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What moats do U.S. shipyards have that prevent disruption? Or why doesn't someone spin up the SpaceX for shipbuilding?

by floxy 3y ago

teruakohatu 3y ago
> Or why doesn't someone spin up the SpaceX for shipbuilding? Do VCs invest in industries that are so mature that they are almost as old and civilisation itself?
- teyrana 3y ago
  "Anduril industries" has entered the chat... Long story short, yes, VCs have entered the defense industry (writ large) and although I have my doubts about whether said VC money will achieve FB-like returns, they are trying. And to answer the GP poster.... The industry is not "ripe for disruption" because it's dominated more by the "invisible hand of the lobbyist" much more than the "invisible hand of the market". Fwiw, from my ~20 years in the defense industry.
- Teever 3y ago
  You say this as if there's no innovation in modern shipbuilding, as if the Koreans and Japanese who dominate the industry have just gotten really good at lashing together logs to make really big rafts. That would be like saying that VC's don't invest in communication companies because communication is as old as civilization, and who wants to invest in semaphores and stone tablets anyways?
- obmelvin 3y ago
  You might find this recent article interesting about the uptick in people moving from Pentagon -> VC, as opposed to Pentagon -> Prime Defense Contractor. https://www.nytimes.com/2023/12/30/us/politics/pentagon-venture-capitalists.html https://www.nytimes.com/2023/12/30/us/politics/pentagon-vent...
- nvm0n2 3y ago
  VCs weren't behind SpaceX. Musk invested his own money.
dylan604 3y ago
If you're a conscientious investor, you might have qualms about making money on war and death.
ceejayoz 3y ago
They have powerful Congressional reps in their districts.
renewiltord 3y ago
The moats are the guys you paid to put into power. And because your lifeblood comes from the government no one can outspend you. You just take from it to pay for who makes it up. Of course, as SC Justice Thomas showed, there’s no real moat. And the people in power are just your friends. They’re not placed there by you. And the gifts you give them are just gifts. If you think you can make a better ship, convince my friend in power.
cyberax 3y ago
The US has the Jones Act. Cabotage between the US ports is restricted to the US-built ships.
- missedthecue 3y ago
  Repealing the Jones Act would be good, but would not result in more US shipbuilding. It would just mean that ships meant for routes between US ports would be built in more competitive Japanese, Korean, and Chinese shipyards. There is nothing within the Jones Act itself that currently prevents an innovative and enterprising American entrepreneur from building ships at a lower cost.
  - eru 3y ago
    > There is nothing within the Jones Act itself that currently prevents an innovative and enterprising American entrepreneur from building ships at a lower cost. There is. Without the Jones Act an innovative and enterprising American entrepreneur could build ships partially or wholly outside the US. She could sell them to a re-invigorated domestic shipping industry. The re-invigoration coming from (1) lowered costs by being allowed to hire foreigners, (2) lower cost of capital, because foreign ownership is allowed, and (3) from the foreign competition spurring on productivity improvements. A repeal of the Jones act would lower the costs of our American ship building entrepreneur directly, and increase demand for her products, by lowering the costs of her customers.
    - missedthecue 3y ago
      Yes but we're not talking about that. Everyone already knows foreign shipyards are very competitive. We are talking about why domestic shipyards aren't, and the Jones Act isn't to blame for it.
      - eru 3y ago
        The Jones act still is for the reasons I outlined. It shelters them from competition, and it also outlaws partial outsourcing, too. At a hypothetical example, consider if Thailand passed the equivalent of the Jones act but for computers. At the moment, Thailand produces a lot of hard disks. There are used all over the world, but also in Thai computers. With protectionism in place, Thailand would produce some complete computers for domestic use. But they would be just as abysmal and expensive as American ships. The overall size of the industry would likely be smaller than just the hard disk branch alone was. (This example worked better before SSD were widespread.) In the real world right now, a Thai entrepreneur can start building computers easily, because she's allowed to source parts from anywhere around the world. And Thai computer users are allowed to let foreigners service their computers, too.
nateglims 3y ago
Huge capital requirements, exclusive contracts with the government (naval), overseas competition (merchant, recreation), and not a ton of room for growth.

