Page 46: of Maritime Reporter Magazine (October 1999)

maritime future

American Shipbuilding Poised For 21st Century

By Cynthia L. Brown, president American Shipbuilding Association

States: he American Shipbuilding

Association (ASA) represents the six largest shipbuilding companies in the United

Avondale Industries, LA; Bath

Iron Works, ME; Electric Boat, CT and

RI; Ingalls Shipbuilding, MS; National

Steel and Shipbuilding Company, CA; and Newport News Shipbuilding, VA and CA. These shipbuilders are the largest private manufacturing firms in five states and represent hundreds of thousands of supplier manufacturing jobs in 46 states.

On behalf of the American shipbuild- ing industry, it is my pleasure to share with the readers of Maritime Reporter &

Engineering News the agenda and focus of the American Shipbuilding Associa- tion (ASA) as we enter the next century.

In order to appreciate the significance of our agenda for the future, it is important to first state the tremendous challenges and technological transformation that our industry has undertaken to survive the 1990's, and to position ourselves to rebuild an American naval and commer- cial fleet unsurpassed in the world.

ASA shipbuilders are emerging from a seven-year period in which we have experienced the lowest rates of ship pro- duction since the height of the Great

Depression of 1932. Naval orders have averaged only six ships per year and our orderbook for large oceangoing com- mercial ships has totaled only 15 since 1994. In the face of these low rates of ship production, ASA member compa- nies have been forced to slash their workforce by 33 percent and re-engineer

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This is one of the most exciting and challenging eras of the American ship- building industry. As we enter the 21st

Century, ASA shipbuilders represent the cutting edge of technology and are poised to demonstrate through the cost and quality of our products the quantum leap we have achieved. To fully realize and use this technological edge, a signif- icant increase in the rate of naval and commercial ship production is essential.

We must be able to operate at or near capacity to maximize the efficiencies of these new manufacturing investments and processes.

Sustaining a 300-Ship Navy

The Department of Defense and the

Congress recognize that America and the Free World cannot allow the U.S.

Navy's fleet to fall below a minimum of 300 ships and still meet the Nation's essential security commitments. To sus- tain even a 300-ship Navy, a stable build rate of 10 to 12 ships per year is required. In fiscal years 2001 through 2004, however, the Navy will request funding for only eight ships per year.

This number must be increased or the

Navy's fleet will continue its dangerous nose dive to 200 ships. The number of

Virginia Class submarines procured per year will have to be doubled from one to two per year beginning in fiscal year 2003, and amphibious assault ships and destroyers will need to be added to the six-year building plan.

The American Shipbuilding Associa- tion will continue to stress to the Depart- ment of Defense and the Congress the importance of pursuing commercial ship acquisition and financing practices such as Multi-Year Procurement (MYP) con- tracting, incremental funding, and long- term leasing to make the Navy's required fleet of combatant and auxiliary ships more affordable. The Multi-Year Pro- curement Contract on the DDG-51 class of destroyers is saving the taxpayer $1.4 billion. This contracting method should continue for future destroyer acquisi- tions and be applied to the Virginia Class submarine program beginning in fiscal year 2003. Because large deck amphibi- ous ships and aircraft carriers are bought in few numbers and take years to build, these ships should be bought in incre- mental payments throughout their con- struction rather than in their entirety before construction even begins. And lastly, the Navy should be encouraged to employ long-term lease financing of auxiliary and support ships through the

National Defense Sealift Fund.

Congress has already begun to stress the need for greater Navy ship produc- tion and to encourage greater use of these cost saving acquisition practices.

This year, Congress accelerated the con- struction of the LHD-8 amphibious assault ship and authorized that it be procured incrementally. The Confer- ence Committee on the Defense Autho- rization Act also granted the Navy the authority to enter leasing contracts of 20 years or more for its auxiliary ships, and it extended the Multi-Year Procurement contract to the last six destroyers planned for procurement in fiscal years 2002 and 2003.

Whereas in the past, the Navy designed its ships in-house and then turned to industry to build them, the

Navy has recognized that this process prolonged the design and construction time, limited the insertion of advanced technology, hampered innovation, and increased the cost to the taxpayer. With

ASA shipbuilders now designing the

Navy's 21st Century fleet, it is impera- tive that the Navy and Congress ade- 16A

Cynthia L. Brown quately budget for ship design early in the process to enable the industry to introduce into the fleet superior techno- logically designed and operating ships at a reduced risk — and on an accelerated time schedule.

While Navy shipbuilding orders plum- meted in the 1990's, ASA shipbuilders realized an increase in commercial busi- ness as a result of legislation enacted by

Congress during that period. These were: • The Oil Pollution Act of 1990, which mandated the transportation of oil only in double hulled tankers by 2015 and required that single hulled tankers be phased out of service based on their age and weight. • The 1993 National Shipbuilding

Initiative, which revived and amended the commercial Ship Financing

Guarantee Program and established an industry/government maritime technolo- gy cost share program called

MARITECH. • The 1998 U.S.-Flag Cruise Ship

Pilot Project to begin the development of an American cruise ship industry.

Since 1994, as a result of these initia- tives, ASA shipbuilders have built or taken orders for the construction of 13 double hulled oil tankers and two, 2,000 passenger cruise ships. In the year 2000,

ASA will work to expand upon these and other legislative initiatives to grow our commercial orderbook of environ- mentally safe tankers, cruise ships, con- tainer and other commercial ship types. 60th Anniversary Edition