Cargo Preference Measure Vital To U.S. Shipbuilding

Little noted among 1977 Maritime Day ceremonies was a speech by John P. Diesel, chairman of Newport News Shipbuilding and executive vice president, Tenneco, Inc., before the Newport News (Va.) Propeller Club, which by word of mouth, has since caused considerable comment — and requests for copies.

Noting that the U.S. government would not permit "our national interests to be jeopardized" by having U.S. Navy ships built abroad—at artificially low prices, to be registered under the Liberian flag and manned by foreign crews "perfectly content with substandard wages and poor working conditions" — he deplored U.S.

maritime policy which has long condoned foreign construction of a disproportionate number of merchant vessels for American companies, all of which fly flags of other countries. His conclusion: ". . . The Navy is not contracting with any foreign shipyard, of course, but—under current maritime policy—most other U.S. customers have already shifted their business overseas.

"The government—through its indecision and inaction—is sacrificing the economic, environmental and defense needs of millions of Americans to satisfy the shortterm selfish objectives of a few." With a steady decline in the volume of cargoes carried by U.S.- flag shipping and diminution of the American merchant marine, Mr. Diesel observed: "You might ask yourself about the wisdom of a national policy which calls for a large Navy to keep the sea-lanes open while it provides for no U.S.

ships to sail on these lanes." He went on: "Now, I admit that I don't exactly qualify as an objective observer when it comes to the benefits of cargo equity. And I frankly don't like to be in a position of advocating any form of subsidies, trade restrictions or quotas. I believe in free enterprise and free trade, and let the chips fall where they may. But the international market for shipping and shipbuilding is as far removed from free enterprise as the (aircraft carrier) Eisenhower out there is from the Mayflower.

"This nation's shipbuilders and fleet owners are in the midst of a fierce economic battle with foreign yards and foreign fleets.

Their governments have equipped them with missiles. Our government allows us bows and arrows and campaign promises. Nearly all other major seafaring nations —including several of our closest allies—already have some form of national cargo policy that promotes their own interests and discriminates against U.S. shipbuilders or U.S. fleet owners.

These nations recognize the critical role of the maritime industry in the world economy and maintain strong national-flag fleets to help achieve their objectives.

"We in the United States simply cannot afford to ignore the realities of the international marketplace any longer. Maintaining a free trade policy in this area is about as sensible as the egghead suggestion of unilateral disarmament as a way of ending the arms race with Russia.

"We simply can't pull out of shipping and shipbuilding," Mr.

Diesel said, "and leave these vital industries to those foreign powers who supposedly can do it cheaper.

Unless we are able to compete with them—even if the rules of the game call for subsidies or quotas—they'll be all alone on the field. And then watch what happens to those low prices for ship construction and bargain charter rates." His recommendation: passage of "cargo equity" legislation sponsored by Chairman John M.

Murphy (D-N.Y.) of the House Merchant Marine and Fisheries Committee, which would reserve up to 30 percent of U.S. oil imports for transport by U.S.-flag, U.S.-built tankers. In his words: "The shipbuilding program required to achieve the ultimate 30 percent level would involve a total capital outlay of more than $13 billion and provide during the next five years 60,000 new jobs in American shipyards and another 180,000 jobs in related industries.

"The numbers clearly demonstrate that shipbuilding is a particularly effective job-generating industry. Each $1 million of shipbuilding contracts, for example, generates 33 man-years of em- manufacployment, one of the highest ratios in the manufacturing sector of our economy. By contrast, each $1 million of aircraft contracts generates only 19 manyears of employment.

"And remember, we're talking about productive jobs, where unskilled people—a high percentage of them members of minority groups—can learn a useful trade, where men and women can work hard and earn an honest living doing useful work—not picking up papers on the courthouse lawn under some federal giveaway program." Without "cargo equity" policy, Mr. Diesel predicted a dire outlook for the entire U.S. shipyard industry. "Unless Washington comes up with realistic cargo and energy policies," he said, limited newbuilding opportunities presently available to U.S. shipbuilders "most likely will go down the drain."

Other stories from July 1977 issue


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