As the U.S. Department of Commerce noted in a “National Security Assessment of the U.S. Shipbuilding and Repair Industry,” shipbuilding in the United States has historically been considered a strategic industry, supporting important military and commercial interests. The industry generates more than $10 billion in direct revenues; this does not include indirect economic activities or federal, state and local taxes. Roughly 100,000 workers are employed in facilities across the nation, down from 180,000 in the early 1980s.
The MTD has long been committed to the preservation of a domestic commercial shipbuilding industry, which was threatened by the discontinuation of the Construction Differential Subsidy program in the early 1980s. To correct that, Congress in 1993 passed the Defense Reconversion Act, which, among other things, revived funding for the Title XI shipbuilding loan guarantee program. Until funding for the program (aside from administrative expenses) was discontinued a few years ago, U.S. shipowners used the program to gain access to low-cost capital. Hundreds of vessels of all types were built. According to government studies, the program generated $20 of economic activity for every dollar invested in it.
The Title XI loan guarantee program isn’t the only statute essential to the continuation of the commercial shipbuilding sector. The Jones Act, the nation’s premier cabotage law, also is needed. So, too, is the Capital Construction Fund, which assists operators in accumulating capital to build, acquire and reconstruct vessels through the deferral of certain categories of federal incomes taxes.
Other programs have generated commercial activity in U.S. shipyards as well. As evidenced by a recent 10-tanker order by Overseas Shipholding Group (OSG), the 1990 Oil Pollution Act can be an important source of work for U.S. shipyard workers. A company officer credited the Jones Act and changes to the U.S. tax code as contributing to OSG’s decision to build in a U.S. shipyard.
The maritime industry also has been touting U.S.-flag vessels as being part of the answer to ease the growing congestion that plagues many metropolitan areas by promoting maritime as an alternative source of transportation. Preserving the integrity of the Jones Act is essential if this is to come about, as well as financial investment to improve port access and promote port modernization.
Finally, the U.S. shipbuilding industry as a whole has benefited from the decision of U.S. lawmakers to invest in the U.S. Coast Guard’s “Deepwater” modernization program. Key lawmakers are calling for a reduction in the program’s time frame, saying that port security and important U.S. strategic interests would be enhanced if the work were completed in a 15-year period instead of 20 years.