Puerto Rico - Statehood and attack on the Jones Act


#61

let’s give it up for the Shipbuilders Council of America

[B]Jones Act critics ignore the facts[/B]

10/22/2015

By Matt Paxton, president, Shipbuilders Council of America

In the wake of the tragic loss of the El Faro and her 33-member crew during Hurricane Joaquin, familiar opponents of the maritime industry have shamefully used this difficult time as a weak attempt to blame the Jones Act for the tragedy.

The highly customized vessels that operate between U.S. ports are built specifically for the unique trade that they operate in. The vessels lead the world in both safety and technological advancements. More importantly, U.S.-built vessels are subject to strict safety regulations. So to imply that vessels that do not have to observe rigorous U.S. safety standards are safer than those that do defies common sense.

To try and connect the Jones Act – a law that strengthens our economic and national security – to this tragedy during a period when our industry is mourning the loss is not only incorrect, but also shameful. The United States, including our shipyard and repair industry, leads the world in ship construction advancements, including launching the world’s first LNG-powered containership – with millions more to come in investments in building and infrastructure.

The critics of the Jones Act and the build requirement choose to ignore the cold hard facts. While we will never see them acknowledge our industry’s economic accomplishments and safety standards – including providing nearly 500,000 good paying jobs in all 50 states and $39 billion in output into the U.S. economy – we are exceedingly proud of those accomplishments.

Our industry is also proud to serve as a backbone for the brave men and women who protect our homeland. That’s why the Jones Act has wide bipartisan support in Congress, from every modern day president and the highest levels of leadership in our armed forces. When Vice Chairman of the Joint Chiefs of Staff Gen. Paul Selva was asked about his support of the Jones Act, he replied, “… Without the contribution that the Jones Act brings to the support of our industry there is a direct threat to national defense.”

Adm. Paul Zukunft, the Coast Guard commandant, recently warned against the threat of repealing the Jones Act. “At the end of the day, it will put our entire U.S. fleet in jeopardy. And in a time of crisis, who are we going to charter to carry our logistics? Very difficult if we don’t have a U.S.-flagged ship.”

Despite some of the uninformed statements being touted by critics, the U.S. shipbuilding and ship repair industry remains one of the strongest, safest, and most innovative industries in the world.

Any time a mariner is lost, our industry feels it deeply into our very core. We at the Shipbuilders Council of America stand in strong solidarity with the men and women who served the El Faro as well as their families. Baseless attacks from critics who only seek to gain economically from this difficult time insult the legacy of these mariners and their families, and they need to stop.

Matt Paxton is the president of the Shipbuilders Council of America. In this capacity, he advocates for a robust and expanding U.S. shipyard industrial base. He is also a lawyer, focusing on maritime law and environmental issues.


#62

The idea that the Jones Act is responsible for old pos ships is ridiculous. You are eliminating the threat of competition of foreign old pos ships as well as foreign new ships that are cheaper. The reason we have old ships is because the companies are cheap. If there were a law forbidding ships over 20 years old then the companies would raise their rates slightly and use new ships.


#63

[QUOTE=Carruthers;171903]PS The New York Times followed up its Oct 14 story with another one yesterday – re problems on the El Yunque:

The article states:

"El Faro was built in 1975, and El Yunque a year later. … "

I am currently aboard El Yunque and can confidently say that she was built in 1974 and not in 1976. Also, the El Yunque is not a floating rust bucket as she is made out to be. Like any other ship, the maintenance work aboard her is pretty much the same that can be found on any deep sea ship. We do 20knots coming and going without breaking into a sweat and all machinery aboard her is working just fine, thank you very much. My only grouse is that I wish I had a thermostat in my cabin so that I can adjust the a/c to my liking. Yeah, even the a/c works just fine in this 40some yo ship.

The ship may be old, but she is comfortable, with satellite TV in all cabins and all that blah. So, NY Times can fuck off.

