February 1977 - Maritime Reporter and Engineering News

E.M. Hood Reports Shipbuilders Optimistic Over Long-Term Future

In his year-end statement, Edwin M. Hood, president and board chairman of the Shipbuilders Council of America, a national trade association representing the nation's major commercial shipyards and suppliers of marine equipment and materials, stated, in part: "U.S. shipbuilding and ship repairing events in 1976 were shaped by many complex developments, and the record for the year has accordingly been speckled by both encouraging and discouraging influences.

"Naval shipbuilding has been constantly in the limelight. Debates among legislators and Administration officials on types and sizes of ships to be built for the U.S. Navy to counter the Soviet threat at sea have been mostly indecisive. .. .

"Disputes among civilian and military authorities, in the last 12 months, have frustrated repeated endeavors to resolve shipbuilders' claims totaling nearly $2 billion resulting from contractural imperfections. . . .

"As a consequence, Navy/shipbuilding industry relationships at year-end are not much closer to stabilization than they were at the start of 1976. This situation has been further compounded by announced plans to revive ship construction in naval shipyards whose costs h i s t o r i c a l l y have been shown to be considerably higher than those of private shipbuilders. . . .

"All of these developments have tended to obscure the fact that: 11 private shipyards are presently engaged in the construction of 88 naval vessels (of 1,000 light tons and over) ; Congressional appropriations for Navy shipbuilding and conversion commitments in Fiscal '77 reached a peacetime high of $6.2 billion; forecasts of Fiscal '78 funding are even higher, and employment of skilled workers involved in Navy work has remained fairly stable and will probably increase slightly over the next two years. .. .

"Over the past five years, merchant shipbuilders have also been operating at high levels, but unlike naval shipbuilders, the current backlog of contracts is rapidly dwindling, and the outlook for follow-on orders is hardly comforting. This downturn is attributable to the persisting world shipping depression. . . .

"At present, 18 American shipyards are building 78 merchant ships (each of 1,000 gross tons and over), totaling 4,373,600 gross tons, but at the close of 1978, only 11 of these will remain to be delivered. . . .

"There is much hope that the Carter Administration will take cognizance of this situation. President Carter, during the recent campaign, supported the concept of cargo preference for Americanflag shipping in all trades—a perception which has growing bipartisan support on Capitol Hill.

Further, there has been increasing sentiment, in and out of gov- ernment, favoring more bilateral shipping agreements. A national policy to activate these purposes could generate a substantial volume of merchant shipbuilding opportunities for U.S.

shipyards. .. .

"Meanwhile, there should be a limited demand for Great. Lakes vessels, liquefied natural gas (LNG) carriers, containerships, roll-on/roll-off vessels, tug/barge units, heavy-lift ships and other miscellaneous craft. More than $350 million in Congressionally appropriated funds are available to support the government's share in the construction of some of these vessels. . . .

"With regard to offshore drilling rigs, nine units are now under construction, and all will have been delivered by 1978 . . . . Throughout the world, few new contracts for drill rigs were placed in 1976.

Exploration and exploitation of oil and gas resources on the Outer Continental Shelf, now contemplated along the Atlantic Coast, could revive this segment of the U.S. industry . . . . Enactment of legislation encouraging maximum use of U.S. constructed rigs and drilling vessels on the Continental Shelf, as has been advocated by the U.S. shipbuilding industry and others, could provide a beneficial stimulus.

"Fortunately, the situation pertaining to ship repairing is far more stable. Some decrease in merchant ship repairing because of the lingering shipping recession is likely. On the other hand, an increase in naval ship repairing is anticipated. The material quality of many vessels in the U.S. Navy fleet continues to be a matter of deep concern to the Navy leadership as well as to the Congress, and overdue upgrading of certain of these ships in private shipyards cannot longer be avoided.

"Though the short-term outlook is uncertain, U.S. shipbuilders remain optimistic with regard to the long-term future. Naval and merchant vessels, as well as offshore drilling units, must be built if U.S. national interests are to be properly served. If President Carter is to fulfill his campaign pledge of combating unemployment by creating jobs in the private sector, they will be built— and repaired—in American shipyards."

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