American Shipbuilding Association

House Holds Hearings on Future of U.S. Shipbuilding Industrial Base

In separate hearings held on March 28th and April 5th, the House Armed Services Projection Forces Subcommittee, received testimony from leaders in the shipbuilding industry on the health and future stability of the U.S. shipbuilding industrial base. 

The Navy’s plan for the production of the Virginia-class submarine program was the focus of the March 28th hearing.  According to the 2006 Quadrennial Defense Review and the Navy’s thirty-year shipbuilding plan, both released earlier this year, the Nation will begin procuring two submarines a year starting in 2012.  Representing the shipbuilding industry, John Casey, President of Electric Boat and Mike Petters, President of Newport News, testified that the industry is working closely with the Navy to stabilize the shipbuilding industrial base and to mitigate the loss of designers and production workers who will be laid off to correspond with the delay in production of two submarines a year.  Casey and Petters underscored the threat to America’s future ability to build submarines if the Nation fails to increase orders to two per year.  Both men stated that while the Navy’s plan does provide some predictability, the industry is concerned that the 2012 date may be pushed into the future.  Citing that the shipbuilding industry has seen the two submarines per year plan pushed into the future years multiple times, Petters commented that he was uncertain how to persuade the workforce and supplier base that the workload will be there in 2012.  Casey urged that the best way to prevent losses that could be irreparable would be to increase submarine production to two per year sooner than 2012. 

The health of the entire shipbuilding industry was the topic of the hearing on April 5th.  Cynthia Brown, President of the American Shipbuilding Association, outlined the decade and a half contraction of the shipbuilding industrial base.  Driven by post-Cold War budgets that shifted resources away from a robust Navy, Brown highlighted that the continued underinvestment has driven the U.S. naval fleet and shipbuilding industry to critical lows.  During the 1980’s, the Navy ordered an average of nineteen new naval ships a year.  From the 1990’s until today, the average annual ship production is only six ships a year - - a 61% drop.  Since 2001, the naval fleet has dropped from 341 to 281 ships today.  Additionally, even amid the overall increase of the Department of Defense budget of 51% since 2001, new ship construction budgets have seen a sustained 16.8% cut during the same period of time. 

In order to save and strengthen the U.S. shipbuilding industrial base and reduce the costs of ships, the shipbuilding industry recommended

1. Increasing and sustaining larger shipbuilding budgets;
2. Mandating compliance with U.S. ship acquisition laws;
3. Encouraging clauses in contracts that provide an incentive for investment; and
4. Supporting larger research and development budgets to design technologies and manufacturing practices that will reduce construction and life-cycle costs of each class of ship. 

While the industry applauds the Navy’s shipbuilding plan as a stable blueprint for the future, the Nation must make sure that the stability is robust, rather than anemic.  Brown noted that the health and viability of the U.S. shipbuilding industry depends on America making naval and commercial shipbuilding a national priority. 

Member of Congress Sounds Alarm over Future of the Submarine Industrial Base

Voicing concerns over the Navy’s plan to procure two submarines a year staring in 2012, Rep. Rob Simmons (R-CT), in a letter to Chief of Naval Operations (CNO) ADM Mike Mullen dated March 16th, said that the key to reducing the unit price of submarines was to get production rates up to two per year by FY 2009.  Unless submarine production is increased as soon as possible, many in Congress believe that America faces a threat to our sovereign ability to design and build submarines as designers and productions workers are laid off between now and 2012.  Below is the text of the letter from Rep. Simmons to ADM Mullen. 

March 16, 2006

Dear Admiral Mullen:

I applaud your intention to bring stability and predictability to the United States shipbuilding industry, a critical component of our national security and economy. In addition, I support your goal of a larger fleet of 313 ships - 280 ships are insufficient to meet U.S. defense needs now and into the future.

After closely reviewing the Department of the Navy's thirty-year shipbuilding plan, however, I remain convinced that the Navy's plan should include two Virginia Class nuclear attack submarines (SSN) per year starting in Fiscal Year 2009. Building two SSNs per year, commencing in FY 2009, would stabilize the submarine industrial base and help meet national security requirements. As you know, the shipbuilding plan fails to meet the Navy's stated requirement for 48 SSNs until 2034, at a time when submarine mission demands already outpace the fleet's supply. 

Industry is committed to reducing Virginia Class acquisition cost through continued performance improvement and design modifications for affordability. Similarly, cost improvements also are needed in government programs which account for on average, nearly 40 percent of Virginia class submarine construction costs. Industry, along with its Navy partners, can achieve your stated $2 billion acquisition cost, commencing with the FY09 ships, if the Navy enters into a multi-year procurement order for ten ships, commencing in FY09.

I commend you for your commitment to a capable fleet and a healthy shipbuilding industry. I look forward to helping you make those goals a reality in the most efficient way possible.

All the best,

Rep. Rob Simmons

Shipbuilding Supporters Urge Funding for Title XI

Senators Trent Lott (R-MS) and Mary Landrieu (D-LA) and Representatives Jo Ann Davis (R-VA) and Susan Davis (D-CA) are rallying their colleagues in support of appropriating $30 million for the Title XI Ship Loan Guarantee Program.  Authorized in the FY 2004 National Defense Authorization Act at $30 million each year for five years, Title XI has not received funding in the Transportation Appropriations bill in nearly four years.

The Title XI Program, administered by the Maritime Administration, provides ship owners with a federal guarantee of their commercial bank loans for the construction of commercial ships in the United States.  Most of the vessels built with Title XI financing transport dry goods and petroleum in the U.S. coastwise, and Alaskan and Hawaiian trades.  Ships built with Title XI are also available to serve as military auxiliary ships in times of war or national emergency.  Without Title XI financing, many small and medium sized companies would not be able to expand or modernize their fleets.      

