Previous analyses by the Maritime Administration indicate that the capacity of existing active shipyards would probably be marginally adequate in a short, intense war. There are preliminary indications that additional shipbuilding facilities would have to be activated in the event of an extended emergency preceded by brief intense conflict. Question 10. In your view, could an adequate shipyard base for national defense purposes be maintained by relying on non-subsidized construction, such as vessels for the domestic trades, military vessels, and other non-subsidized construction five of the 13 yards, plus part of a sixth, might well be effectively Answer. An adequae shipyard base for national defense purposes could not be maintained through reliance on Navy and non-subsidized private construction. Thirteen large commercial shipyards are now engaged in the construction of ships for the Navy and for commercial operators with and without subsidy. According to current classified MarAd estimates, almost all of the capacity in these 13 yards would be needed to meet critical requirements at the start of a major war, and it appears that they would not be adequate to meet long war shipbuilding requirements now being analyzed in a joint Navy/MarAd study. According to MarAd estimates, if the U.S. shipbuilding program were limited to vessels for the domestic trades, military vessels, and other non-subsidized elimiconstruction five of the 13 yards, plus part of a sixth, might well be effectively eliminated from the business of ship construction. The remaining capacity would not constitute an adequate base for national defense purposes. Question 11. Has the Maritime Administration analyzed the possibility of a boycott by foreign shipbuilders against the United States? In view of the fact that foreign-flag vessels could always be transferred to the United States-flag, how could such a boycott be possible? Answer. Since most U.S.-flag ships are built in U.S. shipyards, the possibility of a boycott by foreign shipbuilders has not been raised before. The term boycott in this context is interpreted as implying a refusal on the part of foreign shipbuilders to accept orders generated or sponsored by United States citizens or corporations. Under normal circumstances, such orders would presumably be welcomed by foreign shipbuilders. There are foreseeable circumstances, however, under which they might be refused as a matter of foreign national policy. For instance, in the event of a major NATO/Warsaw Pact war it might be anticipated that certain Far Eastern nations, if they were not involved in the war, would refuse U.S. orders for ships lest their acceptance be interpreted as violation of their neutral status. NATO countries, on the other hand, with their shipyards subjected to attack in such a war, might well need their surviving capability to meet national needs and hence be unable to accept U.S. orders. Further, if the United States were without adequate shipbuilding capacity to meet its minimum ship requirements in an extended emergency-less-than-majorwar, perhaps in the Mid East, it is entirely conceivable that groups of shipbuilding countries unsympathetic with U.S. objectives, or desirous of exerting political leverage, might refuse U.S. orders as a matter of policy. Since any meaningful broad refusal to accept U.S. shipbuilding orders would necessarily be a matter of foreign national policy, it is unclear how transfer of registry, assuming that suitable ships were available for transfer, could affect the matter because requests for ship transfers would presumably also be denied for the same reasons that ship orders were refused. Question 12. In your view, is it feasible to arrange bilateral treaties with other countries to make their shipyards available for the construction of vessels required by the United States in times of national emergency? Answer. In the opinion of the Maritime Administration, it would not be feasible to arrange bilateral treaties for ship construction that would have any value to the United States in times of national emergency. The major national emergency that is foreseen, and the one entailing the greatest demand for shipyard capacity would involve an intensive war in Europe between NATO and Warsaw Pact nations. In such a war, European shipyards in NATO countries would be vulnerable to air attack and some are in areas that might be overrun by communist forces. Furthermore, the European countries themselves would be heavily dependent on any surviving viable capacity. In fact, it is reasonable to anticipate that, as in World War II, there would be a European requirement for shipbuilding assistance from the United States. In theory, capacity in the Far East might continue to be viable, but it is extremely doubtful that Far Eastern nations would choose to jeopardize their neutral status by providing a part of the U.S. industrial base in a major war, assuming that it were seriously proposed. In short it is the view of the Maritime Administration that there is no alternative to the maintenance of a strong shipbuilding industrial base in the United States to provide for the construction of vessels required in times of national emergency. Question 13. What role did the Department of Defense play in determining the ship mix which was offered as the proposed Fiscal Year 1976 Constructiondifferential subsidy program set forth in your authorization request? Answer. Ship mixes offered in conjunction with Maritime Administration authorization requests, including the FY 1976 request, represent the best current estimates available to MarAd of the numbers and types of ships for which construction differential subsidy contracts will be written in the ensuing fiscal year. These estimates are based in turn on current forecasts of the financially supportable requirements of various operators for new ships plus forecasts of shipyard abilities and requirements for new work. In other words, the projected ship mix reflects a prediction of the manner in which the market place will behave. (Similarly, it is the market place that determines the mix ships for which viable construction differential subsidy contract proposals are actually offered.) Since the Department of Defense does not maintain expertise in the projection of commercial ship demand, it normally plays no role in the development of ship mixes that are set forth in MarAd's authorization requests, and, by that token, it played no role in the development of the FY 1976 ship mix. Question 14. The Department of Defense has refused to give steel priorities to certain large tankers, although the same types of vessels have qualified for Construction-differential subsidy. Are the national defense standards for determining Construction-differential subsidy different from those regarding steel priorities? If so, why are they different? Answer. It is our understanding that the criteria applied by the Department of Defense in certifying approval of construction-differential subsidy contracts encompass consideration of potential national security contributions of the ships in question as well as their capability to provide direct military support. Under this criterion certain ships, such as large tankers, which can contribute to the national security through carriage of critically needed materials can be certified even though the Department of Defense does not consider them useful in the direct support of military forces. On the other hand, the wording of the Defense Production Act and its implementing regulations is viewed by the Department of Defense as restricting its certification of steel priority requests to ship types that it believes would be useful in the direct support of military forces. Question 15. The G.A.O. report on "Government Support of the Shipbuilding Industrial Base" commented on the difference between the emergency planning assumptions of the Maritime Administration and the Department of Defense. Do such differences remain? What are the emergency planning assumptions of the Maritime Administration? Answer. There is no difference between the emergency planning assumptions of the Maritime Administration and the Department of Defense with regard to the shipbuilding industrial base. The difference alluded to in the noted GAO report dates from 1973. More recently, the Maritime Administration and the Navy, at the direction of the Deputy Secretary of Defense and the Under Secretary of Commerce, have jointly undertaken a study of U.S. shipbuilding mobilization base requirements and capabilities, now scheduled for completion early in 1976. The planning assumptions underlying this joint study are fully concurred in by all agencies involved. The study team is examining shipbuilding requirements and capabilities under assumptions of (1) an intense non-nuclear NATO/Warsaw Pact war of several months duration; and (2) of a war that lasts several years, with a long period of low-level hostilities following a brief period of intense non-nuclear conflict. |