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The ASA web site contains a wealth of information on the American shipbuilding industry. Information includes statistics on the industry, industry policy positions, legislative proposals, as well as current news and past issues of the American Shipbuilder. The web site offers direct links to ASA member shipyards and partners. To learn more about the shipbuilding industry, visit the ASA web site at http://www.americanshipbuilding.com.
Navy Tells Senate Minimum of 300-Ships Needed
Vice Admiral Conrad Lautenbacher, Jr., Deputy Chief of Naval Operations for Resources, Warfare Requirements and Assessments, told the Seapower Subcommittee of the Senate Armed Services Committee on 21 April that the Navy has never worked with as few as 300 ships and that the fleet is stressed now with 324 ships. "We are playing musical chairs in trying to meet our requirements," said Lautenbacher. He went on to emphasize that with three hubs of instability around the world, 15 aircraft carrier battlegroups and 14 Amphibious Ready Groups (ARG) could be used, but the present 12 carriers and 12 ARGs represent risk constrained numbers.
Vice Admiral James F. Amerault, Deputy Chief of Naval Operations for Logistics, stated the Navy supported legislative relief for extended lease authority for non-combatant ships. The Administration has requested 10-year lease authority in its fiscal year 2000 budget for ships to be built and then leased by the government to meet future DOD lift, prepositioning, and other support requirements. Amerault said that many companies would be reluctant to build a ship with only a guaranteed five-year charter, thus making 10-year lease authority necessary. Long-term lease would give the Navy the flexibility in the future to address its auxiliary ship shortfall in a cost-effective manner, said Amerault.
Assistant Secretary of the Navy Lee Buchanan highlighted the cost savings associated with Multi-Year Procurement (MYP) contracting for ships. He stated that the 12 ship DDG-51 MYP saved the taxpayer $1.4 billion; that the Navy likes MYP contracting and wants to explore additional such contracts in its shipbuilding programs.
The most chilling revelation came when Admiral Lautenbacher reported that today "there is no carrier battlegroup or amphibious ready group sailing in the Western Pacific."
If 324 ships can’t meet today’s operational requirements, how is the Nation to remain secure with 300 ships or less? To maintain even a 300-ship Navy requires a steady state build rate of 10 ships per year. However, because the Navy has only been budgeting for six ships per year since fiscal year 1994, there is today a 28-ship deficit that will grow to a 32-ship deficit in fiscal year 2000. Each year that Congress and the Administration fail to increase the shipbuilding rate the larger the number of ships that will have to be procured annually to stop the fleet's plunge below the "risk constrained" number of 300.
Senators Urge Opposition to OECD Shipbuilding Agreement
An influential, bipartisan group of twenty Senators including Olympia Snowe (R-ME), John Warner (R-VA), Christopher Dodd (D-CT), Susan Collins (R-ME), Paul Sarbanes (D-MD), Barbara Boxer (D-CA), Jack Reed (D-RI), Ernest "Fritz" Hollings (D-SC), Charles S. Robb (D-VA), Rick Santorum (R-PA), Arlen Specter (R-PA), Joseph Lieberman (D-CT), Patty Murray (D-WA), Daniel Akaka (D-HI), Robert Torricelli (D-NJ), Daniel Inouye (D-HI), Barbara Mikulski (D-MD), Edward Kennedy (D-MA), Dianne Feinstein (D-CA), and Ron Wyden (D-OR) sent a letter to Senate Finance Committee Chairman, William Roth (R-DE), urging his opposition to moving legislation to implement the OECD Shipbuilding Trade Agreement.
The Senators wrote, "the passage of time has demonstrated that this agreement will be ineffective in disciplining the distorted commercial shipbuilding trade practices of foreign governments. At the same time, it will undermine the national security interests of the United States." The OECD Shipbuilding Agreement was negotiated in 1994.
Since the signing of the OECD Agreement, South Korean shipyards doubled their capacity and began dumping ships on the international market to fill capacity. As a result of the unrealistically low prices, at least two shipyards were unable to repay their bank loans, which were then erased through the bailout of the International Monetary Fund. "This crisis has led European shipbuilders to now also recognize that the OECD Shipbuilding Agreement will not discipline these types of practices, which are injuring shipbuilding industries around the world," they said.
The Senators noted that while the U.S. terminated its shipbuilding subsidy program in 1981, foreign governments increased their subsides, which led to America losing its share of the international commercial market. Today, the United States holds only one percent of the commercial market, which is for Jones Act construction "This agreement targets this one percent by subjecting U.S. shipbuilders to onerous trade sanctions by foreign governments for building ships to serve the exclusive domestic commerce of the United States; by gutting the Title XI ship loan guarantee program for the construction of such ships, and; by subjecting U.S. Navy reserve and auxiliary shipbuilding programs to the review of a foreign trade panel." In short, this agreement will further erode our already fragile defense shipbuilding industrial base, which is sustained by both naval and commercial ship construction.
