by Cathy O'Keefe
DoD Industrial Base
After the Cold War, the U.S. Department of Defense (DoD) significantly reduced its acquisitions. This caused a corresponding decline in the supply base that provided the systems and products that the DoD was purchasing. Without the DoD’s demand for many products, the market did not exist to allow these suppliers to continue to operate at Cold War era levels; causing either significant decreases in workforce or complete exit from the market. For example, the Ohio Class submarines were built between 1976 and 1997. During their construction, roughly 17,000 companies contributed to the effort. Today, efforts to replace these submarines with the Columbia Class are progressing with only about 3,000 suppliers.
Shipbuilding
New construction shipbuilding has a limited number of suppliers. While there is some competition between these suppliers, it is limited even where it exists. For example, only two shipyards, General Dynamics Electric Boat (EB) and Huntington Ingalls Newport News Shipbuilding (NNS), are involved in the construction of Virginia Class submarines. These shipyards do little to no commercial work and rely on government contracts and planning. When DoD scheduled work ebbs and flows, it may lead to a relatively rapid increase or reduction in the shipyard’s labor force, which may result in efficiencies.
Some examples can be easily found in the news. In 2013, EB indicated that it was intending to downsize by nearly 500 employees due to both the Navy’s decision to inactivate rather than repair the USS Miami and not being awarded repair work for the USS Springfield. At the time, EB actually notified the Department of Labor that 94 employees would be laid off due to a decline in contracted work. In 2015, NNS laid off 480 salaried employees and was expected to continue layoffs during the next two years. This occurred because three aircraft carriers were due to be delivered within the “next” 18 months leading to a decrease in future workload.
While layoffs are common when DoD workload decreases, hiring for increasing workload can be difficult. In the past, employees that have been let go might have returned to the workforce, but in recent years it is much more likely that these employees will move on to other employment. Additionally, the pool of new employees has dwindled in recent years. For example, in June of 2019 USNI News discussed the current struggles surrounding recruitment and retention for the shipbuilding industry, which included an aging workforce, lack of stability in contract workload, and pressure for high school graduates to go to college while not knowing about careers available in shipbuilding.
Given the impact DoD shipbuilding decisions can have on employment and the difficulty in increasing the workforce, it is important for the DoD to consider the impact shifting their planned repair and construction contracts may have on a shipyard’s ability to execute the work required in an optimal manner that represents the best value to the Government.
Workload Example
To assist in visualizing the importance of balancing workload, a theoretical company’s project workload is presented. This company has been contracted to complete 5 projects over the next two years. In this example, a single item typically takes 3,400 hours to complete. Table 1 provides additional details on each project.
If the supplier were to simply complete all work as soon as it was contracted, they would end up with the workload plan found in Figure 1. From a manning perspective, this plan is unsustainable. It would require as many as 12.5 employees in 2020 (based on a 2080 man-year) and as many as 15 employees in 2021 with large troughs in between these peaks and no work after mid-2021.
Instead, if the supplier spreads the workload to smooth their manning needs while still meeting the required delivery dates, the minimum manning needs (seen in Figure 2) are about 5 employees and the maximum is about 6.75 employees (disregarding the December 2021 drop off for this exercise). This allows the supplier to maintain a more stable workforce, reducing the need for frequent layoffs and re-hiring.
If the supplier did not have the contract and delivery information found in Table 1, it would be significantly more difficult to plan for a steady state of work. Additionally, if a single project is unexpectedly removed from the plan, for example Project B, all other projects would need to be re-worked as much as possible to attempt to fill the gap that would be created in the workload. Otherwise manning requirements drop to just between 1 and 2 people in late 2020.
If the supplier were to work towards smoothing the remaining workload without Project B, an option such as Figure 4 results in a maximum necessary manning of just over 5 versus the maximum 6.75 that was needed when all 5 projects were still included.
The example presented in the fictional company above demonstrates the effect that the removal of a single project can have on a company’s workload plan. It also highlights the importance of a company’s knowledge of upcoming work in planning their workload and staffing requirements.
As the driving force in workload for many shipbuilders, the Navy must consider how they change the staffing at a shipyard when work is added or removed and how this will impact a shipyard’s ability to best meet the Navy’s future needs.
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