COLUMN | Concept and execution, part two of two: Trump's shipbuilding plans and why they don't seem all too promising [Offshore Accounts]

Earlier this week, we looked at DEME’s recent acquisition of Norwegian offshore wind installation specialist Havfram. We also briefly discussed the latter company’s fleet upgrade program, which also encompasses turbine installation vessels being built in China.

This week, we shift our focus from a country with a successful track record of constructing complex and high-tech vessels to one that is a shipbuilding basket case.

The United States.

White House shipbuilding plan unveiled

On April 9, President Donald Trump signed an executive order (always an executive order, never an actual piece of legislation, it seems) titled “Restoring America’s Maritime Dominance.”

Judging from the celebrations from the MAGA crowd on the social media platform formerly known as Twitter, you would have thought that HD Hyundai Heavy Industries and COSCO were actually announcing massive investments to build huge new shipyards in the United States and train and employ tens of thousands of skilled workers.

Maritime journalist John Konrad declared that it was a “historic day for America’s Maritime future. Honored to be a small part of it. Congratulations to President Trump and his maritime team for making waves that will echo for generations. Full steam ahead [USA flag].”

The executive order begins with an accurate statement of purpose:

“The commercial shipbuilding capacity and maritime workforce of the United States has been weakened by decades of government neglect, leading to the decline of a once strong industrial base while simultaneously empowering our adversaries and eroding United States national security.

"Both our allies and our strategic competitors produce ships for a fraction of the cost needed in the United States. Recent data shows that the United States constructs less than one percent of commercial ships globally, while the People’s Republic of China is responsible for producing approximately half…”

But contrary to the joy of its supporters, the executive order achieves precisely nothing. Instead, all it calls for is this:

“Within 210 days of the date of this order, the Assistant to the President for National Security Affairs (APNSA) in coordination with the Secretary of State, the Secretary of Defense, the Secretary of Commerce, the Secretary of Labor, the Secretary of Transportation, the Secretary of Homeland Security, the United States Trade Representative, and the heads of executive departments and agencies (agencies) the APNSA deems appropriate, shall submit a maritime action plan to the President, through the APNSA and the Director of the Office of Management and Budget.”

Before we start getting all fired up on a renaissance of American maritime dominance and lavish optimism that somehow the domestic shipbuilding industry will be revived, let’s see what the report says. This was an executive order to produce a plan which will be ready by the end of the year. That’s no big deal.

With the US facing a potential recession, a bond yield crunch and a massive budget deficit, I don’t think the major Asian shipbuilding powers, nor the boutique European niche yards, are going to be concerned.

Even if the plan is dramatic and bold, there will only be three more years of the Trump presidency to go when it is published, and the chances of any ships being produced under the scheme before 2030 seem negligible.

Based on current American shipbuilding performance, 2040 might be a more reasonable date to start to see the revival of American “maritime dominance.”

Bollinger’s icebreaking mess shows American weakness

Several real-world examples suggest that the return of mass market commercial shipbuilding to the USA is probably delusional.

Mr Konrad’s own website recently ran a piece by the wonderfully named Malte Humpert - who needs a pseudonym when you have an Austin Powers name like that? This outlined the billion-dollar cost overruns for a single coast guard vessel at Bollinger Shipyard, one of the few remaining American yards.

Humpert wrote:

“Mississippi-based Bollinger Shipyards has received a US$952 million fixed-price-incentive-firm target (FPIF) contract modification from the US Coast Guard to continue designing and constructing the first new heavy icebreaker, also known as the polar security cutter (PSC).

"The modification comes six years after VT Halter Marine won the original US$746 million contract. Bollinger acquired Halter Marine in 2022 inheriting construction of up to three vessels for a total original cost of US$1.9 billion.

"The program has faced repeated delays and cost overruns since its inception, with the Congressional Budget Office (CBO) estimating the lead vessel alone will now cost US$1.9 billion.”

What is important to note is that these massive cost overruns are before steel has even been cut, six years after the contract was awarded. The supposedly “fixed price incentive contract” has already shown that the price is decidedly unfixed, and that the incentives seem to be only for further delays and cost increases.

Bollinger is literally doing worse than Ferguson Marine, the Scottish shipyard that was the scene of the Ferry Fiasco, which saw eight years and a quadrupling of cost to at least build a pair of ships, the first of which is in service. Those vessels, which cost a mere US$500 million together, seem bargains compared to the expected US$1.9 billion (with a “b”) icebreaker.

How late it was

The PSC was originally meant to enter into service in 2024, but so far only the design has been (maybe) finalised. The icebreaker design contract was originally awarded in 2019, under the first Trump administration, to Halter Shipyard in Pascagoula, Mississippi. Bollinger subsequently acquired Halter.

To my knowledge, Halter had no actual experience building an icebreaker in living memory, but no matter, it was a good old American business, and foreign yards with track records like those in Norway, Finland or Germany could obviously be ignored.

The commissioning of the coast guard vessel has now officially been pushed back to at least 2030, and the service has bought Edison Chouest’s 2012-built (but barely used) ice breaking anchor handler Aiviq as an interim solution.

Two billion dollars for what???

Lest you think I am being unfair, the specifications of the PSC really do not look that different to similar ships built for a fraction of the cost overseas. My mind boggles as to how two billion dollars could possibly be spent on a 140-metre long ship with a 27-metre beam, Caterpillar-MaK main generators of 33.7 MW capacity, and just under 200 total POB, as per the outline specifications.

Even the Australian Government (a body not known for its great prowess in maritime contracting) managed to build its Knud E. Hansen-designed polar icebreaker Nuyina overseas for around US$410 million, and the United Kingdom’s polar icebreaker Sir David Attenborough came in for a similar amount.

