Matthew 24:14

A Question of National Will

As stated in an interview following this article, the U.S. maritime fleet is in its present sad state because of expediencies — because of taking, what temporarily was, the easy way out.

Because other more urgent problems demanded national attention, it was easy to neglect the maritime industry.

Further, since building ships in foreign yards costs about half of what it costs to build in U.S. yards, this, too, seemed expedient.

But shipbuilding and shipping are unique. They are among the few national activities in which a direct confrontation occurs between U.S. and foreign wage scales. This is because a ship is its own means of transport, requires no special packaging, etc. These factors make the maritime industry extremely vulnerable to low-cost foreign competition.

So unless shipping and shipbuilding are embarked upon in a vigorous national program — with high priorities and adequate funds — this industry in the U.S. will continue to lose out to foreign competition.

During the past year the author has visited leading shipyards in England, Italy, Sweden and Germany. A number of shipyards all over the U.S. have also been visited. The American shipbuilding industry is not technologically inferior to that in foreign countries. One new plant on the Gulf Coast — costing $130 million — will probably be the most efficient and advanced shipyard on earth when it is shortly completed. New techniques of multiple or series construction can help build a new fleet at great savings.

Officials at every American yard which was visited all pointed out that there is no doubt about America's ability to become a maritime leader again.

But there were grave doubts about the national will to do so.

Yet, "Unless greatly enlarged shipbuilding programs are generated in the years immediately ahead, the United States could find itself inferior to the Soviet Union in naval strength, and for all practical purposes could cease to exist as even a fifth-rate maritime nation" (Statement from Shipbuilders Council of America 1968 Yearbook).

In the decades since the close of World War II, more has deteriorated in America than just the merchant marine. Something has also been eroding away in the American character and sense of values. The U.S. is still strong and powerful, but for some reason, the nation seems to have lost the pride in its power. (Our book, The United States and British Commonwealth in Prophecy explains why — and where this trend is leading. Ask for your free copy)

Will America recapture the pride in her power before it is too late? Will she rebuild her merchant fleet?

Or will the U.S. continue to neglect it until the nation has lost control of the seas — and control of its destiny?

"Why is the MERCHANT MARINE so important to the national interest?"

Suddenly a new crisis has hit America. Officials have become painfully aware of drastic deterioration in the U.S. merchant fleet. To bring our readers an in-depth report The PLAIN TRUTH sent one of its editors to Washington, D.C. for a personal interview with Edwin M. Hood, President, Shipbuilders Council of America.

Washington, D.C.

QUESTION: Mr. Hood, what is the present condition of the U.S. merchant fleet?

ANSWER: The American merchant marine is in a deplorable state. This isn't just my opinion, this is the description applied to it by the Maritime Administrator. It is the opinion of a majority of the Congress.

QUESTION: Why is this?

ANSWER: Primarily because ship construction over the past decade has not been equal to the creeping obsolescence of our fleet. About 80 percent of the vessels in the American merchant marine today were built in World War II. So they're 20 years of age and older. Because of other national commitments and budgetary stringencies, there has not been sufficient money appropriated to cover the Government's share in the construction of needed ships to offset this obsolescence.

QUESTION: How does the U.S. presently rank as a shipbuilding nation?

ANSWER: From its position as the world's greatest shipbuilding nation at the end of World War II, the United States has slipped to 12th place in terms of annual output of commercial ship tonnage. Such countries as Denmark, Greece, Norway and Spain, which are not noted for heavy industrial production, exceed the United States in merchant ship construction.

As of mid-1969, American shipyards had 57 large merchant ships totaling 1.4 million gross tons under construction or on order. This tonnage represented less than 3 percent of the world order-book and relegated our country to 12th place behind the Soviet Union.

It should be mentioned, however, that the United States leads the rest of the world in naval shipbuilding, although Russia is currently challenging our leadership in this field.

QUESTION: Why is the merchant marine so important to the national interest?

ANSWER: The merchant marine is important for several reasons. First, of course, is national security. Another reason is our well-being in terms of national economy. Shipping is a critical item in terms of the persistent balance of international payments problem. Finally, our merchant fleet is a medium by which our trade and commerce — or, if you will, the way a particular philosophy of life — is projected throughout the world.

QUESTION: How does an inadequate merchant marine hurt America in its international balance of payments problem?

ANSWER: In a study made two years ago, it was demonstrated that if all the U.S. trade and commerce that had been carried aboard foreign-flag ships in recent years had instead been carried aboard American-flag ships, there would be no balance of payments problem whatsoever. Shipping is a critical factor, a sensitive factor, in the balance of payments situation.

QUESTION: Would increasing the U.S. merchant fleet by purchasing foreign-made vessels help?

