to give Bath adequate work to maintain its workforce, he said.[7]
Chabraja added that Bath might receive less work, in terms of man-hours, if it produces the DDG-51s instead of the DDG-1000s, but the company's profits could actually increase. For its part, the Navy could take several steps to ensure that the Maine shipyard stays in business.[7]
The Navy could give the majority of the work on the DDG-51s Bath and parcel out more work on other ship programs to Ingalls, whose portfolio is more diverse than Bath's.[7] "Compared to the DDG-51 program, the DDG-1000 program provides far more work and about three times the amount of money for (Bath Iron Works) per ship," Collins said.[18]
Bath's share of the DDG-1000 it now has under contract is $1.4 billion, while the shipyard's share of the most recent DDG-51 it now has under construction amounts to only about $500 million." Allen said this morning that Collins' description of the DDG-1000 cancellation is "misleading." He said he spoke to Chief of Naval Operations Adm.[1] Lawmakers and congressional sources have said the Navy plans to buy anywhere between eight and 11 DDG-51s. If not, Bath could be forced to lay off a significant number of its skilled workers, Collins warned. Each DDG-1000 requires significantly more man-hours than the DDG-51 did during its production heyday in the 1990s, she said.[7] The Navy plans to give Bath the majority of the nine new destroyers, but at a rate of one a year and not as many as seven," said Collins.[5]
Sen. Olympia Snowe, in a seperate statement, called BIW's work force an "irreplaceable national treasure." "Any new proposal by the Navy will be fully reviewed by the Congress to ensure that men and women of the armed forces have a destroyer capable of successfully defending the nation's interests in the 21st Century, and return those men and women safely to the families, loved ones, and a grateful nation," Snowe said in the statement.[11] Workers and city residents woke up to news reports Wednesday that the Navy would not order any more Zumwalt destroyers. "For BIW, it's not a good thing," said John Albis of Litchfield, a maintenance worker in the yard. Albis, however, said he had not yet heard news being circulated by union leaders that improved the outlook.[12]
For years, the Zumwalt has been one of the Navy's prized programs. It has a low profile and composites in its superstructure for stealth. It also features a form of electric drive propulsion, new combat systems and a new hull form.[4]
The service currently has about 280 ships. The lawmakers said they were also told that the Navy had concluded the destroyer's design was not well suited to combating the evolving threat of long-range missiles. Navy representatives declined to confirm they were scrapping the program, nor would spokesmen for Raytheon and General Dynamics.[6] The Bath shipyard, a General Dynamics subsidiary, is building the lead ship, and Northrop Grumman's Ingalls shipyard in Mississippi is building the second ship.[13] Assembly work on the guided-missile destroyers was to have been divided between the 124-year-old Bath shipyard, owned by General Dynamics Corp., and a yard in Mississippi.[6] Roughead made it absolutely clear that we have to take care of BIW, that that yard has to stay open. He was emphatic about that." BIW parent sees profit jump On the heels of the DDG-1000 discussion Tuesday, Bath Iron Works parent company General Dynamics Corp. announced that its second-quarter profit rose 25 percent, reportedly boosted by higher sales of armored vehicles and tanks.[1] "The DDG 51 program, which has been the base program for Bath Iron Works for years, is going to continue to be the base program for several more years."[5] Dugan Shipway, Bath Iron Works president, flew to Washington yesterday to discuss the impact of the cancellation with Maine lawmakers. The lawmakers and their staffs scheduled a series of meetings with the Navy to get more answers.[6] "I'm going to do everything in my power to get a good outcome for the skilled workers at Bath Iron Works. They're my top priority," said Collins, R-Maine.[2] Employment at the Bath Iron Works shipyard has dropped to less than 6,000 from a post-World War II peak of 12,000 in 1991.[6]
Snowe said BIW's work force has proven countless times that the yard can build ships more efficiently than any other yard, and on time. "The men and women at the shipyard have achieved phenomenal success in efficiency and reducing the cost of building these ships," she said. [5] There should be absolutely no layoffs." The shift in plans should provide enough work through 2015, he said. He said, there should be a new generation of ships to build.[12] Depending on the price of the new 51s, anywhere from 8 to 11 ships could be provided over the six-year future years defense plan. "They may continue to build these for the foreseeable future," the source said.[14]
Top Navy and Pentagon brass met Tuesday to make the decision, which means the service will ask Congress to drop the request for the third ship in the 2009 defense budget and forego plans to ask for the remaining four ships.[14] Sen. Jeff Sessions, a Mobile Republican and member of the Senate Armed Services Committee, expected to learn officially of the Navy's plans in the next few days, but said in a separate statement that the decision is not final.[18]
As word of the Navy's decision spread Wednesday, General Dynamics CEO Nick Chabraja said the decision may not hurt the firm's bottom line. During a conference call with investors, Chabraja said he largely agreed with an analysis by Jefferies & Co. that concluded that the Navy's decision is likely to be "more or less neutral-to-positive." "We just don't know all the answers yet," said Chabraja, who said the Navy had not notified him of the cancellation. "We'll find that out as the Navy tells us what their plan is and as we see how their plan is received by."[7]
