AWO
SHIPYARDS
AND THE JONES ACT
Herman J. Molzahn, Vice President—Shipyard Operations
American Waterways Shipyards Conference of the
American Waterways Operators, Inc.
Herman J. Molzahn
When President Reagan was
campaigning for office in 1980, he
said, "Should our shipbuilding ca-
pacity continue to decline, Ameri-
can mobilization potential will be
seriously undermined because a
large reduction in a skilled ship-
building workforce today makes
any increase tomorrow very diffi-
cult. This is a dangerous threat to
our national security, jobs, and a
key U.S. industry."
Sitting on the President's desk
when he took office was a report
from the conservative Heritage
Foundation addressing national
maritime policy. Among the sug-
gestions made by this group was a
recommendation to acquire for-
eign ships for subsidized U.S. op-
eration. It further suggested that
Jones Act trades be opened to for-
eign-flag ships.
The first suggestion, to allow
subsidized U.S. operators to ac-
quire foreign-built vessels, has been
implemented and the damaging
result to the major shipyards is all
too clear—that segment of the
shipbuilding industry has been ex-
ported overseas.
On May 20, 1982, we heard an-
other promise from the Adminis-
tration. The then Secretary of
Transportation, Drew Lewis, an-
nounced the initial elements of the
Reagan Administration's National
Maritime Policy, and therein, the
sanctity of the Jones Act was af-
firmed. Everyone hoped that this
statement would introduce a new
element of long-term stability into
the Jones Act, which is extremely
important to those who serve the
domestic trades.
This stability is again being
threatened, for at the November
1983 Annual Meeting of the Soci-
ety of Naval Architects and Ma-
rine Engineers (SNAME), Warren
G. Leback, Deputy Administrator
of the Maritime Administration,
Department of Transportation, co-
authored a heavily annotated pa-
per titled "The Jones Act: Foreign
Built Vessels and the Domestic
Shipping Industry." The paper os-
tensibly expresses the personal
views of the authors that foreign-
built ships be allowed to partici-
pate freely in the U.S. domestic
trades. The authors argue that
". . . if the domestic ship-building
industry is competitive with for-
eign shipyards, (the entry of for-
eign-built ships into the Jones
Act) would have no adverse effect
on that industry."
Further, they propose construct-
ing a fleet of break-bulk vessels
over a ten-year period to sustain
the shipbuilding base. They rec-
ommend that: "A program for con-
structing twenty vessels per year
for the ten-year period would sup-
port four major shipyards. These,
coupled with the five major ship-
yards in naval construction, would
provide the shipbuilding base."
Edward Renshaw, Chairman
of the Board, St. Louis Ship, and a
past Chairman of the American
Waterways Shipyard Conference
(AWSC), challenged these propos-
als. In his discussion paper which
he presented at the SNAME An-
nual Meeting, Mr. Renshaw
stated, "During World War II, St.
Louis Ship built L.S.T.'s and tugs
for the war effort. We were but
one of the scores of small inland,
river, coastal, and Great Lakes
shipyards deeply involved."
This was not the only attack on
the Jones Act in recent years. Leg-
islators on Capitol Hill have been
barraged by various interests to
give legislative exemptions from
the Jones Act for the carriage of
passengers, iron ore, coal, petro-
leum, liquid natural gas, lumber,
and other commodities on foreign-
flag ships. Applications for waiv-
ers have been submitted to the
federal agencies so that foreign-
flag ships could operate on a tem-
porary basis. And the AWSC has
uncovered and blocked attempts to
bring foreign-built barge sections
into the United States for final
assembly.
The "Jones Act" is used inaccur-
ately to refer to the entire body of
U.S. cabotage or coastwise laws
which limit, in various ways, the
right to engage in the maritime
commerce of the United States.
However, the Jones Act applies
only to the transportation of "mer-
chandise," not people. Other coast-
wise laws pertain to the carriage
of passengers and to towing, fish-
ing, and offshore services on the
outer continental shelf.
From the very beginnings of our
existence as an independent na-
tion, the United States has adopted
a policy of reserving its domestic
trade for its own ships. The basic
principles that guided our fore-
fathers are still valid today. A
strong domestic merchant marine
and shipbuilding base should be
promoted for the economic good of
the country and as an adjunct to
national security forces.
Special interests are pulling this
country in so many directions that
we often lose sight of the basics
which are necessary for our na-
tional survival. The shipbuilding
industry must take a stand to pre-
serve the laws which provide the
cornerstone for its existence. This
cannot be done by the actions of
several companies acting individ-
ually. It must be accomplished, if
at all, by those companies joining
forces to take coordinated actions
against attacks on the industry.
One such organization exists for
the smaller U.S. shipbuilders. It is
the American Waterways Ship-
yard Conference, formed in 1976
by a group of shipyard executives.
After the 1972 amendments to the
Longshore Act were passed, they
were convinced that the days of
"each yard for itself' were over.
The smaller or second tier ship-
yards have the most to lose if the
U.S. built provisions of the Jones
Act are abolished. Not another
tugboat, towboat, crewboat, supply
boat, barge or any other small ves-
sel would be built in the United
States.
This complex network of laws
makes this second tier of the ship-
building industry possible in to-
day's climate of foreign-subsidized
or government-owned shipyards.
A quote from Theodore Roose-
velt never had more meaning than
it does today for this segment of
the shipbuilding industry repre-
sented by the American Water-
ways Shipyard Conference: "Every
man owes a part of his time and
money to the business or industry
in which he is engaged. No man
has a moral right to withhold his
support from an organization that
is striving to improve conditions
within his sphere."
The major shipyards have lost
their commercial business. Will
the same thing happen to the
smaller yards? Not if the ship-
yards realize that there is strength
in numbers and support their trade
association which is waging the
battles to preserve the industry.
18 Maritime Reporter/Engineering News
Digital Wave Publishing