Murphy's Law: Bank Broken By The Breakers


February 29, 2012: Last year, the U.S. Navy decided to go back to the breakers (where ships are broken up for scrap). Four retired aircraft carriers (USS Constellation, USS Forrestal, USS Independence, and USS Saratoga) were to be scrapped instead of sunk or simply allowed to rust away while tied up. These ships were taken out of service between 1993 and 2003 and have been waiting since then while a decision was made on their disposition. But there are seven carriers waiting to be scrapped and the navy has an economic disaster on its hands. Keeping carriers in reserve costs  several hundred thousand dollars a year but it can cost over a billion dollars to scrap one of them.

Since the 1990s, sending warships to the scrap yard has not been considered a viable alternative. It's all about pollution, bad press, and cost. The largest warship to be scrapped, the 45,000 ton carrier USS Coral Sea, took until 2000 (seven years) to be broken up. Thus the process is not only expensive it takes a long time. Then the navy discovered that the cost of scrapping the carrier USS Enterprise would be close to a billion dollars. This was largely the result of a lot more environmental and safety regulations. With so many navy ships (especially nuclear subs) being broken up in the 1990s, and all these new regulations arriving, the cost of disposing of these ships skyrocketed. This was especially true with carriers.

So the navy just tied up retired ships and waited for some better solution to appear. That never happened. In fact, the situation has gotten worse. The navy only has one ship scrapping facility (Brownsville, Texas), so only one carrier at a time can be dismantled. Using official estimates of the time required to dismantle each of the biggest ships, it'll take seven decades to get rid of the surviving conventionally powered carriers. Note also that the conventional carrier in the absolute worst shape, the USS John F Kennedy, is the one being officially retained in category B reserve (but only until Congress forgets all about her, of course). Name recognition really does count. 

It gets worse. With the really vast number of single hull tankers being scrapped and large numbers of old, smaller-capacity container ships laid up and likely to be offered for scrap fairly soon, the market for difficult-to-scrap naval ships is going to shrivel and the price for scrap steel will drop. Efforts to get the navy to include the costs of disposal in the budget for lifetime costs has never caught on and now it's obvious why not. The real nightmare begins in 2013, when the first nuclear powered carrier (the 93,000 ton USS Enterprise) is to be decommissioned. The cost of dismantling this ship (and disposing of radioactive components) will be close to $2 billion.

For thousands of years unneeded ships were "sent to the breakers" (a shipyard that broke the ship up for scrap and reusable parts). However, this is now considered environmentally harmful if done the old fashioned way (as it is still done in countries like India) and too expensive if it is done in an environmentally (and politically) acceptable way. In other words, it could cost more to scrap warships than you would recover from the value of the recycled metals.

Another use for retired ships is as museum ships. That is not happening as much as it used to. The big problem, for whoever takes large ships like carriers, is that you have to spend lots of money. It takes hundreds of millions to outfit a big ship as a museum and maintain it.

Another popular option is to use old ships for target practice. For example most of the 30 decommissioned Spruance class destroyers were used for target practice. Some old warships are sunk closer to the shore, to provide reefs for fish and scuba divers. Running a SINKEX (sinking exercise) enables the navy to test some theories on how vulnerable, or invulnerable, modern warships are. But environmentalists oppose these two methods as well because it puts toxic materials into the ocean.

Going to the breakers is now seen as viable because of more efficient breaking techniques and higher prices for recycled metals. But the prices paid for this scrap metal are declining. The costs of dismantling nuclear powered ships are growing. The navy suddenly has a very large expense that it never expected.




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