American Shipbuilding Association

AMERICAN SHIPBUILDER

Volume 15, Issue 3                                                                              May/June 2009

Senator Jack Reed Receives Herbert H. Bateman Award

Honored for consistent leadership in support of a strong shipbuilding industrial base, Senator Jack Reed (D-RI) was presented with the American Shipbuilding Association’s Herbert H. Bateman Award during a ceremony held on May 13th.  The Bateman Award is the shipbuilding industry’s highest honor. 

Elected to the U.S. Senate in 1996, Senator Reed is a senior Member of the Armed Services Committee, the Seapower Subcommittee, and a Member of the Appropriations Committee.  Senator Jack Reed has dedicated his years in the United States Senate to working men and women who build the finest submarines and surface ships in the world so that American Sailors, Marines, and Coast Guardsmen and women have the best in executing their missions.  “He sincerely appreciates the skills and hard work required to build ships, and understands that saving and creating shipbuilding jobs is critical to America’s economic and national security”, said Cynthia Brown, President of the American Shipbuilding Association. 

During his years in the Senate, Senator Reed has stressed the need for a larger submarine and surface fleet, and has worked to increase Navy shipbuilding budgets.  He is an advocate for the Jones Act, requiring commercial ships traveling between U.S. ports to be American-built, - owned, and - crewed.  The Senator has also consistently worked to add funds to the Title XI ship loan guarantee program to stimulate commercial ship construction and jobs in the U.S.  He opposes the Department of Defense practice of de facto purchasing foreign-built ships through long-term leases to meet dedicated sealift missions.  His support was instrumental in the passage of tax on delivery legislation for Navy shipbuilders, which corrected an anomaly whereby shipbuilders were taxed on profits before they were received.  

The Herbert H. Bateman award was established by the American Shipbuilding Association in 2000.  This Award is given annually to an individual in the Executive Branch, Legislative Branch, or industry who has demonstrated years of consistent, outstanding, and inspirational leadership in fighting for a stronger shipbuilding industry.  Representative Herbert H. Bateman (R-VA), the award’s namesake who served the First District of Virginia from 1981-2000, demonstrated these qualities throughout his tenure in the U.S. House of Representatives.  Previous recipients of the Herbert H. Bateman award include:  Representative Herbert H. Bateman (R-VA); Senator Olympia Snowe (R-ME); Representative Gene Taylor (D-MS); Senator Ted Stevens (R-AK); Representative Duncan Hunter, Sr.(R-CA); Senator Trent Lott (R-MS); Representative Jo Ann Davis (R-VA), Senator Susan Collins (R-ME), and Representative John P. Murtha (D-PA).

FY 2010 Budget Released; $12.1B Requested for 8 Ships

On May 7th, the President submitted the Administration’s FY 2010 budget to Congress.  The base budget of the Department of Defense is $533.8 billion, of which $12.1 billion has been requested for 8 new naval ships.  The Administration is asking for one Virginia class attack submarine and advance procurement to increase to two submarines per year beginning in FY 2011; one DDG-51 multi-mission destroyer; two T-AKE combat logistics force ships; three littoral combat ships (LCS); and one joint high speed vessel (JHSV).  The budget also provides for advance procurement for the design and purchase of long lead materials for the Mobile Landing Platform (MLP) which will be part of the Maritime Prepositioning Force of the Future.  The FY 2010 budget includes requests for funding to complete the third DDG-1000 multi-mission destroyer and the 10th LPD-17 amphibious transport dock ship, as directed by Congress in the FY 2009 Defense Appropriation bill.  The Administration also requested funding in the Navy’s research and development account for the next generation of ballistic missile submarines (SSBN).  According to the Navy, construction of the new SSBN class, which will replace the aging Ohio class submarines, is scheduled to begin in FY 2019.  The following chart depicts the Navy’s FY 2010 shipbuilding procurement budget:

AP = Advance Procurement     
NDSF = National Defense Sealift Fund

Today’s naval fleet is at a 92-year low of 283 ships.  Military leaders have stressed the need for the nation to maintain, at a minimum, a fleet of 313 battle force ships in the U.S. Navy.  In order to achieve the required force structure, annual Navy shipbuilding budgets must provide for the construction of 12 battle force ships.    

The House and Senate Appropriations and Armed Services Committees have begun work on the on the FY 2010 spending bills. 

