Structure and performance in heavy industry: The case of shipbuilding

This study was motivated by the dramatic but uneven renaissance of American heavy industry in the 1990's. Although the U.S. automobile and steel industries have regained international competitiveness, other sectors continue to underperform. The problem was to determine if a functional profile of a given heavy industry is capable of revealing its potential for success in an advanced industrial economy.;The value chain was proposed as the basis for incorporating technical knowledge into a new engineering/economic approach to this problem. Value chain research requires the identification of activities, estimation of value distribution, and analysis. It was hypothesized that a robust value chain model could be constructed by developing a firm-independent product and process breakdown structure to collect and organize data, and that this value chain would provide the basis for analysis of structure and performance in heavy industry in terms of production economics, transaction cost economics, and strategic evolution.;The shipbuilding industry was used as the test case. Through collaborative work with naval architects, production planners, and estimators from three large shipyards and other industry experts, a shipbuilding industry firm-independent product and process breakdown structure was developed and validated using shipyard cost/schedule control records. From this, the shipbuilding value chain was constructed. Value chain analysis was found to require a decomposition of processes, factors of production, and production scenarios rather than a simple process breakdown. A quantitative decomposition instrument was developed and tested at a European shipyard. The shipyard's data, which indicates possible similarities with the automobile industry, was explored.;For comparative static and evolutionary views, qualitative value chain studies were carried out on competitive strategies in the international industry and on trends in shipbuilding industrial processes. The U.S. industry's value chain, weak in design and planning activities, was found not well suited to either the cost leadership or differentiation strategies. However, a focus strategy was formulated which potentially could enable American shipyards to enter global commercial markets.