American Shipbuilding Association

House Committee Acts to Prevent US Tax Dollars from Subsidizing Asian Shipyards

Before adjourning for a month long recess, the House Appropriations Committee completed work on the FY 2005 Transportation Appropriations bill.  Included in this legislation was language that would prevent the Maritime Administration (MARAD) from sending U.S. tax dollars overseas to subsidize South Korean and Chinese shipyards to build ships for the United States.  Rep. Ernest Istook (R-OK), Chairman of the Transportation Appropriations Sub-committee, in an effort to prevent MARAD from unraveling long standing U.S. laws and regulations, included language that would prevent any funds from being expended for the construction of ships built under the Program until MARAD modified its Request for Proposals (RFP) to comply with long-standing U.S. ship construction laws. 

During Operation Iraqi Freedom, the Military Sealift Command chartered 25 clean product tankers to transport jet fuel to our forward deployed troops.  Of these 25 ships, only six were American built, owned, and operated.  The war clearly demonstrated a requirement for additional U.S. clean product tankers to meet our Nation’s security requirements and mitigate our reliance on foreign built and owned ships that pose an increased risk to the security of our troops in wartime. 

Congress recognized the need to ensure the U.S. had a fleet of American built and owned clean product tankers to provide surge and sustainment lift for our forward deployed troops as part of the Maritime Security Program, and in 2003, established the Tank Vessel Construction Assistance Program.  Congress authorized the construction of up to five clean product tankers to be “constructed in a shipyard in the United States”.  The Program is intended to provide the ships needed to supply American servicemen and women, and create jobs throughout the U.S. shipbuilding industry.  This assistance program is necessary to offset the subsidy and dumping practices of Asian shipyards in building similar tankers and to help U.S. shipyards become more efficient in the construction of tankers by building a series of the same design.   The program was not intended to provide U.S. taxpayer subsidies to Asian shipbuilders – which already receives financial assistance from their governments. 

The Maritime Administration, the agency designated to administer the Program, broke from the long-standing definition of “U.S. construction” in its February 20, 2004 RFP, which redefines U.S. construction to mean that 10% of the hull and superstructure of each vessel can be fabricated in foreign shipyards. 

MARAD’s RFP threatens the shipbuilding industrial base of the U.S.  The RFP gives preference to a bidder that also demonstrates the viability and plans for the same tank vessel design to be built for the U.S. domestic coastwise trade, or Jones Act.  This change in construction standards could be used as a justification to change the standards for Jones Act ships as well.  The long-standing regulations defining U.S. construction for Jones Act ships have also been used to interpret U.S. law governing the construction of naval ships.  MARAD’s re-writing of U.S. regulation will have a catastrophic ripple effect for all ships built in this country and will negatively impact every American shipbuilder.  This weakened definition, if left unchanged, will become the law for all ships, commercial and naval.  Evidence of this dangerous precedent is already apparent in MARAD’s revised definition of U.S. constructed for the purpose of a vessel being eligible for financing under the Capital Construction Fund. 

The growing dependence on commercial ships built in China and other foreign countries has devastated U.S. shipyards and suppliers.  The United States, once the most powerful commercial shipbuilding country in the world, now only holds one percent of the global market share.  The defense industrial base has contracted from twenty-two major shipbuilding yards to just six, with a corresponding cut in the number of U.S. ship component manufacturers by two-thirds.  Arguments have been made by some barge and ship repair yards that they need to import bow and stern sections of the ship to learn how to build these modules.  “A shipyard does not learn how to build certain modules without actually building them,” said Cynthia Brown, President of ASA.  Brown continued by stating that “improved efficiencies and technology transfer is achieved by training U.S. shipbuilders -- not by outsourcing the work to Asia.”  The U.S. shipyards that don’t know how to build ship modules should look to other U.S. shipyards that do.  How long will it be before 10% foreign content becomes 50% or 70%?  It is simply not in the interests of dominant commercial shipbuilding powers like South Korea and China to allow the United States a greater commercial market share. 

The American Shipbuilding Association has supported, and continues to support the Tank Vessel Construction Assistance Program and its funding.  But the industry will not sacrifice U.S. ship construction laws and regulations in the process.  MARAD is urged to amend the RFP to reflect existing U.S. construction laws so that this vital Program can go forward.     

