Comment on the Maritime News
January-March 2004
DD(X) SHOULD BE CANCELLED NOW.
The Navy's craven capitulation
to
Northrop Grumman on the need for competition on
the DD(X) program makes it clear who's really running naval shipbuilding.
When was the cost of conducting a competitive procurement ever greater than the
extra cost of not having any competition? Good grief, has nobody in the
Navy noticed how expensive the DDGs have got since they capitulated to Northrop
Grumman on how the program should be divided up? In case you haven't, look
at the chart on the right. In constant dollars, (i.e., adjusted for
inflation) the current prices for DDGs are more than double those at the
beginning of the program. Are the newest DDGs more than twice as effective
as the early ones? Admiral the Right Honorable Doctor Dur may be known as
"God" in Pascagoula, (although not because anyone thinks he's omnipotent), but
that doesn't mean that the Navy has to do everything he says.
My sources tell me that the DD(X) is now so out of control that it's going to cost $1.7 billion, not the $1.45 billion budgeted. A destroyer that costs $1.7 billion. A destroyer that costs $1.7 billion. A destroyer that costs $1.7 billion. Nope, how ever many times you say it, it just isn't believable. This is insanity: it's time for DoD to step in and stop it, as they just did with the Army's Comanche program. Now. Expensive as they are, it would be better to build some more DDGs and to get rolling on the LCS program, while someone rethinks the next generation of surface combatants. Tim Colton, March 28, 2004.
HORIZON LINES FOR SALE AGAIN ALREADY.
The news that
Horizon Lines is for sale again, only 15 months after CSX sold it to Carlyle
Group, confirms what I've suspected all along, that Carlyle Group never
understood what it was getting into. Due diligence is not, apparently, a
concept with which Carlyle Group is familiar.
Here's what I wrote at the time (and read my position paper on this subject by clicking here):
Carlyle is paying $300 million for a company that had net earnings last year of $17 million on total revenues of $681 million, an unimpressive 2.5%. Its net cash flow was, wait for it, zero. The book value of its fixed assets at the end of last year was $167 million. The scrap value of the 13 old ships is around $30 to $35 million, total, and their replacement cost is over $1 billion.
So, if Carlyle didn't buy CSX Lines for its income, and it didn't buy it for its assets, and it can't have bought it for its cash flow, why did it buy it? Somebody please explain this deal to me. Tim Colton, December 19, 2002.
So, the big questions now are (a) who will buy it and (b) how much of a bath will Carlyle have to take? Tim Colton, March 5, 2004.
ADMINISTRATION REQUESTS $13.3
BILLION
IN FY-05 FOR ONLY 9 SHIPS. It's
too much per ship but not enough in total.
Tim Colton, February 13, 2004.
| Program |
# of New Ships |
SC,N |
# of New Ships |
RDT&E |
# of New Ships |
Sealift Fund |
# of New Ships |
Totals |
Prior-Year Costs |
|
CVN 77 |
$626,084,000 |
$352,800,000 |
|
$978,884,000 |
|
||||
|
CVN refuelings |
$333,061,000 |
|
|
$333,061,000 |
|
||||
|
SSGN conversions |
$517,226,000 |
$20,000,000 |
|
$537,226,000 |
|
||||
|
NSSN |
1 |
$2,453,007,000 |
|
$143,300,000 |
1 |
$2,606,307,000 |
$91,330,000 |
||
|
SSN/SSBN refuelings |
|
$353,768,000 |
|
$90,700,000 |
|
$444,468,000 |
|||
|
DD(X) |
|
|
1 |
$1,450,600,000 |
1 |
$1,450,600,000 |
|||
|
DDG 51 |
3 |
$3,444,950,000 |
|
$146,500,000 |
3 |
$3,591,950,000 |
$128,279,000 |
||
|
LHD 8 |
a |
$236,018,000 |
a |
|
$236,018,000 |
|
|||
|
LPD 17 |
1 |
$966,559,000 |
|
$9,000,000 |
1 |
$975,559,000 |
$264,781,000 |
||
|
T-AKE 1 |
|
|
|
|
2 |
$768,400,000 |
2 |
$768,400,000 |
|
|
Littoral Combat Ship |
|
|
1 |
$352,100,000 |
1 |
$352,100,000 |
|
||
|
LCAC upgrades |
$90,490,000 |
$90,490,000 |
|
||||||
|
LCU(X) |
$25,048,000 |
$25,048,000 |
|
||||||
|
Service craft |
$32,099,000 |
$32,099,000 |
|
||||||
|
Outfitting |
$399,327,000 |
$399,327,000 |
|||||||
|
Prior-year costs |
$484,390,000 |
$484,390,000 |
|||||||
|
In all |
5 |
$9,962,027,000 |
2 |
$2,563,000,000 |
2 |
$768,400,000 |
9 |
$13,293,427,000 |
$484,390,000 |
COASTAL SHIPPING
GETS A BOOST.
The news that MARAD has contracted with
Halter Marine to develop the design of a coastal ro-ro is to be welcomed.
It's a smart move by MARAD (see, I can say nice things about MARAD) both
in taking this initiative and in picking Halter (clearly the best qualified yard
for this type of thing) for the job, and it's obviously a smart move by Halter
and its new owners. We have preached endlessly and for over a decade both
that the U.S. needs a coastal ro-ro shipping system and that it's DoT's job to
make such a thing come about. The last administration was never
interested. This one is and more power to them.
Tim Colton, January 23, 2004.
LOCKHEED MARTIN
INVENTS A NEW TYPE OF BOAT.
Lockheed Martin's Littoral Combat Ship, (LCS),
is apparently neither a ship nor a boat but a "seaframe". "Platform" as a
defense-industry euphemism for a ship was bad enough, but "seaframe"? Of
course this vessel also shifts paradigms, so that makes a difference. It
probably takes a seaframe to shift a paradigm. A mere boat wouldn't be
able to handle it.
Read LMT's semi-literate, jargon-packed, preening, self-satisfied nonsense of a press release here. Tim Colton, January 17, 2004.
For comment on maritime news reported in earlier quarters, click on one of the following links:
If you have comments or questions, suggestions or complaints, please e-mail me.