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?
In: 9559
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.
Latest Answers