Cost big factor in decision to sack DDG-1000 Associated Press Growing costs and vulnerability to anti-ship missiles sank the Navy's once-heralded "stealth destroyer," a highly advanced warship designed to slip close to the shore unnoticed and pummel targets with big guns boasting pinpoint accuracy.[2] We simply cannot continue to routinely have huge cost overruns on defense programs." Under its current blueprint, the Navy would build a total of seven DDG-1000s.[18] The DDG-1000's growing cost came as the Navy is trying to expand to a 313-ship fleet.[2]
The Navy's shipbuilding program has been under intense scrutiny from Congress following construction delays and skyrocketing costs.[6] The Zumwalt-class destroyer's costs have the Navy re-examining whether it is necessary for current missions.[15]
The Navy will pursue the construction of additional DDG-51 opnbrktArleigh Burkeclsbrkt class destroyers.[19] The long-rumored end to the next class of Navy destroyers became reality Tuesday, according to Sen. Susan Collins, R-Maine.[1] Senator Susan Collins says the Navy has decided to scrap its newest destroyer after the first two are built.[17]
The Navy now wants just one from each company's shipyards, according to Maine Republican Sen. Susan Collins, who was briefed by the service.[15]
In Pascagoula, the company is prepared to carry out whatever shipbuilding plan the Navy deems best, spokesman Bill Glenn said in a statement. "As a partner with our customer, we will continue to pro vide the Navy our input into how such plans impact the shipbuilding industrial base, realizing that this is one of the many factors included in their decision-making process." He also declined to discuss the potential implications for jobs at Northrop's Gulf Coast shipyards. The Ingalls yard employs about 11,300 workers, some 2,000 of them from Alabama, according to the company.[18] Northrop Grumman expressed a similar sentiment. "We are positioned to support the U.S. Navy to execute the shipbuilding plan which they identify as best meeting their operational requirements and addressing the needs of our nation," spokeswoman Jerri Dickseski said in a statement.[5] Northrop Grumman expressed a similar sentiment. "We are positioned to support the U.S. Navy to execute the shipbuilding plan which they identify as best meeting their operational requirements and addressing the needs of our nation," spokeswoman Jerri Dickseski said in a statement. AP writers Donna Borak and Stephen Manning in Washington contributed to this story. This material may not be published, broadcast, rewritten, or redistributed.[2]
"We're certainly concerned about it." He said, "We're confident that when the Navy need ships, Bath is going to build some of them. They're going to need ships." [12] "The Navy recognizes that. They realize they have to maintain Bath; they need Bath for the future.[5]
"We won't discuss the content of our internal budget briefings," Lieutenant Clay Doss, a Navy spokesman, said yesterday. "That said, we continue to discuss all options to develop the surface ship force for the future that will meet all identified requirements."[6]
Even before the cancellation, the Navy had decided to scale back the program from an original goal of 32 ships to just seven.[6] A Navy spokesman said last week that the termination of the program wouldn't be a total loss despite $11 billion spent in research, design and construction of the Zumwalt.[10] The Navy has spent almost $10 billion to develop the new stealthy warship over the past 15 years and was due to spend another $19 billion in coming years, according to the Pentagon's latest acquisition report to Congress.[8] In March acting Navy acquisition chief John Thackrah told an audience that the service was looking at working in to the design a new SPY-3 radar to replace the current SPY-1 Aegis arrays, and the Navy also has studied fitting the 155mm Advanced Gun System into the DDG 51 hull. Both systems are part of the DDG 1000 design.[14]
The DDG 1000 program, known previously as DD(X), called early on for at least 32 ships, a target that dropped to 11, and then most lately to seven.[5]
"I am confident that the return to the DDG-51 program will maintain a stable work force at Bath for years to come," Allen, D-Maine, said after speaking to Adm. [13] "Adm. Roughead is very impressed with the Bath shipyard and the way they've been able to drive down the man-hours and the costs for each succeeding DDG-51," Allen continued.[1]
Allen, however, said the House's action reflected concerns with the Pentagon about cost overruns and the need for the ships.[5] Winslow Wheeler from the Center for Defense Information said the ship's demise was because of "cost, complexity and irrelevance." "Please tell me what this thing would do today, if it were available in Iraq or Afghanistan?" the defense analyst said.[2] "The ship has tremendous flexibility in a variety of warfighting missions, including the ability to serve as a ballistic missile defense platform," Taylor, D-Miss., said in a statement. "Just as important, the costs of these ships are well known."[2]
