American Shipbuilding Association

Naval Force Structure Legislation Introduced

As one of the first orders of business in the 108th Congress, Congresswoman Jo Ann Davis (R-VA) introduced HR 375, the National Naval Force Structure Policy Act. This legislation calls upon the Nation to provide a naval force structure of 375 ships, built around 15 aircraft carrier battle groups and 15 amphibious ready groups, to meet the essential security requirements articulated by naval fleet commanders and military planners.

“We must ensure that our Navy is capable of defending our borders and national interests across the globe. This legislation will play an important role in rebuilding the Navy to the size and capability required to defend America,” stated Davis. The Virginia lawmaker said that she concluded this legislation was critical because the force requirements articulated by our Nation’s military leaders for many years is not being met. “The U.S. Constitution calls for the Congress to ‘provide and maintain a Navy’, and I take my Constitutional responsibilities very seriously,” said Davis.

Congressman Gene Taylor (D-MS) and 20 other Members of Congress joined Davis in introducing HR 375. A companion bill will be introduced in the coming weeks in the Senate.

“I applaud the leadership of Congresswoman Davis and her colleagues for this action to reverse the sinking of America’s Navy”, stated Cynthia Brown, President of the American Shipbuilding Association. Long before 9/11, naval warfighters were on record that the naval fleet was stretched perilously thin in responding to wars and contingencies around the globe. Since 1987, the Navy’s fleet has shrunk from 594 ships to just over 300, while the operating tempo driven by increased deployments prior to 9/11 had increased 300 times over that of the Cold War era.

The strain on naval forces has grown exponentially since 9/11. The war against terrorism depends on the force and power projection that only ships can provide. Naval ships are mobile, lethal bases at sea hat can operate anywhere in the world – without the permission of a foreign government. This sovereign capability was crucial to fighting the war in Afghanistan because the nations in the region denied America use of their land bases from which to launch offensive strikes against Al Qaeda. America’s dependence on seapower continues to grow as we meet the threats of terrorism, biological and nuclear proliferation, and political unrest at their source in the Middle East, Asia, and the African continent.

While the risks to America’s security as a result of a shrinking and overworked fleet of naval ships has been well documented for years, Department of Defense budgets for more than a decade, including the budgets of the current Administration, are less than half of what is needed to sustain a 300-ship Navy. As a result of inadequate budgets, the Nation will have a naval force of only 180 ships if our national leaders do not act to rebuild the Navy to a 375-ship force level. A 375-ship Navy will require the Nation to budget roughly $16 billion annually for the purchase of 12 to 13 ships a year for thirty years. This investment, while more than double that of the budgets of the past 12 years, is significantly less than the $20 plus billion invested annually during the 1980’s, when calculated in 2003 dollars.

As Congresswoman Davis stated, “HR 375 will help to spur the debate on the need to rebuild America’s seapower to the force levels required to meet existing and future threats to our homeland.” Your support of HR 375 is requested.

ASA Announces Priorities for 108th Congress

In December of 2002, the Board of Directors of the American Shipbuilding Association ASA) met to decide industry legislative priorities for the 108th Congress. In today’s environment of ever growing threats to the security interests and the livelihood of all Americans, ASA will focus on the need to rebuild the U.S. Navy and Merchant Marine, and to strengthen the shipbuilding industrial base to meet the security requirements of the country. To this end, the industry’s primary goals are:

Enactment of HR 375, The National Naval
Force Structure Policy Act.

The defense shipbuilding industrial base (comprised of the six major shipbuilders and 9,000 ship supplier companies) will urge Members of the 108th Congress to cosponsor and support quick passage of Congresswoman Jo Ann Davis’s bill, HR 375.

Enactment of Tax on Delivery Legislation:

Senator Olympia Snowe (R-ME) and Congresswoman Nancy Johnson (R-CT) plan to reintroduce legislation in the 108th Congress to strengthen the financial health of the defense shipbuilding industrial base. Their legislation, entitled “Tax on Delivery”, would allow builders of naval ships to pay their income taxes upon delivery of each naval ship, provided the construction or overhaul period is of two years or more in duration. Today, shipbuilders are required to estimate what their profit will be three to seven years into the future and pay a percentage of that “estimated” profit annually to the Internal Revenue Service. This policy diverts cash during the critical construction phase of a naval ship that is desperately needed for facility investment, workforce training, and timely payment of suppliers to enhance efficiencies and reduce costs in ship construction. Shipbuilding is one of the most capital intensive industries in the world, making cash flow especially critical to contract performance. This legislation would not reduce the amount of taxes each company pays, but allow each builder to pay their income taxes upon delivery of each naval ship, when the profit is actually known. Tax on Delivery will strengthen the financial health of the defense shipbuilding industry, spur investment in the industry, and right a wrong in the Tax Code that penalizes shipbuilders because of the long construction time of naval ships.

Rebuild an American Merchant Marine:

Threats of foreign industrial dependence and terrorism launched from foreign ships calling at U.S. ports and those engaged in re-supplying our forward deployed men and women in the military dictate that the U.S. rebuild her merchant marine fleet. ASA urges Congress and the Administration to support a 50 ship construction program to provide militarily useful ships owned and operated by American citizens to serve as a defense auxiliary in these times of war and national emergency. This construction program would entail a public/private investment under the Title XI Ship Loan Guarantee Program. U.S. citizen ship companies would finance the comparable foreign construction cost of each ship with the federal government financing the higher cost associated with U.S. ship construction. In return for an annual cost of $6 million per ship, the Department of Defense would have access to a fleet of 50 ships for 20 years to meet defense sealift requirements. Construction of commercial ships is critical to sustaining and strengthening the shipbuilding industrial base that builds naval ships. Increased commercial ship production reduces the unit cost of each naval ship and accelerates insertion of commercial technologies and building processes in the manufacture of naval ships. An American Merchant Marine would also significantly enhance national security by reducing America’s growing
reliance on China.

On January 9th, the new Chairman of the House Armed Services Committee, Duncan Hunter (R-CA), unveiled plans to reorganize the committee into six subcommittees with jurisdiction over specific military missions and capabilities to meet the growing threats facing the Nation.

Congressman Roscoe G. Bartlett (R-MD) was named Chairman of the newly formed Projection Forces Subcommittee, which will have jurisdiction over Seapower procurement and research and development.

In announcing the reorganization, Chairman Hunter said the Committee would focus on providing the President the resources he needs to win the nation’s wars; renewing the commitment to modernization; making the Department of Defense a more efficient operation by continuing to shift resources from redundant and unnecessary bureaucracy to warfighting capabilities; and supporting the men and women in the military.

Under the new organization, Chairman Hunter will retain under the full committee’s jurisdiction the Merchant Marine and defense acquisition policy.

ASA, in conjunction with the Surface Navy Association, the Navy League, Naval Submarine League, U.S. Naval Institute, National Defense Industrial Association, and the Association of Naval Aviation, will host the first of this year’s American SeaPower in the 21st Century Forums on Tuesday, February 25th from 12 – 1:30pm in room SR 325 of the Russell Senate Office Building.

The Board of Directors of the American Shipbuilding Association elected Mr. Allan Cameron, President of Bath Iron Works, to be Chairman of the Board of ASA for a two year tenure commencing January 1, 2003. Mr. George Yount, head of the Avondale Operation, was elected Vice-Chairman for 2003-2004.