With Only 4 Major Types of Warship Left, Can the U.S. Navy Still Dominate the Seas?

As ship-class after ship-class reaches retirement age, America's Navy is looking increasingly one-dimensional. But the crisis in cruisers offers a chance to reverse the decline.

Jul 20, 2014 at 10:05AM

It's budget-cutting time for the U.S. Navy. And while the admirals seem fine with this, Congress is getting nervous.

As reported on DefenseNews.com last week, there's a furious debate brewing between Congress and the Pentagon over the future of the Navy's cruiser fleet. In a nutshell, it goes like this: Currently, we have 22 Ticonderoga-class cruisers in the Navy. While sometimes dispatched on solo missions, or to lead a surface combatant task force, these cruisers' primary purpose is heading up the air defense squadrons protecting America's 11 aircraft carriers.

The Ticonderoga-class guided missile cruiser USS Vella Gulf (CG-72) recently completed a mission to the Black Sea, where Russian warplanes had just finished "buzzing" a U.S. destroyer. Photo: Wikimedia Commons.

Problem is, America's cruisers are starting to look a little long in the tooth. Built in the 1980s and '90s by contractors General Dynamics (NYSE:GD) and Huntington Ingalls (NYSE:HII), most of the Ticonderoga-class cruisers are nearing the end of their lifespans. By 2028, all 22 are expected to have lived out their useful service lives, worn out and ready for retirement.

And right now, we've got nothing to replace them.

A planned replacement class of warships, dubbed CG(X), was canceled in 2010 over worries the ships were becoming too expensive. What remains of that effort, and a sister program called DD(X), is what we now call the DDG-1000 program. It consists of a grand total of three planned "stealth" warships, built by General Dynamics at a cost of $3.5 billion apiece -- and they're not even full-sized cruisers, but just upsized destroyers.

USS Zumwalt (DDG-1000). A pretty ship, but can just three of them really replace 22 cruisers? Photo: Wikimedia Commons.

The Navy thinks it has a solution to the problem. It has proposed taking 11 "CGs" out of service starting in 2019, and upgrading them to extend their service lives at a cost of $8.8 billion. The 11 cruisers still in service would still quietly expire by 2028. But the 11 upgraded ships should be good for another 15 years each and, after returning to the fleet, would keep us "in cruisers" through about 2045.

You can have half, or you can have nothing
The upshot? The Navy's giving Congress two choices: Either operate on half today's cruiser fleet for the next 30 years, or face the prospect of going 100% "cruiser-less" after 2028.

This half-or-nothing proposal has ruffled the feathers of defense hawks in Congress. Complicating matters further, some Congressmen worry that the Navy's real intention is to retire the first 11 cruisers, not upgrade them at all, and spend its money on other pet projects instead.

Crazy as it sounds -- worrying that the Navy has a secret agenda to shrink its own fleet -- it's not entirely without basis. After all, the withdraw-upgrade-reintroduce plan would see new-old cruisers returning to the fleet beginning around 2030. "Upgraded" or not, the newest of these ships would be 36 years old when it returns to service.

So what's the alternative?
There's no denying the U.S. Navy is looking rather sparse these days. The DDG-1000 program is stuck at just three ships, down from a planned 32-ship fleet. The last of the Oliver Hazard Perry-class frigates are on their way out the door. Now, we find that the Ticonderoga-class cruisers, too, are also on their last legs.

That leaves us with -- what? A few dozen attack submarines, and about 18 nuclear "boomers?" A handful of Littoral Combat Ships (also under attack)? And of the aircraft carriers -- of which we're supposed to have 11 -- only 10 are now afloat. The only ship that's being produced in real numbers these days is the Arleigh Burke-class (DDG-51) destroyer -- of which a total of 77 are planned.

At best, we're looking at a Navy heavily reliant upon just four major ship classes today -- and if we're being brutally honest, a Navy that's looking awfully one-dimensional, and overly reliant upon the DDG-51. Even if every problem in the world is a nail, I'm not sure the best solution is to hit them all with the hammer that is the $1.5 billion Arleigh Burke-class destroyers.

A modest suggestion
What the Navy really needs is to broaden its base. On the small ship side of things, the proposed Small Surface Combatant class of warships is one solution. But on the larger side of things, just slapping a new coat of paint on won't do the trick. The Navy really must get the CG(X) ball rolling again, and develop a viable large warship to replace its aging Ticonderogas.

How much would that cost? It won't be cheap, that's for sure. Figure a DDG-1000-like price tag of $3.5 billion per cruiser, and it could cost $77 billion to replace the Ticonderoga fleet -- a huge windfall for shipbuilders General Dynamics and Huntington Ingalls, and nearly nine times what they'd likely get for just "upgrading" 11 existing ships.

But considering that the primary mission of each of these cruisers will be defending taxpayers' investment in $13 billion Gerald R. Ford-class nuclear aircraft carriers, a new fleet of cruisers just might be worth the expense.

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The nuclear-powered aircraft carrier USS Gerald R. Ford (CVN-78) (artist's rendering) is a very big boat. And taxpayers should expect to pay a very big bill to protect it. Photo: U.S. Navy.

Rich Smith has no position in any stocks mentioned. The Motley Fool recommends BMW and Nike and owns shares of General Dynamics and Nike. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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