The older Arleigh Burke models, which cost less than half the price of the DDG-1000s, have combat systems developed by a Raytheon rival, Lockheed Martin Corp. [6] BIW currently has five Arleigh Burkes under construction at the yard, with the last scheduled for delivery to the Navy in 2011.[5] Gary Roughead, chief of naval operations. The Zumwalt was originally conceived as a stealth warship with massive firepower to pave the way for Marines to make their way ashore. It features advanced technologies, composite materials, an unconventional wave-piercing hull and a smaller crew than the latest Arleigh Burke destroyers.[13]
Northrop Grumman's Ingalls shipyard in Mississippi will build the second Zumwalt destroyer.[2] General Dynamics shares rose by $5.82 to close at $89.27 on the New York Stock Exchange after the company reported higher earnings; Northrop Grumman closed at $68.12, up $1.41.[2]
The new DDG-1000 destroyer was conceived in the early 1990s as a land attack ship that would fend off Soviet-style threats. It later evolved into an all-purpose vessel that could accompany a carrier group in deep water against conventional enemies while also being able to launch special operations to thwart terrorists closer to shore. [6] Lockheed Martin Corp (LMT.N: Quote, Profile, Research ), which builds the Aegis combat system used on the DDG-51 ships, but had lost the contract for the combat system on the DDG-1000 to Raytheon Co (RTN.N: Quote, Profile, Research ), would also benefit, Thompson said.[8] Indeed virtually every state likely has an economic interest in the DDG-1000, and with many of the subcontractors of the DDG-51 no longer with a personal interest, politicians find themselves in a difficult position. They can either support a sea change in the Navy's current course, a decision absent the support of any specific constituency, or support the current course which has the side effect of supporting some specific local voting constituency.[19] As we know from the Boeing-Airbus tanker kerfuffle, final decisions on procurement aren't really final. It would be mildly surprising (although enormously disappointing) if Congress decided to save an incredibly expensive ship that the Navy no longer wanted.[19]
In a Tuesday evening statement, Collins said Navy Secretary Donald Winter called to announce the decision, made earlier that day during a meeting of Navy and Defense Department officials.[1] Snowe was meeting with Navy Secretary Donald Winter today. Collins said she was also meeting with Winter and Chief of Naval Operations Gary Roughead to discuss how to lessen the impact of this decision on BIW.[11]
"There's a lot of stuff we don't know yet," Work said. This uncertainty appeared to fuel Collins' reaction to cancellation. "The Navy has an awful lot of. work to do to flesh out its plan," she said. [7] The Navy wants to curtail plans for a series of high-tech destroyers in the latest sign that budget pressures are reining in some of the defense industry's most ambitious weapons systems.[15] The termination of the Zumwalt program is the latest sign of trouble for the Navy's plans to achieve a 313-ship fleet.[6] "The Navy is likely to propose continuing the DDG-51 program but at inadequate production levels.[13] While the impact on jobs is unclear, Sessions said, "I will monitor it closely." He added that "the Navy has a responsibility to confront high costs.[18]
The estimated cost for each Zumwalt-class destroyer had jumped from $2 billion to more than $3 billion.[6]
The production of the DDG-1000, once celebrated as a next-generation "stealth destroyer," will be halted after the two that have already been ordered by the Navy.[1] The first ship in the class has been scheduled for delivery to the Navy in 2013.[6] Last year the Navy was forced to restructure the Littoral Combat Ship, a next-generation fleet of small, fast attack vessels, opting to acquire just two ships rather than six after engineering problems.[6] To reach the goal of 313 ships in 30 years while retiring older ships at a steady pace, the Navy also wants to buy as many as 55 of a near-shore combat ship, but budget and schedule overruns have raised questions about how many actually will be bought.[15]
The House Subcommittee on Seapower and Expeditionary Forces is expected next week to hold a hearing on the Navy's plans. [15] The House has balked at funding that ship, which would have been built in Bath.[16] "The CNO made it clear that we can't lose Bath," Allen said. "This is the ship that Bath builds, so Bath is going to build these ships."[7]
The service declined comment on the July 22 decision, but in a statement released July 17, Navy spokesman Lt. Clay Doss provided some insight. [14]
SOURCES
1. The Times Record News
2. Cost big factor in decision to sack DDG-1000 - Boston.com
3. Navy Scraps Zumwalt Destroyer Plans - Portland News Story - WMTW Portland
4. The Associated Press: Cost big factor in decision to sack destroyer
5. Navy plans to buy only 2 stealth ships
6. Navy cancels $20b purchase of destroyers - The Boston Globe
7. CongressDaily - Navy Destroyer Decision Thrusts Maine Yard Into Spotlight
8. UPDATE 1-US Navy explains plan to scrap DDG-1000 destroyer | Reuters
9. Shipping, shipbuilding, offshore news
10. SunHerald.com : Navy scraps newest destroyer
11. MaineToday.com | News Update: Maine senators meet with BIW head, Navy brass
12. No yard layoffs forecast
13. Navy scraps new destroyer, to build older models - AP - NOLA.com
14. DDG 1000 program will end at 2 ships - Navy News, opinions, editorials, news from Iraq, photos, reports - Navy Times
15. Budget Pressures Weigh on Navy - WSJ.com
16. The Associated Press: Sen. Collins: Navy scrapping stealth destroyer
17. WCSH6.com | Portland, ME | Collins And Allen React To Decision To Scrap DDG 1000 Plans
18. Shelby confirms reports- al.com
19. TAPPED Archive | The American Prospect
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