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ships. DOD has also wanted increased flexibility by having ships that

can transit the Panama Canal. Maybe TRANSCOM will determine that

it requires some very large ships, but TRANSCOM should at least have a say in the decision.

DOD also requires car carriers, or Ro/Ro's. However, neither Maersk nor Neptune Orient Lines, for example, own any Ro/Ro's

participating in the MSP program today.

TRANSCOM has a requirement for tankers. Yet, there are no tankers in the MSP program.

The mix of ships that TRANSCOM needs, while still ensuring a competitive commercial market for these ships, will be achieved under

the program we propose.

I recognize that there needs to be a balance between military

usefulness and commercial viability, because these ships will have to

compete in the international commercial shipping business in peacetime.

I am confident that this balance can be struck.

In closing, let me emphasize that our industry supports an

enhanced Maritime Security Program. We support a 20-year annual per

ship operating subsidy to offset the higher costs associated with U.S. merchant mariners and doing business under the laws of the United States. But a program that does not provide for a fleet of American-built ships with military utility, under the ownership and control of America, fails to meet the sovereign security requirements of the United States. A program that lacks these critical elements cannot be called a Maritime Security Program.

Will the program we propose increase the price? Yes. However, 95 percent of all military cargo and supplies for our forward deployed troops will continue to have to go by sea. Given this indisputable fact, this is a small price, which America can no longer ignore if the U.S.

needs a merchant marine and supporting shipbuilding industry.

Thank you.

The American Shipbuilding Association has received no grants

from nor contracts with the Federal Government during the past three

years, nor has it ever.

Mr. Vortmann's curriculum vitae is attached.



2798 East Harbor Drive San Diego, CA 92113

Tel 619 544-3400


Richard H. Vortmann

Vice President, General Dynamics and President, National Steel and Shipbuilding Company (NASSCO)

Richard H. Vortmann became a vice president of General Dynamics in November 1998 when the corporation acquired National Steel and Shipbuilding Company (NASSCO) based in San Diego, California.

Vortmann, for the prior ten years, had been chairman, president and chief executive officer of NASSCO, which was an employee-owned business prior to the acquisition.

Vortmann began his career in 1969, serving in various financial management and strategic planning positions with Kaiser Industries Corporation, then part owner of NASSCO. He joined NASSCO in 1976 as vice president of finance and information systems. He later served as the shipyard's vice president of production before becoming executive vice president of operations in 1980. He became president of NASSCO in 1984. From 1986 to 1988, he also served as Chairman of the Board of Emkey Development, a real estate development subsidiary of Morrison Knudsen Corporation, which was then NASSCO's parent company. From 1987 to 1988, he was a member of the board of Morrison Knudsen. In 1988, he led the management-ESOP purchase of NASSCO.

Vortmann is currently Chairman of the American Shipbuilding Association, a council member of the American Bureau of Shipping, and the Chairman of the American delegation to the annual Japanese, European, Korean, United States Shipbuilding Conference. He currently is serving on the Mayor's Blue Ribbon Committee on City Finances. He has previously served as chairman of the Shipbuilders Council of America and as a director of the Greater San Diego Chamber of Commerce.

Vortmann was born in San Francisco, California on April 11, 1944. He earned a bachelor's degree in finance in 1966 and a master's degree in business administration in 1967 from the University of California, Berkeley. He taught on the Business School faculty of his alma mater from 1967 to 1969.

Testimony of Herschel T. Vinyard, Jr.

Before the Committee on Armed Forces
Special Oversight Panel on Merchant Marine

July 23, 2002

Good Morning. Thank you, Mr. Chairman, for holding this hearing and for your interest in the wellbeing of the U.S. shipyard industry. My name is Herschel Vinyard, and I am Vice President of Atlantic Marine Holding Company. Atlantic Marine is a privately held company that owns and operates shipbuilding and ship repair facilities in Jacksonville, Florida and Mobile, Alabama where we employ approximately 2,000 workers. Atlantic Marine in Jacksonville builds small and mid-sized state-of-the-art vessels and provides high quality commercial and Navy vessel repair. Our Alabama facilities build medium and large commercial ships and barges and as well as repair bluewater commercial vessels, cruise ships and vessels that service the offshore energy industry.

Mr. Chairman, I am proud of the story that Atlantic Marine has to tell. Since the company was founded in 1964, we have built a reputation throughout the world for high quality workmanship, commitment to excellence and for our ability to deliver vessels on time. Atlantic Marine is currently building large 150,000-barrel articulated tug/barge units (ATBS) and is marketing even larger units with a capacity of approximately 250,000 barrels. Atlantic has also entered into a joint venture agreement with Samsung Heavy Industries and Conoco which will give us access to Samsung's large shuttle tanker design and building technology so that we can build shuttle tankers for Conoco and others to operate in the Gulf of Mexico. We plan to use the experience we've gained from building very large tank barges and the expertise obtained through the Samsung joint venture to enter the large commercial shipbuilding market.

Atlantic Marine is not alone. There is a highly competitive shipbuilding industry in the U.S. today building small and mid-sized vessels such as workboats, barges, vessels that service the offshore energy industry, ferries and small cruise ships for commercial and government markets. The small to mid-sized shipyards are aggressive, eager and look forward to the opportunity to tackle larger projects.

Unfortunately, the state of the industry with regard to large commercial ship construction in the U.S. is not as bright. Since the United States unilaterally eliminated the Construction Differential Subsidy (CDS) program in 1981, we have seen America's share of the international shipbuilding market drop from 9.5 percent to less than 0.5 percent today. At the same time, America watched the Asian countries increase their subsidization rates and capture 83 percent of the international market share. European countries continue to subsidize their shipyards, but at rates lower than Asian countries. The European market share has plummeted from approximately 30 percent to less than 15 percent today.

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