Taiwan's Indigenous Warships. Their Impact on Employment and Economy

  • Date:2019/07/02
Taiwan’s Indigenous Warships. Their Impact on Employment and Economy
Executive Summary
(Please refer to the full report in the original Chinese language)
Special Report:

Precision analysis is a key in defense economics. Without an in-depth view of how military programs and their spending impact the domestic economy, necessary plans can face delays in legislative review or be misunderstood by the general public and, ultimately, hurt defense capabilities when force build-up is most needed.

Taiwan’s build program of its indigenous warships represents 62,285 employment opportunities that breaks down to an estimated 6,229 jobs per year over a period of a decade. For every worker directly involved in building a navy combatant ship, additional work will be generated for two and a half individuals in surrounding industries who are indirectly involved in the effort.

The exact analysis is laid out in a special report published in March 2019 by INDSR’s Division of National Defense Resources and Industries. The report was commissioned by the Naval Shipbuilding Development Center, Navy Command, ROC (中華民國海軍造船發展中心) and represents the civil-military collaboration in policy research unique to INDSR.

The ROCN’s planning for new and advanced surface and underwater vessels – including submarines, new-generation main warships, missile frigates, mine hunters, submarine rescue vehicles, marine survey vessels, and amphibious warships, including the landing platform dock (LPD) and landing helicopter dock (LHD), among others – incorporates new technologies and materials that have not previously been part of its indigenous build programs.

With no precedents available in Taiwan, the research covers a comparative study of naval surface ships and submarine build programs for the United States, France, Japan, Australia and Taiwan. The study looks at the economic impact the programs have on the respective economies, providing a view on the spillover economic effect when technologies developed for warship-making are later re-designed for civilian use in health, seismology and power plant safety, as in the case of France.

Rather than running the input-output model, a common quantitative economic model to analyze inter-dependency of different industries in an economy, this research looks at long-running data from international shipyards and established navy programs to form a baseline for analysis on Taiwan and draws from source material in the public domain not only in English and Chinese, but also Japanese and French.

Reviewing the build plans of similar naval vessels, including those for the Arleigh Burke class guided-missile destroyer, the Oliver Hazard Perry class guided-missile frigate, the Canberra class landing helicopter dock, the Guardian class patrol boat and the DSAR class submarine rescue vehicle, the study finds there is an eightfold difference in the amount of overall (direct and indirect) manpower that is required to construct a navy patrol ship compared to a civilian commercial ship.

The research also estimates a 2.5 to 2.7 multiplier effect on the domestic economy from indigenous warships. In other words, the multiplier effect of 500 billion New Taiwan dollars in investment budget will result in 1.25 trillion New Taiwan dollars to 1.35 trillion New Taiwan dollars for the local economy.

The research suggests that managing a new build program in blocks or sections, and utilizing modular design will lend flexibility to the procurement process and expedite vessel construction.

This way, the vessel’s main requirements can be set without delay and construction can begin on the prototype. During production, subsequent adjustments can be made for improvements. This ‘scientification of politics’ can reduce risks in decision-making and costs. This method is often seen in the new build programs of navies of major countries which can prevent delays in the build-up of their overall combat force.