Nuyina, which delivered in August 2021, is comparable to the planned Bollinger PSC, with an LOA of 160.5 metres, a moulded beam of 25.6 metres, a maximum draught of 9.2 metres, and a full load displacement of over 24,000 tonnes. 

With 30.2 MW of installed power on board Nuyina, I am not seeing any facet of the the American design justifying four times the cost of the European-built vessel in service with Australia.

If you can’t stitch a handbag, how will you weld a ship?

Meanwhile, if you thought that reshoring manufacturing to America would be easy, the Reuters coverage of the problems faced by French luxury goods maker LVMH to establish a handbag factory in Texas suggests you should think again.

Reuters found that “the site has consistently ranked among the worst-performing for Louis Vuitton globally, 'significantly' underperforming other facilities, according to three former Louis Vuitton workers and a senior industry source.”

Let’s be clear. The American workers struggled with the quality requirements of stitching the handbags – even though the factory produced only the simplest designs in the Louis Vuitton range.

As a result, production waste levels ran at twice the handbag industry average, with 40 per cent of the leather being destroyed amid inaccurate cutting and poor-quality stitching, even though the plant’s starting salaries were twice the Texas minimum wage.

If you can’t find people capable of stitching a handbag for one of the most prestigious companies in the world, are we seriously expecting a domestic shipbuilding revival to be a success?

From one plan to a fleet of forty?

President Trump has now announced that his administration would acquire up to 40 heavy icebreakers. They can’t even build one and he wants forty? Wipe that smirk off your face.

Those readers familiar with the 2016 chant of “build the wall” will observe that no wall has in fact been built, and that Mexico certainly did not pay for whatever construction was performed.

This is policy based on fantasy, like so many other White House ramblings. I don’t see that the executive order will result in more than a muddled wish list, which will be further delayed from being implemented by financial pressure in 2026.

Bollinger on ice?

Don’t crack open the Bollinger champagne yet (let alone the Dom Perignon). Stand aside, Scots and Tasmanians, nobody does shipbuilding worse than the Americans.

A presidential executive order aspiring to “maritime dominance” or loud talk of building forty icebreakers is not going to change that. Having alienated all of America’s allies who could build such vessels in their shipyards, supporters of an American maritime renaissance are going to be disappointed.

It is highly unlikely that the t-shirt factories and iPhone production is returning to the USA in any meaningful way, even less plausible that more than a handful of expensive, overbudget and probably very late American built icebreakers will see service in the early 2030s.

For further proof, consider what Mozambique is doing offshore…

Quick update: second FLNG for Mozambique

Last week ENI in Mozambique celebrated the export of its one hundredth shipment of LNG from its Coral Sul FLNG facility, which is moored in deepwater in the Rovuma basin in the north of the country and went into production in 2022.

Whereas Shell’s Prelude FLNG off Australia seems wracked by labour issues and technical problems, the ENI facility, like Petronas’ and Perenco’s FLNG unit, just seems to crank out the deep frozen gas.

Coral South FLNG has a gas liquefaction capacity of 3.4 million tonnes per year (MTPA) and puts into production 450 billion cubic metres of gas from the Coral reservoir. The FLNG vessel is the first floating LNG facility ever deployed in the deep waters of the African continent. 

But not the last.

Green light to proceed; Samsung and Technip win big

In the same week, the crisis-ridden Mozambican government approved the development plan for Eni's second FLNG, Coral Norte. The approval of the plan permits ENI and its partners to make the final investment decision in the project near Coral Sul.

The new Coral Norte FLNG is expected to operate with the production capacity of 3.55 MTPA of LNG for over 30 years, based on an investment of around US$7.2 billion. The project is expected to start production in the second half of 2028, Reuters reported.

The gas feedstock will be supplied by six subsea wells, so there will be at least a year of drilling by a deepwater drillship (Saipem 10000, Santorini, Deep Value Drilller or Saipem 12000, I bet).

The design of Coral Norte FLNG will be identical to that of Coral Sul FLNG and once again Technip Energies and JGC will be lead engineers. Coral Norte will be 432 metres long and 66 metres wide.

Coral Sul was built at Samsung Heavy Industries in Korea, and the sistership will also be built there, as per the Korean press.

Whilst America is writing policy papers and approving cost overruns for ships where steel has not been cut in years, the Koreans are doing what they do best – building big, expensive, immensely complicated ships to power the energy needs of the next three decades.

They are winning bigly.

Background reading

If you want to read about the IMO’s carbon trading plans, please read the industry press.

If you want to read about supermodel’s Naomi Campbell’s British charity being shut down for fraud and mismanagement, then click here. Trust me, you will enjoy Paul Caruana Galizia’s sordid tale of crooked lawyers, forged documents and the arrogant philanthropy of a rich fashionista who wanted the prestige of a charity for vanity purposes. As a result, Ms Campbell has been banned as a charity trustee.

Meanwhile, the Organised Crime and Corruption Reporting Project has a scoop on (surprise!) lax anti-money laundering procedures at the (surprise!) Swiss bank Reyl Intesa Sanpaolo. The Swiss regulator found what it described as (surprise!) a “very high” appetite for risk at Reyl, along with “a certain carelessness.”

Readers of this column will not be surprised to learn that the bank’s clients included… the daughter of Kazakhstan’s former president, the son-in-law of Uzbekistan’s longtime ruler, a financial adviser to the ruling family of Azerbaijan, and a trio of shady Russians.

I am sorry. I was at least hoping for some members of Angola’s Dos Santos family and a few Nigerian admirals, ministers or generals. But I guess they bank in London or New York…