By Brett Davis, Editor-in-Chief
Shipbuilding giant HII (Booth 923) is not worried about the impact of new international tariffs on its business, but it’s changing its hiring practices to help rebuild the shipbuilding workforce and looking to become more efficient as it deals with what CEO Christopher Kastner calls a still-fragile supply chain.
Kastner held a press availability with Washington-area reporters on the eve of Sea-Air-Space and said he is not worried about the Trump administration’s tariffs, which were announced later that day.
“We buy and build in America,” he said. He said if tariffs create jobs in the United States, “I’m happy, because we need to broaden that base.” Otherwise, “tariffs is not a story for us. It just isn’t. We buy and build in America.”
The company has 40 ships in process and a goal of increasing its throughput by 20% in 2025, partly by qualifying new vendors, bringing new suppliers into the shipbuilding yards and buying suppliers where needed, such as its recent purchase of W International, the South Carolina-based manufacturer of modules used in Virginia-class-and Columbia-class submarine construction.
“We’re very focused on getting the ships delivered to the Navy, because they really need them,” Kastner said.
However, the fragility of the supply chain, which Kastner mentioned several times, is an ongoing concern. For one thing, Kastner said the industry is still recovering from COVID.
“I know people don’t like to talk about it, but it fundamentally changed our business, because of what it did to our labor force, and really the policies of the last administration relative to COVID and vaccine mandates and how that was treated, which caused us to lose a lot of good shipbuilders,” he said.
In addition to that, “there’s a pretty material reduction in amount of ships ordered in the last 10 years before we went into this [shipbuilding] upturn, in which you saw suppliers leaving the industry,” Kastner said. “So, it’s a combination of that, COVID, and an increase in demand. So, it’s kind of three things happened, in succession, that negatively impacted the shipyards and the suppliers.”
Now, the biggest problem with the supply chain is “just the general lack of … inventory is probably the wrong word, but general lack of capacity in the supply chain,” Kastner said. “Twenty years ago, if something broke through the test program, you either had it in your inventory, or you had it at the supplier inventory, or you had it on another ship that you could pull it from, so you could quickly continue with your test program. Now, you may not have it available, and you have to go reorder and get in line, which impacts your test sequencing and your test program. It’s just a general lack of capacity throughout the entire supply chain … so it’s not a specific area, it’s just very broad.”
The new administration is preparing a new maritime industrial base office, which the president announced in his February address to a joint session of Congress.
Kastner said he has met with members of the group and described them as “responsible and knowledgeable.” They are working on an executive order to strengthen U.S. shipbuilding. Kastner said he doesn’t know when that will surface, but “we’re going to lean into that” to help rebuild the industry.
Hiring isn’t necessarily the issue, he said, but retention is, as the industry has a big worker retention problem. To help with that, the company has repositioned its hiring program to hire fewer entry-level workers in favor of those with more experience — those who are “mature, more experienced, which means it’s more expensive,” he said.
The industry and workforce needs to grow, but that pipeline should be maintained with programs in high schools, community colleges and regional workforce development centers, he said.
“What we’re finding is you don’t grow them [shipbuilding workers] by hiring them off the street,” he said. “That’s too easy, it takes no investment to do that, other than training them when you bring them in … recreating this industrial base isn’t easy, and it isn’t inexpensive.”
One of the biggest international cooperation programs in recent years is the AUKUS agreement to equip Australia with nuclear submarines and develop its industrial base to create a bulwark against China.
The Trump administration has been skeptical of some international cooperation, but administration officials have said the president supports AUKUS and Kastner said it makes sense both from the administration’s perspective and from the perspective of rebuilding the industrial base.
“We’re really co-investing on a program,” he said of the agreement with the United Kingdom and Australia. “A strong submarine program in Australia only strengthens our submarine program here. So, having a strong partners that are integrated into our process is, I think, very consistent with the administration’s policy.”
