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Good afternoon, everyone! It is great to be back home in New York City, especially for Fleet Week. These events are of great importance to me, as it provides our Fleet an avenue to engage with the general public, not only to showcase some of our ships, but to allow the American people to interact with our Sailors and Marines, fostering a sense of connectedness to our naval services.
I would like to thank Joe Purcell and Morgan Stanley for inviting me to join you today, affording us the opportunity to come together and discuss the state of our Navy and Marine Corps, as well as for me to hear what is on your mind, especially when it comes to your views on America as a maritime nation.
I would also like to recognize all of the Veterans here at Morgan Stanley, as well as the other organizations represented here today, for their service to our Nation.
As a Veteran myself, I am aware of the sacrifices you and your families made during your time in service. While you are no longer in uniform, it is my hope that your experiences as members of the United States military were formative and positive, and that the lessons you learned prepared you for success in your current roles at this firm.
Throughout this week I intend to ask—in fact, to challenge—our active-duty and reserve personnel, as well as our veterans, to share their stories with our fellow citizens in this great city as they contemplate how they can best serve our country.
You are the best recruiting tool our Department has, and I hope you will consider supporting our efforts to enlist our next generation of Sailors and Marines.
As I prepared for our engagement today, it was not lost on me that there are strong parallels between Morgan Stanley and our Department of the Navy.
For the past 88 years, this firm has demonstrated resiliency. From weathering the Great Depression and World War II, the tragic loss of 13 employees on September 11th, the financial crisis of 2008, and more recently the COVID-19 pandemic, this firm, as is the case for many companies, has adapted to and overcome many challenging global events.
In that vein—and before we get into our conversation—I would like to share with you a few thoughts on the challenges our Navy and Marine Corps team faces today, how we are adapting to the changing competitive maritime landscape, and what investments are needed to ensure our Fleet and our Force are ready to execute our assigned missions in defense of our Nation.
As you are no doubt aware, the world around us is changing at lightning speed. The general peace and stability we have enjoyed over the past 20 years are giving way to uncertainty and unpredictability.
Indeed, around the world we—along with our allies—are being challenged by those who wish to upend the rules-based international order and norms that have underpinned a very long, stable period of global economic prosperity.
In Europe, we continue to bear witness to Russia’s unprovoked and illegal campaign against Ukraine, violating its territorial and national sovereignty, targeting Ukrainian civilians in the process.
In the Middle East, Iran remains a destabilizing regional force as it tries to distract the world from the issues it faces at home. The most recent example of this is its illegal seizure of two commercial tankers in international waters, one of which was engaged in lawful commercial activities transporting oil from Kuwait to the United States.
In the Indo-Pacific, North Korea’s regime persists in its antagonistic behavior, launching ballistic missiles towards its neighbor Japan, as well as violating UN sanctions through illicit maritime activity.
Additionally, and impossible to ignore, the People’s Republic of China continues its rapid military buildup as it looks to establish the People’s Liberation Army as a “world-class military” by 2027, with a strong naval force as a key component.
All of these nations, as well as non-state actors, pose challenges to our Navy and Marine Corps team every day, in every region and domain we operate in, from the ocean floors to the stars above, as well as in cyberspace.
However, to prioritize what we need to address the most, our National Defense Strategy rightly identifies the People’s Republic of China as our pacing challenge.
The PRC’s naval strength is supported by a strong shipbuilding industry, with several of its shipyards capable of producing high numbers of commercial vessels in addition to warships and submarines.
Chinese leaders recognize that a strong commercial fleet capable of facilitating trade, and, in-turn, driving economic growth is key to funding a strong navy, and they have invested heavily to make this a reality.
Given that 90% of goods are transported via sea lines of communication, the People’s Republic of China—through its fleet of thousands of commercial ships—is a major contender in this space.
China’s maritime advances are not limited to increasing its military and commercial fleet size.
Through its Belt and Road Initiative, the PRC has made strategic investments to establish ownership stakes in key international ports and canals, opening up the potential for them to influence—and possibly control—the end-to-end flow of maritime commerce.