Bath Iron Works Embarks on Recruitment of Sea Power Ambassadors 

In the July 2004 issue of BIW News, Dugan Shipway, President of Bath Iron Works (BIW) penned a letter to BIW employees on the importance of registering to become a Sea Power Ambassador.  The American Shipbuilding Association would like to take this opportunity to share some of Mr. Shipway’s comments:

Almost a year ago, I outlined three goals we must achieve to keep quality manufacturing jobs at BIW.  Over the last 12 months, I have frequently reminded all of us about the importance of meeting these goals.  Today, however, I am asking you to add another item to our “must do” list.  ... In 1965 there were in the U.S. 11 shipyards that built surface combatants.  Since then, those numbers have dropped every decade.  Today, there are only six major shipyards in the country, and only two build surface combatants – we’re one of them.  Keep that in mind. 

Now consider that for more than a decade the Navy has ordered, on average, just six ships a year.  Today, our fleet is half the size it was in 1987 and, with the war on terrorism increasing operating tempo, our Navy customer faces enormous budget pressure to do more with less.  For us shipbuilders and citizens of the USA, “less” means fewer new ships will be built, and that threatens our nation’s security.  For us shipbuilders and citizens of Maine, it gets a lot more personal as the trend reflected above has the potential, between now and the end of this decade, to impact our jobs at BIW and our families.  The good news is that we can help turn the tide – but we must together act now. 

In recognition of these trends, an online, all volunteer national public education and grassroots effort is underway to inform as many Americans as possible of the security and economic threat facing America.  The Sea Power Ambassador Program is designed to educate the American public and elected officials about the importance of a strong shipbuilding industry and a strong Navy for our national and economic security.  Today, I am asking each of you to become a Sea Power Ambassador. 

Our ability to successfully influence the public and elected decision makers to make rebuilding America’s Navy a priority depend upon recruiting tens of thousands of Sea Power Ambassadors from the ranks of America’s  shipyards, ship system manufacturing firms, and concerned citizens from across the country.  In this state alone, nearly 7,000 of us depend on shipbuilding to provide us with quality manufacturing jobs and over 450 other Maine businesses are supported by what we do here in Bath.  In spite of those impressive statistics, at the end of June, Maine had fewer than 50 Sea Power Ambassadors.  We must increase that number to ensure our voice is heard in Washington.  I’m proud to say that, at my urging, Governor [John] Baldacci has joined the ranks of Maine’s Sea Power Ambassadors.  But I am not stopping there – right now I’m contacting each member of the Maine Legislature and making the same appeal.  Their voices will help, but each of you must add your voice too…

If you haven’t taken action yet, I urge you to take the time to become a Sea Power Ambassador and educate your family and friends on the importance of Sea Power and its importance to each of us and our state.  We must ensure that Maine’s voice is heard!

The Sea Power Ambassador Program reports that in the month and a half since Mr. Shipway began his recruitment effort, the number of Maine citizens who have become Sea Power Ambassadors has increased from around 50 to nearly 2,000.  ASA congratulates Mr. Shipway and BIW in fighting for American sea power and jobs. 

Citizens for American Ships…Security Begins at Sea Become a Sea Power Ambassador! 

America’s Navy currently numbers 297 ships – the smallest naval fleet since 1917.  Whether you are a shipbuilder, supplier, member of the military, or private taxpaying citizen of the United States, all of us must join together to tell our elected officials that America needs a strong Navy and other sea services to protect this country.  Register today because security begins at sea!

www.seapowerambassador.com

New Partners

The American Shipbuilding Association is pleased to announce the addition of five new Partners:  the American Bureau of Shipping, headquartered in Houston, Texas, General Cable in Highland Heights, Kentucky, Guill Tool and Engineering Co., of West Warwick, Rhode Island, Standard Nut & Bolt in Fall River, Massachusetts, and Turnbull Enterprises, Inc., of Baltimore, Maryland. 

Well Said!

“This is a great day for the forces of good in this world…
this ship is another exhibit in our strong national
resolve to win the war on terror.”

Senator Kay Bailey Hutchison (R-TX)
Christening of the USS Texas
July 31, 2004