American Shipbuilding Association

Congress Promotes Commercial Shipbuilding

(Washington, D.C.) – Today, The House Armed Services Seapower and Expeditionary Forces Subcommittee received testimony on the Federal Ship Loan Guarantee Program, also known as Title XI, which facilitates financing of commercial ship construction in U.S. shipyards. Cynthia L. Brown, President of the American Shipbuilding Association, testified on the importance of funding and improving the program to increase commercial ship construction in the U.S.

Members of the subcommittee in attendance were Chairman Gene Taylor (D-MS), Ranking Member Roscoe Bartlett (R-MD), Representatives Madeleine Bordallo (D-Guam), Rick Larsen (D-WA), and Joe Sestak (D-PA). Chairman Gene Taylor stressed the importance of Title XI, stating his concern that the United States is importing goods on foreign ships and that building commercial ships in U.S. shipyards would lower the cost of military ships. Taylor indicated that the subcommittee plans to fund Title XI and that he believes $60M is an achievable goal for fiscal year 2008. Rep. Bartlett and Rep. Bordallo expressed their support for funding the Title XI program, and Rep. Bordallo emphasized the importance of Jones Act ships financed by Title XI to the economy of Guam.

Ms. Brown highlighted that commercial ship construction “helps American shipyards retain and grow their highly skilled engineering and production workforce vital to building Navy and Coast Guard ships, reduces the cost of U.S. Navy and Coast Guard ships, facilitates the introduction of the best commercial building practices into Navy and Coast Guard programs, expands the fleet of U.S.-built commercial oceangoing ships available to the Department of Defense (DoD) in time of war or national emergency, and provides for the highest construction standards in the world.”

Mr. Martin Gottlieb of the Argent Group, Ltd., a vessel finance company, testified that “while commercial financing is readily available for foreign-built vessels, it is more of a challenge for vessels built domestically.” He stated “foreign-built vessels are considered commodity assets financed largely on their asset value of being re-deployed or sold upon default, however, U.S.-built vessels are purpose-built and are rarely re-deployed or sold. Typically, a commercial lender will consider only the value of a vessel in the foreign market when lending.”

 The American Shipbuilding Association is the national trade association of the shipbuilding industry. ASA members include the nation’s six largest shipyards and more than 70 companies engaged in the manufacture of ship systems and components.