A steel-hulled ship is like a huge floating magnet with a large magnetic field surrounding it. As the ship moves through the water, this field also moves and adds to or subtracts from the Earth's magnetic field. Because of its distortion effects on the Earth’s magnetic field, the ship can act as a trigger device for magnetic sensitive ordnance or devices which are designed to detect these distortions. The degaussing system is installed aboard ship to reduce the ship's effect on the Earth's magnetic field. In order to accomplish this, the change in the Earth's field about the ship's hull is "canceled" by controlling the electric current flowing through degaussing coils wound in specific locations within the hull. This, in turn, reduces the possibility of detection by these magnetic sensitive ordnance or devices.
The ship's permanent magnetization is the source of the ship's permanent magnetic field. The process of building a ship in the Earth's magnetic field develops a certain amount of permanent magnetism in the ship. The ship's induced magnetization depends on the strength of the Earth's magnetic field and on the heading of the ship with respect to the inducing (Earth's) field.
