> Is it that the US ship builders aren't competent
Yes, they are woefully uncompetitive. They produce single-digit numbers of commercial oceangoing ships annually, at 2-4x the cost of elsewhere. It’s an industry on life support.
Canada has the same problem with building icebreakers.
The problem with icebreakers capable of dealing with multi-year ice is that they're a very expensive and specialized kind of ship that's hard to construct, but also the sort of ship that has a very long lifetime. Only a few governments in the world have any need of such ships, and they typically only need a few in the span of many decades.
By the time Canada got around to looking for new icebreakers, not a single shipyard in the country had made one in many decades. Ordering a ship from someplace foreign that had actually made one recently would be cheaper than trying to make one domestically. However, then shipyards that haven't made an icebreaker for twenty years would become shipyards that haven't made one for forty years.
It really would make a lot of sense for close allies like Canada and the U.S. to collaborate on building icebreakers.
Finland is part of NATO. The US and Canada should collaborate with it too. Sharing knowledge is a perfect way for European NATO allies to carry more of the collective defense burden.
Does it really make sense for Finnish shipyards to share knowledge of icebreaking when there the released text above discusses things such as the US and Canada selling icebreakers to third parties?
It seems more like a way taking over the industry from the Finns.
Obviously there may be specifics of the deal that makes it acceptable, but the vague text I see seems just terrible for the Finns.
I suppose it might be accepted because of the Canadian ownership of the shipyard in question.
It is in US/Canada's interest to have a shipyard in North America building ice breakers. Even though Finland is a NATO member, if something happens to Finland NATO may need some ship yards elsewhere to build more ice breakers (running 24x7 shifts!) while liberating Finland. Remember NATO (and military in general) needs to plan for all worst cases not likely cases.
The above does not mean the shipyards need to be US/Canada. If they are Finland owned and operated that is fine. So long as the workers and a couple (minor) engineers are local that is enough - in the worst case (Finland's shipyard is taken and all the experts there killed) that shipyard is expanded and has some expertise to build on.
Yes, but the yard is Canadian owned. I suppose it was Russian-owned before.
But the combination of foreign ownership together with exporting know-how, this combination is kind of how one loses an industry to some other country; and then upon that there's that you can't even sell to the country that owns the company because of protectionism on their part.
It is a case of economic security. US National Security Advisor Daleep Singh spoke about this on the Odd Lots podcast a month ago. The goal is an integrated supply chain across all three countries, and an end result of marketing the ice breaker capacity to other allies.
Yes, he says 'What do they get. Well, in exchange, we agree to integrate our ice breaking supply chains so that they are interoperable at every stage of production', but that doesn't actually benefit Finland
Furthermore, suppose that it actually was something substantial, some kind of deal that NATO icebreakers are to be made by the US, Canada or Finland, then you screw the Aker group in Norway, who also make icebreakers.
The way I see it they expect that since the Canadians have been able to nab the shipyard after the disorder caused by the sanctions they can transfer all the knowledge from the Finns and make the icebreakers themselves, seizing appealing high-tech shipbuilding niche from the Finns, and they offer nothing in return but bullshit.
An integrated supply chain, sure, maybe that can save money, but once you've transferred your knowledge you no longer have your niche.
I think this is very obvious in the talk because of the vagueness in what is offered to the Finns; and my interpretation is that nothing meaningful is offered to the Finns and the the US is just expecting to seize this niche.
I don't think the 'there'll be enough for all of us' talk is plausible either. Surely, there might be an expansion demand, but there's really only the Baltic and the polar area that matters, and maybe US and Canada together do need 40 or so icebreakers to keep the North-West Passage safe and open in case it is to become a major trade route, but they'll last basically for ever, and my understanding is that the US is talking about only nine or so.
"US: cost $800-$900 million per ship ($1.1-$1.3 billion in 2024 dollars)
FIN: Finnish shipyard can build a heavy icebreaker for just a few hundred million dollars"
Bill North Americans for $500-600 million per ship? Can give some discount if significant amount of these projections indeed gets built
ODD LOTS: "And our best estimate is that the global total global demand for ice breakers over the next decade from allies and partners is between seventy and ninety vessels."
