Union Questions Aker Philadelphia's Jones Act Compliance

Monday, May 22, 2006
According to the Philadelphia Inquirer, the AFL-CIO accused Aker Philadelphia Shipyard Inc. of undercutting the struggling U.S. shipbuilding industry by using too many foreign-made components in its new vessels. Aker, formerly Kvaerner Philadelphia Shipyard, denied the allegations, and asserted it is leading the industry's rebirth by expanding its business using mostly local workers and suppliers. The war of words began after the labor federation's Metal Trades Department, representing about 600 Philadelphia shipyard workers, said Thursday that it was asking the Coast Guard to probe Aker's use of components and prefabricated parts from Hyundai Mipo Dockyard and other South Korean companies. Under its partnership with Hyundai, Aker, a unit of Norway-based Aker A.S.A., is importing prefabricated bulbous bows and stern tubes for use in construction of 10 double-hull tankers. It is also using other foreign-made components, including engines and piping, Aker said. Under the federal Jones Act, Aker said it is obligated, among other things, to limit the weight of foreign-made hull steel to 1.5 percent in any ship intended for use in U.S. ports. The act also requires such a ship's owner and most of its crew to be American. Metal trades president Ron Ault said in a statement that Aker was violating the construction rules. According to the article, David Meehan, Aker Philadelphia's president and chief executive officer, called the complaints groundless and said the company was complying fully with the Jones Act, adding that 90 percent of its roughly 1,100 workers in Philadelphia are American. Meehan said Aker regularly has requested, and received, Coast Guard clearance for its ship construction since 2003. He said limited use of imported components is commonplace in the industry and roughly similar to the proportion used in four previous ships built without complaint in Philadelphia. Angela McArdle, a Coast Guard spokeswoman, said Aker has one pending clearance request submitted last month but could not confirm or deny previous clearances. She said it has not yet received the union's request. The union's attorney, Keith Bolek, of O'Donoghue & O'Donoghue L.L.P. in Washington, said the union mailed the request Thursday after the Coast Guard said it had no record of Jones Act clearances for Aker or Kvaerner. Source: Philadelphia Inquirer
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