What moats do U.S. shipyards have that prevent disruption? Or why doesn't someone spin up the SpaceX for shipbuilding?

by floxy 3y ago

What moats do U.S. shipyards have that prevent disruption? Or why doesn't someone spin up the SpaceX for shipbuilding?

> Or why doesn't someone spin up the SpaceX for shipbuilding? Do VCs invest in industries that are so mature that they are almost as old and civilisation itself?

teyrana 3y ago
"Anduril industries" has entered the chat... Long story short, yes, VCs have entered the defense industry (writ large) and although I have my doubts about whether said VC money will achieve FB-like returns, they are trying. And to answer the GP poster.... The industry is not "ripe for disruption" because it's dominated more by the "invisible hand of the lobbyist" much more than the "invisible hand of the market". Fwiw, from my ~20 years in the defense industry.
Teever 3y ago
You say this as if there's no innovation in modern shipbuilding, as if the Koreans and Japanese who dominate the industry have just gotten really good at lashing together logs to make really big rafts. That would be like saying that VC's don't invest in communication companies because communication is as old as civilization, and who wants to invest in semaphores and stone tablets anyways?
obmelvin 3y ago
You might find this recent article interesting about the uptick in people moving from Pentagon -> VC, as opposed to Pentagon -> Prime Defense Contractor. https://www.nytimes.com/2023/12/30/us/politics/pentagon-venture-capitalists.html https://www.nytimes.com/2023/12/30/us/politics/pentagon-vent...
nvm0n2 3y ago
VCs weren't behind SpaceX. Musk invested his own money.

dylan604 3y ago

If you're a conscientious investor, you might have qualms about making money on war and death.

ceejayoz 3y ago

They have powerful Congressional reps in their districts.

renewiltord 3y ago

The moats are the guys you paid to put into power. And because your lifeblood comes from the government no one can outspend you. You just take from it to pay for who makes it up. Of course, as SC Justice Thomas showed, there’s no real moat. And the people in power are just your friends. They’re not placed there by you. And the gifts you give them are just gifts. If you think you can make a better ship, convince my friend in power.

cyberax 3y ago

The US has the Jones Act. Cabotage between the US ports is restricted to the US-built ships.

missedthecue 3y ago
Repealing the Jones Act would be good, but would not result in more US shipbuilding. It would just mean that ships meant for routes between US ports would be built in more competitive Japanese, Korean, and Chinese shipyards. There is nothing within the Jones Act itself that currently prevents an innovative and enterprising American entrepreneur from building ships at a lower cost.
- eru 3y ago
  > There is nothing within the Jones Act itself that currently prevents an innovative and enterprising American entrepreneur from building ships at a lower cost. There is. Without the Jones Act an innovative and enterprising American entrepreneur could build ships partially or wholly outside the US. She could sell them to a re-invigorated domestic shipping industry. The re-invigoration coming from (1) lowered costs by being allowed to hire foreigners, (2) lower cost of capital, because foreign ownership is allowed, and (3) from the foreign competition spurring on productivity improvements. A repeal of the Jones act would lower the costs of our American ship building entrepreneur directly, and increase demand for her products, by lowering the costs of her customers.
  - missedthecue 3y ago
    Yes but we're not talking about that. Everyone already knows foreign shipyards are very competitive. We are talking about why domestic shipyards aren't, and the Jones Act isn't to blame for it.
    - eru 3y ago
      The Jones act still is for the reasons I outlined. It shelters them from competition, and it also outlaws partial outsourcing, too. At a hypothetical example, consider if Thailand passed the equivalent of the Jones act but for computers. At the moment, Thailand produces a lot of hard disks. There are used all over the world, but also in Thai computers. With protectionism in place, Thailand would produce some complete computers for domestic use. But they would be just as abysmal and expensive as American ships. The overall size of the industry would likely be smaller than just the hard disk branch alone was. (This example worked better before SSD were widespread.) In the real world right now, a Thai entrepreneur can start building computers easily, because she's allowed to source parts from anywhere around the world. And Thai computer users are allowed to let foreigners service their computers, too.

nateglims 3y ago

Huge capital requirements, exclusive contracts with the government (naval), overseas competition (merchant, recreation), and not a ton of room for growth.