It's an interesting side note that in the 80's the Soviet Union, despite having a large icebreaking ship building capabilities, also bought icebreakers from Finland (then not a member of NATO)
Including a couple of Nuclear ones (they fitted the nuclear engine themselves):
When I was living in Helsinki, there were two huge icebreakers there whose main job it was to keep the baltic see open for the Russians. I think that probably changed a bit since they joined NATO.
I guess that aside from Alaska, the US doesn't have to deal with a lot of sea ice and isn't that dependent on arctic shipping routes. For Russia that's very different. The sea near St Petersburg can freeze over and Murmansk is also hard to reach in winter. And with Svebastopol and the black see fleet out of action, those would be strategically important for Russia. And they rely on the northern arctic route for trade with China as well.
The US Navy will send ships in the Arctic Ocean past Alaska. It tends to be more common for submarines to be there, but surface ships do go there on occasion.
Well...it's reasonable for the shipyard to still employ folks with hands on experience 20 years later. I occasionally get tapped to pitch in on things I did 20 years ago (even if it's just "why the hell did you do this?"), and shipbuilding changes vastly slower than my gig. That's much less likely 40 years on.
More likely though isn't the same as likely. If I'm going to buy an icebreaker from a foreign supplier, sure the US is in the market, but they're still more expensive and take longer than Finland.
To get good at something, good enough that you're competitive on the world stage, you need to be building lots, iterating, getting feedback and so on.
The US coast guard doesn't have the need to kick-start that sort of scale of development. So it takes a fortune (think 10s of billions) to catch up to the Finns.
But the headline number is somewhat irrelevant. 300m sent to Finland is "gone forever". 1.1 billion spent in the US boosts the economy, and ultimately works its way back to the govt in taxes.
The benefits have little to do with "preserving skillset" and more to do with the economic benefit of circulating another billion in the local economy.
I didn't mean it to be tasteless, and it wasn't personal against Finland.
My point was that "internal spending" and "external spending " are not (economically the same thing. Obviously, Finland wants to export - tests a given - but the price tag of a Finnish ship and a US ship are not the same unit.
No worries. From a national sovereignity perspective, I can see what you were trying to say. Especially with the growing international tensions, wanting to maintain an industrial and manufacturing base is a rational take.
FTR: I think that the CHIPS act is based on good intentions. US has identified advanced semiconductors as a strategic, critical base. Trying to in-shore the manufacturing and skills is clearly a desirable goal. But in case of something as niche and "bulky", ice-breakers feel more like they'd fall under comparative advantage.
You can look at China. They have had a persistent strategic goal to build up their advanced manufacturing base, and after sustaining that for >30 years, are now at the position where they can start to close off foreign suppliers. That shows roughly how long similar shift of balance could be expected to take if you wanted to counteract.
>But the headline number is somewhat irrelevant. 300m sent to Finland is "gone forever".
You can make a deal that US buy icebreaker for 300M from Finland and Finns buy weapons from US for 300M. They need it because of Russia and you boosts US economy in other areas.
You get 300 million asset. If that asset produces more than 300 million in economic value you would have generally missed, isn't it still decent investment? If you do not need icebreaking, why spend money in first place? And instead use it somewhere that you get both benefits from.
Curious why the US does not think this is a big problem. I mean, look at the US 80 years ago. The US easily out produced the Axis. We could produce faster and cheaper. There's really no excuse that the cost of making canon shells is 10x higher than Russia. Isn't being able to manufacturing cheaply the signature of a highly developed society? Besides, expertise is not just volumes of blueprints, right? We can only keep our expertise by actively doing. If the next war breaks out, how would the US win? By sending armies of lawyers and coders?
The US outproduced the axis towards the end of the war but it was a real mess for the first few years while industries retooled and the government broke through obstacles like the aluminum cartel. It was only after Pearl Harbor and the formation of the War Production Board in 1942 that manufacturing really picked up because everyone felt the existential threat and organized against it.
The US can’t make cheap artillery shells because we don’t have much artillery manufacturing. Our armies just don’t use much artillery. We use mostly guided munitions dropped from planes and rockets fired from the ground, whereas Russian doctrine has always focused on artillery.
> We use mostly guided munitions dropped from planes and rockets fired from the ground, whereas Russian doctrine has always focused on artillery.
