This report assesses the economic impacts that a shipbuilder has on its local community and region. The authors utilize a case study methodology to examine two U.S. shipbuilders and the Saab Aeronautics Gripen program in Sweden. While each shipbuilder has had beneficial effects on its local economy, neither shipbuilder has given rise to the ecosystem of favorable spillovers and spin-offs that the Gripen program seems to have created.
The Economic Consequences of Investing in Shipbuilding
Case Studies in the United States and Sweden
- What would individuals who would be employed in shipbuilding in Australia be doing if that work were not in Australia?
- To what extent would shipbuilding in Australia generate favorable spin-offs and spillovers?
There Are Slack Economies in the Regions Surrounding Newport News Shipbuilding and Austal USA
- There is considerable rigidity in workers' abilities to find commensurate employment.
- Workers employed in shipbuilding appear to be quite geographically immobile (though willing to incur sizable driving commutes).
- The two shipbuilders are able to attract many job applicants, suggesting that these workers do not have alternative employment options as desirable as working at the shipbuilders.
- The shipbuilders have not displaced high-value activities for many of their workers.
The U.S. Shipbuilders Did Not Generate Many Favorable Spin-Offs and Spillovers, but the Gripen Program Did
- Newport News Shipbuilding has generated relatively few spillovers, and the region has been critiqued for a dearth of entrepreneurial activity.
- No cluster of suppliers has yet emerged around Austal USA.
- The Gripen analogy appears to be overly optimistic as to the magnitude and nature of spin-offs and spillovers that might be expected from naval shipbuilding in Australia.
- The indigenous production of ships in Australia cannot be expected to have both low opportunity costs and displacements and high levels of favorable spillovers. Instead, these two objectives seem to trade off against one another.
Table of Contents
Economic Multipliers and Their Implications
Newport News Shipbuilding Case Study
Austal USA Shipbuilding Case Study
The Gripen Case Study