Vigor, which also owns a 27-acre facility on Seattle’s Harbor Island for new construction and repair of mid-sized vessels (what’s left of the famed Todd Shipyards here), answers to a new master. Private-equity giant Carlyle Group is acquiring Vigor and combining it with a Virginia shipyard.
Between 1953 and 2016, the number of major U.S. shipyards declined from 30 to six. This astounding collapse was years in the making, but a seminal moment came when President Ronald Reagan removed a decades-old program of direct construction subsidies in 1981. Reagan didn’t demand that Asia and Europe drop their extensive shipbuilding subsidies.
As a result, tens of thousands of good American jobs were lost. U.S. commercial shipbuilders, once the world’s leaders, now account for only 1 percent of the global market. Meanwhile, new mergers in South Korea and China will create two giantsthat control 46 percent of the global market.
Private equity can’t fix this. At its worst, the business model is rip, strip and flip. At best, it patiently invests and adds executive and operational expertise to improve the company. We can only hope the latter happens to Vigor until a more constructive national policy comes along.
I made a comparable graph from Finland from 1945 to 2025 using IHS Sea-web. The red (GT) graph should be pretty accurate as the missing hulls are likely tugboats etc. Obviously there’s a trend towards smaller number of very large, high-profile orders particularly following the dissolution of the Soviet Union.
The point of my original question was to find out whether the subsidized US shipbuilding industry competed in the international market or, even at that time, mainly built ships for US-based operators bound by the Jones Act. In the latter case, the loss of subsidies would explain at least partially why the average age of the US commercial fleet is relatively high today - the shipping companies simply stopped ordering new ships because they suddenly became more expensive.
There is no doubt the loss of subsidies to US shipbuiding resulted in fewer ships being built in the USA. Jones Act ship owners get around the Jones Act in many ways, there are waivers. In addition many “foreign” shipping companies are controlled by US investment corporations sheltered in offshore accounts.The US ship building industry is doing well building US military vessels which are 100% subsidized and the US government as not as picky about cost overruns as a private or corporate owner may be. Ship builders get their ships built where they can be built as cheaply as possible, that is the free market at work. Subsidy is another name for welfare. The USA hates welfare unless you are a big time farmer, corporation etc, etc. They that have the gold rule. It’s the golden rule
Yeah you’re headed one step beyond what’s bugging me. That program was not to make the US competitive on the world market as a shipbuilder. It was a way to help US flag shipowners finance building new ships to replace old ones or expand operations. Not specifically for Jones act trade either. Back then there were more US flag ships in foreign going trade.
More ships, more jobs for seamen, more work in the yards maintained the yards in a healthier condition such that maybe they could bid the odd “world market” job. More work to keep yards busy between navy programs.
It wasn’t a total handout, was a differential subsidy as I recall.
What seems obvious to working stiffs (more jobs, healthy industry) is not always clear to a certain sort of greedy corporate citizen. I don’t think that small program was going to F with the free market system and what’s better anyway? Watch manufac jobs all disappear have people requiring assistance or have them paying taxes, buying things etc.
Every little thing is portrayed as a definitive good vs evil decision and seems to get resolved only to the benefit of the financial industry.
That is what I used to think about as we hauled all those boxes out of China and Japan … who is going to buy all this crap when the last American worker loses his job?
Isn’t it obvious? Swing the pendulum the other way and turn the USA into the new slave labor haven of the world. Desperate citizens willing to work for gruel while the upper class relocate to the newest tax haven to count their rubles. It’s only a matter of time
Very true. And the “customer’s” management encourages the larger checks so s/he can have a sweet job after earning his superb life pension (that s/he can collect in new sweet private sector job).