Thanks for the specifics. I don't know about guided munitions, but I'd imagine a million dollar a rocket will be quite expensive for a prolonged war. Also, the US debuted a killer zone, Rogue 1, a few months ago, and it cost about $94K. $94K! I'm sure the drone is more advanced than DJI Mavic 3 Pro, but is it really 50 times more advanced even if we take the cost of military-grade into consideration? It looks to me the only explanation is that without a healthy manufacturing sector in the US, the cost of anything would go through the roof because we have lost the economy of scale.
A million dollar rocket is expensive, but it hits exactly where you want it and so you need far less of them. Artillery is a lot cheaper but also much harder to get exactly where you want it and so you end up using far more of it.
Note that Russia and the US have both guided misstles and artillery. Both have value in different situations. They both have their reasons for their preference, but that is more about how they expect a war they are involved in to look than about thinking one is better.
Every hear the term "arms race". This is a constant in history. There precision weapons that don't use GPS. There are various ways to evade GPS denial (I don't know how effective they are). We will constantly be in a race of out doing each other.
There are alternatives to GPS but they are expensive. While the arms race is normal the issue is the penny hasn't dropped yet and no one wants to admit their weapons are now obsolete.
Ah, I was actually thinking about how iron dome vs Hamas rockets. Iron dome was super effective, yet a million a pop to shoot down a rocket that costs a few thousand dollars at most may quickly bankrupt a country. That said, maybe it's just one aspect of the war while in grand scheme of things highly effective guided missiles will win the war.
while i agree about the importance of precision, a 3-d printed drone from a ukrainian basement workshop also hits exactly where you want it, to the point that the problem is finding out what you want
drone is an incredibly broad category and military ones have really good reasons for sometimes costing a ton more. the biggest reason is the need to deal with adversarial input. dealing with GPS spoofing, properly encrypted and jamming resistant spoofing, not leaking the location of the operator, etc all are really complicated requirements that need expensive mitigation (and worse, prevent you from using commercial components)
> drone is an incredibly broad category and military ones have really good reasons for sometimes costing a ton more.
After following the development of drones in Ukraine since 2022 and also listening to people familiar with the US army, I also think there are some not so good ones, one particular nasty one being scope creep.
Recently heard about a US effort to create home built expendable drones for use at the squad level like the ones Ukrainians use and the result was too heavy and a lot more expensive (some of it thanks to the demand that everything be produced in a US controlled supply chain) but also as a result of good old fashioned scope creep.
And this is nothing new: AFAIK there is an old British military saying something like "an elephant is what a mouse would be if specified by a military procurement committee".
Note that FPV drones in Ukraine are not squad-level, there are separate drone units (at the very least 2 operators, at least 1 explosives guy because arming drones with makeshift explosives is not trivial and super risky, plus cover). Plus they are supplied literally on the back of a minivan in cardboard boxes because they only need to survive one way trip over a couple hundred km, the US needs to supply their units half a globe away.
US army drones are squad-level, have proper safing/arming, transportable, and shelf-stable. It's not scope creep, it's a very different doctrine and circumstances.
I don't think I wrote FPV, one way attack or kamikaze drone although I can understand why you interpreted it that way that I wrote home built (this was a mistake on my side, I was thinking about the commercial drones they use) and expendable (this doesn't mean attack drones, only that it is cheap enough that one doesn't hesitate too long to use it and don't try to recover it).
These surveillance drones can absolutely be used at the squad level.
US shipyards and military production are extremely low on any number of metrics. It's unclear even now whether the US has enough stockpiles and enough production of modern munitions to maintain an active war against a peer adversary like China with such massive production capacity and such a massive population. At some point, you do need constant production of enough munitions, doesn't matter how smart or precise those might be.
Just recently a US navy tanker ran aground and now they're scrambling to find some way to fuel the carrier group in the middle east because for some reason that's the only one that was available. The navy logistics group is woefully understaffed und under-equipped.
What are the priorities in actuality? Because maintaining a military at adequate readiness doesn't seem to be at the top of the list.
> Because maintaining a military at adequate readiness doesn't seem to be at the top of the list.
