US Ship building. Biggest boom in twenty years

YEAH! That’s what I’m talkin about! here’s the text

[B]Made-in-USA shipbuilding finds an unlikely ally[/B]

Friday, 25 Oct 2013 | 9:31 AM ET

Brad Quick | CNBC

The 820-foot Liberty Bay sits dry-docked in Philadelphia’s Aker Shipyard. A massive supertanker destined for the West Coast, the ship is set to launch next week when it will undergo its final outfitting before being delivered to SeaRiver Maritime in April. It’s taken more than 1,000 workers a year to build the Liberty Bay, and construction has already begun on her sister ship in the same yard.

And while it might not be surprising that the City of Brotherly Love is home to a thriving shipbuilding economy, the reason for the boom might be: domestic oil production.

Thanks to the century-old Jones Act, which requires all goods moved between U.S. ports to be carried by U.S.-flagged and U.S.-built vessels, shipbuilders across the country are working overtime to keep up with demand for tankers that can transport the bounty of newly drilled shale oil and gas now being produced in the United States.
33 million gallons per journey

33 million gallons per journey

When it launches, the Liberty Bay will be able to deliver 33 million gallons of oil from Alaska’s North Slope to refineries on the West Coast in a single trip. SeaRiver Maritime, Exxon Mobil’s marine affiliate, has commissioned the two ships. At a cost of $200 million each, the tankers represent a significant investment that will help boost Philadelphia’s economy.

According to the Department of Transportation, 15 tankers are on order or under construction at shipyards across the country, with options for many more. It’s the biggest boom the industry has seen in 20 years.

When Aker finishes with the two ships for Exxon, it will begin construction on four more for another client, with the option to deliver another four after that. In all, the company has won orders for $1.1 billion, and has tripled in size since 2011.

Railroads get in on the action

And it’s not just ship builders that are benefiting from the country’s massive energy boom. Railroads and tank-car makers have also seen huge upticks in business. BNSF Railway, a subsidiary of Warren Buffett’s Berkshire Hathaway, is investing $220 million to improve rail capacity in North Dakota—home of the massive Bakken oil and gas field.

Last week, crude shipments by domestic rail surpassed 600,000 barrels per day. Rail-car manufacturers are having a hard time keeping up with demand for new cars. The Railway Supply Institute, an industry group, expects the backorder on new rail cars to stretch into 2015.

Back at Aker, workers are pulling extra shifts to make sure the Liberty Bay is delivered on time. And with energy production in Texas and North Dakota at record highs, it looks like the ship builders in Philadelphia will be busy for quite a while.

Now, if there was some way to get Avondale back into the commercial shipbuilding business and keep another huge yard from collapsing. I wish Gary Chouest would buy it and make it a super North American Ship. Between Avondale and Tampaship, ECO could be THE shipbuilding powerhouse of the USA!

Glad to see the Jones act still working.

Yes, if John McCain swears that the Jones act and the shipbuilding industry can’t survive, what the hell’s going on?

Where’s all the labor coming from these days though? Last time I was in a bayou yard it was all eastern Europeans (romanian/bulgarian etc) but i recall reading that all those visas went away or something? Maybe not.

Let’s not forget the two container ships on the books for Tote Services with an option for three more out of NASSCO. Also rumors of Matson shopping around for some fleet renewal and even more rumors of Crowley looking to replace the trailer barges to puerto rico with container ships. Now if only the wages deep sea matched these union tanker and box boat companies…

I spoke at length on this topic over the weekend with a friend who has been a very active member of the business world for the last 40 years. Although he has never been a member of the maritime industry he is very deeply interested in maritime matters. He is a huge proponent of free enterprise. We both agree that, as Reagan said, “The business of America is business.” We also both agree that the main goal is to see the nation and its businesses do well and be better than all the other nations, and their businesses. We further agree that the biggest problem with domestic maritime power is the crippling cost of domestically constructed vessels due to the influence of corrupt labor unions, among other things.

Where we differ is in our idea for a solution to the problem. Being a long-standing member of the business community he dashes immediately to the free enterprise solution. In other words, the John McCain solution… It is his, not wholly uninformed, opinion that the best thing for the nation to do is to throw out the Jones Act immediately and force the domestic maritime industry to become competitive on an international scale. Commercial Darwinism, in other words. Let the strong, the most efficient, survive and let the rest file for bankruptcy. He argues that there would be an adjustment period, which would be miserable for all of us, but after which businesses would adjust, in a sink or swim reaction, and the maritime industry would be back on its feet again, this time bigger, better, and stronger than it was before.

