American Shipbuilding Issociation

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, National Steel and Shipbuilding, and Newport News Shipbuilding. The ASA will work to focus public and government attention on the need for additional action to preserve America's capability to build major naval ships and oceangoing commercial vessels.

Among them, ASA member shipyards 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 supply ships; fleet oilers; strategic ballistic missile submarines; and strategic sealift ships.

The Navy shipbuilding budget has dramatically declined in recent years.

ASA members have taken steps to restructure operations and reenter commercial markets.

Doing so can help sustain the unique defense industrial base capabilities that the ASA member shipyards and skilled workers possess. Prior to the November 1994 formation 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 repair, the building of coastal and inland waterway commercial vessels, and the building of smaller, mostly non-combatant, naval vessels and craft.

The interests and policy objectives of the large new construction yards and those of the smaller yards and repair firms have grown increasingly 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 market for commercial ships, a market that almost completely disappeared for U.S. yards and suppliers when our government terminated the Construction Differential Subsidy (CDS) program without corresponding action by our trading partners. 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 shipyard infrastructure subsidies.

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

The case for preserving the defense shipbuilding industrial base has not been made in recent years with clarity.

The member yards of the American Shipbuilding Association confront a very different challenge: to retain the unique capability to design and construct complex Navy ships.

We must diversify our businesses and adopt the best practices of commercial shipbuilding while also preserving those skills, systems and business practices that are essential and unique to the design and construction of complex ships for the U.S. Navy.

Preserving elements of our shipbuilding industrial base will mean little if we are unable to preserve and advance the capability and tech- Duane "Buzz" Fitzgerald It isn't a thoite of building warships or tommerdal ships.

We must preserve the capability to do both.

nology to design and build ships critical to our national defense. ASA member companies have actively supported recent government efforts to revitalize commercial shipbuilding — the expanded Title XI loan guarantee prog r a m , M A R I T E CH matching funds for commercial s h i p b u i l d i ng technology development, and negotiation of an international agreement on shipbuilding subsidies.

American Shipbuilding Association member companies appreciate the efforts of the Clinton Administration and the Congress to revitalize 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- H ^ ^ M H ^ H builders have an enormous advantage as measured by the small number of labor hours they expend to build large oceangoing ships.

The advantage has been established and sustained, because of their access over many years to a wide mix of major support programs from their governments. The OECD Agreement on Shipbuilding does not solve the problem. 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 Association members have advocated temporary government support to level the playing field to make the necessary transition.

Twice in the last session of Congress, the U.S. House of Representatives passed — by overwhelming margins—legislation that contained such a program, the Series Transition Payments (STP) program.

Unfortunately, the Administration 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 guarantees 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 warships is to preserve the major Navy shipbuilding yards through continued Navy programs and more focused policy action to assist us in achieving a re-entry into the international commercial market. Neither element alone will sufficiently maintain this nation's vital defense shipbuilding industrial base, or its unique capabilities.

Re-entering the commercial market is key.

We must do that in order to preserve the skills to design and build warships into the next decade at the low production rates that already characterize the status of naval shipbuilding. Diversification into commercial shipbuilding will help keep the costs of naval ships affordable, despite low production levels.

It isn't a choice of building warships or commercial ships. We must preserve the capability to do both.

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