I think Yamamoto Isoroku gave the answer to this challenge: just keep a booming manufacturing industry. When he was trying to convince the Japanese government not to have a war with the US, he said that he saw so many chimneys when flying over Philadelphia. All those factories would turn into a giant war machine if a war ever broke out.
That is, the economy of scale matters. When the US had its entire supply chain domestically, replacing a special screw could cost a few cents. When we were in good terms with China, it would cost a few dollars as we had to order the replacement overseas, but well, it was still cheap. Now that we are trying to cut China off, then what will do if we'd need to get a replacement? Setting up a shop from scratch with little expertise and no supply chain to back it up? Well, such replacement would then cost a few thousand dollars and we would be screwed.
> Setting up a shop from scratch with little expertise and no supply chain to back it up? Well, such replacement would then cost a few thousand dollars and we would be screwed.
You were correct up to here. However the US has a lot of manufacturing and so is not setting things up from scratch. Most of our manufacturing is automated these days and so it doesn't appear in many of the reports people care about, but the talent is still here.
Of course just like WWII, if war breaks out it will be several years before the US can ramp up production.
> You were correct up to here. However the US has a lot of manufacturing and so is not setting things up from scratch
This is music to my ears. I read somewhere that the average age of the technicians in the US shipyards are well over 55 years old, hence I worry that we are losing key talents. There was also a NYT article more than 10 years ago that analyzes why the US can't make Kindle even if we want. Also, when people were outraged that the air force spent more than $20K per toilet more than 10 years ago, I read somewhere that it was because our law mandated that certain percentage of the components have to come from domestic manufacturing. Unfortunately the air force had a hard time finding such components, so they chose toilet. In order to do this, they had to find a factory in the US, which caused really high unit price. And then a recent article explained why it was so expensive to replace components on weapons: usually these components are custom-made. It would be cheap if we had a vast supply chain domestically, as it would be inexpensive to set up a custom mold or tooling chain for a few such component as the cost can be amortized over millions of other regular components. Without such supply chain, we wouldn't have such luxury. Hence came my worry.
We have a high dollar value of manufactured products, but volume is way down, and the supply chain is ragged or totally broken. If your factories are warehouses where you assemble Chinese feedstock with German tools, how much local expertise do you have, or is it just LEGO kit stuff for tariff evasion?
> It's unclear even now whether the US has enough stockpiles and enough production of modern munitions to maintain an active war against a peer adversary like China
Is it? What is the theory that the US could keep up with China? That would be the US vs the globe's industrial superpower with an arguably larger real economy. It doesn't seem plausible that the US can fight a long sustained war.
The plan as far as I can see it is to make use of a large network of allies and partners as well as aiming to finish the war quickly by cutting off materials like food and industrial inputs to stall the manufacturing engine. If it turns into a slugfest where munition reserves start to matter that seems like it would favour China.
One of the big surprises out of the Ukraine war is that the US isn't in a position where it can easily bully Russia. If that is the case it is hard to see it coming out ahead vs China in any plausible conflict.
>One of the big surprises out of the Ukraine war is that the US isn't in a position where it can easily bully Russia.
The US hasn't been fighting Russia - if they'd deployed F35s in 2022 then Moscow would be called West Alaska by now. Don't conflate "doesn't" with "can't".
But if they "doesn't" fight Russia now, why are they going to fight China in the future? Pretty good odds they won't because the cost is too high.
What we appear to be seeing is they don't really have a lot of tools that can be used against an uncooperative nuclear-armed power; and many of those tools would probably fail against China.
Nobody wants to fight China because the cost is so high - we are talking about lives more than dollars here (though dollar cost is high too).
What everyone worries about is being forced to fight China anyway. China is not playing nice with the US on the world stage. They are clearly supporting Russia over Ukraine (while pretending to be neutral). They are siding with Iran in the middle east. They are doing things in Africa that are against US interests (the US doesn't have a good record in Africa, but the US generally has supported democracy while China is fine with dictators which leaves lots of room for China to be worse though only time will tell). They escalating with Taiwan and the Philippians. Those are the major reasons I'm aware of to be worried about China, there is more that I didn't write.
How will this turn out - we can only guess. But there is reason to worry.
