Under construction: smarter shipbuilding could help ease Navy's budget troubles.

• Author: Jean, Grace V.
• Position: Shipbuilding - Cover story

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MARINETTE, Wis. -- When the Navy's first littoral combat ship was in its final construction phase at this shipyard near Lake Michigan, about a quarter of the hull protruded from the end of the 300-foot long indoor facility that shields workers from subzero temperatures.

The 374-foot USS Freedom, which was delivered to the Navy last fall, was Marinette Marine Corp.'s largest and most complex ship construction project. In anticipation of building more of the Navy's newest class of warships, officials here are planning to give the 67-year-old yard a significant makeover so that it can churn out the littoral combat ship faster and cheaper in the future.

With 55 ships expected in the class, the LCS is central to the Navy's long-term plan to expand its fleet to at least 313 ships by 2020. Navy officials wanted to build these vessels--modeled on two designs--in smaller commercial yards to take advantage of lower costs and shorter construction periods. But both lead ships have experienced significant cost overruns and schedule delays.

With tightening budgets and angry lawmakers chasing down wasteful defense programs, there is increasing pressure on the Navy--and the shipyards--to control costs. Builders of the LCS are modernizing their yards with automated machinery, computer-based tools and expanded construction areas to drive down those costs and increase production.

"Over the last decade or so, a lot of mid-tier companies have started to put significant investments into their facilities, both to increase capacity and improve efficiency," says Joe Carnevale, senior defense advisor at the Shipbuilders Council of America, a trade association that represents the industry.

Founded in 1942 along the Menominee River, which forms the border between Wisconsin and Michigan, Marinette Marine has evolved from building wooden barges to constructing the steel-hulled version of LCS. The company is part of the LCS team led by the Lockheed Martin Corp. Through the years, the shipyard has grown to encompass 300,000 square feet of indoor production areas on 60 acres about a quarter mile upriver from Green Bay. But the yard's layout is outdated, officials say, and they aspire to transform it into a modern, efficient facility with state-of-the-art equipment.

Unlike larger government-owned shipyards, mid-tier yards that employ 600 to 1,200 workers such as Marinette Marine must rely on state grants and other types of public and private funding for improvements.

While the American Recovery and Reinvestment Act includes $100 million to help recapitalize small shipyards, only 25 percent of the funds would be available to the mid-tier yards through competitive bids.

Earlier this year, Marinette Marine became a subsidiary of Fincantieri S.p.A., an Italian shipbuilding company based in Trieste. Known for its work in the European commercial and military markets, the parent firm is investing $60 million in the Wisconsin yard for upgrades.

The yard recently launched a five-year capital investment plan, says Duane Roehm, vice president of program management at Marinette Marine.

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European shipyards have added a great deal more automation than U.S. yards, and they have a higher throughput with a smaller workforce, Richard McCreary, president of Marinette Marine, points out. His hope is that Fincantieri will bring similar advancements to Marinette. "These are all improvements that they have made in years past in their own shipyards," he says.

Unlike the automobile industry, whose manufacturing plants rely heavily on robotic systems and moving assembly lines, building a ship requires a labor-intensive, hands-on approach. It commences with steel plates that are cut into panels, which are erected into three-dimensional blocks, called modules. The modules are outfitted with ship components such as piping, ductwork, electrical wiring and light fixtures. Cranes then hoist the modules into larger blocks, where the ship pieces are connected, and the sections finally are welded together to form the vessel.

Automobile assembly lines typically are housed in mile-long facilities through which the vehicles proceed along one continuous conveyer. But at this shipyard, materials pass through multiple buildings and shops before amassing at a final construction...