Shipbuilder wrings out savings through yard improvements, partnerships.

• Author: Jean, Grace V.
• Position: Navy

Navy officials have come down hard on shipbuilding companies to cut out the fat where they can on soaring construction costs. One U.S. shipyard is embracing the ultra-efficient business practices of South Korean builders.

General Dynamics NASSCO, a builder of commercial cargo carriers and Navy auxiliary and support ships, is attempting to regain control over warship prices that have doubled in the last two decades. The San Diego-based yard is improving its facilities while also trimming overhead budgets, reducing supply chain costs and streamlining labor processes.

"We're looking under all those rocks to try to reduce those costs," says Kevin Graney, vice president of programs.

Since 2005, General Dynamics has spent $150 million to convert the steel construction facilities into a modern "outfit-centric" yard that assembles hulls in blocks that are fully equipped, or outfitted, before being connected and welded into the ship.

"If we're installing a piece of equipment, it's easier to do it on the ground as opposed to getting it up aboard a ship and installing it three floors down below deck where the crane can't get to," Graney explained.

The yard is constructing the final three hulls of a 14-ship dry cargo-ammunition transport (T-AKE) class for the Navy. Because of the facility improvements and a two-ship-per-year construction cycle, program managers have eliminated 2.5 million man-hours of construction time on each vessel.

Navy officials have lauded T-AKE as a model for the way the service will do business in the future.

Rear Adm. Frank C. Pandolfe, director of the surface warfare division on the Navy staff, called it an "effective and efficient building program."

Though part of the efficiency can he attributed to a steady six-year production run, yard officials say that they have benefitted from the commercial side of the business as well. In 2006, the company partnered with Daewoo Ship Engineering Co., a South Korean firm with the world's second largest shipyard, to build vessels for the U.S. market under provisions of the Jones Act. The law requires cargo ships that travel between U.S. ports to be built domestically. So far, the companies have produced for American Petroleum Tankers a five-ship class commercial product carrier designed to transport liquids and chemicals from port to port.

"That opened up an opportunity to bring Korean master shipbuilders over to show us how to improve the facility," Graney said.

The collaboration yielded...