American Shipbuilding Association

Nine Ships in FY 2005 - Naval Shipbuilding Remains Under-funded

Released the first week of February, the President’s FY 2005 budget submission to Congress provides for the procurement of nine ships in FY 2005.  Though the two ship increase over the FY 2004 budget is an improvement, the United States is failing to procure the 12 -15 ships necessary to begin rebuilding our fleet.  Moreover, while DOD is receiving a $26.4 billion increase, the funding to buy new ships was cut by $100 million over last year’s request.  As Cynthia Brown, President of the American Shipbuilding Association stated in a February 9th press release, “Cutting funding for naval ships is reckless when we do not have enough to fight the war on terrorism.” 

Despite the overall increase to the defense budget each year, the procurement account has barely increased.  In late February, analysts at the Congressional Budget Office (CBO) made statements noting that over the past 30 years each service’s share of the defense budget has generally stayed constant, and in recent years, has even declined slightly.  According to Eric Labs, CBO’s principal analyst for naval forces and weapons, given historical trends CBO does not expect the Navy’s share of the defense budget to change. 

The Nation’s fleet of 294 ships is stretched thin.  During Operation Iraqi Freedom, 70% of the Navy’s surface fleet and 50% of its submarine fleet were deployed to Iraq.  This marked the largest percentage of ships deployed since WWII.  The remaining ships in the fleet were either undergoing repair, engaged in security patrols in other troubled regions, or being used to train our Sailors and Marines.  Despite the significant number of U.S. ships in the region, America had to rely on the British and Australian navies to provide combat assistance and support.  The navies of nearly eight other countries were needed to protect shipping lanes in the area.  Though the United States has historically worked in concert with allied forces, the harsh reality is that for a war of relatively short duration, the United States did not have the capability to execute the  war on its own.  The gap is increasing each year between the number of naval ships America needs and the number it currently possesses.  This shortfall will continue to hinder our ability to protect this Nation’s borders, U.S. oversea interests, and the sea lanes of commerce. 

As the United States watches its naval fleet decline, it is also witnessing the destruction of the shipbuilding industrial base.  Over the past decade, naval shipbuilders have been forced to eliminate tens of thousands of highly skilled engineers and manufacturing employees, and are struggling to maintain their diminished workforce.  The number of companies manufacturing critical ship systems and components has been reduced by 60 % and hundreds of thousands of jobs have been lost. 

The decimation of American jobs and the defense industrial base is being hastened by the Administration’s policy to export shipbuilding jobs.  DOD is buying ships from Australia and South Korean via long-term leases rather than ordering ships in the United States, and the Navy is buying more and more critical ship components from foreign sources. 

As Congress begins work on the FY 2005 Defense Budget, ASA will continue to assert the need for increased naval shipbuilding budgets to preserve America’s sovereign capability to defend against any adversary. 

ASA Announces Legislative Priorities For 2004

Building ships is building security and jobs.  The American Shipbuilding Association continues in its efforts to ensure this country maintains a strong U.S. shipbuilding industry and vibrant manufacturing industrial base.  To support these goals, the industry’s 2004 legislative priorities include:    

The National Naval Force Structure Policy Act, HR 375/S 902

Representatives Jo Ann Davis (R-VA) and Gene Taylor (D-MS), and Senators Mary Landrieu (D-LA) and Trent Lott (R-MS) continue with their efforts to reverse the decline of the naval fleet by generating support for the National Naval Force Structure Policy Act.  This legislation makes it the policy of the United States to rebuild our Navy to a fleet of at least 375 ships – the number the Chief of Naval Operations has publicly testified is needed. 

The United States cannot continue to remain a world power without a strong Navy and a strong shipbuilding industrial base.  Co-sponsorship of the legislation gives Members of Congress a legislative vehicle to go on record in opposition to a Navy of only 180 ships.    

Limiting the Leasing of Foreign Built Ships

The Budget Enforcement Act of 1990 was an effort to impose budget discipline on the Executive Branch and end costly long-term leases of capital assets.  The legislation sought to encourage the purchase of capital assets to meet long-term requirements because of the cost advantage of purchasing versus leasing, and the need to minimize out-year budget exposure. 

