Anti-Jones Act Proposal Draws Ire from Industry


February 2015


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In one of the strongest pro-maritime movements in recent memory, the SIU helped voice vehement opposition to a Senate floor amendment that would kill the U.S.-build provision of the Jones Act, a vital maritime law that protects America’s national and economic security.


When Sen. John McCain (R-Arizona) offered the unrelated amendment to Keystone XL Pipeline legislation in mid-January, the backlash was immediate from other members of Congress, maritime unions, rank-and-file members, American-flag ship and boat operators, and prominent domestic maritime coalitions. The U.S. Coast Guard and the Navy League of the United States also came out against the amendment.


The SIU called upon members to ask their senators to oppose the amendment, and Seafarers responded passionately and in large numbers. Rank-and-file comments on the union’s social media pages, in the halls and aboard ship all reflected a solid awareness that any weakening of the Jones Act would wipe out American jobs.


The amendment’s fate hadn’t been decided at press time, but all indications were that it had little chance of passing. For that matter, the Keystone bill itself was far from a sure thing, partly because of a veto threat from the White House.


Nevertheless, the domestic maritime industry took the threat quite seriously, both because of the Jones Act’s importance and because the show of strong support for the nation’s freight cabotage law may dissuade other attempts to weaken it.


“This amendment has no place in the Keystone bill or in Congress,” stated SIU President Michael Sacco. “It is just another attack on the Jones Act, one that could cripple the U.S.-flag maritime industry. We need all hands on deck to defeat this amendment.”


Coast Guard Commandant Adm. Paul Zukunft was quoted in a newspaper article as having stated, “If we have foreign-flag vessels doing coastalized trade, what are the safety standards, what are the maritime pollution … standards, how are they in compliance with the same standards that we apply to our U.S. fleet? I think, at the end of the day, it will put our entire U.S. fleet in jeopardy. And then in a time of crisis, who are we going to charter to carry our logistics?”


The Jones Act requires that cargo moving between domestic ports be carried on ships that are crewed, built, flagged and owned American. It has enjoyed strong bipartisan support since its enactment in 1920, and in modern times it helps sustain more than 400,000 American jobs while contributing billions of dollars annually to the U.S. economy.


As U.S. Rep. Duncan Hunter (R-California) put it in a Jan. 15 letter to two Senate committee chairpersons, “The Jones Act keeps jobs, ships and a maritime skill base in the United States – and any effort to diminish this longstanding law is sure to negatively impact America’s maritime industry and its significant contributions to the national economy.”


U.S. Rep. Linda Sanchez (D-California) wrote in The Hill that the amendment “would undermine our domestic maritime industry and threaten the more than 400,000 jobs it supports nationwide. After years of stagnation, the American maritime industry is investing a record amount in new ship construction with American shipyards building many modern state-of-the-art vessels.”


The congresswoman further noted, “The Jones Act is an essential pillar of national and homeland security. A strong domestic shipyard base helps support strategic sealift requirement and Navy shipbuilding while ensuring that U.S. ports are free from foreign influence.”


Speaking on the Senate floor on Jan. 16, Sen. Mazie Hirono said, “The Jones Act helps to shore up our national security by providing reliable sealift in times of war. It ensures our ongoing viability as an ocean power by protecting American shipbuilders. As a result, the Jones Act provides solid, well-paying jobs for nearly half a million Americans from Virginia to Hawaii. In short, the Jones Act promotes national security and American job creation. Therefore, I am unclear why some of my colleagues are opposed to this common-sense law.”


Many others also reiterated their support of the Jones Act.


From the pages of Maritime Executive, Publisher and Editor-in-Chief Tony Munoz stated in an editorial, “McCain’s laissez-faire sentiments would actually destroy U.S. jobs, lower personal income, devastate U.S. vessel-operating companies and obliterate American shipbuilders, never mind the national security impacts.


“Meanwhile, statistics show that there is a steady loss of blue-collar jobs such as those found in shipyards, contributing to growing income inequality in the U.S. Despite the fact that 63 percent of the jobs lost during the Great Recession have been replaced, middle class incomes have actually declined by 11.6 percent,” added Munoz in his Jan. 18 editorial.


President Thomas Buffenbarger of the International Association of Machinists told senators that “the Jones Act has the strong support of the U.S. Navy and the Department of Defense. Passage of Senator McCain’s amendment would result in the outsourcing of U.S. shipbuilding to foreign nations, which will not only severely damage our defense capabilities, but will also devastate U.S. commercial shipbuilding and lead to a loss of good-paying American jobs.”


Ed Wytkind, president of the Transportation Trades Department, AFL-CIO, challenged the McCain amendment assumption that it would benefit the economy: “This could not be further from the truth. By removing the build provision of the Jones Act, the amendment would eliminate 400,000 U.S. jobs, reduce the GDP by $36 billion, and erase $24 billion in American workers’ wages and benefits. In fact, the only parties that stand to benefit from this amendment are heavily subsidized foreign shipping competitors who are not subject to U.S. laws, regulations, environmental standards and taxes.”


The head of the key coalition American Maritime Partnership (AMP), of which the SIU is a member, also weighed in.


“The McCain amendment would gut the nation’s shipbuilding capacity, outsource our U.S. Naval shipbuilding to foreign builders, and cost hundreds of thousands of familywage jobs across this country,” said AMP Chairman Tom Allegretti. “The shipbuilding requirement, which Senator McCain seeks to eliminate, is in place to ensure that the United States maintains the industrial capacity to build its own ships, so as to protect and defend the American homeland. It is hard to believe that the Congress would endorse a change to the law that would outsource U.S. jobs and reduce national security by effectively creating dependence on foreign countries to build our ships.”


A primary purpose of the Jones Act is to promote national and homeland security. The Navy’s position is clear – repeal of the Jones Act would “hamper [America’s] ability to meet strategic sealift requirements and Navy shipbuilding.” Similarly, last December, Congress enacted legislation reaffirming the Jones Act and calling a strong commercial shipbuilding industry “particularly important as Federal budget cuts may reduce the number of new constructed military vessels”. The independent Government Accountability Office, the investigative arm of Congress, said America’s military power is dependent on a strong “shipyard industrial base to support national defense needs.”


The American domestic maritime industry is investing record amounts in new ship construction in virtually every trade, a “tremendous renaissance,” according to Chip Jaenichen, administrator of the U.S. Maritime Administration (MARAD). A recent MARAD study cited the “economic importance” of the American shipbuilding and repair industry, with annual employment of more than 400,000, annual labor income of about $24 billion, and annual gross domestic product of $36 billion.


Also speaking in support of the Jones Act were representatives from the Great Lakes Maritime Task Force (GLMTF), another SIU-affiliated organization. In a press release, the GLMTF said is “sees no benefit to allowing foreign-built vessels to carry cargo between U.S. ports, but warns that nearly 60,000 jobs in the Great Lakes states will be sacrificed for no good reason if the amendment to the Keystone pipeline bill offered by Senator John McCain is accepted.”


“There is no reason to even consider this amendment,” said John D. Baker, president of the GLMTF. “The vessels built in Great Lakes shipyards are so efficient that year in, year out they save their customers billions of dollars in freight costs compared to the landbased transportation modes. What shortcoming, what failing can be found there?”


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