American Shipbuilding Association

ASA Announces 2nd Sea Power Forum

The second in a series of forums on American Sea Power in the 21st Century will be held on Wednesday, February 24, 1999 at 12:30 p.m. in SC-5 of the Capitol Building. Congressional speakers include Representative John Murtha (D-PA), Ranking Member of the Defense Appropriations Subcommittee and Representative Gene Taylor (D-MS), Ranking Member of the Military Installations and Facilities Armed Services Subcommittee. Participating from the armed services will be Chief of Naval Operations Admiral Jay Johnson, USN, Commandant of the Coast Guard, Admiral James Loy, USCG, and Commanding General of the Marine Corps Combat Development Command, Lt. General John E. Rhodes, USMC. The Master of Ceremonies will be Dick Vortmann, President of National Steel and Shipbuilding Company (NASSCO), San Diego, CA.

The discussion at this event will pick up where the last forum left off – bridging the funding gap between fleet requirements and actual budgets – and will focus on the Sea Power requirements of the Navy and Marine Corps and examine the Coast Guard’s Deepwater requirements. Increased annual budgets of $3 to $5 billion are required to build 10 to 12 ships per year and thus sustain a 300-ship Sea Power fleet. The Coast Guard is also in need of increased budgets if it is to replace its aging deepwater cutters with modern systems.

The Sea Power forums are sponsored by the American Shipbuilding Association (ASA) in conjunction with the National Defense Industrial Association, the Navy League, the Naval Submarine League, the Surface Naval Association, the U.S. Naval Institute, and the Association of Naval Aviation. If you are interested in attending this event, please contact the ASA offices at (202) 544-8170.

Rep. Tom Allen Questions Navy Shipbuilding Rate

At the recent House Armed Services Committee (HASC) hearing on the FY'00 Department of Defense Budget, Representative Tom Allen (D-ME) questioned Secretary William Cohen on the Navy shipbuilding rate. Representative Allen noted that even with a $112 billion increase in the Defense budget over six years, the FY’00 budget calls for the procurement of just six ships – a rate that will not sustain a 300-ship Navy, as called for by the Quadrennial Defense Review. He also noted that the procurement of 11 to 12 ships per year is necessary to sustain a 300-ship fleet. Secretary Cohen said the Department of Defense is working on increasing the build rate in order to sustain their shipbuilding program.

Increase Funding for Title XI Program

In FY’00, the Administration has requested $9.9 million for the Title XI Ship Loan Guarantee Program, which is administered by the Department of Transportation’s Maritime Administration (MARAD). This budget request is based on pending applications. Industry anticipates that several applications will be submitted for MARAD review that if approved would render the budget request insufficient.

The Title XI program, revived in FY’94 as part of the National Shipyard Initiative, provides a government guarantee of a commercial loan for the construction of commercial ships in U.S. shipyards for domestic and export customers. The guarantee covers 87.5 percent of the loan over a 25-year period. Since the revival of the Title XI program MARAD has approved over $2.9 billion in financing for the construction of commercial ships in the United States and for shipyard modernization projects.

Two U.S. companies, American Classic Voyages and FastShip, Inc., have been planning large construction projects of several oceangoing ships and intend to submit applications for Title XI financing for these vessels in this fiscal year. The U.S.-flag Cruise Ship Pilot Project, enacted in FY’98, will result in a binding contract between American Classic Voyages and Ingalls Shipbuilding by April 1999 to build two large oceangoing cruise ships, with options for more. These cruise ships will be the first ships of their size built in the United States in over 40 years and will be built to the highest of U.S. safety and environmental standards. Almost $1 billion in financing will be required for this project. FastShip, Inc. will also require over $1.3 billion in financing for four ships with national defense features to meet military surge sealift requirements. These two applications alone would render the $9.9 million budget request for Title XI financing insufficient.

Additional funding should be added to the Title XI budget request in order to facilitate billions of dollars of shipbuilding in the United States and to create thousands of jobs for Americans. The Title XI program functions at no cost to the taxpayer and will continue to do so as long as MARAD is diligent in its review process based on the economic soundness of the loan guarantee applicant.

Increase Funding for MARITECH ASE

In FY’00 the budget request for the Maritime Technology Advanced Shipbuilding Enterprise (MARITECH ASE) is $19.7 million, less than half the amount of government funds required in this fiscal year, and less than half of the amount appropriated during each of the first five years of the program. MARITECH funds industry-led collaborative research and development projects to enhance commercial competitiveness of the shipbuilding industry while reducing the costs of ships for the U.S. Navy.

As background, Congress authorized the MARITECH program in the National Defense Authorization Act in FY’94 as part of the National Shipyard Initiative. For five years, the program was administered by the Defense Advanced Research Projects Agency (DARPA). In FY’99, with the support of U.S. Navy and shipbuilding industry, Congress appropriated $16.6 million and transferred the administration of the program to the Navy.

During the transition in 1998, U.S. shipbuilders led the effort to develop a 5-year Strategic Investment Plan to focus shared government-industry investments in research and development initiatives. Members of academia, the scientific community, and Navy and Department of Transportation officials participated in the program planning and determined that $400 million in government/industry investments would be necessary over the next five years. Research and development opportunities will be open to all industry stakeholders and results will be openly shared throughout the industry. The Advanced Technology Institute of South Carolina, a non-profit organization, was selected to administer industry-led MARITECH ASE research and development efforts under the program management of the Navy.

While MARITECH was under DARPA management, it was funded between $40 to $50 million annually. In 1998 alone, over 115 industry abstracts were submitted for consideration – over twice the number received during any of the previous five years. FY’99 appropriated dollars will only support a handful of these initiatives, thus making a FY’00 authorization and appropriation of $40 million necessary to support the most meritorious of the proposals to insert new technologies in the design and production process of the shipbuilding industry to maximize productivity and cost reductions for commercial and government customers.

Industry News

Navy Destroyer Christened at Ingalls

The U.S. Navy Aegis guided missile destroyer ROOSEVELT (DDG 80), named for President Franklin Delano Roosevelt and First Lady Eleanor Roosevelt, was recently christened at Ingalls Shipbuilding, Pascagoula, MS. The ROOSEVELT is the 30th ship of the DDG 51 class of Aegis destroyers, and the 13th to be launched and christened by Ingalls.

Northrop Grumman Wins $62.8 M Contract

Northrop Grumman, Sunnyvale, CA has been awarded $62.8 million contract by the U.S. Navy to upgrade the U.S.S. NEVADA (SSBN-733), the second of four U.S. Trident I nuclear submarines to be backfitted with new launch tubes and subsystems to accommodate the larger D-5 Trident II ballistic missiles.

Well Said!

"The U.S. Navy’s shipbuilding budget must be immediately increased, or the service risks falling below the minimum 300-ship level required to support today’s operations."

Admiral Jay Johnson, USN
Chief of Naval Operations
January 1999