> but the US generally has supported democracy while China is fine with dictators
In the Middle East the US's #1 ally is indeed a democracy, but is currently fending off various challenges [1, 2] accusing them of genocide, war crimes and crimes against humanity. Their #2 ally is an authoritarian regime run by a gentleman who can be identified with phrases like "the bone saw incident" let alone the Kingdom's long record of barbarism and human rights abuses.
The US might win a battle of who supports better causes, but it isn't a can of worms to open either. There is no particular indication that it cares about the government system or actions of the people it supports.
[0] If the US didn't do it directly, they endorsed it.
Yes, the theory is that the USA should keep up with China and maintain a qualitative edge in order to contain them. Keep it up long enough and hopefully they will collapse or undergo an internal revolution, sort of like what happened to the USSR.
> That would be the US vs the globe's industrial superpower with an arguably larger real economy
Wouldn't it be sad if this were true? Since when US was no longer a "industrial superpower"? Just 25 years ago, Chinese government officials were astound by how wealthy and advanced the US was when they visited the US. They wrote articles after articles to reflect why China was so behind, yet now China is the "globe's industrial superpower". In Oliver Stone's movie Heaven & Earth, Joan Chen's character went to the US and was totally mesmerized by the abundance in a supermarket. That was how Chinese people was amazed by the US too. And now? It's definitely great for China, but isn't it sad for the US to be behind?
Or perhaps it was just inevitable for PRC, also a continental sized land power with 4x population to be ahead once they got shit together. Comparing US industrial stagnation in US lens frequently fails to grasp/comprehend that PRC industrialization at PRC scale brought forth another "weight-class" of industrial output. Last year, PRC ship building launched roughly same amount of tonnage as entire 5year US WW2 ship building program. IMO many people think US industry declined from 10 to 5, and maybe whole of system effort can bring in back to 10. Meanwhile PRC didn't just turn the industrial output dial to 11, it turned it to 20, beyond what US was ever capable of, and likely will be capable of. Same way US didn't so much leave British Empire behind in the industrial race as UK was never capable of running better than a 7 minute mile while US stalled at 5 minute mile (and now de-trained into a 6 minute mile), meanwhile PRC is now running a 3.5 minute mile. IMO ultimately, not about sadness but being realisitic about systemtic potential. Maybe US can AI/automate their way to overcome human capita disadvantage, but PRC playing that game too.
> It's unclear even now whether the US has enough stockpiles and enough production of modern munitions to maintain an active war against a peer adversary like China with such massive production capacity and such a massive population.
I don't think it's unclear at all. It's uncomfortable to call out an obvious truth: We couldn't even compare. The only hope we have is basically economic mutually assured destruction. If it comes to a hot war, it better be over (without going nuclear) within weeks or at most single digit months or it's more or less over. At least from where I'm standing.
It's unclear if the US could even get production ramped up on the scale of a decade. We simply don't have the people to train the people we need. Much less the people with the skills to do the thing.
> If it comes to a hot war, it better be over (without going nuclear) within weeks or at most single digit months or it's more or less over. At least from where I'm standing.
Why? There is essentially zero chance that China can mount an invasion of the mainland US or even strike at its heartland enough to disrupt an industrial ramp up, even if it takes a decade (which it won't). The US can literally wait out anyone except Canada and Mexico (which... lol) by defending its coasts, with plenty of domestic natural resources - including agriculture, metals, and oil - to supply not just its military but the entire civilian population.
There is zero chance of China invading the US or vice versa. But this issue isn't about a ground war in either place, it's about a war in some 3rd place.
It's not about "home country". The US doesn't need carrier groups to defend home country. It needs them to project power into other parts of the world.
Take Taiwan. If China invades there that represents a significant dilemma for the US. On balance, they'll likely make a token response, then fade away. Places where the US has enjoyed power (like the South China Sea) might be harder to protect.
Does the US have the stomach for wars in Taiwan, Japan or Australia?
> There is zero chance of China invading the US or vice versa. But this issue isn't about a ground war in either place, it's about a war in some 3rd place.
Agreed
> It needs them to project power into other parts of the world.
China can barely project power in its own backyard while the US has nearly a century of experience projecting around the world, with eleven carrier groups to China's two. Assuming they all get destroyed by hypersonic missiles within the first few months, the US still has military bases all over the world. As far as I know, China has zero military presence in the Western hemisphere except some surveillance balloons.