Even here in the U.S., PRC state-owned enterprises hold ownership stakes in our ports, including those in Long Beach and Seattle, through joint ventures or investments in other foreign firms.
And while we have laws and policies to place limits on foreign control of our ports, other countries do not.
China’s ascendency in the international maritime commons is no accident.
Make no mistake, the investments they are making in the maritime domain—commercial, civil, and naval—are aimed at transforming the People’s Republic of China into one of the world’s premier maritime powers.
But let me tell you, we are not going to stand by and watch it happen.
The Department of the Navy is hard at work to counter their influence.
When I was sworn in as the 78th Secretary of the Navy in August of 2021, I effectively became the CEO of the Department of Navy. With that, I am responsible for overseeing the work of nearly one million Sailors, Marines, and civilians, supported by a budget of roughly $250 billion.
Our personnel, backed by Congressional funding, are committed to ensuring the readiness of our Navy and Marine Corps in support of our national security and national interests.
As our Department works to address competition with China and the other challenges we face, our efforts are guided by our three enduring priorities—strengthening maritime dominance, building a culture of warfighting excellence, and enhancing strategic partnerships.
Allow me to provide some examples of how we are making progress against all of our priorities to make our Navy and Marine Corps team stronger than it has ever been.
We are increasing our Fleet’s capability through the construction of several classes of ships and submarines. Today, we have 55 ships in various stages of construction and 78 on contract.
This includes our first Columbia-class ballistic missile, nuclear-powered submarine, USS District of Columbia, supporting the modernization of our Nation’s most survivable leg of our nuclear deterrent.
On the surface, construction continues on the first-in-class frigate USS Constellation, and we look forward to commissioning the Fleet’s first Flight Three Arleigh Burke-class destroyer, USS Jack H. Lucas, later this fall.
Additionally, we are experimenting with unmanned surface vessels through Task Force 59 in the Middle East and Fourth Fleet in the Caribbean to identify how these platforms can augment our manned ships, creating an advanced, hybrid Fleet.
The Marine Corps continues its transformational Force Design 2030 modernization effort, shaping how Marines are trained, educated, organized, and equipped to bring unique warfighting capabilities to the Joint Force.
From improving our Marine aviation fleet with the acquisition of F-35 fighter jets and CH-53K heavy lift helicopters, to our budget request for munitions that enable Marines to conduct long-range precision strikes against maritime targets, our Marine Corps team continues to adapt itself to operate in environments throughout the Indo-Pacific and beyond.
However, our Navy and Marine Corps are more than just advanced platforms and weapons systems. Our people remain our greatest strength, and are at the core of everything we do.
To be an employer-of-choice for America’s best and brightest, we must do everything we can to offer a competitive benefits package to recruit and retain qualified individuals to become our next Sailors and Marines.
We are committed to providing our Sailors and Marines with world-class training and education at every step of their careers. Examples of this include offering degree-granting programs through Naval Community College, Naval Postgraduate School, and Naval War College.
Additionally, our surface fleet is leveraging virtual simulators, providing our watch standers with opportunities to train to challenging situations at-sea, ensuring they are ready once they get underway.
We are also working tirelessly to make quality-of-life investments, improving the lives of our Sailors, Marines, and their families through a focus on better housing, expanded access to child care, and new strategies to combat destructive behaviors that have a negative impact on unit readiness.
We are in a competition for talent not just in recruiting Sailors and Marines, but in attracting government civilians and employees for the defense industrial base to support our Fleet and our Force.
Again, I ask that everyone in the audience today to share your stories of service to our Nation to inspire our fellow Americans to consider a career in our Navy or Marine Corps as both servicemembers and civilians.
In addition to our focus on recruiting, retaining, and improving quality of life for our personnel, we are committed to developing our partnerships, both internationally and domestically. In the Indo-Pacific, we are advancing our trilateral AUKUS security partnership, with our Navy playing a leading role in supporting the Royal Australian Navy’s acquisition of conventionally armed, nuclear-powered submarines, supporting stability throughout the region.
In March, President Biden, alongside his British and Australian counterparts, announced that this year we will be welcoming Australian Sailors and civilians to embed within our submarines, installations, and industrial base.
