Shipbuilding Technology and Education (1996) / Chapter Skim
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Introduction
Introduction
Pages 6-24
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From page 6... ...
. Since 1985, Japan and Europe have supplied the dwindling number of commercial ships built for U.S.
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The plan points out that such a proposed transition program is consistent with federal assistance to other industries seeking to convert from defense to civilian markets. Three parts of the administration's plan concern financial issues: ensuring fair international competition; financing ship sales through loan guarantees; and assisting in international marketing.
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• Finance foreign-flag as well as U.S.-flag sales through Title XI loan guarantees. • Provide executive-branch assistance with international marketing.
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The subject of building military ships is discussed only to the extent that practices developed to build ships for the Navy may help or hinder commercial ship production. INDUSTRY STRUCTURE AND EMPLOYMENT The following discussion briefly describes some critical characteristics of the U.S.
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MARAD has sometimes used a different, but related, classification of shipbuilding companies. MARAD distinguishes "major" shipbuilding facilities, which can construct vessels of at least 400 feet in length, from "second-tier" facilities.
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Experience Most of the 21 companies have neither designed nor built an oceangoing commercial ship in 15 years. Designs Numerous types of commercial ship designs can be purchased if a shipbuilder wishes to employ a firm of naval architects.
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workers posed by the Occupational Safety and Health Administration, tend to increase the cost of ship construction in the United States as compared with other nations that do not have such stringent requirements. Few of the companies shown in Table 1-1 can successfully compete with overseas builders of commercial ships at this time.
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yards were stronger participants in commercial markets some years ago. Table 1-2 shows the classification of world shipbuilding market segments that emerged from a recent gaming exercise sponsored by ARPA and the U.S.
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However, the U.S. domestic market, which is protected by the cabotage features of the Jones Act, is different, and in fact can provide leverage for entering niches in the international market, such as 40,000-DWT tankers.1 It is perhaps a contradiction that the 40,000-DWT tanker market is perceived by the committee to be a hard market to enter, yet that market is the first international market for which orders have been placed with U.S.
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SUPPORT OF THE SHIPBUILDING INDUSTRY Government can try to support the shipbuilding industry in international competition by: • reducing government regulations in processes, products, and business practices, when verified to be appropriate; • providing nationwide tax incentives for modernization (e.g., capital gains tax reduction and investment tax credit) , including new facilities that are more productive and quality improvement activities; • developing training programs to increase skills in yards (in designing, building, or marketing)
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Programs currently on the books include direct subsidies for ship construction and operation (the construction differential subsidy, or CDS, and the operating differential subsidy, or ODS) , loan guarantees (Title XI under the Federal Ship Financing Program)
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Title XI Loan Guarantees Title XI of the Merchant Marine Act of 1936, as amended, established the Federal Ship Financing Guarantee Program. This program offers loan guarantees of up to 87.5 percent on U.S.-flag ships constructed in U.S.
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Capital Construction Fund The Merchant Marine Act of 1970 modified existing legislation and resulted in the current CCF. The program allows U.S.
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Over the last several years, orders for new ships in the international market have increased, but world shipbuilding capacity has increased even faster; therefore, pressures to provide financial support are increasing even though the OECD agreement eliminates many methods of support, especially direct subsidy. The important aspect
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The Department of Defense does invest heavily in technology related to shipbuilding -- they provide at least $100 million annually. However, as will be shown in Chapter 3, the thrust of current programs is toward developing warships that have greater military capability cost less and not on the technology for producing commercial ships for the international market.
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The OECD agreement defines the types of subsidy practices to be terminated and provides for enforcement measures, including penalties for violations. Some of the direct and indirect subsidies to be eliminated include government cash subsidies to shipyards for contracts, operations, and improving facilities; some research and development funds; forgiving some shipyard debt; and removing discriminatory regulations and practices.
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yards between 1988 and 1993. • ship financing, notably in the form of Title XI loan guarantees in the United States, has been removed from the dispute settlement procedures and enforcement mechanism that will apply to other practices covered by the agreement.
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Merchant Marine acts have encouraged shipbuilding capital expenditures and aggressive marketing by U.S. shipbuilders in the international commercial shipbuilding market.
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Presented to National Shipbuilding Research Program 1992 Ship Production Symposium, New Orleans, Louisiana, September 2–4, 1992, Society of Naval Ar chitects and Marine Engineers, Jersey City, New Jersey. Clinton, W
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