As a mariner my gut feeling is to scowl in horror of such a thought but as a conservative the other half of my gut tells me that free enterprise and being internationally competitive is the right thing to do. I am really and truly torn on this issue for the first time since I began to understand it. I certainly believe in “don’t bite the hand that feeds you” and it is unquestionably true that the Jones Act does keep the lights on and food on our tables, but it’s no secret that it’s also part of what is killing is. I know what blasphemy this is but for the first time in my life I find myself questioning whether the Jones Act is truly the best thing for us or if we’re just suffering a slower death because it, not in spite of it.

Someone please help!

paddy I for one don’t like the sound of doing away of the Jones act . When you say internationally competitive my 1st thoughts are wages, so the middle class workers will take it in the shorts and have to work for Chinese wages? Also safety will they also have to cut corners to be competitive with those ship yards? Then there’s the foreign crews working in U.S. Waters what will those wages be like? I believe the Jose Act was made law for a reason and don’t see why we should do away with it. Just my thoughts on this issue.

Maybe not a perfect comparison, but I don’t see any car manufacturers coming back to Detroit after moving jobs outside the U.S.

It would suck, and we can all kiss our jobs good-bye. Close all the yards too. Don’t think for a second anyone is going to continue paying high wages to us when they can run foreigners through license mills from whatever country is currently the cheapest. You get quality officers from a number of countries but some (usually the cheapest) are absolutely useless. You want these guys steering chinese pushboats and 30 barge tows through bridges? For a fraction of the operating expense plus damage/fines (that the CG wont enforce) they will most likely still save money. Foreigners don’t need benefits! 401k’s! Next thing you know all the companies move offshore and you just have foreign companies moving product between ports using foreign mariners. No benefit whatsoever. In addition to throwing us out of work, there will be much less taxable income, which is really what we need to support the federal gummint. While we’re at it lets eliminate the need for work visas for machinists, electricians, plumbers, airline pilots, technology, engineering, and medicine and just let anyone come in and compete regardless of where their “qualifications” come from. Guy says he’s a grade-a electrician from malaysia, why not, wire up my house!

If you’re going to get rid of the jones act then lets get rid of every other requirement to come and do business here so we can all feel the pain equally.

[QUOTE=K.S.;123304]Maybe not a perfect comparison, but I don’t see any car manufacturers coming back to Detroit after moving jobs outside the U.S.[/QUOTE]

And the funny thing is, if this comparison is the one you want, foreign companies have moved here to capitalize on the business climate(inport taxes) and a productive yet non-union workforce in the south! My toyota truck is more american than any ford/gm/chrysler vehicle, at least [I][B]when i bought it[/B][/I]!!!

Australia recently brought back their cabotage law.

http://maritimetrades.org/mtd-calls-passage-of-australian-cabotage-laws-job-truly-well-done/

http://www.asa.com.au/maritime-workforce/industrial-relations/cabotage-and-industrial-relations

Indonesia even has a cabotage law. There are nay-Sayers there too.

http://www.thejakartaglobe.com/archive/enforcing-the-cabotage-law-could-cost-country-billions/

There is very little “free trade” in the world and our trade deficit is a fine example (consequece?) of this. We are consistently allowing corporations to offshore good jobs, why not keep a little something for ourselves.

If we got rid of our cabotage law, and others countries continue to keep theirs, is that “free trade”?

Even the Canadians have such laws! And by most standards their economy is doing damn well. Counter-point?

[QUOTE=z-drive;123322]Even the Canadians have such laws! And by most standards their economy is doing damn well. Counter-point?[/QUOTE]

I was informed last Thursday that the canadians are doing away with their cabotage laws and bring chinese bottoms into the lakes. A sign of end times? Quite possibly.

I think this Jones Act Vs. free trade argument would be made wholly unnecessary if the shipyards got on the move again. That’s what really needs to be internationally competitive, not the mariners. We already are. Luckily the shipyards are starting to work their way back but it would be a very sad mistake to say that we’re getting close to where we need to be. We’re certainly going in the right direction but the path to getting our shipyards to where they need to be is far, far longer than this. I only hope we’re ready for the journey.

