OSG Executive: Labor-Management Cooperation Boosts Maritime Industry

April 2010

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Working together, management and labor are writing a new chapter in American maritime history. However, much work remains if the industry is to continue making progress and weathering the current economic crisis.

That’s what Eric Smith, the vice president and chief commercial officer of OSG America, told the executive board of the Maritime Trades Department on Feb. 25.

The most prominent examples of this management and labor cooperation are the 12 new SIU-contracted Jones Act tankers that were commissioned by OSG America a few years ago, Smith said. It was the largest order of its kind in the U.S. commercial sector.

According to Smith, unionized workers at the Aker Philadelphia Shipyard who are building the vessels have been meeting the highest international standards, matching shipbuilding giants like those located in China and South Korea. Smith stressed that these are state-of-the-art vessels that will enable OSG to remain the second-largest tanker company in the world and the largest one in America.

He reminded the audience that in 2004, the company went to Washington, D.C., with a promise that if certain tax laws were changed to allow for fair competition, the company would use the savings to build new tankers “and create jobs at sea and ashore here in the United States. The law was changed; we honored our promise. We took 20 future years’ worth of tax savings and spent them in three years. We signed a contract to build 10 new, modern tankers…. We then increased that order to 12, bought a competitor and ordered large ATBs for lightering in Delaware Bay. After spending a couple of billion dollars, we added $17 billion to the nation in economic impact, created 2,600 jobs at sea and on shore, generating $3 billion in income for these folks. Together, we stimulated the economy.”

He believes management and organized labor need to continue working together to get the federal government to enact policies helping the maritime industry to get through these difficult times. Among other potential benefits, such policies could help the nation fully capitalize on opportunities involving massive oil and energy supplies in the Gulf of Mexico that would create tens of thousands of jobs in industries across the board. Already, some of those jobs will involve shuttle tankers.

There are billions of barrels of “proven reserves” in that region, Smith said. Because of a lack of pipelines in certain areas, shuttle tankers “may be the next great Jones Act shipping opportunity. This is new ground for the U.S., as there are no shuttle tankers currently trading in the Gulf of Mexico. That’s about to change, as OSG will deliver the first-ever shuttle tanker in the Gulf of Mexico on April 1 of this year,” he stated, referring to the Seafarers-crewed Overseas Cascade.

Smith also credited MTD-affiliated unions for their outstanding safety records. He described OSG’s diverse U.S.-flag fleet and pointed out that “since 1985, we’ve lightered more than 2 billion barrels of crude oil in Delaware Bay and carried on 12,000 voyages with no incidents or spills.”

Both on the legislative front and when it comes to shipboard safety, Smith said the company is “succeeding because of the efforts from SIU, MEBA and AMO…. We at OSG are grateful to you and your folks for the support we’ve received.”

He concluded, “Good tax policy is a critical element in growing our economy and in growing jobs in the maritime community. We – OSG and labor – are living proof that when good policy is created and established, great things come to this industry. We did it in 2004 and we can do it again. We become more competitive with Jones Act tonnage. We create a means for the U.S. government to use Jones Act tonnage in times of war. And, most of all, we create jobs.”

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OSG America VP and CCO Eric Smith

OSG America VP and CCO Eric Smith