costing, quality, delivery, and adapting designs to customer needs. They must also acquire a better understanding of the close relationships among these capabilities. For example, foreign shipbuilders have developed regular working relationships with suppliers and are able to procure good quality components rapidly and cost-effectively; whereas U.S. shipbuilders, constrained by U.S. government procurement regulations, have little experience with international equipment suppliers. Similarly, U.S. builders have little knowledge of commercial customers and market segments. In other industries, building this kind of knowledge has been time consuming and expensive.

Conclusion 3: System technologies, engineering and manufacturing systems that support the yard, are also behind international practice. Although U.S. shipbuilders understand quite well the CAD/CAM models currently used and often use the same models as international shipbuilders, the aggregate of foreign experience results in simpler and more accurate construction, faster planning and estimating of shipyard labor hours, and fewer engineering labor hours per ship. Moreover, most U.S. yards are constrained by physical location and U.S. environmental standards. Improving the basic layout and material flows to international standards will be difficult and will require a high degree of process simulation to minimize capital costs while improving process flow and unit cost. Such process simulation technology now has many other applications, but it must be adapted for commercial shipbuilding so that yards can reprocess their work flows within financial constraints.

Conclusion 4: Within the shipyards, U.S. shipbuilders are behind in the commercial aspects of shipyard production processes technology . Although the basic technology is well understood and the technology being applied in international yards has been observed and analyzed by U.S. shipbuilders, the labor hours required by foreign shipbuilders are as much as 50 percent fewer than those required by their U.S. counterparts. In addition, foreign builders cut and weld more complex shapes to closer tolerances and to international commercial standards. As in other industries, such as automobiles and machine tools, international competitors are producing high quality products faster and at lower cost than the United States.

Conclusion 5: U.S. shipbuilders, again because of their long absence from the international market, do not have close knowledge of customer requirements or ready product designs and materials technologies to serve different commercial market segments. For example, fast ferries are being made in Australia, other ferries in Europe, and cruise ships in both Scandinavia and Italy. The Koreans and Japanese are building tankers and other bulk carriers. U.S. shipyards will in some ways have to start from the beginning, competing against yards that have designs that are "almost ready" to build. In addition, U.S. experience with new technologies, particularly with components and engineered products that go into

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