BTW, z-drive … the tug that we use in PR is a Moran tug named z-one. Thought you’d get a chuckle out of this :slight_smile:


#64

The highly customized vessels that operate between U.S. ports are built specifically for the unique trade that they operate in. The vessels lead the world in both safety and technological advancements. More importantly, U.S.-built vessels are subject to strict safety regulations. So to imply that vessels that do not have to observe rigorous U.S. safety standards are safer than those that do defies common sense.

Maybe the best way to save the Jones Act and domestic shipbuilding would be to stop bragging and start to look at why it cost 2-3 time more to build a ship in US yards than to build the same ship with the same machinery and equipment and to meet the same standard of safety at a shipyard in Japan or South Korea.

To claim that US ships are designed and built to a higher standard than others is plainly not true. USCG rules are generally based on IMO requirements minimum standard and Class requirement are similar for all major classification societies. To believe otherwise, or to claim that foreign built ships are less safe then those built at US yards is just kidding yourself.
Those of you who have worked on foreign built Ocean-going ships, OSVs or Rigs can maybe enlighten those who hasn’t.

The claim that the cost is because of the high labour cost and safety standard in US yards, while “them for’ners” are working for a “handful of rice” and in unsafe conditions is also manifestly not true. Simple container ships, bulkers and tankers are still being built in countries like Japan and South Korea, although China is taking over more of this business. Top of the line Offshore and other specialized vessels are built in Norway, (nobody in their right mind will claim that Norway is a low-cost taxhaven with lax safety standard)in Holland and Germany.
Admittedly the hulls are mostly built in East European countries, where labour cost is less, but still not slave wages.

The LNG Container ships being built in San Diego are being lauded as proof of US shipbuilding and design superiority.
The fact is thatis actually built to a standard DMSE design The main machinery are MAN B&W but manufactured in South Korea: http://www.lngworldshipping.com/news/view,introducing-the-worlds-first-lngpowered-container-ship_39075.htm
So what make them Jones Act compliant? The work of putting them together and the steel (if not imported from China)? I wouldn’t be surprised if the navigation equipment is supplied by Furuno and the GMDSS station by Sailor. What is left then that is domestic?

PS> The same applies to the Product Tankers being built at now Philly Shipyard: http://www.phillyshipyard.com/news.cfm?path=1,229&id=3-1602

Maybe it would make more sense to put pressure on the few yards that is still in operation to modernize their equipment and building methods to compete with foreign yards on price, quality and design.
The age profile of the US fleet, Jones act or otherwise, is telling you that there must be a potentially large market for new shipbuilding for the US market, but as long as they can go on charging unsustainable costs and Owners are forced to pay, there will be no improvement in any of the above.

For those of you working on rigs in deep water GOM; How many US built and flagged rigs are there out there? Where does the equipment on them originate from, incl. on the drill floor?

The same questions can be asked for the “state of the art” Sub-sea Construction vessel working in deep water GOM, or the Heavy Lift Crane vessel (SSCV), the Seismic vessels and just about anything else that is able work there, except simple PSVs.

There are some development towards building high end Offshore vessels in the US, but to foreign design and with foreign equipment, which may be the way to go to improve the capability of US yard.
Eventually they MAY be able to compete with own design and US made equipment, but not as long as they can hide behind a protective barrier that enable them to charge whatever the captive market is willing to pay, and keep on building the same old-same old.

Many countries regulate domestic shipping and require that port to port transport is by ships owned, flagged and manned by locals. Locally built vessels are encourage, but OECD rules (and EU rules in case of Europe) prohibit such protective barriers, as well as subsidies over and above certain limits set by OECD.

I don’t advocate removing the Jones Act altogether, but maybe modify it to where it would encourage US flagged vessel in both domestic and foreign going trade and US shipbuilding to supply those vessels at competitive costs. At one time US shipyard built vessels for the world, not just for a minuscule captive market. Why not again??

The idea that if ANYTHING is changed in the Jones Act, US shipping is doomed and US seafarers cannot find work is not necessarily true, even if it is repeated many enough times.
In worst case there is a shortage of qualified seafarers world wide and many flags allow foreign officers, incl. Masters, as long as they hold COC that is internationally recognized. (IMO STCW compliant) Wages and conditions may vary from company to company, but some foreign owners may offer better terms than what you can expect from US owners.


