The state of American shipbuilding is a noteworthy example of the effects of government policy. While we in the SIU remain justifiably proud of the outstanding work performed by union shipyard employees, the worldwide shipbuilding statistics are sobering. Only onethird of a percent of the world’s ships carry the “Made in the USA” label. By contrast, China produces around 40 percent, while Korea and Japan account for 25 percent each.
The main reason for that disparity is straightforward: The U.S. eliminated its construction differential subsidy program in 1981 but didn’t attempt to secure any sort of reciprocity from other shipbuilding nations. Asian yards, buoyed by billions of dollars in subsidies, took over the global market. It only took a little more than a decade for America to go from being the biggest commercial shipbuilder in the world to no longer producing any vessels for international trade. All of that said, things are hardly hopeless. We still have more than 100 shipyards in the U.S., most of them smaller facilities but all staffed by capable, well-trained employees, many of whom belong to unions, including ones affiliated with the Maritime Trades Department (where I also serve as president). In particular, union yards in Philadelphia and San Diego in recent years have constructed some of the world’s most modern, state-of-the-art tonnage, including tankers, containerships, and container/roll-on, roll-off vessels.
But many of those ships are for the Jones Act trade, which largely has been recapitalized. In order to truly bounce back, our shipyards need a commitment from the federal government and a solid plan to rebuild the Navy. Legislation has been introduced in Congress to do both. Bringing back a modern version of the construction subsidy program also would help level the playing field for securing contracts to build commercial vessels for global trading.
In the interim, America would benefit by taking better advantage of the Title XI Shipbuilding Loan Guarantee Program. According to the U.S. Maritime Administration, Title XI “provides for a full faith and credit guarantee by the United States Government to promote the growth and modernization of the U.S. merchant marine and U.S. shipyards. The program … provides U.S. Government guaranteed debt issued by (1) U.S. or foreign shipowners for the purpose of financing or refinancing either U.S.-flag vessels or eligible export vessels constructed, reconstructed or reconditioned in U.S. shipyards and (2) U.S. shipyards for the purpose of financing advanced shipbuilding technology and modern shipbuilding technology of a privately owned, general shipyard facility located in the U.S.”
Title XI is not a subsidy program and it has been under-utilized for too long. Studies have shown that for every dollar invested in the program, $20 worth of economic activity is generated. America’s shipbuilding capability, like other parts of the maritime industry, is vital to national, economic and homeland security. That’s why the SIU believes it is of utmost priority to promote, protect and grow United States shipyards from coast to coast. (More U.S.-flag ships also mean more SIU jobs.) To do otherwise is to risk eventual full dependence on foreign countries both for the nation’s commercial trade and, more importantly, supporting the troops. Those risks are obvious and unacceptable. We need to do something about it.