BUILD AND CHARTER' —A VITAL STEP IN THE RIGHT DIRECTION

By William E. Haggett*

Although funding for Senator Ted Stevens's "Build and Charter" program has been appropriated by the Congress, this particular effort to revive commercial shipbuilding in the United States cannot become a reality until the authorization plan makes its way through Congress and the White House.

No one in the shipbuilding industry underestimates the task of winning the rough second lap of this important race. The program, already eyed with caution by some Congressional skeptics, will no doubt receive an even closer look with passage of the Gramm-Rudman deficit-cutting legislation.

In a nutshell, the Stevens plan earmarks $852 million of savings from Navy shipbuilding programs for a "Maritime Fund." Patterned after President Eisenhower's mariner program to construct ships for commercial operation, the ships could ultimately be used for military sealift. The Navy would have a voice in the type of vessels to be built, the shipbuilder and the leaser.

In the event of a national emergency, the ships would be on call to our government on short notice.

The Shipbuilders Council of America has supported the "build and charter" approach as a good faith attempt to focus Congressional and White House attention on a very serious problem—the severely declining U.S. merchant marine fleet and its implications for defense readiness.

As chairman of the Shipbuilders Council and president of Bath Iron Works, I appeared before the Merchant Marine Subcommittee of the Commerce, Science and Transportation Committee to support the "build and charter" program as the most effective legislative initiative which can contribute to the achievement of the following vital national objectives: 1. Provide needed, militarily- useful ships, operating in a commercial environment; 2. Sustain shipyards, skilled workers and management needed as components of the shipyard mobilization base; 3. Sustain the pool of U.S. citizen seagoing manpower which must always be available; and 4. Provide an opportunity to improve the operation of American shipping companies.

There seems to be no real debate in Congress over the need to maintain an adequate maritime capability to make certain that vital supplies and equipment can be transported in a time of war or international crisis. Likewise, there seems to be general agreement that our merchant marine fleet has been in a steady state of decline for the past several years.

It seems that the only real question in the minds of some of our national leaders is whether the decline in our commercial shipbuilding capabilities has reached a point where national security is a major concern.

Data presented by M. Lee Rice, president of the Shipbuilders Council, to the National Strategic Mobility Conference last November demonstrated conclusively that there is a significant problem to be solved if America's shipbuilding and ship repair capability is to be maintained.

Mr. Rice's analysis showed that manpower projected to be in place at a time of mobilization will be less than adequate. In reality, a shortfall of at least 25 percent of the required skilled manpower base will occur in the near future. As of today, the shortfall is over 18 percent. In other words, we lack 30,000 skilled production workers who would need to be on the job if mobilization tasks were to be done correctly and on time.

It is certainly not an overstatement that the problem has become a critical one and that national security could easily be impacted.

It is especially distressing to see America's shipbuilding base continuing to erode at a time when the performance of our shipyards is improving.

Because of a number of things—technological advances, facility improvements and various cost containment efforts—the cost of building ships in the United States has decreased dramatically.

At the same time, quality and schedule adherence are improving.

Having reached a point where American shipyards are capable of competing with the best in the world in naval construction, it is particularly sad to see them closing and, in doing so, weakening our national defense capabilities.

Because of the improved performance of U.S. yards, several major Navy shipbuilding programs have been coming in under cost in recent years. As a result, there exists within the Navy's shipbuilding budgets unexpended funds which have been appropriated but not obligated.

Senator Stevens's approach of using those funds to rekindle militarily- useful commercial shipbuilding in America is sound, fair and. above all, fiscally responsible.

While much-needed progress is being made rebuilding the Navy and attaining an essential 600-ship fleet, Navy construction alone to support combatant fleets will not sustain an adequate shipyard mobilization base. Fewer funds are available to purchase shipyard services when large amounts are required for combat systems in the construction of combatants and auxiliaries. Generally, only 30 percent of the naval shipbuilding budget is spent in our shipyards, compared with nearly 100 percent which flows to the yards when commercial ships are constructed.

David Klinges, vice president of Bethlehem Steel's Marine Construction Group, may have summed up the shipbuilding industry's general feeling about the Stevens's initiative in a recent interview with Baltimore's "The News American." "This legislative initiative represents the realization that something has to be done about our nation's decreased maritime capability," said Mr. Klinges. "We are encouraged to see a move in a direction that would strengthen shipbuilding and our maritime fleet and its personnel.

"We think it makes sense to have a ship being used commercially as a viable maritime asset, rather than attempting to reactivate crewless vessels that may not be well suited to a particular military transportation need," Mr. Klinges continued.

The bottom line is that ships constructed under this program would be put to a commercial use and would have high military utility should they ever be needed for that purpose. Other approaches to "build and charter" might work, but the plan awaiting Congressional authorization is workable and offers sound solutions to the various and difficult problems facing the shipbuilding industry. It fills a real void and is not a subsidy.

Maritime Reporter Magazine, page 6,  Mar 1986 Florida

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First published in 1881 Maritime Reporter is the world's largest audited circulation publication serving the global maritime industry.