The $530 Million Question: Why Do Shipyards Keep Making the Same Costly Mistake?

Cranes line the docks of a bustling shipyard, silhouetted against a muted sky as they work to load and unload cargo from a large vessel.

Recent reports from the U.S. Government Accountability Office (GAO) have cast a harsh spotlight on the nation's shipbuilding industry, revealing a consistent pattern of staggering cost overruns and debilitating delays. One of the most glaring examples is the Virginia-class submarine program, which is running so far behind schedule that its production rate is only 60% of its annual goal, contributing to an estimated $530 million cost overrun for just the first two submarines in its latest block [1]. The GAO identifies two primary culprits for these systemic failures: a lack of physical capacity at shipyards and a severe shortage of skilled labor [1].

While the Navy has invested billions to shore up the shipbuilding industrial base, it continues to draft plans that exceed the known capacity of the shipyards, creating a cycle of failure. This raises a critical question: if the Navy knows its plans are unrealistic, why does it persist? But perhaps a more pressing question for those on the ground—the shipbuilders, port engineers, and union leaders—is this: are we making the exact same mistake in our own backyards?

The Shipyard's Parallel: A Race to the Bottom on Labor

There is an unsettling parallel between the Navy's flawed planning and a pervasive, costly practice within the shipbuilding industry itself: the use of general labor and non-specialized electricians for highly complex marine electrical work. In a misguided effort to reduce upfront costs, often driven by the "race to the bottom" dynamics of low-bid contracts, shipyards frequently opt for cheaper, less qualified labor [2]. This decision represents a fundamental misunderstanding—or willful ignorance—of the vast differences between general electrical work and the specialized, demanding discipline of marine electrical systems.

This distinction is not a matter of semantics; it is a matter of safety, reliability, and long-term cost. A standard electrician, while skilled in their own right, is trained for land-based systems governed by different codes and environmental assumptions. A marine electrician, by contrast, possesses a unique and critical skillset forged through specialized training and experience in one of the most hostile environments imaginable.

Factor	Standard Electrician	Marine Electrician
Environment	Predictable, dry, stable	Corrosive (saltwater), high humidity, constant vibration, confined spaces
Governing Codes	National Electrical Code (NEC)	American Boat and Yacht Council (ABYC), U.S. Coast Guard (USCG) regulations
Power Systems	Primarily AC	Complex AC and DC systems, battery banks, generators, shore power integration
Specialized Knowledge	Residential/Commercial Wiring	Navigation systems, communication equipment, propulsion controls, cathodic protection

The False Economy of Unskilled Labor

The decision to use a less-qualified electrician is often framed as a cost-saving measure. However, this represents a dangerous and expensive false economy. Research into construction projects has found that rework, often stemming from poor workmanship and a lack of specialized skills, can account for 4-6% of the total contract value [3]. When you apply that percentage to a multi-billion dollar shipbuilding program, the numbers become astronomical.

Consider the unique challenges of a marine electrical system. Wires are not simply run; they must be meticulously secured to withstand constant vibration. Connections are not merely twisted together; they must be sealed against the relentless intrusion of saltwater and humidity that breeds corrosion. Grounding is not just for safety; it is a complex science to prevent galvanic corrosion that can eat away at a ship's hull. A general laborer or a residential electrician is simply not equipped with the knowledge to address these critical, vessel-specific requirements.

How Much of that $530 Million Was Rework?

This brings us back to the Virginia-class submarine and its $530 million overrun. While the GAO report points to broad workforce and capacity issues, we must ask the more pointed question: How much of that staggering cost is attributable to rework? How many man-hours were wasted correcting electrical installations performed by individuals who lacked the specialized training to do it right the first time? How many delays were caused by failed inspections and the subsequent need to rip out and replace substandard work?

The shipbuilding industry is facing a generational challenge. The solution is not to double down on flawed strategies, whether in high-level planning or on the shipyard floor. The answer lies in recognizing the profound value of specialization and investing in the skilled tradespeople who are the true foundation of a quality vessel. It's time to stop making the same costly mistake. It's time to ask whether the upfront savings from hiring cheaper labor are worth the long-term cost of failure.

References

[1] U.S. Government Accountability Office. (2025, April 8). U.S. Navy Shipbuilding Is Consistently Over Budget and Delayed Despite Billions Invested in Industry. GAO.gov. Retrieved from https://www.gao.gov/blog/u.s.-navy-shipbuilding-consistently-over-budget-and-delayed-despite-billions-invested-industry

[2] Morgan Sindall Construction. (2018, December 3). Blog: Construction tendering - avoiding a race to the bottom. Retrieved from https://www.morgansindallconstruction.com/news/blog-construction-tendering-avoiding-a-race-to-the-bottom/

[3] Construction Management Association of America. (n.d.). The Impact of Rework on Construction & Some Practical Remedies. CMAA. Retrieved from https://www.cmaanet.org/sites/default/files/resource/Impact%20of%20Rework%20on%20Construction.pdf