China may have a short term advantage in production and cost but the US has the advantage in every other area of logistics relevant to a military.
> Take Taiwan. If China invades there that represents a significant dilemma for the US. On balance, they'll likely make a token response, then fade away. Places where the US has enjoyed power (like the South China Sea) might be harder to protect.
Absolutely but it'd be a pyrrhic victory worth little except as domestic propaganda. If the US does help defend Taiwan, the invading Chinese fleet will likely be massacred. There's little room to hide in the 80 mile wide Taiwan strait against modern anti-ship and anti-aircraft weapons. China's only real advantage will likely be air power, which doesn't win wars without lots of boots on the ground.
> Does the US have the stomach for wars in Taiwan, Japan or Australia?
I'm not sure about Taiwan, but I don't think we'd let Japan or Australia slip into war without assistance. (but what do I know? :-))
> China can barely project power in its own backyard while the US has nearly a century of experience projecting around the world, with eleven carrier groups to China's two
Today. China is clearly building up their ability. In a few years the situation will look different which is the real worry. Also China may not need to be as big - China isn't patrolling the ocean like the US and so it is their 2 carrier groups near Taiwan against whatever the US can afford to send
destroying taiwan would permanently cripple the supply chain for the us, japanese, and australian military. in iraq and armenia we saw what happens when a conventional industrial-age military banking on tonnage of explosives faces off against one with precision-guided weaponry, and since your comment we've seen it again in lebanon
circumstantial evidence suggests that, like the usa, china has extensive military presence in western hemisphere telephony and networking equipment
The recent incarnation of isolationism in American politics might manifest if the US had the wrong leadership during an invasion of Taiwan or, I guess, Australia.
Defending Japan is a reflex action. We have bases and troops there, as well as a mutual defense treaty.
The hypothetical war in Taiwan would likely be almost entirely naval/aerial so yeah the question is if US has enough political will. Don’t think artillery shells will be a huge factor and even on paper the Chinese navy (and probably the air force) doesn’t even come even remotely close to US (yet).
Actual invasions of Japan and Australia are even harder to imagine. How would that even work? And why?
Artillery and particularly guided artillery like Excaliber rounds are highly effective at resisting landings.
In the most recent US wargame, China succeeded in occupying parts of Taiwan which would make artillery even more important — as attacks from the mountain regions towards Chinese occupation would keep them from establishing a secure foothold.
War games can be very deceptive though. Back in 2019/20, 2 separate studies ( Polish and US) expected that it would only take Russia 4-5 days to get to Warsaw with Polish units sent to the border suffering 60-80% casualties.
To be fair NATO wasn’t taking really taking defense that seriously back and maybe they had a point, although considering what happened in Ukraine that seem like a very unlikely outcome (unless Britain/France/Germany decided to stay out and not risk their air forces ..)
I guess overestimating your opponents is usually better than the opposite. OTH had Britain/France not made that mistake in the 30s much of WW2 could have been prevented.
The purpose of wargames is to find holes in your defense and the shore them up. If your war game doesn't find holes you are probably doing it wrong. In the real world your enemy doesn't have spies everywhere, but in a war game you should give them spies everywhere just because you won't know where those spies are and so everything could be compromised.
China-Taiwan situations is technically still a civil war. Internal conflict to "China". Like war between Confederacy and Federation forces.
It is unlikely that China will invade Japan and certainly not Australia. I find it extremely more likely that USA will invade Mexico with some fake pretence like war on drugs.
You adapt. Ukraine is emptying the US armories to kill Russians at scale.
You get smarter/more accurate with the constrained supply of shells, adopt drones etc.
In the 80s, expensive Maverick missiles were the primary airborne tank killer. Now the Ukrainians are dropping mortars into tank hatches from cheap drones.
80 years ago the priority was beating the nazis and japanese. The priority now is making money. Can't make money with ice breakers, so use the steel to make SUVs instead.
>There's really no excuse that the cost of making canon shells is 10x higher than Russia. Isn't being able to manufacturing cheaply the signature of a highly developed society?
We have prioritized high wages for workers in the US, a phenomenon also driven by the reserve currency status of the dollar. Russians, Chinese, and Indians work for a fraction of the price we do. We have high labor costs and have to import many components due to them being made much cheaper elsewhere.
