By Geoff Fein
Earlier this month when Defense Secretary Robert Gates proposed extending the build rate for aircraft carriers from four to five years, the idea led to a flurry of outcries from lawmakers and concern from the shipbuilding industry over the future of its supplier base.
Adding a year to the build rate could cause Northrop Grumman [NOC] Shipbuilding to lose some of its mid-and small-tier suppliers, D. Scott Stabler, vice president supply chain management, told Defense Daily yesterday.
“We have paid a lot of attention particularly in this economy to how well our suppliers are doing, not just at the first tier but at the second and third tier level as well. We’ve really tried to pay closer attention,” he said during the annual aircraft carrier suppliers breakfast in Washington, D.C.
“If we lose a key supplier it gets to be a real issue for us, from the standpoint of our ability to support tight schedules and tight budgets we have to get these ships back– either new construction in-service or RCOH…maintenance availability return to service,” Stabler added.
Extending the funding for carriers out another year will have an impact, he said.
“We’d like to get to a steady drumbeat for these folks, and failing that some of the production [could] go cold,” Stabler said. “You can have loss of learning, you can have suppliers seek alternative markets…”
The interaction with suppliers is what makes the industry day gathering so beneficial, Stabler said. “We get a chance to talk to them directly.”
“We have a lot of one-on-one conversations, but we don’t have the opportunity to get the carrier suppliers together and talk across the industry at once,” he added. “Part of our discussions [Monday] was much toward what part of their business is defense? How do [they] feel about [going from] four to five years? We had some good discussions on what the implications of that could be.”
Over the past 15 years, Northrop Grumman has seen the number of its aircraft carrier suppliers shrink, both from those leaving the market to Northrop Grumman trimming the supplier base to the companies the best suited for the business, Stabler said.
“There has already been a survival of the fittest. Now we are looking at how to sustain the base we have now. This is what the focus is,” he noted.
Northrop Grumman Shipbuilding officials talked to the suppliers to see where their pressure points and anxieties reside, Stabler added. “So we are not surprised at the eleventh hour by somebody who is going out of business.”
“As we get into a test program, into trials, if we have a critical supplier that exits the market in an unexpected way, that can be very disruptive for operations,” he said.