SHIPYARDS ENGAGED IN NEW CONSTRUCTION MAJOR NAVAL, MERCHANT, OFFSHORE EXPLORATION VESSELS [RECENT, CURRENT, PENDING)

Mr. HOOD. Preliminarily, however, it might be helpful to picture briefly the present profile of the private shipbuilding industry of the United States. It is an industry of great variety and flexibility. There are large shipyards, and there are small shipyards. There are also those which do not fit the classic definition of a shipyard; that is, possessing either a building way, building dock, launching platform, or a drydock. There are yards that specialize in naval shipbuilding, those that engage only in merchant ship construction, and those that build both naval and merchant ships. There are those that build only drilling rigs and those that build oil industry support vessels. There are yards whose primary activities center on the construction of barges and other shallow draft vessels. Still others restrict their operations to ship repairs and ship conversions. On the other hand, there are those which build and also repair; and some, large and small, engage in nonship activities as well. There are both privately owned as well as Government-owned facilities. Most major private yards, it should be noted, are now units of large corporate entities whose financial resources have strengthened the industry.

As you will see from charts 1, 2, 3, 4, and 5, it is an industry made up of yards geographically dispersed throughout the country with a wide range of capabilities.

SHIPYARDS ENGAGED IN NEW CONSTRUCTION MAJOR NAVAL, MERCHANT, OFFSHORE EXPLORATION VESSELS (RECENT, CURRENT, PENDING)

In all, this complex includes more than 500 establishments. Government statistics, however, are normally predicated on some 150 principal privately owned yards of which 48 have the capacity for building or accommodating ships 400 feet or longer. Of this latter group, some 19 private facilities, in a very substantial sense, compose the Nation's shipbuilding resource base.

SHIPYARDS ENGAGED IN NEW CONSTRUCTION

MAJOR NAVAL, MERCHANT, OFFSHORE EXPLORATION VESSELS
[RECENT, CURRENT, PENDING)

SHIPYARDS ENGAGED IN NEW CONSTRUCTION
MAJOR NAVAL, MERCHANT, OFFSHORE EXPLORATION VESSELS

No two shipyards are identical. All, of course, are located adjacent to navigable waters. By virtue of geography, topography, and acreage, plant layouts vary considerably. Management philosophies, operational techniques, manpower policies, and production capabilities range widely. Major shipyards also maintain extensive design and engineering capabilities; others rely on the services of independent design agencies.

During the past 10 years, the industry has vastly changed. Expansion of private yard capacities and capabilities has resulted from steadily increasing capital investment, as shown in chart 6. In the 1965-75 period, nearly $1.2 billion have been spent or committed for these purposes. At today's prices for real estate, construction, and equipment, this figure is about the equivalent of eight brand new shipyards.

These capital improvements reflected a high degree of optimism in the long-term future for U.S. shipbuilding. These investments also recognize the changing nature of ship sizes and characteristics, the constantly changing nature of shipbuilding markets, and the changing nature of employment requirements.

According to the Labor Department's Bureau of Labor Statistics reports, private shipyard employment totaled 159,600 workers in April of this year, compared with 155,700 in 1974 and 144,300 in 1973. (See app. B.)

Of the total of 159,600 in the private sector, it is estimated that approximately 50,000 people are engaged in the construction and conversion of large naval vessels, and that another 10,000 are engaged in the repair and overhaul of Navy ships. The balance are engaged in commercial work including contracts coming within the purview of the 1936 act, as amended by the 1970 act.

Shipbuilding is a very complex, labor-intensive process, involving more than 60 separate journeyman-artisan-skills. As the workload and labor force have expanded over the past 2 years, difficulties have been experienced in recruiting certain skills in some localities. Shortages in the shipfitter, welder, machinist, and pipefitter trades have been identified at various times. These shortages have occurred despite (1) intensive recruitment and training programs on the part of individual shipyards; (2) high levels of chronic unemployment in at least 7 of 10 geographical areas in which major shipyards are located; and (3) increasing opportunities for minority employment in most shipyards.

Shipbuilding has also often experienced source and supply problems for critical materials and equipment. During 1973 and 1974, shortages of a variety of items-most notably steel plates, steel shapes, forgings, and castings seriously plagued the industry and exposed certain ambiguities, or inconsistencies, in the assignment of priorities for merchant ship construction under the Defense Production Act. Though the problem has been vastly eased by subsequent developments, this vacuum in the coordination of national shipbuilding endeavors could recur and needs attention without the pressures of crisis.

Even in good times, labor shortages as well as material shortages, or both, can inhibit expansion.

We would therefore hope that the subcommittee might see fit to give further impetus to reviews of this matter now in process within the Commerce and Defense Departments.

With the preceding introduction, I would like, now, with your permission, to equate the implications of CDS to "where we have been," "where we are," and "where we are headed."

WHERE WE HAVE BEEN

Since colonial days, for reasons of geography and longevity, the United States has relied on the oceans for security and as a conduit for the movement of basic materials and manufactured goods. Since colonial times, a primary function of the U.S. Navy has been to assure access to the sealanes of the world for the transport of exports and imports essential to national security, national growth, and national survival. Even now, 69 of 71 critical materials without which the entire U.S. industrial structure could not function, must be importedand must be imported by ship. More than 95 percent of these vital imports are presently brought here by foreign-built, foreign-flag ships. Historians record the 1830 to 1860 period as the golden age of shipping and shipbuilding in the United States. The development of fast clipper ships in those days brought the U.S. shipyard industry to great prominence. But that greatness has not been enduring. Except for the critical years of World Wars I and II, American shipbuilding has alternated between periods of stability and instability in terms of opportunities, operations, and output. Domestic as well as international conditions have influenced the peaks and valleys of each cycle.

Following unsatisfactory experiments with shipping aids during the 1920's and earlier, President Franklin Delano Roosevelt sparked an extraordinary sense of national purpose in stabilizing maritime/ shipbuilding matters which led to congressional enactment of the 1936 act. The rationale of that statute was, one, to assure a sufficiency of shipping and shipbuilding capabilities for national defense and development of foreign and domestic commerce; and two, to provide economic parity for the American ship operator through the granting of construction and operating differential subsidies.

To carry out the purposes of the 1936 act, a long-range shipbuilding program was started in 1938. Contracts for 50 merchant vessels were placed that year as the first increment of a planned 10-year program of 50 ships per year. When the war started in Europe in 1939, this