Despite this effort at fiscal discipline, abuses have occurred.  There is concern amongst Members of Congress that DoD is circumventing the intent of the Budget Enforcement Act and U.S. acquisition laws by leasing foreign-built ships to meet long-term military requirements.  While DoD needs to have flexibility to lease ships, including foreign-built vessels, to meet short-term or surge requirements, DoD is relying more and more on leasing contracts as a de facto means to purchase foreign-built ships.  DoD should comply fully with the letter and intent of the Budget Enforcement Act and U.S. acquisition laws by purchasing American-built ships to meet our military requirements, rather than long term leasing of foreign built ships for cumulative periods of 5,10, 20, or more years.

ASA supports an amendment in this year’s Defense Authorization Act to close the long-term lease loophole that increases costs to the taxpayer and exports United States shipbuilding jobs.   

Maritime Security Program – Construction of Clean Product Tankers

During Operation Iraqi Freedom, the U.S. Department of Defense experienced a significant shortfall in commercially available, American-built and –operated clean product tankers to supply jet fuel to our forward deployed troops.  Of the 25 tankers chartered for this mission, only six were American-built and crewed by U.S. mariners.  The shortage of American commercial tankers significantly increased the risk of terrorist attack against our forward deployed troops during the refueling operation.  In the war on terrorism it is imperative that the U.S. have critical access to American ships for the supply of jet fuel and other military cargo and supplies. 

Recognizing the need to begin rebuilding the U.S. merchant fleet, last year Congress authorized $250 million in FY 2005 to construct up to five clean product tankers in the U.S.  These ships would be enrolled in the Maritime Security Program and be contractually obligated to serve as an auxiliary fleet to the Department of Defense in times of mobilization.  In peacetime, they would transport refined fuel in the international commercial market. 

$250 million must be appropriated in FY 2005 for the construction of these vessels, which will  create thousands of jobs, in addition to expanding the fleet of American-built and owned ships to serve as an auxiliary fleet to DoD in the war on terrorism. 

US Joiner Joins ASA 

US Joiner (USJ), a subsidiary of Gatewick Enterprises, has joined ASA as a Partner.  USJ purchased certain assets from Hopeman Brothers Marine Interiors, and will provide the interior outfitting on the LPD contracts at Avondale and Ingalls, as well as the BP tankers and Navy T-AKE’s being built at NASSCO.  USJ has locations in Waynesboro, Virginia, San Diego, California, New Orleans, Louisiana, and Pascagoula, Mississippi.

Sherwin-Williams Joins ASA

ASA welcomes the Sherwin-Williams Company as a Partner.  Headquartered in Cleveland, Ohio, Sherwin-Williams is a manufacturer of marine coatings used on commercial and naval ships.   

Industry News

Ingalls Operation Expansion Underway

During a February 19th ceremony, Ingalls Operation broke ground on a $35 million West Bay Expansion Project.  The project is the first phase of a $224 million expansion and modernization planned for Ingalls as part of its public/private partnership with Mississippi.  The expansion will create 400,000 square feet of new ship construction area to support the new DDX program. 

Mark Your Calendars

ASA announces the first of this year’s Sea Power in the 21st Century Forums.  The forum will take place on Tuesday, April 20th from 11:30 AM to 1:00 PM in room SR 325, the Russell Caucus Room, of the Russell Senate Office Building.

Register Now!

Join the growing ranks of Americans who have taken a stand to rebuild the U.S. naval fleet.  Register to become a Sea Power Ambassador.  www.seapowerambassador.org

Well Said!

“Oceans cover three-quarters of the Earth’s surface.  The vast majority of the world’s population lives within two miles of a seacoast.  Seventy percent of our trade moves by sea.  Maintaining America’s naval superiority is an imperative, not an option.”

Congressman Roscoe Bartlett (R-MD)
Chairman of the Projection Forces Subcommittee
House Armed Services Committee
January 2004