071 LPD thread

AndrewS

Brigadier
Registered Member
US warships are built to the highest standards no cuts, the grade of the work is second to none top end stuff as is Japan

US warships can easily do 40 years, UK warships do half that

Question is how robust is the Chinese warships, the old units are not that good

but these new Type 052DL and Type 055 certainly look like top tier warships

Note that we see a big difference in costs for Arleigh Burkes between Japan and the USA.
 

AndrewS

Brigadier
Registered Member
I read the article from pop3 on the cost of 071 a while back. Basically he said 071 costs about 1 billion yuan, after some costing-cutting measures, including downgrading the original plan of installing 1130 to 630K. 054A costs about 1.5 billion yuan. The first 071 commissioned more than a decade, so it's likely costing more, but should still be less than 054A.

I could not find the original pop3 article, but here is a re-posting of the article on
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.

I dug out this old cost estimate of the Type-54 Frigate
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So if you strip a 25000tonne Type-71 LPD to the bare essentials, I guess it could cost 1billion RMB (approx $150M)


Type-54 cost breakdown estimate
thediplomat_2015-06-18_14-12-08.png
 

Brumby

Major
To understand why PLAN ships are much cheaper than US and western counter parts, two main factors are (1) the production cost (material, wages) in China is much lower, and (2) the profit on military ships are fixed at cost plus 5%.

Western shipyards and equipment manufacturers sell their wares at huge profits, I do not have real figure, but I guess anything less than 100% (on original contract cost) is unlikely. Thus if the cost of a ship in US is $100 million, US Navy likely to procure it at above $200 million. While in China PLAN would have paid only $$105 million.

The notion that the US Military Complex is making significant profits on the contracts is just not supported by the facts. Yes commercial companies in a free market exist to profit from its enterprise. The ones engaging in military contracts are within the norm of any profitable sector because free market forces dictate its overall behaviour. For example, Huntington's recent financial disclosure shows an operating income in the region of 10 % - hardly the 100 % plus as in your speculation.

Operating income in the quarter was $213 million and operating margin was 9.7 percent, compared to $231 million and 11.6 percent, respectively, in the fourth quarter of 2017.
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The problem with SOE's in China and with a cost plus profit approach is that invariably efficiency suffers due to lack of competition and overall incentive to be efficient. An inefficient enterprise with a cost p[us 5 % business model will inevitably lead to financial ruins because such business model and the associated cost structure is simply not long term sustainable. An enterprise has other cost such as administrative overheads; financing charges; et al and a 5 % margin will be insufficient to cover. You just have to look at any financial statement of any industry.

What is most likely happening is the enterprise is building debt load to sustain ongoing operations. In China, SOE debts no matter the degree of performance are just rolled over rather than recognising that there is an issue. This can go on indefinitely as long as the State is prepared to bank roll or until the State itself runs out of money. Somebody pays for it - eventually. . .

Yes, Makassar is really cheap because it is a lot smaller, and is strpped down and possibly due to South Korean subsidies.
The Makassar is simply a commercial vessel build for military purpose.

Another factor that shouldn't be overlooked is the survivability rating of a ship.

The USN has three military levels. San Antonio class is classified as Level 2. Burkes for example are level 3. Some navy ships are built only up to commercial standards.

It's not just Chinese ships that are cheaper. Euro ships also tend to be cheaper than comparable USN ships. However, they have not fared as well when struck by weapons or freighters/tankers.

I had a similar conversation with Jeff Head many years ago in this forum. I questioned why was the French Mistral cost about 35 % of the San Antonio. In my view French labor would unlikely be that far off from US rates. Jeff's typical reply and to the point is that the Europeans build to commercial standards and the US to mil specs.

Survivability of a ship is not transparent until something happens to test it and for that we have a recent example with the Norwegian frigate and compare that with the two outcomes with the Burke collision. . .
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In other words you get what you pay for - eventually.
 

Tam

Brigadier
Registered Member
Commercial standards?

Those ships that bumped and sank that frigate, and took two Burkes out of action, and yet managed to sail away and head back to work weeks later --- those ships that go bump in the night are built to commercial standards.
 

Tam

Brigadier
Registered Member
To put it in to prespective, Hyundai Marine Merchant got an immediate 5 billion in state funding from the SK government after Hanjin when belly up, while Daewoo got 10 billion alone for shipbuilding, double the sum. While the US shipyards do not have such practices.

We can only really speculate the total sum that is poured into Chinese shipyard in return due to their opacity, but we can be sure that it is there due to the simple fact that subsidizing is really the only way in the global shipbuilding industry. Some analysis states that government subsidizing allows for ships to be build 15-20 per cent cheaper. And that is not accounting for the fact that state owned corporations need not account for future dry spells or losses.
So as much as people will like to crap on the state of US shipbuilding, they at least don't carry a truck load of baggage underneath the rug.

CSSC made money, and in fact, it was one of the profitable and shining stars among the SOEs. CSIC on the other turned out to be a major loser, which is why it got management purged and looks to get merged into CSSC.

There are other shipyards out there, private and SOE. Status not clear but there is a global downturn in shipbuilding due to the lowering of global trade.

If you want the highest safety and survivability standards for any ship in the planet, the crown goes to the LNG carriers. You have to understand the nature of these ships to understand why, and why they are considered the highest end of ship building. Currently the South Koreans are top in this, with Japan the second and China the third.
 
