Page 6: of Maritime Reporter Magazine (January 6, 1995)

American Shipbuilding Association

Yards take action today to ensure the U.S. shipbuilding capability tomorrow by Duane "Buzz" Fitzgerald, CEO, Bath Iron Works

The six largest shipyards in the U.S. formed the American Shipbuilding Association (ASA), a new Washington, D.C.-based industry trade association. The six yards include Avondale, Bath Iron

Works, General Dynamics' Electric

Boat Div., Ingalls Shipbuilding, Na- tional Steel and Shipbuilding, and

Newport News Shipbuilding.

The ASA will work to focus public and government attention on the need for additional action to pre- serve America's capability to build major naval ships and oceangoing commercial vessels.

Among them, ASA member ship- yards build all of the U.S. Navy's complex combatant ships and large auxiliary ships including: AEGIS guided missile destroyers; aircraft carriers; amphibious assault ships; amphibious landing ships; attack submarines; fast ammunition sup- ply ships; fleet oilers; strategic bal- listic missile submarines; and stra- tegic sealift ships.

The Navy shipbuilding budget has dramatically declined in recent years.

ASA members have taken steps to restructure operations and re- enter commercial markets.

Doing so can help sustain the unique defense industrial base ca- pabilities that the ASA member ship- yards and skilled workers possess.

Prior to the November 1994 for- mation of the ASA, the six largest

U.S. yards had relied primarily on the Shipbuilders Council of America (SCA) to represent its namesake industry the public and our national leaders.

In addition to the major Navy shipbuilders, the SCA membership has included a number of smaller firms engaged primarily in ship re- pair, the building of coastal and inland waterway commercial ves- sels, and the building of smaller, mostly non-combatant, naval ves- sels and craft.

The interests and policy objec- tives of the large new construction yards and those of the smaller yards and repair firms have grown in- creasingly different as conditions in the industry have changed in the post-Cold War period.

U.S. shipbuilding yards must find ways to re-enter the world mar- ket for commer- cial ships, a mar- ket that almost completely dis- appeared for

U.S. yards and suppliers when our government terminated the

Construction

Differential Sub- sidy (CDS) pro- gram without corresponding action by our trading part- ners.

The response by our trading partners to the end of CDS in 1981 was not to follow suit and end their direct subsidy programs. Instead, they expanded their ship construction and ship- yard infrastructure subsidies.

They have dominated the market for more than a decade. In that time, they have become highly pro- ficient at constructing commercial ships.

The case for preserving the de- fense shipbuilding industrial base has not been made in recent years with ^hbihhi clarity.

The member yards of the Ameri- can Shipbuilding

Association con- front a very differ- ent challenge: to retain the unique capability to design and construct com- plex Navy ships.

We must diversify our businesses and adopt the best prac- tices of commercial shipbuilding while also preserving n^^^B^^m those skills, sys- tems and business practices that are essential and unique to the de- sign and construction of complex ships for the U.S. Navy.

Preserving elements of our ship- building industrial base will mean little if we are unable to preserve and advance the capability and tech-

Duane "Buzz" Fitzgerald nology to design and build ships critical to our national de- fense.

ASA member companies have actively sup- ported recent government ef- forts to revital- ize commercial shipbuilding — the expanded

Title XI loan guarantee pro- gram,

MARITECH matching funds for commercial shipbuilding technology de- negotiation of an ship-on

It isn't a

We must preserve the

American Shipbuilding Associa- tion member companies appreciate the efforts of the Clinton Adminis- tration and the Congress to revital- ize commercial shipbuilding in the last several years. But we contend that the magnitude of the challenge our industry confronts has not yet been fully understood or addressed.

Foreign ship- ^^mm—m^m builders have an enormous advan- tage as measured by the small num- ber of labor hours they expend to build large ocean- going ships.

The advantage has been estab- lished and sus- tained, because of their access over many years to a wide mix of major support programs from their govern- _ ments. The OECD

Agreement on

Shipbuilding does not solve the prob- lem.

The proposed agreement permits foreign governments to continue to subsidize commercial ship prices another four years and to provide shipyard infrastructure assistance indefinitely.

American Shipbuilding Associa- tion members have advocated tem- porary government support to level the playing field to make the neces- sary transition.

Twice in the last session of Con- gress, the U.S. House of Represen- tatives passed — by overwhelming margins—legislation that contained such a program, the Series Transi- tion Payments (STP) program.

Unfortunately, the Administra- tion chose to oppose the program and the Senate was unable to act.

The situation was not helped when some of the smaller U.S. yards chose during last session's Congressional debate to argue that a STP program was not necessary and that an OECD

Agreement (apparently in any form) combined with Title XI loan guaran- tees would more than adequately level the playing field in commercial shipbuilding.

As reflected and conveyed through the Shipbuilders Council of America, especially last year, our industry has not spoken with one voice. Great confusion has ensued.

Our industry's interests, and, we believe, the national interest, were poorly served because of that.

The ASA member companies, employing more than 90 percent of

U.S. shipbuilding workers, believe that the only way to preserve this country's capability to build war- ships is to preserve the major Navy shipbuilding yards through contin- ued Navy programs and more fo- cused policy action to assist us in achieving a re-entry into the inter- national commercial market. Nei- ther element alone will sufficiently maintain this nation's vital defense shipbuilding industrial base, or its unique capabilities.

Re-entering the commercial mar- ket is key.

We must do that in order to pre- serve the skills to design and build warships into the next decade at the low production rates that already characterize the status of naval ship- building.

Diversification into commercial shipbuilding will help keep the costs of naval ships affordable, despite low production levels.

It isn't a choice of building war- ships or commercial ships. We must preserve the capability to do both. \ 8 Maritime Reporter/Engineering News