#65

Gotta love when Europeans climb up on a soap box and prove how little they know about our hemisphere. The absence of cheap American ship building is a product of not just labor costs but also the high safety standards at our yards. Look at your post. Most vessels finished in Western European are 70% completed in an Eastern European yard, where yes, the wages are about half of (if not more) and safety standards are not quite the same. Norway is building “money is no object” vessels supported by oil companies, not bulkers or general cargo ships. China is now the most dominant nation with regards to shipbuilding and there are reasons for that, currency exchange and labor cost being paramount.

The vessels are domestic because the vessels are assembled at an American yard. The Act is not about creating innovation, it is about preserving the trade of shipbuilding. As far as the rest, you are correct and the U.S. is in a relative shipbuilding boom that is replacing our aging tonnage and these vessels will go into a protected market so the owners will make their investment back. It the market were to be opened American companies making this expensive investment would be bankrupted through outside competition.

The barriers allow owners to recoup their investment on expensive vessels, but those expensive vessels keep thousands of Americans employed. On the subject of employment I find your statement completely unfounded. American tax structure and health systems make it very difficult for an American to sail foreign and still make a living. If spending money on labor was popular with shipowners then Wilhelmsen wouldn’t be getting rid of the Norwegians and Maersk would be keeping the Danes.


#66

Here is another person on a different soap box (from post # 61):

Despite some of the uninformed statements being touted by critics, the U.S. shipbuilding and ship repair industry remains one of the strongest, safest, and most innovative industries in the world.

Shipping and shipbuilding is not hemispheric but international and I did not say “scrap the Jones Act” but modify it to where it becomes a tool to force US shipbuilders to become just what Mr. Max Patton said; “strongest, safest and most innovative in the world”.
As long as they don’t have to modernize they will not. They will be a burden on the taxpayers rather than a source of income, and the US fleet will continue to shrink. Most of the modern Ocean going US fleet available to MSC is already foreign built, partly foreign owned and operated though US subsidiaries of foreign shipping companies. Do you think that Maersk and others are there for charity? No, they secure a steady income from the US Government and from “preference cargo”.

By all means, keep the cabotage part of the Jones Act, requiring US flag and US crew on domestic trade ships, as most other countries also do, but allow Owners to demand competitive prices for ships being built in US yard. Cost of labour in Japan and Norway is not exactly low.
The days when US wages and living cost were the highest in the world is long gone, so it should be feasible to build quality ships at competitive prices in the US, especially highly sophisticated vessels for the Offshore and deep water mining industry etc.

MARAD already have the tools to finance ships built at US yards, whether for domestic or foreign trade and even for export: http://www.marad.dot.gov/ships-and-shipping/federal-ship-financing-title-xi-program-homepage/
Use this to re-establish US Shipping and Shipbuilding, don’t just think it cannot be done. There may even be some people interested in setting up new yards to build ships for a revived US market.

When I got into the Offshore industry in the 1970s ALL rigs were either built in the US, or by US owned and operated yards in other countries, but to US design and with US equipment. Here in Singapore there were 3 rig building yards (Bethlehem, LeToureau and Livingston) spitting out identical Jack-up and the odd drillship/drillbarge. The rigs were originally owned and operated by US Drilling Contractors. Some of the rigs went to the GOM to work there. The first rig was loaded on a Redstack barge for dry tow to the US in 1975.

Rigs are still being built here, but now by Singapore owned and managed yards. Many are built to their own design, but also some to external design. Last year Keppel FELS alone delivered 21 new rigs. They also own the only US yard that still build J/Us and has just taken over the rights to LeTourneau’s rig designs. They have already build several 116E design rigs at their AMSFELS yard in Brownsville. (Now the don’t have to pay royalty)

Most of the OSVs working in S.E.Asia in the 1970s were owned and operated by US boat companies. In the early days they were US built and US flagged. That changed quite early, however, as locally built boats became more numerous and use of FoC became the norm for US owners.