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manqiangrexue

Brigadier
The problem with SOE's in China and with a cost plus profit approach is that invariably efficiency suffers due to lack of competition and overall incentive to be efficient. An inefficient enterprise with a cost p[us 5 % business model will inevitably lead to financial ruins because such business model and the associated cost structure is simply not long term sustainable. An enterprise has other cost such as administrative overheads; financing charges; et al and a 5 % margin will be insufficient to cover.
So that's going to be a hypothetical "problem" that is not reflected in real life. In reality, Chinese military ship-building is the most efficient in the world, both in terms of time and resources spent. I agree that paying 5% plus cost is technically incentive to be very inefficient and expensive in the way things are built but clearly, that is not happening. The only way to argue that would be to just assume, for the sake of your following statement, that these new Chinese ships look shiny, modern and maintained but are just terrible in quality.

In other words you get what you pay for - eventually.
That's one of the wrongest often repeated phrases in the world. It's wrong in daily shopping, wrong in business deals, wrong in global economics, and wrong in military spending. The whole reason for which people shop around, negotiate deals and research manufacturing advancement is that this statement is wrong and the same amount of money can go very far or nowhere at all and everywhere in between depending on how it is used. "You get what you pay for" is what non-competitive shops sling around hoping to dissuade costumers from making comparisons.
 

Brumby

Major
The ex HMS Ocean is a prime example of going to commercial standards to save on building cost.

On 11 May 1993, the government announced that VSEL had won the contract.
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The build was to commercial standards, reducing costs significantly and leading to a construction spend of £154 million (£308 million in 2018)
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Tam

Brigadier
Registered Member
The notion that the US Military Complex is making significant profits on the contracts is just not supported by the facts. Yes commercial companies in a free market exist to profit from its enterprise. The ones engaging in military contracts are within the norm of any profitable sector because free market forces dictate its overall behaviour. For example, Huntington's recent financial disclosure shows an operating income in the region of 10 % - hardly the 100 % plus as in your speculation.

The prices went up because the US military complex has far less competing companies in this decade back to compared in the 1950s. How many shipyards were still there in 1955? How many aircraft companies were still there in 1955? Compared to now.

Commercial companies compete in the free market means reduced profits and even losses. Although there is now a clear trend to consolidation, the big fish eating the small fish, like what happened to the military industry. You can expect ship prices to go up once there are few fish left.

The US shipbuilding industry has another problem. It does not have a commercial shipping industry to live on. That means all the cost of the military contracts have to include all the costs to keep that shipyard surviving. That raises your cost entirely.

The Chinese shipbuilding industry doesn't need military contracts to live, and in fact it was said they prefer doing commercial contracts because it makes more money --- apparently the Chinese government dictate to the SOEs the profit margins the shipbuilders can put on the military contracts.

The same can be said of the S. Korean, Japanese, and European shipbuilding companies, except they can dictate profits on the military contracts on their own. They do not need military contracts to survive but its an added bonus to their income. The shipbuilding business is cutthroat enough with bidders constantly undercutting each other, so any contract to keep the company working is welcome.

Then there is to a certain extent that their governments support these shipbuilding industries, despite WTO rules. US shipbuilding companies don't have such government support.
 

Max Demian

Junior Member
Registered Member
Commercial standards?

Those ships that bumped and sank that frigate, and took two Burkes out of action, and yet managed to sail away and head back to work weeks later --- those ships that go bump in the night are built to commercial standards.

Those ships were also 6+ times the displacement of the ships they hit, and they hit them with their strongest point. Most of the damage was done by the bulbuous bow below the waterline, concentrating all that mass on a small area. No real surprise there. If a 40t semi truck slammed into a Humvee from the side, I wouldn't be surprised if the outcome was similar.

In case of modern naval combatants survivability means not just structural strength, but also redundant systems (surplus buoyancy, propulsion, electronics, robust power distribution), damage control systems, etc.
 
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Tam

Brigadier
Registered Member
Those ships were also 6+ times the displacement of the ships they hit, and they hit them with their strongest point. Most of the damage was done by the bulbuous bow below the waterline, concentrating all that mass on a small area. No real surprise there. If a 40t semi truck slammed into a Humvee from the side, I wouldn't be surprised if the outcome was similar.

In case of modern naval combatants survivability means not just structural strength, but also redundant systems (surplus buoyancy, propulsion, electronics, robust power distribution), damage control systems, etc.

Should be no surprise if that Norwegian frigate sank, not because of some nonsense about 'commercial quality' --- after all its a frigate that is a much smaller ship than a Burke --- getting rammed by a tanker. It is also said that many watertight doors were left open so the ship flooded quickly.

This day and age, a freighter that is around 20 to 50,000 tons in displacement is considered to be a runt and the small side of things. One of the ships that rammed a Burke was only a 30,000 tonner. In World War 2, that's battleship displacement, today, that's a runt of a freighter. The bigger the cargo ship, the greater its structural strength, which is what it needs after it can be loaded with as much as 200 to 400,000 tons of weight in some cases. In the case of modern commercial ships, specialized ships like tankers and LNG carriers --- which is the most dangerous and highest end of all --- require extensive robotic systems that constantly monitor the entire ship for leaks, temperature changes, and so on. These ships are also extensive automated --- the tanker that Iran seized, only has 23 people on board. The crew is only there to watch over the robot. These ships are also heavy in bulkheads all around and no one likes an Exxon Valdez happening in yours or any countries waters.
 
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