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plans related to non-U.S.-flag ships, bulk carriers as well as tankers, that would be necessary in case of a national emergency to continue the input of goods to the United States that the Navy has permitted MA to go forward with?
Mr. WOOLSEY. I will.
FOREIGN FLAG SHIPS SERVICES In connection with securing the services of ships registered under foreign flag but owned or controlled by U.S. citizens, MARAD has several methods of assuring commitment when needed. These methods include conditions attached to war risk insurance binders and permits to register under foreign flag. We would defer to MARAD to provide the details of their program.
Mr. McCLOSKEY. I understand it is a MA program, but it seems to me that it falls within the national security, and your responsibility, and I would like to have a summary from you of just what ships will be available, and under what programs, and with what degree of certainty, and in what places in the event of a national emergency, say the Iran situation, or the Straits of Formosa require an expeditionary force.
Mr. WOOLSEY. This is non-Union flag?
This is in response to your recent letter to Mr. Woolsey concerning his appearance before the House Merchant Marine Subcommittee in connection with the Maritime Administration Authorization Bill for FY 1980.
In accordance with your request, I am attaching a copy of the Summary Record of my meeting with Mrs. Kreps, Secretary of Commerce, on 12 January 1979. Concerning your questions on shipyards, I am attaching three additional enclosures which should be responsive to your needs.
With respect to your question on foreign-flag shipping, we understand that the Merchant Marine and Fisheries Committee was provided in April 1977 with a study prepared by the Joint Chiefs on the utilization of the Effective U.S. Controlled (EUSC) Fleet. The EUSC fleet consists of U.S. owned or U.S. controlled ships of foreign registry which are subject to call for the use of the U.S. government. Sealift resources identified in the Joint Staff study included the EUSC fleet as one of the several sources of sealift for reinforcement of Europe. Department of Defense (DoD) planning for contingencies includes the use of EUSC assets, as necessary, based on the availability of U.S.-flag shipping. EUSC sealift envisioned is minimal, and is comprised of tankers. There is presently sufficient U.S.-flag tanker capacity to support DoD needs for a NATO contingency. However, there is the likelihood of a requirement for EUSC shipping to carry sufficient petroleum imports to meet national security requirements. While all EUSC ships might not be needed or necessary under contingency conditions, we have no reason to believe that a significant portion would not be made available if required.
Summary Record of Meeting between Mrs. Kreps, Secretary
1. The meeting was held beginning at 1530 in Mrs. Kreps' office, Room 5851, Department of Commerce Building. The following individuals were present:
Mrs. Juanita Kreps, Secretary of Commerce
Mr. Robert J. Blackwell, Assistant Secretary
Mr. W. Graham Claytor, Jr., Secretary of
Mr. Everett Pyatt, Principal Deputy
Mr. William W. Kinkead, Director, Transportation
2. The purpose of the meeting was to discuss matters of mutual interest related to ocean shipping, shipyards, and related maritime matters. There was no formal agenda. A summary of the matters discussed follows.
3. The general condition of the industry was reviewed including the shipyard order book, the condition of berth line operators, and the constrained Navy budget. The contingency needs of the Navy were generally reviewed with respect to RO/RO ships and vessels for the carriage of non-self deployable aircraft.
4. Plans for the Ready Reserve Fleet (RRF), a portion of the National Defense Reserve Fleet (NDRF), were reviewed. The possibility of the addition of some 4 newer break-bulk ships to the RRF on the West Coast was considered. 5. The authority for the inclusion of National Defense Features (NDF) on ships constructed with Construction Differential Subsidy (CDS) was discussed. Broadening of the CDS authority to include retrofit and stockpiling of materiel was considered.. MARAD is preparing proposed legislation which, will be supported by the Navy. In the meantime, satellite and high frequency communication equipment capability is being specified where authorized as NDF.
6. Mrs. Kreps and Mr. Claytor agreed to meet at approximately six-month intervals to review the progress of the NavyMaritime Policy Board as well as matters of mutual interest and concern. These meetings would of course be in addition to the quarterly meetings between Mr. Claytor and Mr. Blackwell.
had, together with production delays and manpower problems dating from the early seventies, produced a virtually, I will not say virtually—an extraordinarily serious situation for us with the three yards that do the lion's share of our business in the Navy' in constructing combatants.