Canadians have been using foreign bottoms domestically for quite some time, nothing new there.

They pay a type of ad velorum tax for every bottom that they build off shore. As a direct consequence, the deep draft shipbuilding industry in Canada has become almost non-existent. Closures if Collingwood and Port Weller Dry Dock are great examples.

http://www.defensenews.com/article/20130521/DEFREG02/305210025/

Canadians have always allowed foreign vessels to travel coastwise if there wasn’t a suitable vessel available. There was a Montreal to Sarnia/Nanticoke run a few years back that had a foreign tanker chartered to it.

Yes, and the “free market” shipbuilding system prefers china/chile etc.

Don’t forget the US issues a waiver to move oil on foreign bottoms ASAP to reduce the chance of any political ramifications. Rabble Rabble Rabble!

Chinese yards are heavily subsidized.

http://www.chinascopefinancial.com/en/news/post/26888.html

As is the shipping industry

http://www.china-briefing.com/news/tag/shanghai-shipping-
subsidies

India is considering it as well

Here is the jones act wiki page. Please take special notice of the last two paragraphs in the background section.

http://en.m.wikisource.org/wiki/Congressional_Research_Service_Report_RS21566_The_Jones_Act:_An_Overview

If the jones act requirement is repealed, which is doubtful, it becomes precedent in whatever form it takes. I don’t like the idea of foreign nationals flying planes, driving trains, and hauling trucks inside the US. The last is happening now.

Giving away industry and offshoring revenue does nothing to improve our employment status or our financial woes. It strategically compromises the US by laying the building blocks of dependence.

No single nationality has the market cornered on any one occupation. That being said, i feel its ok to reserve certain functions within our borders for citizens, or leagal residents. It helps retain industry and re-enforces sovereignty.

Really, does anyone else scratch their head when they look at the parent companies to the majority of MSP recipients?

Alas, I am preaching to the choir. On the jones act, anyways.

[QUOTE=Signal Red;123231]Glad to see the Jones act still working.[/QUOTE]
Thank god.

[QUOTE=PaddyWest2012;123290]I spoke at length on this topic over the weekend with a friend who has been a very active member of the business world for the last 40 years. Although he has never been a member of the maritime industry he is very deeply interested in maritime matters. He is a huge proponent of free enterprise. We both agree that, as Reagan said, “The business of America is business.” We also both agree that the main goal is to see the nation and its businesses do well and be better than all the other nations, and their businesses. We further agree that the biggest problem with domestic maritime power is the crippling cost of domestically constructed vessels due to the influence of corrupt labor unions, among other things.

Where we differ is in our idea for a solution to the problem. Being a long-standing member of the business community he dashes immediately to the free enterprise solution. In other words, the John McCain solution… It is his, not wholly uninformed, opinion that the best thing for the nation to do is to throw out the Jones Act immediately and force the domestic maritime industry to become competitive on an international scale. Commercial Darwinism, in other words. Let the strong, the most efficient, survive and let the rest file for bankruptcy. He argues that there would be an adjustment period, which would be miserable for all of us, but after which businesses would adjust, in a sink or swim reaction, and the maritime industry would be back on its feet again, this time bigger, better, and stronger than it was before.

As a mariner my gut feeling is to scowl in horror of such a thought but as a conservative the other half of my gut tells me that free enterprise and being internationally competitive is the right thing to do. I am really and truly torn on this issue for the first time since I began to understand it. I certainly believe in “don’t bite the hand that feeds you” and it is unquestionably true that the Jones Act does keep the lights on and food on our tables, but it’s no secret that it’s also part of what is killing is. I know what blasphemy this is but for the first time in my life I find myself questioning whether the Jones Act is truly the best thing for us or if we’re just suffering a slower death because it, not in spite of it.

Someone please help![/QUOTE]

With the Jones Act we still do operate in free trade / enterprise. We freely trade in the commodities and materials used to build these vessels and we freely engage in trade of the fruits of the labor that these vessels provide. What is not and should not be a component of free enterprise is our occupations, no matter what that occupation may be. There is enough domestic competition for jobs as it is among qualified and some unqualified candidates, I for one do no want my job or any other American job up on the international market.