American Shipbuilding Association

Sea Power Revolution Requires More Dollars

Congressman Duke Cunningham (R-CA) stated at a 24 June forum on American Sea Power in the 21st Century that he "supports more dollars going into the shipbuilding budget." The former naval pilot said that Democrats and Republicans on the defense committees are strong on defense, but there is a body of Representatives calling for a 50 percent cut to the current defense budget. "These are ongoing efforts to take us well below what is an emergency situation already." said Cunningham.

He stated that America’s naval forces are performing at a 300 percent higher deployment rate than during the height of the Vietnam War, and that this operating tempo is wearing out our service men and women. Cunningham emphasized that pay and benefits are important, but the number one reason for people leaving the services is separation from their families, and low retention is directly linked to today’s high operating tempo.

The country will not be able to build the necessary ships to meet requirements and reduce the duration of forward deployments if we are going to pay $20 million to build roads in Haiti and spend $116 billion rebuilding Bosnia and Kosovo, said Cunningham. He said that these costs should be borne by other NATO members since it was American defense systems that shouldered 86 to 90 percent of the military operations in these regions.

Navy Secretary Richard Danzig stated that American sea power has undergone a revolutionary change. Referring to the role of naval power in Afghanistan and Kosovo, Danzig said: "For naval forces to exercise influence over the outcome of events in land-locked countries speaks volumes to the achievement and significance of our Navy and its importance to our future. We have a Navy that delivers unparalleled punch and reward to the Nation."

While emphasizing the increasing capabilities of naval ships, Danzig said that the number of ships very much matter as well. "We need a Navy of at least 300 ships and a larger Navy is better," he said. The Secretary concluded that "by transforming the Navy with more and more capability, we have the ability to deliver even more for the Nation. Increased potency will be the horse that pulls the cart of our shipbuilding program."

Mr. Ron O’Rourke of the Congressional Research Service summarized the findings of the 1999 Sea Power Forums. Copies of the findings are available from the American Shipbuilding Association.

Congress Reaffirms Necessity of Double Hulls

Congressman Rodney Frelinghuysen (R-NJ), a champion of the environment, testified on 29 June before the House Transportation Subcommittee on Coast Guard and Maritime Transportation on the importance of maintaining the double hull provision contained in the Oil Pollution Act of 1990 (OPA 90). Congress enacted OPA 90 following the grounding of the EXXON VALDEZ and subsequent catastrophic spill of 11 million gallons of oil in Prince William Sound Alaska, to minimize and prevent future oil spills. OPA 90 mandates the phase-out of single hulled ships based on their age and weight and requires that all ships have double hulls by 2015. Rear Admiral Robert C. North, Assistant Commandant for Marine Safety and Environmental Protection, United States Coast Guard, reaffirmed the Coast Guard's strong support for the law.

In his testimony, Representative Frelinghuysen praised Mobil and ARCO for making the commitment to double hulls, and criticized the "seemingly defiant indifference" of other companies that have neglected to order replacement vessels in a timely manner.

American Shipbuilding Association (ASA) President, Cynthia L. Brown, testified on the effectiveness of double hulls by providing specific examples where double hulls have prevented oil spills, and on the status of replacement of U.S. single hulled tankers in compliance with the phase-out schedule of OPA 90. She raised concerns that some oil companies and tanker operators are seeking ways to undermine the law by ‘remeasuring’ and reconfiguring their vessels to allow for a later phase-out date.

Brown explained that there are 66 single-hulled vessels in the U.S. fleet that will be phased out by 2015. The average age of the fleet is 25 years. "Old, single hull tankers pose the greatest risk to America’s coastlines, marine environment, and wildlife and should be replaced sooner rather than later," she said. Brown confirmed that there exists more than enough shipbuilding capacity to replace the entire U.S.-flag single hull tanker fleet well ahead of the OPA 90 phase-out schedule. However, it is up to oil companies and tanker operators to order their double-hulled tankers now. If orders are not placed within the next two years, there may not be adequate eligible tonnage by the year 2005 to carry our nation’s oil, as evidenced by the chart below.

