American Shipbuilding Association

Crisis At Sea

When is Congress going to rebuild America’s Naval Sea Power Fleet? Since 1987, the Nation’s Sea Power Fleet has shrunk from almost 600 ships to 324 ships today, and for the past seven years the Department of Defense has budgeted for a fleet of fewer than 200 ships. In just a few short years, America’s naval fleet will drop below 300 — irrespective of warnings from regional commanders-in-chief that the Fleet is already stretched perilously thin.

So thin, in fact, that there are not enough ships to cover the three critical strategic theaters deemed essential to our national security. As an example, the aircraft carrier battlegroup ENTERPRISE was on station in the Mediterranean until she was sent to Iraq to deter and contain the threat there. Consequently, when the war in Kosovo began there was no aircraft carrier battlegroup in the region. It took two weeks into the war before the carrier battlegroup ROOSEVELT arrived from Norfolk. Vice Admiral Dan Murphy, Commander of the Navy’s Sixth Fleet, uses this analogy to describe this alarming situation: "time-sharing may be a fine way to rent a vacation home, but it’s a poor way to run a Navy."

What will it take to rebuild and maintain even a minimum fleet of 300-ships? The average life expectancy of naval ships is 30 years. This means that a steady build rate of 10 ships per year, every year is required to maintain a 300-ship Navy. However, the Department of Defense has only been procuring six ships a year for the past seven years. This equates to a 32-ship shortfall, or a fleet of only 268 ships, and a budget deficit of $48 billion. This means, rather than having to build 10 ships a year, the country must now build more than 10. For example, if the build rate were increased to 12 ships per year, it would take 16 years to buy down the shortfall and return the fleet to even 300 ships.

This is a crisis of huge proportions. A 300-ship naval fleet cannot meet the Nation’s security requirements, yet the fleet is dropping to 200. A fleet of even 300 cannot be forward deployed where it must be to deter conflict, maintain world political and economic stability, and also respond to wars and other contingencies. America’s national and economic security will suffer, and the only way to reverse course is to begin now to make the investment in rebuilding America’s Sea Power.

Deferring ship construction is like playing Russian Roulette. Unlike any other major weapon system, it takes three to seven years to build a sophisticated warship. Therefore, a decade of neglect takes more than a decade to correct. When will Congress muster the political will and commitment to restore America’s security?

ASA Comments on Matson Request for Waiver

ASA recently submitted comments to the Maritime Administration urging the denial of a waiver request by Matson Navigation Company to operate several of its vessels built with construction differential subsidies (CDS) in the domestic trade. The Merchant Marine Act of 1936 stresses that ships built with the aid of CDS funds cannot be used in the domestic trade. In fact, Section 506 states, "(E)very owner of a vessel for which a construction-differential subsidy has been paid shall agree that the vessel shall be operated exclusively in the foreign trade…or on a voyage in foreign trade on which the vessel may stop at the state of Hawaii.…" Adding a single foreign port call to a predominantly domestic itinerary is totally inconsistent with the letter and spirit of the law.

ASA President, Cynthia L. Brown stated, "Matson acknowledges that use of CDS-built vessels in the domestic trade raises the prospect of ‘unfair competition to exclusively domestic operators.’" However, Matson then discounts this concern by asserting that it will not result in unfair competition to any other carrier, but submits no supporting documentation to validate its assertion.

Additionally, "Other domestic carriers have made financial investments in modern state-of-the-art, new and efficient tonnage in the domestic merchant fleet. These investments strengthen the domestic fleet and shipbuilding industrial base and would be undermined if waiver requests are approved under the ruse that if a predominantly domestic shipping route include a stop at a single foreign port, it will automatically qualify as a bona fide foreign voyage," said Brown.

