I read in the news that after decommissioning its aircraft carriers, the US Navy sells them to a scrapping company in exchange for $0.01.
How does something that cost over $5 billion to build and contains over 50,000 tons of steel get reduced in value to a mere single cent?
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It costs a lot to make a ship like that safe – fuel, oils and other chemicals etc, quite often countries have to pay people to take them away. Cleaning and breaking down the ships is a costly and skilled job, though clearly someone thinks they can make a profit from it.
I’d guess the $0.01 is a symbolic / minimum contact type value, in the uk it’s £1.
I found a news story which covers a bit of the reasoning here https://www.independent.co.uk/news/world/americas/kitty-hawk-1-cent-scrap-ebay-b1996695.html?amp
Normally, scrapping a carrier *costs* money. The fueling, crewing, towing, and beaching of a carrier of that size is stupid expensive, and the pay of $0.01 reflects the fact that the scrap from the carrier will provide for the costs associated with processing the ship.
It’s not a standard practice, this was done with 2 specific aircraft carriers at the end of last year. The metal is worth a lot of money but it also costs a lot of money to move 50,000 tons and then break it apart into usable pieces. They decided to basically call it even. The Navy generally has to pay for their ships to be broken down and recycled but the amount of steel in the aircraft carriers was enough to offset that cost.
Basically you’ve got an old fridge you don’t need anymore. It’s too heavy to move alone and it’s not worth enough to justify hiring movers. So you
tell your buddy they can have it if they come get it
You’re not looking at it the right way. Look at it from the buyer’s standpoint. You’re about to buy a boat weighing 50,000 tons whose purpose in life was to carry airplanes which were specifically designed to be able to take-off and land on this boat. It’s *HUGE* and expensive just to run it. Crew, fuel, logistics like feeding those people at sea…
That boat has no use to you. The only party you could possibly sell it to is a different military that also has aircraft carriers. And the US Navy could have just as easily sold it to them instead. NOBODY wants it.
At this point the value of this boat is what it’s made of. And you’re going to have to disassemble it yourself and separate all the parts, dispose of anything you don’t want/can’t use, etc. Even if you could make millions of dollars turning it into scrap metal, you’ll spend millions of dollars taking it apart and doing all that stuff. Oh, and while you’re disassembling it you’ll need to store it somewhere and keep it safe. Presumably a lot of water is involved in that process.
That’s a very tough purchasing decision. The fact that it only costs a penny is downright irrelevant. Even if you were paid a million dollars to take it, would you?
Having worked on the haz mat side of this, the buyer is going to spend millions and millions before they see a cent of income.
They’re going to have to move this thing, then they’re going to have to pay to store it… for years. There will be expensive plans worked out for how to isolate, remove, transport, and dispose of the hazardous waste. The port, city, county, and state all get to slowly mull over whether the plans are safe enough, while the salvage company pays and pays. There will be samples taken and analyzed, consultants will write reports, there will be meetings. Eventually they will pay through the nose to deal with the haz mat.
Then you get to pay to cut the ship apart, and then you get to sell the steel. The electronics cost a zillion dollars and are not useful to anyone. They’ll be melted down for the copper. Most of the expensive stuff can’t really be scrapped.
Remember that a lot of the ten billion that went into the aircraft carrier isn’t really in the aircraft carrier. A lot of the original cost was planning and designing and meetings and research. None of that makes the steel more valuable when you take it apart.
If someone gave me an aircraft carrier right now and then someone offered to buy it from me for a penny I would take the penny and be very thankful. I might be tempted to ask for a penny plus 1% of whatever they make disassembling the carrier, but if I did there’s a good chance I’d be stuck with a carrier.
Also, graft. What are you going to do…
It happens in the energy industry as well. Old, retired coal burning plants are sold to a contractor for nothing. They take on all the environmental liability and recycle/remediate the site…very expensive but must be worth it.
There’s a lot of click bait but very little information about the two carriers being scraped. Kitty hawk got towed from Washington state to Texas and I can’t imagine the cost to go through the Panama canal.
I read the older carriers were basically asbestos disasters. Like some old ocean liners the cost to remove the maz mat would be greater than any profit from scrap metal.
The scrap is barely worth more than the labor it takes to deconstruct decommissioned boats and aircraft.
Far and away the largest cost of building an military aircraft and or boat is the research, design, and test. These companies are contracted to make them and have an incredibly healthy margin. Only a few companies can even logically bid on and compete for the work to do so, which drives prices up.
So by the time these things get to the point of decomission and selling for scrap that $5 billion to design and build has near no value aside from giving it to someone who will dispose of it properly.
Same reason companies (try to) sell 22″ LCD monitors for $1 – it costs them more to store and properly dispose of it than it’s worth. A company that specializes in this has at-scale mechanisms in place for transport, demo, hazmat disposal, and scrapping that can allow them to see some margin on it. Economic realities.
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