Representative Herbert Bateman (R-VA) stated his support for the law and requested that the Coast Guard provide the committee with a comprehensive list of all U.S. single hulled tankers, their owners, and their scheduled phase-out dates to monitor compliance with the law. Subcommittee Chairman Wayne Gilchrest (R-MD) asked the Coast Guard to provide the subcommittee with that information.

Representative Peter DeFazio (D-OR) affirmed his support for OPA 90’s phase-out of single hulls. He recalled several years ago when Chrysler was the only automobile manufacturer that made the economic investment in producing a more fuel-efficient and environmentally friendly automobile. Because others did not follow suit, Chrysler was placed at a competitive disadvantage for doing the right thing by the environment. DeFazio said he hoped that would not be the case with the oil industry.

Representative Brian Baird (D-WA) asked Brown how long it takes to build tankers and if there could be a logjam at the shipyards if oil companies waited until the last moment and then placed their double hull orders en masse. Brown responded that such a scenario could create a severe problem, and that if it did occur, the oil industry would probably blame the shipbuilding industry and would base the blame on their unrealistic delivery schedules. Furthermore, as a result of their intentional delays to order double hull tankers in a timely manner, they may then seek relief from the law. She said as the number of eligible tankers to meet our domestic oil transportation needs decline, Congress will come under increasing pressure to grant the oil industry relief from the law.

Senator Snowe Speaks Out Against Waiver
of U.S.-build for Food Aid Transport

Senator Olympia Snowe (R-ME) submitted for the record a strong statement opposing the section 615 waiver of the Merchant Marine Act to allow foreign-built ships to be immediately eligible to carry government food aid. On 23 June, Senate Committee on Commerce, Science, and Transportation marked up S. 937 to authorize appropriations for the Maritime Administration (MARAD) for fiscal year 2000 and included the controversial waiver at the request of the Maritime Administration.

Senator Snowe said she recognized the recent increase in amount of U.S. food aid, however, "foreign aid must not come at the expense of U.S. shipyards and their workers." Senator Snowe stressed that the United States should not be encouraging U.S. companies to buy foreign built ships at rock bottom prices as a result of the Asian financial crisis. She noted that it was bad policy to create two sets of rules – one for those companies that have abided by the law, made the investment, incurred the cost of bringing ships into compliance with the law, and another for those seeking a waiver.

The House Armed Services Committee rejected the waiver in its mark of the FY’00 Maritime Administration Authorization bill.

Industry News

St. Pe’ Elected Executive V. P. of Litton Industries and COO of Litton Ship Systems Keene Named President of Ingalls

On 6 July Gerald J. "Jerry" St. Pe’ was elected Executive Vice President of Litton Industries, Inc. and Chief Operating Officer of Litton Ship Systems, a newly formed business operation. Litton Ship Systems is comprised of the corporation’s shipbuilding operations, which include Ingalls Shipbuilding, Pascagoula, MS and Avondale Industries, New Orleans, LA. W. Patrick Keene, the former Ingalls Vice President for Operations, Engineering, and Business Development, will succeed St. Pe’ as President of Ingalls.

NNS Awarded Maintenance Work on CVN 65

Newport News Shipbuilding (NNS), Newport News, VA, was awarded on 7 July a contract modification by the U.S. Navy valued at $88.5 million for maintenance work on the aircraft carrier USS ENTERPRISE (CVN 65).

Ingalls Completes Outfitting of Drillship

Ingalls Shipbuilding, Pascagoula, MS, recently completed a major outfitting of DISCOVER ENTERPRISE, an 835-foot long drillship owned by Transocean Offshore of Houston, TX, and leased to BP-Amoco Corporation for drilling off the Louisiana coast.