Изображения страниц

changed. When MSP was enacted, all of these companies were American citizen-owned companies. Sealand was one of the biggest, strongest American companies.

APL, again, completely American owned-all of these companies-and what else? We all worked for the same companies. These Section 2 companies were part of the operating entities that were these strong American companies.

In the interim, both APL and Sealand have been sold and, in addition to a number of others, leaving only my friend, Mr. Johnsen, here as the true American citizen.

So everything has changed of late. And we have to address a modern world and make some compromises that will protect both the security of the United States and induce continued availability of the kind of networks that these two companies run.

Mr. ALLEN. And let me make sure, if I could-I will come to you in just a moment, Mr. Johnsen-for Mr. Bowman and Mr. Clancey, as I understand the heart of your argument, you are saying you have these middlemen that you are paying X number of million dollars per year. And you ought to, I think in your words, Mr. Clancey, you would like to operate the ships yourselves so you would have more money to invest in new ships. And that is, as I understand it, the heart of your argument.

I want to prioritize this and make sure I understand where you are coming from.

Go ahead.

Mr. CLANCEY. It is money; it is synergies; it is control. And it is the focus on our strategic planning as we go forward. If we are going to re-capitalize the fleet and build new technology, we would like to be able to control it.

Mr. ALLEN. Mr. Bowman.

Mr. BOWMAN. I would hate for this to be only about money. It is not only about money. It is about the question of, as Mr. Clancey said, controlling your own ships. After all, the way the structure now works, APL and Sealand and the other companies in their position have to invest in the ships, give them to the Section 2 citizens and then get them back.

What sense does that make when at the same time these same companies are entrusted by the Department of Defense in their pre-positioning forces, where both our ships are, where we carry military equipment ready to go, completely at the disposal of the Defense Department and they trust us. It just does not make any


Mr. ALLEN. Mr. Johnsen.

Mr. JOHNSEN. Mr. Allen, I just wanted to say that we should look at the existing legislation because we, as Section 2 citizens, saw that way back in 1996 when there are already documentation citizens that are eligible. They just put a priority system. Priority one is Assistant Section 2 and if there are no Section 2s, then you go to documentation.

So, from a practical point of view, what we are talking about, from my point of view, as a Section 2 citizen, I wanted to try to, quite frankly, narrow it. And I wanted to say, "Okay. We have got these 28 or 30 ships. Let's grandfather those, but let's go back to Section 2."

That has been my theory here, because I do not back away from the hesitancy factor because I do not mind telling you about a year ago I had the hesitancy. But all of these people know about it. But I said, “Okay. I have to look at reality and where we are. And the U.S. Government has to look at reality as to what has been done." So what is the practical solution? Confine it to where we are and then grandfather what we have, but then go back to Section 2 citi


Mr. ALLEN. Okay. All right.

One more question for Mr. Truchan and Mr. Keegan.

Mr. Bowman and Mr. Clancey were making the argument that our companies are so large that we have an infrastructure in other parts of the world that we count on to deliver materials that, you know, where the delivery does not finish, you know, right in the port. They have transportation terminals.

Do you have any response to that argument? That is just an open-ended

Mr. TRUCHAN. Well, under the present arrangements in the TRANSCOM-the VISA program, in stage one and two, we use the infrastructure of, in my case, APL to deliver the products to the various countries. In stage three, we become the servant of the United States government. if the United States government has another destination for the ship, it is our responsibility to go ahead and take over that responsibility.

Mr. ALLEN. Anything to add, Mr. Keegan?

Mr. KEEGAN. Yes. I think, while some of the larger carriers, the global carriers, have some of their own facilities and lease facilities, there are many terminals around the world that are common-user facilities. Companies like ours could go there with a contract, sign up to use those terminals.

The intermodal system in the U.S., which they claim is very important, is not owned by them, it is owned by the U.S. railroads. And it is operated by the railroads. And it is available to, you know, one on-come one, come all, as long as you can pay.

The computer systems that are needed in the systems, you know, those systems are available in place today to monitor and track. And, frankly, our systems would be based in the U.S. where any of the global carriers, their computer systems are based on offshore overseas locations, whether it be China or India or wherever. I still think you have more control there.