In this way we will be supporting our Australian allies as they develop the capacity necessary to build, crew, and maintain conventionally-armed, nuclear-powered submarines.
We look forward to continuing our leading role as we advance this critical partnership with two close allies.
Likewise, here at home we are focusing on building relationships with America’s companies that are on the leading edge of technology development.
Through the Naval Innovation Center in Monterey California and the Marine Innovation Unit in Newburgh, New York, we are creating opportunities for private companies to come together with our Sailors and Marines to identify new capabilities that will improve upon our existing systems and platforms.
While both of these units are in their early stages, we are confident they will serve as key enablers to leverage the power of American innovation in support of national security.
All of these efforts require a tremendous amount of investment, both public and private.
On the public side, we are doing just that, both through ongoing initiatives and via the President’s 2024 budget request.
We are investing in our critical infrastructure to make it more resilient, especially in the face of a changing global climate.
One of our flagship initiatives is the multi-billion dollar Shipyard Infrastructure Optimization Program to improve our public shipyards in Virginia, Maine, Hawaii, and Washington State, sustaining their ability to service our modern Fleet for decades to come.
To address gaps in skilled labor, we are establishing training programs like the Additive Manufacturing Center of Excellence in Danville, Virginia to support the training of a workforce capable of meeting our Navy’s industrial needs.
Finally, this year in the President’s Budget Request for Fiscal Year 2024, we are requesting $1 billion of support for our industrial partners, including $400 million for supplier development, shipyard infrastructure, workforce development and $380 million for increasing the capacity of our weapons industrial base.
While these are just a few of the investments we are making to address our own needs, they are part of a larger, whole-of-government effort to invest in several critical and emerging industries to support our economic and national security.
Last month, a major economic security address at the Brookings Institute, National Security Advisor Jake Sullivan discussed at-length our Administration’s industrial strategy.
This strategy highlights areas, such as critical infrastructure and technology innovation, for targeted public investments—meant to complement private capital— to “unlock the power and ingenuity of private markets, capitalism, and competition to lay a foundation for long-term growth,” enabling “American business to do what American business does best—innovate, scale, and compete.”
And as we think about what sectors and industries are important to the Nation’s economic security, shipbuilding is at the forefront of my mind.
As I mentioned earlier, the People’s Republic of China’s rise as a maritime power is fueled by the capacity and rate at which its major shipyards are able to build both commercial and naval vessels.
To remain competitive in the maritime space—both building up our US-flagged commercial fleet as well as increasing our numbers of submarines, destroyers, and other ships—we need to focus significant capital to bolster our Nation’s shipbuilding capacity.
Earlier this month, I met with Secretary of Transportation Pete Buttegieg to discuss how we can improve the global competitiveness of the U.S. maritime industry so that it is capable of meeting our commercial and military needs.
Our teams are actively exploring how our respective departments can most effectively work together towards this end.
Now, I recognize that new shipyards, their associated supply chains—and a skilled workforce to staff both— are not created overnight.
However, the actions we take in the near-term, hopefully through the synchronization of public and private investment efforts to address our shipbuilding needs, will lay the groundwork for a generational American maritime renewal.
Since our founding, America has been—and will continue to be—a maritime nation. We need to invest in the industries that support this identity.
A strong merchant and naval fleet are key to our economic security, and economic security is national security.
As I close, I will leave you with a quote from fellow New Yorker President Theodore Roosevelt.
“A good Navy is not a provocation to war. It is the surest guaranty of peace.”
Every day, thousands of Sailors and Marines are deployed around the globe, both on-land and at-sea, to guarantee this peace and to ensure that maritime commerce flows freely across the global sea lines of communication.
A robust Navy and Marine Corps team is critical to supporting our Nation’s economic security, and I ask that you consider how you in your current professions can support us as we look to invigorate the U.S. maritime industry.
Again, it is great to be home and to spend time with you with afternoon. I look forward to what questions you may have for me, and am excited to learn more from you as to how your firm thinks and operates.
May God bless our Sailors, Marines, civilians, and their families.
Carlos Del Toro
23 May 2023
19 June 2023
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