Op-Ed: Why America’s small and medium yards need nurturing

Steven Clarke, CEO and co-owner of Silver Ships, Inc.

Steven Clarke, CEO and co-owner of Silver Ships, Inc. – an Alabama-based mid-sized boat builder – discusses how the recent award of the largest federal contract in his company’s history reemphasizes the need for industry support and protection of small and medium-sized boat builders.

As the marine industry and the rest of the American manufacturing base navigate the economic turmoil of the last few years, it is important to step back and admire the resilience of the American defense industrial base, writes Steven Clarke. These member businesses have withstood the turbulence of market shifts with the drawdown of two wars, unprecedented supply chain disruptions, unanticipated tariffs on steel and aluminum (with no contract relief), the highest inflation in decades and the tightest labor market in history. Despite such challenges, these firms continue to manufacture the required materiel that supports our military and those of our allies. The Small Business set aside program for federal purchases acts as an essential component of this industrial base. Competitively bid, large federal contracts serve as the stable work that allows us to flourish. These contract awards promote the economy of scale necessary for small and medium manufacturers to thrive. Yet the federal limits on firm size set by the Small Business Set Aside regulations prevent these manufacturers from consolidating into just a few companies, like so many other oligopolistic market segments in our modern economy.

Silver Ships is a prime example of a manufacturer that has experienced upward growth from a small to mid-sized builder over our 38-year history. Since our first HSMST award in 1994, we have continually benefited from the steady revenue and technical challenge these contract awards have brought to our business. These benefits have been extended back to the military in our ability to manufacture innovative, customized, designs that are fabricated efficiently within budget and time parameters. It has also allowed us the revenue base to support the staff and equipment necessary to design and build boats to meet the needs of numerous agencies at every level of government (municipal, state and federal) as well as several commercial customers at an affordable price. A much smaller company could not afford the engineers, designers, project managers, quality assurance team and other support staff nor the millions of dollars in capital equipment necessary to design and build these complex vessels.

The experience and resilience of builders like Silver Ships has resulted in vessels that exceed basic capabilities and close the gap of size versus innovation. From this, Silver Ships has been able to satisfy a need not only for military vessels but also for boats that can support all governmental agencies: from law enforcement to fire districts and beyond. These federal contracts not only afford us crucial production efficiencies and a stable revenue base but also push us to improve our products. The challenge of meeting demanding federal contract specifications (validated by customer inspections and design review) drives us to innovate and improve our vessel designs. The need to meet production timelines for multiple boats pushes us to improve our manufacturing and business processes. There is something to be said for efficiency of execution and we small to mid-sized builders excel in this arena. We possess the flexibility required to truly customize mission-specific, durable, high-quality boats.

In an industry where builders of all sizes face many of the same challenges, the ability to support each level regardless of scale matters. The viability of small and mid-size boat builders is not just each owner’s responsibility, but an industry-wide issue that in turn affects our shared economy and national welfare.