And I think containers, themselves-people talk about where are you going to get the containers. They are available on a spot basis anywhere in the world from leasing companies. So it is a system where, you know, you can put that together, if necessary, in a very, very short time if needed.

Mr. ALLEN. All right.

Any response, Mr. Clancey, Mr. Bowman? I will give you the last word.

Mr. BOWMAN. If something happened in the Middle East, we own the terminal at Algiers. We own the terminal in Oman. Our own people there, we have U.S. citizens there.

Going out on a 24-hour notice and getting a terminal is preposterous. Any terminal in the world-let's say Kwai Chung in Hong Kong-I guess there is no room. All of the priority on all of the

berths is taken. Going out and leasing 50,000 pieces of equipment and putting it into a tracking system in-you would need 5,000 people to track the equipment. You need dispatchers. You need gate people. You need truck drivers. You need train drivers.

And certainly, the American railroads own the network. But, you know, it is our flat cars and our intermodal people that dispatch the trains and pull them back and forth in the United States. They just make the highway available to us.

Mr. ALLEN. That is fine.

Thank you all very much-appreciate it.

Yield back, Mr. Chairman.

Mr. HUNTER. Thank you, Mr. Allen.

Just one question here, but it is a $64,000 question for everybody. Embedded in this so-called compromise is a $2.1 million to $3.5 million increase per ship. Why do you get-that is a pretty substantial increase.

What is your best one-sentence justification for that increaseother than we all agreed it would be good? [Laughter.]

Mr. JOHNSEN. We are, Mr. Chairman, we are, all of us, competing day in and day out with foreign competition that have costs that are materially below the level. They do not have income taxes to the sailors. They do not have corporate taxes, et cetera.

And I can tell you that the difference, and we do not try to make it just. The difference is one thing and another, but the difference between our operating in an American environment and operating against a competitor is more than that; there is more than $3.5 million.

Mr. HUNTER. Okay. So you think it is one thing Rusty suggested is tax breaks for the crews might help to some degree.

Mr. JOHNSEN. That will help somewhat, yes. A tax break for the crew will help somewhat, a tax break for the corporations. the British, for instance, have just enacted a tonnage tax, which has helped get flags on the stern of the ship with the union jack, you know. Mr. HUNTER. Okay.

Well, gentlemen, thank you so much.

Oh, Mr. Taylor has another question.

Mr. TAYLOR. Mr. Clancey, I have a question.

Mr. CLANCEY. Yes, sir?

Mr. TAYLOR. Is Maersk a corporation?

Mr. CLANCEY. Maersk, Inc. Is a corporation. And

Mr. TAYLOR. Publicly traded?

Mr. CLANCEY [continuing]. AP Moller is a publicly traded company. It is two separate companies. In Denmark it is publicly traded. There is a thin float, about 10 percent.

Mr. TAYLOR. Okay. What would happen if the guys from Hutchinson showed up and offered substantially more money per share than the present owners?

Mr. CLANCEY. The owner, who owns 90 percent, would say, "How much do you want for your company?"

Mr. TAYLOR. The reason I ask that, Mr. Clancey, I am aware of at least I was very much impressed in a dinner with some Norwegian container ship owners when they talked about, when they saw the rise of the fiddler, the fall of Norway that they shipped, they basically told all the ships to head for America.

But I am also aware, that around 1936, when Franco revolted against the Spanish Republic, that American oil tankers in route to Spain delivered their cargo to North Africa to help him instead of the Spanish government that paid for the-so there is historical precedence for guys you are counting on to switch sides on you, depending on who they think is going to win and where the money is.

I would hate to have our country as vulnerable as the Republic of Spain was in 1936.

I will just leave it at that.

Mr. CLANCEY. I am not familiar with that. I just know where-
Mr. TAYLOR. It is in the history books.

Mr. CLANCEY [continuing]. The sentiment of this company is, and also that Maersk Line, Limited is controlled by Americans. And the people from Denmark cannot tell that three-star admiral what to do.

Mr. BOWMAN. That is the problem. The devil is in the detail.

