American Shipbuilding Association

American Shipbuilder - Volume 7, Issue 2 - March 2001

Numbers and Capability Really Do Matter

Addressing an audience of over 200 people in the Capitol at a February 27 forum on American Sea Power in the 21st Century Forum, General James Jones, Commandant of the Marine Corps; Vice Admiral Dennis McGinn, Deputy Chief of Naval Operations for Warfare Requirements & Programs; Rear Admiral Joseph Sestak, Director of Navy Quadrennial Defense Review (QDR) Support Office; and Bill Fricks, Newport News Shipbuilding Chairman and CEO, stated that the decline in the Navy’s fleet continues while demands on the fleet are increasing. The panel members, in their remarks on the role of the Navy/Marine Corps team in meeting the U.S. national security policy, called for a spending increase to reverse the shrinking of our naval fleet.

Highlighting the need for forward presence around the world, General Jones stated, “Sea Power is the essential component of our National Security Posture,” and that “around the world sea basing is an important concept as land basing becomes harder and harder.” General Jones emphasized the importance of forward presence for, “providing the opportunity to shape world events … [and] increasing our economic opportunities as the military helps to set the conditions for American business to prosper at home and abroad.” General Jones reminded the audience “we are a maritime nation … and our economic growth and security are tied to the sea.”

Vice Admiral McGinn warned that the United States would not remain a maritime power without the necessary national commitment and investment in sea power: “The numbers are just as clear as can be; at the present rate of investment our Navy will grow smaller, not dramatically so in the near years, but by the 2010 time frame the numbers start becoming a bit alarming.” Currently there are 315 ships in the Navy. However, analytical studies show that more ships are needed to meet the regional Commanders-in-Chief mission requirements. Vice Admiral McGinn also noted the length of time it takes to build a naval ship, three to seven years, and called for a wise investment in rebuilding the fleet.

Echoing General Jones and Vice Admiral McGinn, Rear Admiral Sestak pointed out that ship, “numbers do matter” and we can’t be over there with the fleet size that we have today. Admiral Sestak went on to say, “We are already proportioning strategic risk.” On a typical day about half the ships in the Navy are at sea, with one third deployed in the Mediterranean, the Persian Gulf and the Western Pacific, putting wear and tear on ships and sailors. Rear Admiral Sestak added, “All our Carrier Battle Groups to deploy have engaged in combat operations, either in Kosovo or Operation Southern Watch.” In addition to combat over the last ten years, naval forces have conducted: 19 non-combat evacuation operations, 4 maritime intercept operations with more than five thousand boardings in support of United Nations sanctions or U.S. drug policy, 32 humanitarian assistance operations, and 20 shows of force to send powerful messages to friends and foes alike.

“Today, American sea power is at its lowest ebb since 1917. Having said that, it’s important to note that the fleet today, while smaller, is also the most technologically advanced in the world,” stated Newport News Shipbuilding Chairman and CEO Bill Fricks during his opening remarks at the forum. Mr. Fricks went on say, “There is one thing that we can’t accomplish with technology, and that’s having one ship in two places at the same time.” Mr. Fricks went on to warn that the U.S. shipbuilding industry is at risk of deteriorating if the build rate to sustain only a 180-ship Navy continues. At this low rate of production, the cost for ships will go up and efficiency will go down.

Members of Special Oversight Panel on
Merchant Marine Appointed

On March 1st, House Armed Services Committee Chairman Bob Stump (R-AZ) and Ranking Minority Member Ike Skelton (D-MO) announced the new Chairman and Ranking Member for the Merchant Marine Panel. The Chairman and Ranking Minority Member are Representatives Duncan Hunter (R-CA) and Tom Allen (D-ME) respectively. The other Representatives on the Special Oversight Panel on Merchant Marine are: Curt Weldon (R-PA), Gene Taylor (D-MS), Jim Saxton (R-NJ), Adam Smith (D-WA), Walter B. Jones, Jr. (R-NC), James H. Maloney (D-CT), Ander Crenshaw (R-FL), and Jo Ann Davis (R-VA). The panel has jurisdiction for oversight of all issues, including funding, related to the national security responsibilities of the Maritime Administration.

A Deadly Proposal for a Maritime Nation

In a move that threatens commercial shipbuilding programs and the defense industrial base, the Office of Management and Budget has ZEROED all funding for the Maritime Administration’s (MARAD) Title XI Ship Loan Guarantee Program. Recognizing the importance of sustaining America’s national defense shipbuilding industrial base and the role of the Title XI program in promoting growth and modernization of our American maritime industry, Representatives Duncan Hunter (R-CA), Randy “Duke” Cunningham (R-CA), Gene Taylor (D-MS), James Maloney (D-CT), Ronnie Shows (D-MS), Jo Ann Davis (R-VA), Ed Schrock (R-VA), Tom Allen (D-ME), Walter Jones (R-NC) and Charles “Chip” Pickering (R-MS) jointly sent a letter to President Bush urging him to include $100 million in the fiscal year 2002 budget for the Maritime Administration’s Title XI Ship Loan Guarantee Program.