Those-all three sets of-claims, after very lengthy and difficult negotiations, were settled, the latest one last fall. I believe that it is fair to say that Secterary Claytor's primary focus on improving the situation, in at least those three shipyards, was related to, or has been to this point, related to the claim settlements, the management changes and contracting-type changes that went along with those settlements, and trying to insure that sort of thing does not happen again.
Mr. MCCLOSKEY. Now, let me sum up that answer. I asked you what steps and programs have been considered to revitalize the shipyards. I asked because of the testimony on page 1, that you viewed with misgiving, the stagnant condition of your shipyards.
And your answer has been that for 2 years, the Secretary's primary concern has been with settling claims.
Now, settling claims scarely contributes to end the stagnant condition of the shipyards. I would like to ask again, what programs or steps is the Navy considering to revitalize these stagnant shipyards which you view with alarm?
Mr. WOOLSEY. I disagree. I think the management changes and the contract type changes that we instituted along with them were an important feature, with respect to those three yards, of trying to do away with at least some of the construction stagnation that had occurred.
Mr. McCLOSKEY. All right.
What are the number of shipyards engaged in the construction or repair of U.S. ships?
Mr. McCLOSKEY. I would hate to think this silence indicates that the Secretary of the Navy does not know how many shipyards we have.
Mr. WOOLSEY. I wanted to ask, Congressman, whether the nominal figure that we usually use, around 26 or 27, includes the Navy shipyards or not. It does not. So I would say 32 or 33.
Mr. McCLOSKEY. Mr. Secretary, in addition to the claims in the three yards that do the lion's share of the work, what steps or programs is the Navy considering to revitalize the other yards?
Mr. WOOLSEY. Are you including the Navy yards in that, Congressman?
Mr. McCLOSKEY. Whatever yards you were referring to in your testimony.
Mr. WOOLSEY. All right.
We are trying, and with respect to the yards with which we have direct responsibility for investment
Mr. MCCLOSKEY. How many is that?
Mr. WOOLSEY. To improve the capital, the working capital in the sense of machine tooling and utilities at those yards, as best we can, in the current budgetary situation. With respect to the privately owned yards, you are aware, as well as I am, that primary responsibility for improving such matters as capital investment is going to lie with the owners, and that they are going to make those investments based upon the business they perceive being able to get.
From our point of view, the healthiest thing for them, and for the yards that they own, is a vigorous shipbuilding program, for both Navy and the merchant marine.
Mr. MCCLOSKEY. How many privately owned shipyards are presently receiving Navy construction business?
Mr. WOOLSEY. I said the majority is the three yards I described. There are at least another six or seven and overhaul work is done in a larger number, of course. I would have to supply the precise number that is now doing construction work, for the record. [The following was received for the record.)
NAVY CONSTRUCTION IN PRIVATE YARDS Nine major privately owned shipyards are presently receiving Navy construction business. These are Avondale; Bath Iron Works Corporation; General Dynamics, Electric Boat Division; Ingalls Shipbuilding; Lockheed Shipbuilding and Construction Company; National Steel and Shipbuilding Company; Newport News Shipbuilding and Drydock Company; Todd Pacific Shipyards Corporation (Los Angeles and Seattle Divisions).
Mr. McCLOSKEY. So six or seven private yards do major repair and overhaul work?
Mr. WOOLSEY. Yes.
Mr. McCLOSKEY. And you are not familiar with the number that are presently engaged in new construction?
Mr. WOOLSEY. No, I said in addition to the three largest yards, another six or seven are also certainly engaged in construction for us. I do not know the precise number. It may well be a few more than that, because some small auxiliaries, for example, are constructed at a number of places. That is the reason, if I might say so, Congressman, that I have had difficulty from the beginning, knowing exactly what you want, because I do not know whether you are referring, for example, to small boat construction or not.
Ms. MIKULSKI. All of it.
Mr. McCLOSKEY. Let us consider shipyards capable of construction of a Navy ship, destroyer or larger. How many such shipyards, in the Navy's opinion, does this Nation need in order to have an adequate shipbuilding base for the Navy alone?
Mr. WOOLSEY. Congressman, I am going to have to-if you want the specific number-
Mr. McCLOSKEY. Yes, I did want a specific number. I would expect that would be an absolute golden cornerstone of the Navy's program.
Mr. WOOLSEY. I would have to say that what we have now is only marginally adequate
Mr. McCLOSKEY. That is not the question. What is the number of working shipyards necessary, in your opinion, to maintain the national security, shipyards capable of building ships the size of a destroyer or larger?
Mr. WOOLSEY. I will have to make it for the record, Congressman. I will have to make it for the record.