Administration Requests No Funding For Title XI Loan Guarantees;
House Members Urge Support for $60 Million

Despite calls for government spending in support of economic stimulus, the Administration requested zero funding for new loan guarantees in its FY 2010 budget for the Title XI ship loan guarantee program.  Administered by the Maritime Administration, Title XI provides U.S. ship owners with a federal guarantee of 87.5% of a commercial bank loan over 25 years.  With the tightening of the credit market and hesitancy of banks to issue large commercial loans, the affordable financing provided by Title XI has become even more important to ensuring that ship owners are able to place orders for new ships in America’s shipyards.  Sixty million dollars, at a minimum, is needed annually to satisfy the growing demand for ship construction to recapitalize the Jones Act fleet. 

In a letter dated May 18th, Representatives Gene Taylor (D-MS), Rob Wittman (R-VA), and 26 of their colleagues urged House Defense Appropriations Defense Subcommittee Chairman John P. Murtha (D-PA) and Ranking Member Bill Young (R-FL) to appropriate $60 million for the Title XI Loan Guarantee Program in the FY 2010 Defense Appropriations Bill.  Last year, Congress appropriated $48 million for new loan guarantees in the National Defense Sealift Fund under the Department of Defense.  Ships built with Title XI loan guarantee are also available to serve as defense auxiliary ships during times of war or national emergency.  In addition to Representatives Taylor and Wittman, the following Members requested funding for Title XI:  Representatives Neil Abercrombie (D-HI), Todd Akin (R-MO), Jason Altmire (D-PA), Tammy Baldwin (D-WI), Roscoe Bartlett (D-MD), Brian Bilbray (R-CA), Tim Bishop (D-NY), Madeleine Bordallo (D-GU), Robert Brady (D-PA), Corrine Brown (D-FL), Joe Courtney (D-CT), Susan Davis (D-CA), Bob Filner (D-CA), Randy Forbes (R-VA), Gene Green (D-TX), Duncan Hunter, Jr. (R-CA), Jim Langevin (D-RI), Rick Larsen (D-WA), Frank LoBiondo (R-NJ), Stephen Lynch (D-MA), Eric Massa (D-NY), Charles Melancon (D-LA), Chellie Pingree (D-ME), Bobby Scott (D-VA), Carol Shea-Porter (D-NH), and Bart Stupak (D-MI). 

Since funding of the program last year, the Maritime Administration has seen a surge of applications which is evidence of the need for financing to build commercial ships.  An appropriation of $60 million in FY 2010 will finance $1.2 billion in new ship construction, and create and sustain roughly 13,000 shipyards jobs and tens of thousands more jobs in the supplier base. 

Increased Piracy Underscores Need for More U.S. Naval Ships

In a May 5th hearing before the Senate Commerce Surface Transportation and Merchant Marine Infrastructure, Safety and Security Subcommittee Captain Richard Phillips of the Maersk Alabama,who was held hostage by pirates following an attack on the ship, testified on the important role that America’s naval forces must play in protecting U.S.-flagged merchant ships.  In his opening statement Captain Phillips stressed that “unlike most nations of the world, the United States has the capability to protect its vessels and their crews from piracy… it is the responsibility of our government to protect U.S.-flagged vessels, which are by definition, an extension of the United States…”  In a separate hearing on May 5th before the Senate Armed Services Committee Senator Joe Lieberman (I-CT) expressed his concern that the added responsibility of responding to pirate attacks is placing stress on America’s already overextended and undersized Navy fleet of 283 ships.  Vice Admiral James Winnefeld, Director for Strategic Plans and Policy of the Joints Chiefs of Staff responded that the U.S. Navy is undertaking fewer missions than it otherwise would in order to respond to the growing pirate threat. 

The same day the Senate hearings took place, the USNS Lewis and Clark, a U.S. Navy combat logistics force ship, was fired upon by pirates off the coast of Eastern Somalia.  The increased pirate attacks and violence against America’s ships and merchant mariners highlights the need to make rebuilding the Navy a national priority.  Maintaining a robust naval fleet ensures that this country is able to fulfill all its naval missions, which includes keeping the sea lanes of commerce open. 

New Partner

W.F. Magann Corporation

W.F. Magann Corporation, based in Portsmouth, Virginia, is a contractor specializing in industrial, marine, and concrete construction.  The company is involved in bridge, dam, and reservoir construction; machinery control system installation; marine and offshore pile driving; and dredging. 

Well Said!

“The nation cannot continue to change the fleet size and force structure requirement with the evolution of each new threat.  Threats evolve too quickly and ships take time to build…The country must always maintain a strong fleet of ships.”

Representative Chellie Pingree (D-ME)
May 13, 2009