>We can only keep our expertise by actively doing. If the next war breaks out, how would the US win? By sending armies of lawyers and coders?
You're totally right. This war is coming very fast as well, and by some accounts has already started. I worry we will all soon find out just how bad of a position we are in, the hard way.
> We have prioritized high wages for workers in the US
I'm not sure if this is the dominating factor. Russia fired around 10,000 shells a day, and each costs about $1000. So for a year, Russia would have fired 3.65M shells that cost $3.6B. Let's say we need 100 workers to produce these shells. Then, he wage of the workers would cost merely $10M a year, if each one earns $100K a year. $10M over 3.65M shells, and that's just $3 a shell, or 0.3% of the cost of a Russian shell, or 0.075% of the cost of a US shell.
What the US lost was not advantage of labor cost, but the economy of scale. By the way, this is also what Tim Cook said. He said that Chinese labor not cheap anymore, but China has so much scale and expertise so that the output from China is still cheap. Again, economy of scale.
Are you kidding? Everything is outsourced because wages are high in the US. I can't believe I have to spell out such basic and obvious economic facts to presumably intelligent people.
>What the US lost was not advantage of labor cost, but the economy of scale.
We've lost a lot of things but the reason things are expensive here is NOT that we didn't have economies of scale. That issue came much later. You get to have scale in the first place by being economically competitive. When things are outsourced due to some other country using slave labor or else their workers surviving on a tenth of what you make in the US, that is when you lose economies of scale.
Literally the only way we could compete in an open market with countries that have cheap labor is to use automation. But even with automation, those machines can be set up anywhere in the world, and they will tend to go wherever it is cheapest to run them.
>> When things are outsourced due to some other country using slave labor or else their workers surviving on a tenth of what you make in the US, that is when you lose economies of scale.
There may be "Slave Labor" in some places, but the vast majority of people doing out-sourcing for US companies are very well paid (by local standards.) They are not "surviving" they are thriving.
living in the US is expensive. So prices go up to match. So wages go up. So materials go up. "National security" is expensive (and the US is obsessed by it.) 13% of the budget goes to the military. Protectionist tarrifs. Security theater like the TSA. All of this comes at a price.
The US has enjoyed a leadership role in world affairs, economic strength, influence etc for 75+ years. But it turns out that "expensive is the head that wears the crown".
I say this not as a criticism, merely as a statement of reality. Of course, whether it changes, or indeed even discussing if it should change is debatable.
If you check the real numbers, not everything is outsourced. There is still very significant manufacturing in the US - and the number is increasing. China is perhaps increasing faster, but that doesn't mean the US isn't doing well.
I believe initially yes, wage is a big factor. It's just that now the wage gives way to the economy of scale (maybe regulation plays a big role too). It's pretty sad too. The capital wants returns and growth, at the cost of weakening a country for generations to come.
I wasn't talking about a change in costs. Costs have been high in the US for a very long time. What matters in terms of industry is that the rest of the world is coming online and their products are much cheaper than ours, mostly due to cheap labor and the currency exchange rates. Cost increases of domestically sprouted goods in terms of dollars are overwhelmingly driven by inflation.
> I mean, look at the US 80 years ago. The US easily out produced the Axis. We could produce faster and cheaper.
Read TFA. Faster, yes. Cheaper, no. Even after fully ramping up, Liberty ships cost considerably more to produce in the US than an equivalent ship elsewhere. In wartime that is acceptable. When you're producing for a global market, it's not.
The question was, is it uncompetitive because self-imposed requirements/limtiations are stricter or because of lack of competence. You are answering something else
>woefully uncompetitive. They produce single-digit numbers of commercial oceangoing ships annually, at 2-4x the cost of elsewhere
unions and pro union legislation makes US shipbuilding uncompetitive. it also ruins US merchant marine. We could encourage it, but the world market is fairly competitive so we don't really need to, except for defense.
Other countries have unions too. I don't know the situation in Finland, but they are surrounded by countries that have even stronger union and union laws that the US. (and some of those countries also have ship building)
Yes, they are woefully uncompetitive. They produce single-digit numbers of commercial oceangoing ships annually, at 2-4x the cost of elsewhere. It’s an industry on life support.