In letters submitted to the respective Senate and House Transportation Appropriations Subcommittees, Members of the Subcommittee are urged to fund the Program at the authorized level.  Failure to fund Title XI will lead to the further erosion of this country’s shipbuilding industrial base, and impair the Nation’s ability to build commercial ships, which will conversely hinder our ability to build ships for the Navy. 

Congressional Shipbuilding Caucus Reaches 100 Members

The Congressional Shipbuilding Caucus, chaired by Reps. Jo Ann Davis (R-VA) and Gene Taylor (D-MS) now numbers 100 Members.  The Caucus was established in January 2005 to educate lawmakers about the U.S. shipbuilding industry, and work for enactment of budgets and policies to rebuild our sea services and shipbuilding industrial base.  Today, it is one of the largest and most proactive caucuses in Congress.  Caucus Members include:  Representatives Neil Abercrombie (D-HI), Gary Ackerman (D-NY), Todd Akin (R-MO), Rodney Alexander (R-LA), Tom Allen (D-ME), Robert Andrews (D-NJ), Richard Baker (R-LA), Charles Bass (R-NH), Marion Berry (D-AR), Michael Bilirakis (R-FL), Tim Bishop (D-NY), Henry Bonilla (R-TX), Jo Bonner (R-AL), Dan Boren (D-OK), Allen Boyd (D-FL), Jeb Bradley (R-NH), Robert Brady (D-PA), Corrine Brown (D-FL), Henry Brown (R-SC), Sherrod Brown (D-OH), G.K. Butterfield (D-NC), Eric Cantor (R-VA), Shelley Moore Capito (R-WV), Dennis Cardoza (D-CA), Steve Chabot (R-OH), Geoff Davis (R-KY), Susan Davis (D-CA), Tom Davis (R-VA), Rosa DeLauro (D-CT), Norm Dicks (D-WA), Mike Doyle (D-PA), Thelma Drake (R-VA), Phil English (R-PA), Anna Eshoo (D-CA), Bob Filner (D-CA), Mike Fitzpatrick (R-PA), Randy Forbes (R-VA), Trent Franks (R-AZ), Rodney Frelinghuysen (R-NJ), Virgil Goode (R-VA), Bob Goodlatte (R-VA), Bart Gordon (D-TN), Gene Green (D-TX), Mark Green (D-WI), Melissa Hart (R-PA), Robin Hayes (R-NC), Brian Higgins (D-NY), Maurice Hinchey (D-NY), David Hobson (R-OH), Peter Hoekstra (R-MI), Tim Holden (D-PA), Steve Israel (D-NY), Darrell Issa (R-CA), William Jefferson (D-LA), Bobby Jindal (R-LA), Nancy Johnson (R-CT), Walter Jones (R-NC), Marcy Kaptur (D-OH), Patrick Kennedy (D-RI), Randy Kuhl (R-NY), Jim Langevin (D-RI), Rick Larsen (D-WA), John Larson (D-CT), Frank LoBiondo (R-NJ), Stephen Lynch (D-MA), Carolyn McCarthy (D-NY), Thaddeus McCotter (R-MI), James McGovern (D-MA), Mike McIntyre (D-NC), Charlie Melancon (D-LA), Mike Michaud (D-ME), Juanita Millender-McDonald (D-CA), Candice Miller (R-MI), John P. Murtha (D-PA), Richard Neal (D-MA), Bob Ney (R-OH), Chip Pickering (R-MS), Todd Platts (R-PA), Nick Rahall (D-WV), Mike Ross (D-AR), Steve Rothman (D-NJ), Dutch Ruppersberger (D-MD), Tim Ryan (D-OH), Jim Saxton (R-NJ), Joe Schwarz (R-MI), Allyson Schwartz (D-PA), Bobby Scott (D-VA), Rob Simmons (R-CT), Chris Smith (R-NJ), Cliff Stearns (R-FL), Ted Strickland (D-OH), Bart Stupak (D-MI), John Sullivan (R-OK), Bennie Thompson (D-MS), Stephanie Tubbs Jones (D-OH), Roger Wicker (R-MS), Joe Wilson (R-SC), and Frank Wolf (R-VA). 

Industry News

ALSTOM Power Conversion Becomes Converteam

ALSTOM Power Conversion, located in Pittsburg, PA, has become Converteam Inc.  Converteam is a leading designer and manufacturer of electric drive propulsion systems for the U.S. Navy.

Save the Date

ASA announces the return of the Sea Power in the 21st Century Forums.  The forum will take place on Tuesday, May 9th from 11:30 AM to 1:00 PM in room SH 902 of the Hart Senate Office Building.  Senator Thad Cochran (R-MS), Chairman of the Appropriations Committee, will be the keynote speaker.  Leaders from the Navy and shipbuilding industry will also speak. 

The purpose of the forum is to increase awareness of the critical role of Sea Power in defending the security of America, and the increased risk to our security if the Nation continues to allow our sea services to decline.  Please plan to join us on May 9th.

Make a Difference!

Have you registered to be a Sea Power Ambassador?  If not, you are missing out on an opportunity to let your voice be heard regarding the future of America’s sea services.  Don’t miss the opportunity to tell the Nation’s leaders that America needs a strong Navy, Marine Corps, Coast Guard and Merchant Marine.  Join today!  www.seapowerambassador.org.

Well Said!

 “The security of the United States of America and the future capabilities of our submarine force need guarantees.”

Rep. Rob Simmons (R-CT)
House Armed Services Projection Forces Subcommittee
March 28, 2006