Legacy of Aging Single Hull Tankers—Oil Spills

On December 12, 1999, a tanker broke in two and sank off the coast of France. Three weeks later, more than 250 miles of the French coastline were blackened and coated with the residue of an oil slick, and the event is now being described as a "significant ecological catastrophe." The tanker was single hulled and was over 24 years old.

Although the oil spill and beach spoilage occurred in France, it could easily happen off the East, West, Gulf, or Alaskan coasts. Why? Because in 1999 there were 50 single hulled tankers that are over 20 years old that transport oil in the domestic trade of the U.S., and a review of U.S. history of major oil spills throughout the world reveals that almost all of them occurred when a single hulled tanker was over 20 years old. Aging oil tankers and oil spills are not a coincidence - - they are a harsh reality of indifference to the environmental consequences of using tankers until they sink, rather than replacing them with safe, state-of-the-art double hull tankers. The time for replacement is now,….not after the U.S. experiences another oil spill of the magnitude of the Exxon-Valdez.

Industry News

Welch to Head GD Marine Systems Group

On January 6, 2000, General Dynamics, Falls Church, VA, announced that John K. Welch has been named senior vice president of the corporation and head of the Marine Systems Group, which includes all of the company’s shipbuilding and marine services operations. Welch had been a vice president of the corporation and president of the Electric Boat Corporation, Groton, CT since October 1995. James E. Turner, Jr., who recently announced his retirement, had been president and chief operating officer of GD, and also head of the Marine Systems Group since 1995. Michael W. Toner will succeed Welch as president of Electric Boat.

NASSCO Wins Jones Act Contract – Recapitalization of Fleet Begins

On December 6, 1999, National Steel and Shipbuilding Company (NASSCO), San Diego, CA, announced that it had been awarded a $300 million contract from Totem Ocean Trailer Express, Inc. (TOTE), a privately owned Alaskan company, to build two, roll-on, roll-off (RO/RO) ships for TOTE’s Alaskan service. ASA President, Cynthia L. Brown, said of the announcement that this contract "marks the first of many expected orders by Jones Act ship owners to recapitalize their aging fleets." "The ships’ modern, innovative design demonstrates, once again, the superior quality of American-built ships that serve the domestic commerce of the United States," said Brown.

Ingalls Wins $660 Million Contract

On December 16, 1999, Ingalls Shipbuilding, Pascagoula, MS, announced the award of a $660 million contract by the U.S. Navy for the construction of two additional DDG 51 Class AEGIS guided missile destroyers. The two-ship contract represents the funding of two additional ships included in a multi-year, multi-ship contract awarded to Ingalls in March 1998.

BIW Wins $324 Million Contract Modification

On December 17, 1999, Bath Iron Works Corporation, Bath, ME, announced that the U.S. Navy has awarded the company a contract modification, which provides $324 million in funding for one ARLEIGH BURKE Class AEGIS guided missile destroyer. The ship was one of six awarded to BIW in March 1998, also as part of a multi-year contract for fiscal years 1998-2001.

NASSCO Launches the USNS Charlton

On December 13, 1999, NASSCO, the U.S. Navy, and the U.S. Army launched the USNS CHARLTON (T-AKR 314), the fifth of seven strategic sealift ships being built by NASSCO. All seven ships are being named for U.S. Army Medal of Honor recipients. The USNS CHARLTON is a large, medium-speed, roll-on, roll-off (RO/RO) ship with 390,000 square feet of cargo carrying capacity, and is assigned to the U.S. Navy’s Military Sealift Command to carry prepositioned U.S. Army equipment, vehicles, and supplies near potential areas of conflict around the world.

Well Said!

"Without laws requiring the use of U.S.-owned, -built, and -crewed vessels for cargo movement between U.S. ports, the U.S. maritime industry, a critical member of our [Defense Transportation System] would wither, and maritime readiness would be severely degraded, if not crippled."

 General Charles Robertson, CINC
U.S. Transportation Command

Quoted by Maritime Administrator Clyde Hart, Jr.
January 13, 2000