LCS cuts could strain shipbuilding industry.

• Author: Versprille, Allyson

Projected reductions to the Navy's littoral combat ship program and the ensuing uncertainty surrounding the platform could have a significant impact on the industrial base, according to experts and industry executives.

New concerns over the program's long-term future stem from a December memorandum in which Secretary of Defense Ash Carter directed the Navy to reduce its combined procurement of littoral combat ships--and the more heavily-armed frigates to follow--from 52 to 40. The memo also called for a downselect to one variant of the vessel in fiscal year 2019.

Carter's directive lays out a construction plan to build one ship per year--at alternating shipyards--from 2017 to 2020, and two ships in 2021, removing a total of eight vessels from the Navy's future years defense program for fiscal year 2017 to fiscal year 2021.

The 2017 budget request released Feb. 9 asked for funding for two ships in 2017--one more than what Carter had directed in his memo--in order to give the two manufacturers of LCS, Lockheed Martin and Austal USA, a more even playing field when competing in the 2019 downselect. The new budget request will add an extra littoral combat ship, while cutting a frigate that would have been purchased after 2021, committing the Navy to 33 LCS and frigates within the FYDP and seven frigates forecast outside of the FYDP, for a total of 40 ships.

Bryan Clark, a naval expert at the Center for Strategic and Budgetary Assessments, said cuts to the program would have a significant impact on both shipyards. The Austal shipyard located in Mobile, Alabama, and the Fincantieri Marinette Marine shipyard in Marinette, Wisconsin--where the Lockheed variant is being constructed--were sized for the three ships per year the Navy originally planned to build through 2025, Clark said in an email. Fiscal year 2019 was an exception with only two ships allotted for construction.

"A reduction from that level will result in layoffs at both shipyards to control costs," he said. "If the Navy does not develop and fund a follow-on ship, die shipyards will have to begin laying off workers as they work through any backlog on their current ships, which is not large at this point."

Employees who work in the initial construction phases such as welders, shipwrights and pipe fitters will be the first laid off, and those who outfit the ships such as electricians and combat systems installers will be let go last, he noted.

Layoffs of the former could occur at one of the shipyards as early as fiscal year 2018 when the Navy is projected to buy a single ship, allocated to only one of the LCS manufacturers, Clark said. "The other shipyard is going to be stuck and not going to be able to keep those people [working in those initial stages] gainfully employed."

The directive in Carter's memo to downselect from two vendors to one in fiscal year 2019 is "perhaps the most disruptive aspect of the decision," Clark said.

Technically, both shipyards could bid on the single variant for the frigate design, and the Navy could award the ship to both shipyards at about one per year, he said. But that scenario is unlikely. "The two LCS variants are so dramatically different--one is a steel monohull and the other an aluminum trimaran-that either builder would have to invest tens of millions of dollars to retool to construct the...