ANSWER: This course would constitute a further drain on the balance of payments, though, I suppose, in a period of years after foreign-built ships are operated, under the American flag, they would contribute something to the plus side. But meanwhile they are not helping the imbalance of payments.

QUESTION: Why do some then seem to favor foreign shipbuilding?

ANSWER: Because of expediencies — expediencies that relate to money, primarily. We've been in a budget squeeze — we're still in a budget squeeze — and there's no walking away from the very clear fact that to cure the maritime problem you are going to have to spend money — whether you build ships in this country or abroad. The people who advocate foreign building think that foreign construction minimizes the overall cost or impact. But when you take into account the balance of payments and other economic factors, shipbuilders don't agree with that view. Remember that you're talking about employment for American citizens when ships are built in the U.S. You're talking about components produced by American companies. This production is diffused throughout the entire United States — throughout the entire American economy. Every State in the Union provides something that goes into the construction of every ship in an American shipyard.

QUESTION: Is there a difference in the quality of American-built ships and, say, Japanese-built ships?

ANSWER: Japanese shipyards — and most foreign yards — build very good ships. The difference, however, between the Japanese-built, foreign-built and U.S.-built ships is primarily in terms of regulatory and specification requirements. We must incorporate in U.S. built ships some 20 to 25 different groups of safety and quality requirements, all of which are cost additive.

QUESTION: How much can foreign builders undercut the American cost of building ships?

ANSWER: The popular statement is that it costs twice as much to build a ship in the U.S. as it does in a foreign shipyard. This is not an absolute statement of fact because all sorts of factors and influences must be considered, not the least of which are the specifications and regulatory requirements mentioned a moment ago. We're talking about roughly 15 to 20 percent of the value of the ship in just those requirements. Then there is the matter of wages. Shipyard wages in this country are roughly four times those of Japan. Productivity of American shipyards is generally superior to that of Japanese shipyards. But to overcome the wage differential alone would require a tremendous amount of improvement in productivity which I don't think is humanly possible.

QUESTION: Why do so many ship operators choose to sail under flags of convenience?

ANSWER: This is not really in my field, but as I understand it, there are some 1200 ships owned by American interests which are registered under the flags of other nations — the flags of convenience. Some of these operate in American foreign trade, others in what is called the offshore trade. The unions have very emphatic views on this subject because registering the ships under foreign flags means decreased employment for American seamen. Interestingly, since the end of World War II, there have been just about 1200 ships built in foreign shipyards for American interests. I would say less than ten of these have been brought under American registry. To do so the owners would have to immediately modify the ships to meet U.S. safety and regulatory requirements, and agree to crewing the ships with American citizens at American wage levels. The lower wages paid to a non-American crew are one of the biggest appeals in flying the flags of convenience.

QUESTION: What are the dangers of these flags of convenience?

ANSWER: The dangers are that we probably can never be sure that these ships will be available for U.S. needs when we need them. There is, of course, the so-called doctrine of effective control. The Pentagon has agreements with some of the owners of these flags of convenience ships that, in the event of emergency, they would be returned immediately to American control. How this might actually work out in a real national crisis is uncertain.

QUESTION: What do you feel it would take to revitalize the American maritime fleet?

ANSWER: This is really an open-ended question. But here's perhaps the best way to look at it: We are now carrying roughly six percent (by volume) of our trade and commerce on American-flag ships. President Nixon has indicated that the goal should be 30 percent by sometime in the 1970's. This is a reasonable goal. It is a goal about which none of our allies could quibble because in many instances other maritime countries, including Russia, are carrying 50, 60 and 75 percent of their own trade and commerce on their own ships. Obviously, a jump from six to 30 percent would require a considerable volume of merchant shipbuilding.

QUESTION: If the money were appropriated for a crash shipbuilding program, would we lack the ability to carry it out? Is our technology behind the other shipbuilding nations?

ANSWER: I don't think so. We have two new yards which will be among the most technically advanced in the world when completed early next year. And nearly every major shipbuilding facility in the country is improving or expanding its capacity, primarily to achieve a better output. Shipbuilding is no different than any other industry or activity. American inventiveness, ingenuity and free enterprise will respond to the market place. Shipbuilders are businessmen. If an enlarged program were enacted, the shipbuilding industry would react as any other industry or business would.

QUESTION: Is there a need for public education concerning the importance of shipping and shipbuilding?

ANSWER: Definitely. In my judgment, the average person knows little about this subject. This is why the Shipbuilders Council of America has just produced a film called "Shipbuilding for the Seventies." We recently showed this film to a group of people in the investment community. We were amazed at their reaction. Even these fairly sophisticated people knew very little about our problems, technology and progress. So there is a great deal that needs to be done by way of public education to show what a maritime industrial base, including shipyards, means to the national economy, the balance of payments, our commercial and military strength on the oceans, etc. Informative articles in the public interest are certainly beneficial in helping to achieve this education.