"This OECD Shipbuilding Agreement was out-of-date when it was signed. Changes in the commercial market have in less than five years demonstrated that it is even more irrelevant today with respect to international practices. Let us not engage in unilateral disarmament once again by implementing this flawed agreement," they urged.
Members Support Increased Funding for MARITECH
Representatives Owen Pickett (D-VA), Sam Gejdenson (D-CT), Gene Taylor (D-MS), Norman Sisisky (D-VA), William Jefferson (D-MS), W.J. Billy Tauzin (R-LA), Herbert Bateman (R-VA), Duke Cunningham (R-CA), Norman Dicks (D-WA), Duncan Hunter (R-CA), and Tom Allen (D-ME) recently sent a letter to House Defense Appropriations Subcommittee Chairman Jerry Lewis (R-CA) and HASC Military Research and Development Subcommittee Chair Curt Weldon (R-PA) in support of increasing the Navy’s Maritime Technology (MARITECH) budget request by $20 million.
The MARITECH program, which was authorized by Congress in the National Defense Authorization Act in Fiscal Year 1994 as part of the National Shipyard Initiative, was administered by DARPA until 1998. In FY’99, Congress transferred the program administration to the Navy and appropriated $16.6 million to fund industry led research and development projects that are aimed to enhance commercial competitiveness while reducing the cost of ships for the U.S. Navy.
"In 1998, U.S. shipbuilders led the development of a Strategic Investment Plan to focus shared government-industry investments in R&D initiatives," said the Members. "The plan, which was endorsed by the Navy, academia, the scientific community, and the Department of Transportation calls for government/industry investments of $400 million over five years, or $40 million per year by the Navy and $40 million by industry. Yet the Navy’s fiscal year 2000 budget requests only $19.7 million for MARITECH, or half the government funding recommended by the Strategic Investment Plan," they said.
These Members asked that the program be funded at $40 million "to support the most meritorious proposals to insert new technologies in the design and production processes of the shipbuilding industry."
Coast Guard Rules in Favor of the Environment
The Coast Guard ruled that the integrity of the single hull phase-out schedule of the Oil Pollution Act of 1990 (OPA 90) would be upheld. OPA 90 requires tanker vessels involved in the carriage of oil to be phased out of the U.S. domestic trade on a date predetermined by Congress depending on the vessel’s gross tonnage, build date, and hull configuration. All vessels trading in U.S. waters must be double-hulled by 2015.
Since enactment of OPA 90, some tanker owners and operators have made it a practice to "reconfigure" their old single-hull ships and seek Coast Guard waivers that would extend their vessel’s original phase-out dates. The Coast Guard, to its credit, recognized that these old ships and reconfiguration proposals pose a significant threat to our marine environment and that the integrity of OPA 90 has been compromised enough.
Industry News
Final Sea Power Forum for 1999
ASA President, Cynthia L. Brown, announced that the final forum on American Sea Power in the 21st Century planned for 1999 will be held on Thursday, June 24, at 12:30 p.m., in SC-5 of the Capitol. Senator Olympia Snowe (R-ME), Congressman Duke Cunningham (R-CA), and Navy Secretary Richard J. Danzig will be speaking.
Shipbuilders Continue to Make Major Investments
Major Shipyard Modernization Project Underway At Bath Iron Works (BIW) - Construction of a modern $218M Land Level Transfer Facility (LLTF) began at Bath Iron Works in November 1998. The state-of-the-art facility at the Maine shipyard will complete construction in the fourth quarter of 2000, in time to lay the keel on the first of six DDG-51 ARLEIGH BURKE AEGIS Destroyers awarded to the company in the current DDG-51 Multiyear Procurement.
BIW will construct all four of its scheduled LPD-17 SAN ANTONIO-Class amphibious ships at the world-class facility and the company’s share of the Navy’s 21st Century Land Attack Destroyer (DD-21) Program. This project is the result of a unique partnership between General Dynamics, the State of Maine and the City of Bath.
NNS Officials Break Ground for Carrier Integration Center - Officials from Newport News Shipbuilding (NNS), the Commonwealth of Virginia, the U.S. Navy, and the City of Newport News recently broke ground for the Virginia Advanced Shipbuilding and Carrier Integration Center (VASCIC). This state-of-the-art center will employ 500 shipbuilding employees and integrate systems and the application of new technology into future aircraft carriers.
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