An economic analysis of investment in the United States shipbuilding industry

Executive Summary

This thesis analyzes the U.S. shipbuilding industry's economic impact, particularly its potential as a stimulus during the 2008-2009 recession. It compares shipbuilding's monetary and labor market benefits to alternative investments, finding it comparable in monetary terms but superior in job creation. The study concludes that the industry's excess capacity could absorb increased demand, providing prompt economic recovery.

Why It Matters

This document is crucial for defense and geopolitical analysts as it examines the economic underpinnings and strategic importance of the U.S. shipbuilding industry, directly linking defense spending to national economic health and strategic fleet goals. Understanding these dynamics is vital for assessing industrial base resilience and future naval power projection.

Key Takeaways

• U.S. shipbuilding generates monetary benefits comparable to other sectors but supports significantly more labor.
• The industry possesses excess capacity, indicating a readiness to absorb increased demand and contribute to economic recovery.
• Investment in shipbuilding aligns with strategic goals like the 313-ship fleet target while providing substantial economic stimulus.
• The U.S. Navy's budget for ship construction experienced only modest real growth despite the 2008-2009 recession and federal stimulus packages.
• The 2010 Quadrennial Defense Review reaffirmed a fleet size goal of 313 ships, requiring significant annual investment.
• The research utilized economic models (Leontief inversion process) and data from the U.S. Bureau of Economic Analysis to compare shipbuilding with alternative investments.

Strategic Relevance

The strategic relevance lies in demonstrating how investment in the domestic shipbuilding industry not only supports national defense objectives, such as maintaining a 313-ship fleet, but also serves as a potent economic stimulus, creating jobs and leveraging existing industrial capacity. This dual benefit makes it a critical consideration for national security and economic policy.