With the low level of naval ship construction in the last decade, averaging just six ships a year, Title XI commercial shipbuilding has been critical in sustaining the national defense shipbuilding industrial base of 9,080 companies, employing 879,014 Americans in 47 states. Commercial shipbuilding helps to lower the cost of naval ships and it facilitates the incorporation of commercial best practices, technology, and innovation into new naval ships, while maintaining stable employment for hundreds of thousands of high-skilled domestic shipbuilders and vendors. Without the Title XI program, many of the recently completed commercial ship construction contracts would never have taken place. These commercial orders have been vital to sustaining the skills and companies that make up the defense shipbuilding industrial base.

The Title XI program has generated over $4 billion in commercial shipbuilding since it was revived in FY’93, and needs adequate funding to meet the considerable pent up demand for the program. The American Shipbuilding Association joins with those Members of Congress who have called upon the Administration to demonstrate its commitment to a strong maritime industry by increasing the budget for Title XI from $0 to $100 million to strengthen the shipbuilding industry.

Senator Olympia Snowe Introduces
“The All American Cruise Act”

On January 31, 2001, Senator Olympia Snowe (R-ME) introduced S. 222, The All American Cruise Act, demonstrating her continued commitment to the construction of an all American cruise ship industry to serve America. Senator Snowe stated in her introductory remarks, “The legislation I am introducing today is designed to level the playing field between the U.S. cruise industry and the international cruise industry.” Senator Snowe’s bill will provide tax parity for U.S. builders and operators. Specifically, the bill will:

Provide a tax credit to American builders of cruise ships,
Exempt U.S. cruise ship owners from paying U.S. corporate income tax in keeping with foreign flag companies that pay no income taxes,
Allow ship owners to depreciate their vessels over a five-year period rather than the current 10 year period,
Repeal the $2,500 business tax deduction limit for a convention on a cruise ship, which would allow the same tax code treatment for conventions held at shore-side hotels, and
Authorize a 20 percent tax credit for fuel operating costs associated with environmentally clean burning engines manufactured in the U.S.

Senator Snowe’s bill would also allow investment of the Capital Construction Funds to include not only cruise ships in the non-contiguous trades, but also in domestic point-to-point trades and “cruises to nowhere.”

As Senator Snowe stated on the floor, “I truly believe that this legislation would help jumpstart the domestic cruise trade, benefit U.S. workers and companies, and promote economic growth in our ports. I strongly urge my colleagues to join me in a strong show of support for this effort.”

Is the Coast Guard Enforcing OPA-90?

Public Law 106-346 directed the United States Coast Guard, in consultation with the Maritime Administration, to assess the status of replacement of single hull tanker vessels with double hull tanker vessels under the Oil Pollution Act of 1990 (OPA-90), and report the findings of this assessment by February 1, 2001, to the House and Senate Committees on Appropriations. The Coast Guard was told the report should include: “(1) a list of double hull vessels and their carrying capacity in the U.S.-flag fleet; (2) a list of single hull vessels, their cargo carrying capacity, and the year in which each single hull vessel is scheduled to be phased out of service under the Oil Pollution Act; and (3) the amount of oil transported each year by domestic U.S.-flag tank vessels to meet the energy needs of the United States.” Congress directed this report as a result of a General Accounting Office (GAO) recommendation for such a report dated April 2000.

On January 17th, Vice Admiral Thomas Collins, Vice Commandant U.S. Coast Guard, sent Appropriations Committee Chairman Bill Young (R-FL) a letter requesting additional time to respond. The Coast Guard also forwarded as an interim response the very GAO report to Congress that prompted the request. This begs the question whether the Coast Guard is actually enforcing OPA-90 when it cannot even produce, in a timely fashion, a list of single hull tankers and their phase-out dates. The Chairman of the Coast Guard Subcommittee of the Transportation and Infrastructure Committee, Wayne Gilchrest (R-MD), verbally requested this same report of the Coast Guard at a hearing before his subcommittee in 1999.

Industry News

Avondale Industries To Build Fifth Double Hull Tanker for Polar Tankers

On March 1st Polar Tankers Inc., a subsidiary of Phillips Petroleum Company, exercised a $205.5 million option with Avondale Industries for construction of a fifth double hulled crude-oil tanker, with options for two more ships in the contract. The fifth tanker is schedule to be delivered in August of 2004.

Newport News Designed Machine Improves Welding on Virginia class Submarines

Newport News Shipbuilding (NNS) was awarded the contract to fabricate the Virginia class submarine’s hemispherical head or hemi head. A hemi head is the rounded section that serves as the end pressure hull boundaries of the submarine. In the past NNS purchased these parts pre-assembled. “One hemi head joint took weeks to weld and was normally done by hand,” said Welding Engineering Supervisor Lynn Showalter. “This lengthy process led to welder fatigue and loss of concentration.”

As a result, NNS Welding Services Group designed and built a mechanized welding machine, and developed a process to improve joint fit-up and welder proficiency needed for the mechanized equipment to be successful. This process has reduced the overall welding time by about 50 percent, and increased quality with a reject rate of less than one percent.