procurement practices. Current procurement practices create inherently inefficient design, engineering and procurement practices in U.S. shipyards. The business methods developed to meet these procurement requirements are entrenched in U.S. yards and leave them unable to operate effectively in the international marketplace.
Recommendation 4. ARPA should continue current efforts in MARITECH, concentrating on the ''front end" of the process. Until the industry reaches a level of investment approximating that of European yards for technology and capital, only ARPA is investing at the scale required for the industry to become competitive. The "front end" includes both business-process technologies, such as marketing, estimating, sourcing, and process simulation, and technologies related to product design. ARPA should insist on viable business plans for each project, and if they are lacking, should cancel the project and concentrate funds where there is a reasonable chance of success.
Recommendation 5. The Maritime Administration (MARAD) should continue and should expand its role in assisting U.S. yards to enter the international commercial market. MARAD should be more aggressive as an informed commentator on efforts required by the industry to become internationally competitive. MARAD can also help by collecting general market information, much like the departments of Commerce or Labor, but success will depend on individual shipbuilders understanding their target market segments to a depth well beyond that achievable by MARAD. Nevertheless, MARAD, by combining information from the departments of State, Commerce, Defense, Labor, and Transportation, can provide useful perspective to the industry. More useful still would be a technical assessment of international yards that would provide U.S. industry competitors with some idea of the gaps they must overcome. This information would need to be available to any U.S. competitor who requested it.
There will be a serious need to monitor the many ways other governments subsidize their shipbuilding industries. Because financial mechanisms and subsidies have played a major part in competitive position for decades, the single most important function of MARAD would be to ensure reasonably accurate measurement of these subventions and subsidies in other shipbuilding countries.
Recommendation 6. ONR should continue support of NA&ME faculty through fellowships, research projects directed at Navy objectives, and to the extent possible, projects with commercial economic impact. Certainly, the economics of technology will be of overwhelming interest to the industry in the next decade. Relatively little study has been done of the economics of various available technologies. U.S. shipbuilders must achieve many fewer labor hours, shorten delivery schedules, and achieve greater precision in shipbuilding. To the extent that it falls within ONR's charter, achieving better understanding of the economics of technology around the world and of the differences between the economics of