It’s now common knowledge that commercial shipbuilding is in crisis in the United States, and has been for decades—and this revelation is triggering something like universal panic.
There are currently 154 active shipyards in the US, spread across 29 states. That’s an impressive figure, except when you realize only ten are engaged in building large-scale vessels, and only four do any shipbuilding for the U.S. Navy. The possibility that this number may shrink further has put Congress and the current administration on notice. They realize they need to address America’s shipbuilding gap with China before it’s too late. Because if civilian shipbuilding disappears from our shores, the US Navy will be on a trajectory for irreversible decline, as well.
And the gap with China is fast becoming a yawning chasm. China’s maritime fleet has nearly three times the value of the US’s. Even more important, according to the most recent credible report, Chinese shipyards have 200 times the capacity of US yards. Some are building as many as 13 ships at once, with naval and commercial vessels coming down the slips at the same time.
Meanwhile, the FY 2025 budget forecast has the US Navy building just six ships in 2025, while decommissioning 19 vessels—a net loss of 9 ships. In 2023, China added 30 ships to its navy. The United States added exactly two.
Just as in the 1950s defense officials and Congress worried about a “missile gap� with the Soviet Union, now we face a shipbuilding gap with Communist China—except this time that gap is for real, with the future of the global economy, which still rests on transoceanic trade, at stake.
As one might expect, several proposals exist to solve the problem, from pouring more federal dollars into the shipbuilding industry to mobilizing high tech and automation in our shipyards—even imposing tariffs on non-US hulls.
But the most effective approach might be to reinvent the entire enterprise. Doing so will require us to take a lesson out of the history books, and look carefully at how master builder Henry Kaiser managed to upend the entire shipbuilding industry during the Second World War.
Back then, the US faced a similar crisis with the inadequacy of its merchant marine: first, in order to support the UK before and after Lend-Lease, and then to supply a two-million man US military serving across two oceans in Europe and the Pacific. It was Kaiser who stepped in close the gap.
Born in New York, Kaiser moved west in 1906, where he established first a hardware and then a road construction business. His entrepreneurial drive and founder instincts propelled Kaiser to the top of his profession, including building a series of major hydraulic dams like the Hoover and the Grand Coulee. When America began to prepare for war, the same founder instincts pushed Kaiser to look for a major government contract. He found it with shipbuilding, even though he and his team of production engineers knew nothing about shipbuilding before they started.
It's not even clear if Kaiser had ever been to sea.
But between 1941 and 1944, Kaiser surged ship production in ways that had never been imagined. Working with a single simple ship design, he and his colleagues produced over 2,710 of the so-called Liberty ships, build in ten shipyards that never existed when Kaiser got his first contract in December 1940.
Following on the success of his Liberty ship construction surge, Kaiser went on to build 50 aircraft carriers for the US Navy, the so-called baby flattops of the Casablanca class.
Before he was done, Kaiser left behind five important lessons for anyone looking to surge the US merchant fleet and to rebuild our naval supremacy vis a vis China. Three of those lessons are included in this post, Part I. The others will follow in Part II.
Lesson 1: Stop thinking like you are building ships.
Kaiser and his team had never built ships in their lives. But they knew how to make things, from roads to bridges and dams. They also knew to do it ahead of schedule and under budget.
That mentality allowed Kaiser to rethink the entire process.
He thought through the problem horizontally instead of vertically from the keel up, like traditional shipbuilders had done since the ancient Phoenicians. Kaiser introduced a modular system of construction, with pre-assembled units that could be snapped together like Legos. The result slashed construction time. By the beginning of 1943, he had cut the labor hours required for building a ship almost in half, from 640,000 in March 1941 to 352,000.
By 1944, Kaiser and his colleagues were building 50 merchant ships a day. After the war, both the Japanese and South Koreans learned Kaiser’s first lesson when they rebuilt their shipyards, laying the foundation for their current world-beating industries (Japan’s merchant fleet is still the biggest in the world, in terms of market value).
Lesson 2: Rethink processes and materials from the hull up.
Faced with persistent wartime supply chain shortages, Kaiser opted for a ship design that allowed him to cut corners and use more available materials. Liberty ship construction relied on time-saving welding instead of rivets, while standard wooden interior decks were replaced with steel. Kaiser used cement instead of tile for bathroom spaces, and oil lamps lit the galleys and crew bunks instead of electric lights.
Instead of modern diesel or turbine engines, Kaiser relied on an old-fashioned reciprocating powerplant that was a relic of an older maritime age, but which could be built by a variety of different companies in a variety of venues.
There was no firefighting system. It was assumed Liberty ships were on a one-way trip across the Atlantic, as sea-going box cars ready to stow 8,000 tons of war materiel, from tanks and airplanes to ammunition and copper wire.
In fact, far from being throwaway freighters, Kaiser’s design proved so durable that two are still afloat today.
The one material Kaiser couldn’t find a substitute for was steel. Faced with perpetual shortages, Kaiser decided to solve the problem by building a steel mill of his own at Fontana, CA, close by his California and Oregon shipyards. With the help of the finest steel mill designers, the Fontana facility not only proved state-of-the-art but also outperformed comparable efforts. Kaiser finished his plant five months before the government finished its US Steel plant in Geneva, Utah—even though Geneva had a years� head start. Kaiser’s plant also cost less than half the government’s version.
Today, the Kaiser edge isn’t from steel or cement, but from introducing AI to drive automation and massively accelerate productivity and the construction process.
It’s about introducing new composite materials, like fiberglass-reinforced polymers (FRP) and carbon fiber-reinforced polymers (CFRP).
It’s about turning to 3D printing to speed up delivery of key components and to cheaply produce standardized parts needed for specific uses and requirements.
Lesson 3: Stop worrying about workforce, just hire and train whoever is willing to show up.
All through the war, industrial workers were free to go where and when they liked. The Kaiser shipyards offered higher wages than comparable wartime industries, and Kaiser and his team always assumed anyone who came to work would need to be trained from scratch, including the thousands of former secretaries and housewives who came to learn the shipbuilding business. Kaiser also ignored race and color when hiring and employing his workers; the key shipyards in Richmond, CA and Portland, OR were true meritocracies.
When word spread of the advantages of working for Henry Kaiser, Henry wound up having to schedule special trains to move would-be employees in the eastern states to the West Coast.
Kaiser and his colleagues like Steve Bechtel at his Liberty shipyard in Marin County, CA firmly believed workforce issues shouldn’t be treated as a problem, but as an opportunity. To put it in more familiar terms: if you build it, meaning the new shipyard or the new facility, they will come, meaning the workers.
The entire experience of World War Two proved them right.