Can those times be brought back? NO, but to resign to total defeat on building ships, rigs and boats in the US, except for a small and captive market, without a fight sounds un-American to me.


#67

There are huge government subsidies to shipyards in other countries, you ought to know that and point it out.


#68

Intelligent robots may be throwing mariners onto the unemployment line in about 20 years. A spinoff from Planetary Resources plans to mine the asteroids and Lockheed Martin’s plan to mine the seabeds’ rich metal ore deposits.


Don’t know if the robots will be wearing US, China, Korean or Japan flag.


#69

[QUOTE=ombugge;172277]Maybe the best way to save the Jones Act and domestic shipbuilding would be to stop bragging and start to look at why it cost 2-3 time more to build a ship in US yards than to build the same ship with the same machinery and equipment and to meet the same standard of safety at a shipyard in Japan or South Korea.

To claim that US ships are designed and built to a higher standard than others is plainly not true. USCG rules are generally based on IMO requirements minimum standard and Class requirement are similar for all major classification societies. To believe otherwise, or to claim that foreign built ships are less safe then those built at US yards is just kidding yourself.
Those of you who have worked on foreign built Ocean-going ships, OSVs or Rigs can maybe enlighten those who hasn’t.

The claim that the cost is because of the high labour cost and safety standard in US yards, while “them for’ners” are working for a “handful of rice” and in unsafe conditions is also manifestly not true. Simple container ships, bulkers and tankers are still being built in countries like Japan and South Korea, although China is taking over more of this business. Top of the line Offshore and other specialized vessels are built in Norway, (nobody in their right mind will claim that Norway is a low-cost taxhaven with lax safety standard)in Holland and Germany.
Admittedly the hulls are mostly built in East European countries, where labour cost is less, but still not slave wages.

The LNG Container ships being built in San Diego are being lauded as proof of US shipbuilding and design superiority.
The fact is thatis actually built to a standard DMSE design The main machinery are MAN B&W but manufactured in South Korea: http://www.lngworldshipping.com/news/view,introducing-the-worlds-first-lngpowered-container-ship_39075.htm
So what make them Jones Act compliant? The work of putting them together and the steel (if not imported from China)? I wouldn’t be surprised if the navigation equipment is supplied by Furuno and the GMDSS station by Sailor. What is left then that is domestic?

PS> The same applies to the Product Tankers being built at now Philly Shipyard: http://www.phillyshipyard.com/news.cfm?path=1,229&id=3-1602

Maybe it would make more sense to put pressure on the few yards that is still in operation to modernize their equipment and building methods to compete with foreign yards on price, quality and design.
The age profile of the US fleet, Jones act or otherwise, is telling you that there must be a potentially large market for new shipbuilding for the US market, but as long as they can go on charging unsustainable costs and Owners are forced to pay, there will be no improvement in any of the above.

For those of you working on rigs in deep water GOM; How many US built and flagged rigs are there out there? Where does the equipment on them originate from, incl. on the drill floor?

The same questions can be asked for the “state of the art” Sub-sea Construction vessel working in deep water GOM, or the Heavy Lift Crane vessel (SSCV), the Seismic vessels and just about anything else that is able work there, except simple PSVs.

There are some development towards building high end Offshore vessels in the US, but to foreign design and with foreign equipment, which may be the way to go to improve the capability of US yard.
Eventually they MAY be able to compete with own design and US made equipment, but not as long as they can hide behind a protective barrier that enable them to charge whatever the captive market is willing to pay, and keep on building the same old-same old.

Many countries regulate domestic shipping and require that port to port transport is by ships owned, flagged and manned by locals. Locally built vessels are encourage, but OECD rules (and EU rules in case of Europe) prohibit such protective barriers, as well as subsidies over and above certain limits set by OECD.

I don’t advocate removing the Jones Act altogether, but maybe modify it to where it would encourage US flagged vessel in both domestic and foreign going trade and US shipbuilding to supply those vessels at competitive costs. At one time US shipyard built vessels for the world, not just for a minuscule captive market. Why not again??

