From our archives …

We began these commentaries when this website was established in September of 2004, but our concerns predate these writings. Shipbuilding, you may have noticed, has been a particular concern of ours not only because of an early connection with Quincy’s Fore River shipyard, but also because shipbuilding brought about such startling economic development in war-ravaged South Korea.

Here’s an example of our past efforts to alert (and advise?) U.S. shipbuilding officials of their wayward wanderings. You’ll notice that the following letter was sent out ten years ago this month.

Cynthia L. Brown, President
AMERICAN SHIPBUILDING ASSOCIATION
600 Pennsylvania Avenue S.E., Suite 305
Washington, DC 2003 May 13, 1998

Dear Ms. Brown;

Your comments in the April/May issue of PROFESSIONAL MARINER, in an article entitled, “Industry Signals”, have come to my attention. I have been following the developments in the shipbuilding industry and am deeply concerned about the events that have adversely affected that industry in this country. I have been unable to reach you by phone and have decided, therefore, to send you this letter because of the situation’s urgency.

Secretary of Transportation Rodney Slater was quoted in the article as saying, “Revitalizing the commercial shipbuilding industry in the United States will create jobs and economic opportunity”. So much more could have been said, but this truism at least, provides me with a starting point.

Quincy and Philadelphia, as the article points out, seem elated over the effects that have been produced by the infusion of money, while troubled shipbuilders on the other hand, “are having to finance their own capital improvements without subsidies from the government.” You added, “It’s a fairness issue. Expanding shipbuilding capacity by subsidizing a foreign shipbuilder to compete against existing American shipbuilders for a limited number of shipbuilding orders does not bode well for the future of the Navy’s shipbuilding base. Nor is it fair to other U.S. commercial yards that have also not benefitted from new, U.S.-taxpayer-provided facilities. Give us the same treatment and we could make a real dent in the international market with that kind of money.”

Secretary Slater’s observation is basic. We’ve been hearing such wishful thinking for years. Your observation is more to the point, and the ASA membership, no doubt, will wholeheartedly agree with your assessment. Selling out the American shipbuilding industry to foreign interests (yard by yard, maybe) would contribute nothing to the American shipbuilding industry, and would bring additional difficulties to other segments of our country’s economy, as well. Does it make sense, after all, for the administration to throw a bone, in the form of a few thousand jobs, to once-thriving shipbuilding communities which had in times past provided employment for hundreds of thousands?

President Clinton, in his address to the U.S. Congress on October 1, 1993, clearly stated his Administration’s position, back then, with these words:

“The Administration’s plan provides important assistance to U.S. shipyards in taking advantage of the significant opportunities in this decade’s rapidly expanding international market. Yards also will have to be … and no doubt will be … aggressive in their own efforts.

“The Administration looks forward to working with Congress and with industry in establishing a basis for the industry to enter the international marketplace. By working in partnership … labor and management, shipyards and customers, Congress and the Administration … Americans can meet this challenge as they have met others in the past.”

He began that very important address with the following personal statement which appears immediately above his signature:

“I look forward to working with Congress and the industry to ensure a successful transition to a competitive industry in a truly competitive marketplace.”

He should be expected to uphold that pledge to the American people. For whatever reasons, however, the Administration has chosen a path directly opposite to the one proposed on October 1, 1993, a path entirely inimical to the American shipbuilding industry and to the American worker. This Administration, unwittingly, I suppose, has introduced Trojan Horses into two job-hungry communities. In exchange for a few thousand jobs, the interests of these two communities, and the interests of the United States, will hereafter be subordinate to the interests of rival shipbuilders in countries such as, Canada, Finland, Germany, Greece, Japan, Korea, Norway, Russia, Singapore, the United Kingdom, and a number of others. Effectively, and contrary to what we’ve been asked to believe, the Philadelphia and Quincy shipyards, and the American workingman, are not being placed in a position to compete against foreign shipbuilders in these new arrangements. The cost of building ships at these two locations will not be reduced just because foreign interests have acquired ownership of these yards. The new foreign owners know this, of course, but (with U.S. taxpayer funds) they have now been allowed to take a position that will allow them to keep foreign contracts away from these two shipyards. Apparently, there are no conflict of interest considerations in international dealings.

Will there be similar “bailout” offers on the table for some of the ASA membership? A defection at this critical juncture would severely weaken your group and lead to an inevitable dissolution. Prior to such consequences, consideration should be given to any avenue which would enable your shipyards to survive and flourish. Competing is out of the question. Along with subsidies, foreign shipbuilders have a much lower overhead. The Administration and the two communities mentioned above have already determined this to be a hopeless cause. “If you can’t beat ‘em, join ‘em” was the only solution obvious to them. In both cases, however, the actions of the principals involved will prove to be hasty and reckless. These communities will require further, more costly bailouts in the months to come as a result of these rash decisions.

There is a road open to your association which will allow you to assume control of the international shipbuilding industry. Under Federal and international laws, and with quite modest legal fees, the ASA can attain an impregnable position in international shipbuilding. Shipbuilding activities in the U.S. would reach, and even exceed, World War II levels. To achieve this, steps must be taken immediately by a representative group, such as you Board of Directors, in order to examine all the means available to you. Such an examination must weigh the feasibility of merging you six shipyards in some way, thereby forming an entity of considerable posture. We read every day of well-known firms merging in order to strengthen themselves in the face of threatening competition. Where the U.S. shipbuilding industry is concerned, however, not just profit margins but survival itself is at stake. A simple 1031 stock exchange may be all that would be required to effect this corporate metamorphosis. I would, without hesitating, grant a license under my patent rights to your newly formed combine. No other entity could compete against you in the construction of our new container ship design, and America would once again lead the way.

I hope to hear from you in this regard, and will make myself available to you if I am called upon. Until further notice, I will remain unavailable to representatives of foreign shipyards.

Very truly yours,

(Signed by this writer)
Director

Copies to: ASA Member Shipyards [END OF LETTER]

So … not only did Ms. Brown receive the above letter, we saw to it that every ASA member also received a copy. But not a single acknowledgment was forthcoming. What would happen, do you suppose, if we sent that letter once again, unedited, to Ms. Brown and the ASA membership?

Our economy is spiraling downward in a way that none of us had ever imagined possible. We continue to read the wishful thoughts of U.S. officials, in industry as well as in government, about an eventual economic turnaround. Historically, economic turnarounds have always come around, but those past turnarounds, those officials are failing to note, could always be foreseen by those who could point to economic causes and effects.

Today is different, though. Without jobs … which we farmed out to unsophisticated foreign laborers … we’ve deprived ourselves of a sustaining buying power. There is an age-old saying in sales that, “Nothing moves until something is sold,” and an updated addendum to that adage would be “… and nothing is sold until something is bought”. And so we’ve come to the end of the road and an inevitable precipice. We’ve offered a solution in Vol. XV, Art. 16, but the ASA is still at-sea.

Much like South Korea, we’re war-ravaged now. In a different way, maybe, but we’ve nevertheless been brought to our knees by a “war that never should have been launched”. We’re down-and-out. We need an economic miracle, yet none of those officials whose guidance we’ve come to rely upon … and who live in a dream world … have the vaguest notion about how to effect this needed miracle.