Navy secretary says shipbuilders need long-term focus

Navy Secretary Donald Winter told the shipbuilding industry Tuesday to get beyond its short-term focus on its earnings and think more of the long term and national interests.

In a luncheon speech at the Navy League's annual forum, Winter used terms such as "storm clouds on the horizon" and warned that the relationship between the Navy and industry is "fraying" in urging the industry to make fundamental changes to help the Navy meet its challenge of expanding its fleet with limited funds.

Later at a news conference, Winter said he was not suggesting that the industry needs to reduce the number of shipbuilders to match the relatively few ships the plan suggested will be built each year. "I do not want to specify the solution," he said.

Addressing an audience heavy with defense industry representatives at the Wardman Park Marriott, Winter noted the Navy's recently released "ambitious, comprehensive" 30-year shipbuilding plan that promises to build the fleet up to 313 ships from the current 281.

But to make that plan work, he said, "we need a better alignment between the industry and the Navy. From where I sit today, I see diverging interests."

A former defense industry engineer and executive who ended up as a Northrop Grumman sector president, Winter said the defense industry is increasingly focused on "short-term financial goals," which prevent a long-range strategy to provide what the Navy and the nation may need.

Winter said the Navy was offering industry a long-range plan on which it can base its investment decisions and called for "a balance" between the need to satisfy the stock holders and Wall Street and what would be required to help the Navy build those ships at a price it can afford.

After his speech, a member of the audience noted that all of American business shared the focus on short-term interest that Winter decried and asked what can the Navy do to help the defense industry change that view.

Winter replied that the best thing the Navy could do was to provide some stability in its acquisition plans so industry could plan for the future.

In the news conference, Winter indicated that the Navy has given up on its previous effort to force a competition between Northrop Grumman's and General Dynamic's shipyards to build the DD(X) destroyers.

Noting Congress's insistence that both yards share the work, he said, "we have to accept the reality that we're going to have two yards involved." With seven ships planned, he said, one yard will get an extra ship, which he hoped would create some competition to reduce cost and improve quality.