The idea that if ANYTHING is changed in the Jones Act, US shipping is doomed and US seafarers cannot find work is not necessarily true, even if it is repeated many enough times.
In worst case there is a shortage of qualified seafarers world wide and many flags allow foreign officers, incl. Masters, as long as they hold COC that is internationally recognized. (IMO STCW compliant) Wages and conditions may vary from company to company, but some foreign owners may offer better terms than what you can expect from US owners.[/QUOTE]

Excellent post.

The two Norwegian built vessels that I sailed on were very well built, with plenty of top shelf equipment that went far far beyond US requirements. They were an order of magnitude superior to US vessels of the same age in the same trade.

We here in the US could, and should, learn a lot about designing, building, operating, and regulating ships from the Norwegians, and other Northern Europeans.


#70

Who says U.S. Shipyards are not modern? Automate the yard all you want, Asia and Eastern Europe are still going to be cheaper which is why the last 30% of the vessels that are finished in a Western European yard are mostly built elsewhere. Philadelphia if following the same formula with their assembling of ships. As it stands now commercial building in America are not a burden on the tax payer. If Title XI loans fail and go to default, then it becomes a burden on the citizen. The size of the U.S. built fleet is dependent on the market that it serves, it prevents the overbuilding we saw in China in 2007.

Not lost on me. I don’t believe Maersk, WWL, Neptune Orient, etc… should receive these subsidies. They should have used to promote and secure a U.S. Owned liner service, to which foreign built vessels are an option. All the more reason for irritation when a European climbs up on a soap-box

I don’t think you live here so to comment on our cost and standard of living is out of your purview. The cost of labor is high and a shipyard worker is highly skilled personnel so correspondingly his compensation isn’t simply adequate, it is a good job with good health benefits for himself and his family, and that’s how it should be. Using Norway as a base, how many handy size bulkers were built there, keel up? The rest of Europe? Not many. The offshore sector, where you obviously work, has a different pool of capital to draw on than the shipping industry as a whole. If you are not concerned about how much money you are spending, you can build your vessels anywhere. Plenty of Vessels for the offshore sector are built here in the states as well as plenty of other vessels for our domestic markets, as demand dictates. Almost every mariner here is aware of our Title XI program and sailed on a vessel that brought it into existence. It is currently being used in the manner that you write about. Take a drive on I-95 by the Philly Yard and count the ships being built. No offense but your not very knowledgeable about our industry here stateside and you telling things we already know.

Our shipyards are doing quite well thank you as referenced in your last. New tonnage has/is ordered and delivered. The system is actually working well except for export, but that is not the purpose of our cabotage law, which is also working quite well. Shipping is the front line of globalization, as you can see from Singapore. Owners are forever going to chase lower cost and you my friend are a sterling example of it. I can guarantee that you are much cheaper than your American Counterpart.


#71

[QUOTE=z-drive;172290]There are huge government subsidies to shipyards in other countries, you ought to know that and point it out.[/QUOTE]

Where do you get that from?? Are ALL foreign countries the same?? Since you are so sure, where is your proof of this?
Stop looking for excuses why US shipbuilding and US Shipping cannot survive on it’s own in competition with others and start looking for solution to revive the industries to where they can. Don’t blame underpaid foreigners with lax safety rules and huge government subsidies, which is manifestly wrong.

The US has gone from being a major shipping nation to one that can only sustain a small aging fleet by protective barriers and preferential rules in 40 years. That is the facts and you know it. The way to revive it is NOT by allowing things to continue as before, but to force changes on a reluctant industry that is happy with status quo, as long as they can make money.


#72

reading comprehension: learn it. I never said (or implied) all foreign countries subsidize their shipyards. Some do, some don’t; it effects the global shipbuilding industry.


#73

[QUOTE=Carruthers;172292]Intelligent robots may be throwing mariners onto the unemployment line in about 20 years. A spinoff from Planetary Resources plans to mine the asteroids and Lockheed Martin’s plan to mine the seabeds’ rich metal ore deposits.


