We used to visit Brian Potter's site Construction Physics fairly often but then, as with Warren Buffet's Letters to Shareholders and a few other other sites, they become popular, the crowd moves in and we move on thinking "My work here is done." But now, we're back.
From Construction Physics, September 5:
For those of us worried about America’s ability to manufacture things, there’s no shortage of worrying indicators to point to. Manufacturing employment has fallen by a third from its peak in 1979, even as the population has grown by nearly 50% over the same period. Storied manufacturing companies like Boeing and Intel are struggling. From machine tools to industrial robots to consumer electronics, the list of American industries where manufacturing capability has been hollowed out is long.
Another worrying indicator is shipbuilding capacity. Commercial shipbuilding in the U.S. is virtually nonexistent: in 2022, the U.S. had just five large oceangoing commercial ships on order, compared to China’s 1,794 and South Korea’s 734. The U.S. Navy estimates that China’s shipbuilding capacity is 232 times our own. It costs twice as much to four times as much to build a ship in the U.S. as it does elsewhere. The commercial shipbuilders that do exist only survive thanks to protectionist laws like the Jones Act, which serve to prop up an industry which is uncompetitive internationally. As a result, the U.S. annually imports over 4 trillion dollars worth of goods, 40% of which are delivered by ship (more than by any other mode of transportation), but those ships are overwhelmingly built elsewhere.
In many cases, American manufacturing woes are a story of dominance (or at least success) followed by decline and stagnation. But with shipbuilding the story is different: U.S. shipbuilders have struggled to compete in the commercial market since roughly the Civil War. Outside of a few narrow windows, the U.S. has never been a major force in international shipping. The situation we face today, with U.S. ships costing at least twice as much to build as ships built elsewhere, is not a recent development; it’s been the norm for at least the past 100 years.
Golden age and decline of US shipping
To find a competitive American shipbuilding industry, you need to go back prior to the Civil War, to the era of wooden ship construction. The period from 1840 to 1860 is considered the golden age of American shipbuilding. Thanks to an enormous abundance of wood, and a long tradition of wooden shipbuilding, the U.S. built some of the fastest ships in the world in the form of packet ships and their descendants, clipper ships. When gold was discovered in California in 1848, most of it was brought back east via clipper ship. U.S. shipbuilding was commercially competitive enough that on the eve of the Civil War, roughly 2/3rds of America’s foreign trade was carried on U.S. ships.
But the wooden ships the U.S. was so adept at building were already in the process of being displaced by iron, steel, and steam. This process did take time. While the first steamships were built at the end of the 18th century, sail-powered wooden ships remained superior for ocean transport for decades. Early steam engines were large, bulky, and comparatively inefficient, and the huge volume of coal required to feed them forced steamships to stop mid-journey at coaling stations, and to be equipped with sails in case coal ran out. Early steamships were also slow, traveling roughly half as fast as the American clippers. But over time, steamship technology improved with inventions like the screw propeller and the compound engine, and the advantage of sail-powered wooden ships was slowly whittled away. By the 1860s, it was clear the future of oceanic shipping was in steam-powered metal ships.
But American shipbuilders were reluctant to transition to building steamships. They were experts in wooden ships, a technology that was still improving, and building a steam-powered metal ship required a totally different set of skills (more akin to what was needed to build a locomotive). Additionally, Britain had what seemed like an insurmountable lead given its proficiency in ironmaking and steam engine construction, a lead U.S. shipbuilders were reluctant to challenge. Thus, despite being the birthplace of the river steamboat, the US lagged behind in the construction of ocean-going steamships. Construction of sail-powered schooners used for coastal trade in the U.S. didn’t peak until the early 20th century, and in 1905 73% of the US’s ships engaged in foreign trade were sail-powered, compared to less than 20% of Britain’s....
....MUCH MORE
