Can the shipbuilding strategy withstand an economic recession?

In just a few days (or weeks?) an announcement will be made about the decision on which shipyards will be chosen as the ‘winners’ of the two main components of the NSPS.  There will be equal amounts of happiness and furore over the outcome, and maybe even a lawsuit or two as has been the case in the past.  But, the world economic situation is not good at the moment and the most optimistic predictions are only for a long period of very slow growth.  What might be the result if the world collapses into a very deep recession?

The timing of the government’s strategy is problematic.  While the move to create a long-term, stable relationship to build and maintain the country’s federal fleets is logical and, I feel, will result in a positive economic influence, the competition for federal dollars will be fierce if the failing global economy drags Canada into a deep recession.  How will the need of the national sea services for reliable and capable ships compete with funding for health care, employment insurance, and government-funded ‘stimulus’ programs?

Most famously, the Roosevelt government used shipbuilding as a means for economic stimulus before the Second World War.  Not only was it very successful, it provided the strategic means for the United States to build the maritime power to ‘tip the balance’ in all theatres of that war.   The post by ‘Galrahn’ on 04 October contains a very important concept about the long-term advantages of having a stable shipbuilding industry.  He wrote: “The navy will do what they have always done when budget cuts come - they will retire old ships quickly and throw everything they can towards building new ships.”  The ships are merely the product of the strategic capacity that the industry represents.  In Galrahn’s view, the most important issue is to sustain the industrial base and, if necessary, sacrifice existing operational capacity to ensure future capabilities.

Canada does not have this option, at least not at the moment.  The industrial capacity is largely dormant and the naval leadership is fixated on maintaining the fleet, as evidenced by the one-for-one replacement philosophy in the strategy.  Cutting existing capability is a ‘non-starter’ for any admiral leading the institution.

From the Canadian perspective, the argument could be advanced that the USN has a lot of overcapacity that can be cut, although most analysts in America believe their navy has already shrunk too far.  What view of the Canadian navy will ‘win out’ if the monies in the NSPS shrink by half, or more, as the result of a major economic recession?  Here is what I believe is the ‘nightmare scenario’ for the navy:

First, the government will mandate that the Arctic and Offshore Patrol Vessel program goes ahead as their ‘highest priority’ under the Canada First Defence Strategy.  The navy has been ‘dumbing down’ the capabilities of these ships in the hopes that the naval reserve will be able to provide the bulk of the crewing, if not all of it.  Six or eight ships will be built, with the prospects of more following being viewed politically as decidedly better than building more frigates.  The MCDVs will be scrapped.  The AOPVs will form the ‘backbone’ of the future RCN, and, unwittingly, will bring to fruition the leadership’s ‘one navy’ philosophy.

Second, the JSS project will result in only two enhanced AORs that will be capable of embarking cargo and some vehicles for Humanitarian Assistance and Disaster Relief missions.  HA/DR tasks, along with technical maritime assistance to fragile states, will become the major focus of government diplomatic outreach and the navy will be required to live without operational sustainment for long periods of time while the AORs are out ‘doing good in the world’.

Third, the frigate modernization and life extension program funding will prove insufficient, resulting in less than half of that part of the fleet being updated.  The unmodernized frigates will be put into reserve status, and will eventually be cannibalised for parts, then sold for scrap.  The others will follow within 10 years.  The navy will confronted with the difficult choice of putting ‘regulars’ into the AOPVs to ‘save their numbers’ or chopping the naval reserve.

Fourth, the submarines will be decommissioned on the grounds that they are both too expensive to maintain and irrelevant due to their very limited ability to operate in the Arctic.  The last of them will go out of service quite swiftly, before the next federal election.  A series of underwater listening arrays and unmanned drones will be deemed ‘adequate’ for Artic surveillance.  The navy and the air force will squabble endlessly over who should operate these drones.  Strangely, neither side will want them.

Lastly, the future single-class surface combatant program will run into horrific cost escalation problems, with advanced sensors and weapons being far beyond the means of the resources provided by the strategy.  The government will be faced with a very difficult decision: to build mediocre warships in Canada, or to buy first-class warships in the United States.  Seeing Canada’s swiftly reducing maritime power, the United States will ‘make a bargain offer that the government cannot refuse’ to sell four Arleigh Burke-class destroyers with the advanced capability to shoot down ballistic missiles.  This will integrate Canada into the American plan to sea-base the majority of its ballistic missile defence system.  Only a conservative government would contemplate such a move, and they will think long and hard about it.  The need to keep Canadian borders open for our exports to the United States will exert unbearable pressure on the government to integrate itself deeply with the American plan.

The net result of these five developments will be that the Royal Canadian Navy has swiftly declined as a national capability to that of a mainly coast guarding and diplomatic initiatives force.  This will be in keeping with Canadian national values and popular perceptions of our status as ‘peacekeepers’ and there will be no public protests about the change.  The decision to build some kind of a limited naval war fighting capability will hinge largely on the question of cost.  Canadians are, after all, cheap.  The political future of the government in another ‘Great Depression’ could hinge on whether or not they build or buy warships.  The American experience with economic benefit suggests that they should build their own.  But, the attractiveness of ‘real capabilities’ has been enough to sway several Canadian governments to buy their premier warships offshore, and let the political fallout go where it may. Only time will tell what will happen. Stay tuned.