The company that runs the ships are American companies, in our case, headquartered in Delaware and right here in Washington. The boards are controlled by these independent American citizens. And even if the ultimate parent took the view that you suggest, it could not be done, with respect to the American flagships.

Mr. HUNTER. How about if the stockholders, though, have the ultimate vote on this.

Mr. BOWMAN. No, the board. In a corporate entity, the board controls the corporation. And the board, these independent directors cannot be replaced without the consent of the Department of Defense.

Mr. HUNTER. Well, now wait a second.

Mr. BOWMAN. That is what

Mr. HUNTER. Wait a second, though. In the corporation, if a majority of your stockholders want to replace the board, can they replace them?

Mr. BOWMAN. No, because the Department of Defense says you may not replace the independent directors without the consent of the Department of Defense. There are other directors that are representative of the foreign owner. They can be replaced.

Mr. HUNTER. Well, they can if they want to jettison the program. Mr. CLANCEY. What do you mean?

Mr. HUNTER. If you have got a foreign owned corporation, that corporation has not for here, for now and forever vested its power irretrievably in the United States Department of Defense.

Mr. BOWMAN. As long as it is a defense contract, I guess.

Mr. HUNTER. Well, precisely.

Mr. BOWMAN. Yes.

Mr. HUNTER. Obviously, if you have decided to go with the enemy, I think we can presume you have probably broken the contract at that point, right? [Laughter.]

Mr. BOWMAN. But my point is that it would take a long time to get that done.

Mr. HUNTER. Okay. We will concur it would take a while to do that.

Mr. BOWMAN. Right.

Mr. HUNTER. We have got to go to this other panel.

Mr. BOWMAN. Yes, sir.

Mr. HUNTER. But just one last one real fast one here.

Mr. Keegan, do you agree with this idea that there is a lot of margin in this $10 million, or so, contract with Maersk?

Mr. KEEGAN. No sir, I do not think

Mr. HUNTER. Do you think most of it is cost and there is a small profit, but not a lot?

Mr. KEEGAN. There is a very-there is a small profit. And I can tell you what the profit is, if you would like that.

Mr. HUNTER. Go ahead.

Mr. KEEGAN. But Mr. Clancey would have to waive confidentiality for me to do that. We have a contract. That is okay?

Mr. CLANCEY. Well, we are waiting for the courts to give usMr. HUNTER. We have got lots of congressmen that want to pick this contract up extraordinary-congressmen. [Laughter.]

They are waiting anxiously to hear this.

Mr. KEEGAN. It is not-it is $216 per day, per ship. We are paid to manage those ships, the management fee.

Mr. HUNTER. Okay. So how much of that is-how much of the fee, roughly, in percentage, is profit?

Mr. KEEGAN. That is the profit, $1.5 million if you keep all the profit. The rest of it is for operation.

Mr. HUNTER. Okay.

Mr. KEEGAN. The rest of the money, $7 million, is-85 percent of that, sir, is for salaries.

Mr. HUNTER. So that must be, basically, those facts must have been put out when the initial negotiation took place

Mr. KEEGAN. Sure.

Mr. HUNTER [continuing]. That ended up, that resulted in this agreement.

I take it, if we reauthorize MSP a new agreement, that that point, by the contracts own terms, has to be struck. Is that right? Mr. CLANCEY. Yes.

Mr. HUNTER. If an MSP is-are you folks prepared to see that happen, Mr. Keegan?

Mr. KEEGAN. No, our company would be out of business, sir.
Mr. HUNTER. Well why is that?

Mr. KEEGAN. Well, there is a contract clause that says if a law changes, our company no longer exists. They can operate these ships.

Mr. HUNTER. Well, but what they would have to-but if we kept the requirement that you have got to have the American citizen, they would have to

Mr. KEEGAN. That is correct, sir.

Mr. HUNTER. They would have to maintain an American citizen. Mr. CLANCEY. It could be a congressman.

Mr. HUNTER. You could tell Mr. Clancey all those mean things you said about him do not count. [Laughter.]

I am just kidding, Mr. Keegan. We have got to have a little humor in this business.

Mr. Clancey, what is your

Mr. CLANCEY. No, I just said that if that was the case, it could be an ex-congressman.

« ПредыдущаяПродолжить »