Don’t know if the robots will be wearing US, China, Korean or Japan flag.[/QUOTE]

You are a moron. You aren’t even a professional mariner. You have no idea what it entails. My current job has a shitload of automation, it also needs engineers to monitor and correct problems as they arise. Please shut the fuck up and leave.


#74

I can guarantee that you are much cheaper than your American Counterpart.

You want to bet?


#75

[QUOTE=ombugge;172315]Where do you get that from?? Are ALL foreign countries the same?? Since you are so sure, where is your proof of this?
Stop looking for excuses why US shipbuilding and US Shipping cannot survive on it’s own in competition with others and start looking for solution to revive the industries to where they can. Don’t blame underpaid foreigners with lax safety rules and huge government subsidies, which is manifestly wrong.[/QUOTE]

Here are the top five shipbuilding nations, by tonnage (source: http://www.statista.com/statistics/263895/shipbuilding-nations-worldwide-by-cgt/). The links that follow each nation talk about the subsidies that their government provides.

China: http://www.reuters.com/article/2013/12/09/us-china-shipping-idUSBRE9B80Q320131209

South Korea: http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=c/wp6(2014)10/final&doclanguage=en

Japan: http://www.oecd.org/sti/ind/C-WP6(2012)26-FINAL-ENG.pdf

Philippines: http://www.rina.org.uk/Major_overhaul_needed_for_Filipino_yards.html

Taiwan: http://www.oecd.org/industry/ind/47500389.pdf


#76

[QUOTE=z-drive;172316]reading comprehension: learn it. I never said (or implied) all foreign countries subsidize their shipyards. Some do, some don’t; it effects the global shipbuilding industry.[/QUOTE]

You never said some either. Can you name the major shipbuilding countries that heavily subsidize their yards, over and above what is allowed under OECD rules?


#77

MARAD’s Title XI talk about what is available to US shipbuilders, which is similar to what is offered in other OECD countries, if not exceeding it.
Example:

In sum, Korea’s shipbuilding industry has been a success story, but the global economic crisis has
dented its finances and it now faces serious challenges to set itself back on a solid footing. The role of the
government in the Korean industry has changed significantly over the last 50 years, and the government
commented that government support is not now a critical engine for industry success. However, the events
of the past 5 or so years have resulted in an increase in government policy attention to the industry, as in
other shipbuilding economies, and have highlighted questions about optimal ways of dealing with
struggling businesses that are relevant for all players in the industry

The main difference is that South Korea has succeeded so far, but they are in for a brutal shock now.

China is offering subsidies to Chinese shipowners to scrap old and inefficient ships as long as they build eco friendly replacement at Chinese yards.
The ships to be scrapped must be 1-10 years younger than their “mandatory retirement age”.

Would it be an idea to do the same for US ships??
What is the “mandatory retirement age” for US ships anyhow??


#78

Looks like one small yard in the US is taking initiative to improve their products by teaming up with foreign yards and designers in stead of producing same old-same old. It save on R&D costs and bring in expertise, yet it is able to offer US built efficient and eco friendly Fast Ferries: http://www.mainebiz.biz/article/20151022/NEWS0101/151029987


#79

Some (not all, an unspecified number) yards have been using foreign designs for a long time. Where have you been? This isn’t new. What about all of those Aker tankers and incat-crother design catamarans? ECO has borrowed many designs as well, for example. Many of Robert Allan tugs. Wind farm vessels being built for Rhode Island on a foreign design. Damen USCG cutters, the list goes on. Even austal!

Once again you prove your ignorance by asking the mandatory age for US ships to be retired. Or maybe you’re just trolling?!?


#80

Front Street is a new boatyard that is a joint venture between two small yacht yards and a manufacturer of composite products for the pulp and paper industry that also makes a line of small powerboats. I thought Front Street was primarily a yacht repair yard and marina, I did not realize that they are building boats too.

Washburn & Doughdy build Robert Allen (Canadian) design tractor tugs, and also build tractor tugs to their own in house design. I have met pilots that prefer the in house design to the Robert Allen tugs.

I believe that the Aker Philly tankers are a South Korean design. I do not know, but would like to hear, the story on where the modules are built and where the steel for them is made.