Question #3

What steps or programs is the Navy considering to revitalize
American shipyards?

Response: Presently, the Navy through its new construction programs supports approximately 70,000 of the 168,000 people in the private shipbuilding industry. When the people involved in Navy ship repair and conversion are added to this number, the total is increased by approximately another 22,000. Navy shipbuilding and ship repair therefore supports about 55 percent of the overall private shipbuilding and ship repair industry. This is the Navy's biggest contribution to industry, a workload, that although reduced in recent years, still forms the major portion of the shipyards' business.

The Navy is acutely aware of the ongoing downturn in shipyard workload that is facing our shipbuilding industry. Whereas in years gone by, the overhaul of complex surface ships was almost exclusively done in naval shipyards, we are now beginning to rely more and more on private shipyards to overhaul satisfactorily and expeditiously these ships. Working with these yards we have set about significantly improving the facilities and skill levels needed to accomplish this work. Although at first glance the increase in the numbers of people (up to about 28,000 when the program peaks and levels out) involved in this work may not appear significant, the fact that the increase is concentrated in a new field establishes a wider base from which these yards can seek work. This work will become even more significant to the survival of these yards if the present downturn in workload continues as presently predicted.

Although the overall workload has been declining, the need for highly-skilled craftsmen to do the difficult and demanding shipwork remains. The Navy has been participating in a federal program to expand such formal skills training in the private sector with funding from the Department of Labor's Comprehensive Employment and Training Act (CETA) (Public Law 93203). The Navy with both the Department of Labor and the Maritime Administration formed an interagency committee to explore formally methods to obtain more skilled personnel for the shipyards.

The most promising joint effort involves the proposed establishment of a Job Corps Center and its pilot program of training in the marine trades. Disadvantaged young Americans will live and work at this center for two full years. At the end of that time, they will have received a high school diploma

and the equivalent of at least the first year of an apprenticeship in one of the shipyard trades. They will then be placed in one of a number of shipyards that will bid for their services..

The most significant contribution the Navy can make to the shipbuilding industry is an increased and steady shipbuilding program. Present government priorities have dictated a reduced shipbuilding program. The consistency of the program has also varied as each five year shipbuilding program has differed from the previous one, usually in the form of a reduced program. However, the Navy is doing more careful analyses of proposed shipbuilding programs during the planning process. These analyses indicate how, by either shifting ships from one fiscal year to another or even adding ships, the industry's workload can be more level. This then provides shipyards with a more steady workload of particular ships which in the long run saves money by eliminating many of the costs associated with stops and starts. It also aids the shipyards by simplifying their planning and guaranteeing them a run of ships. This effort is just underway and although it has not affected any ship programs, it has been received well. For several years, extremely large claims have clouded the Navy/industry environment and detracted from industry's ability to produce ships. The claims and supporting documentation were complex and voluminous requiring a significant diversion of both industry and Navy management attention and personnel resources from regular assignments in support of ship construction. Following a number of unavailing and frustrating efforts to resolve differences, intense, determined negotiations during 1978 between Navy and contractors concluded in settlements on all outstanding naval shipbuilding claims. The resolution of the claims has greatly improved the atmosphere within which naval ships are being built and enabling personnel involved in the claims process to return to the business of building ships.

Recognizing that it was equally important to abate the underlying problems and circumstances leading to claims as it was to resolve existing claims, a high level study group was commissioned by the Navy in 1977 to identify the underlying causes of shipbuilding claims and reach conclusions as to how to avoid the sources of claims in future procurements. This study effort, The Naval Ship Procurement Process Study, published an Interim Report in August 1977 which set forth industry and Navy perceptions of the problems plaguing shipbuilding. Following a year of comprehensive study and analyses, the Final Report of the Naval Ship Procurement Process Study was printed in July of 1978. The Final Report delineates the sources of claims and offers conclusions on claims avoidance. The Navy is presently reviewing the conclusions contained in the Final Report and proceeding with implementation or further evaluation, as appropriate.

Question #4

I understand that the Navy and the Maritime Administration have done studies of the adequacy of the U.S. Shipbuilding mobilization base:

a. What were the major conclusions of this study?

b. How much shipbuilding capacity did the study indicate would be needed?

C. Do you consider this study to be final or is further work required?

Response:

a. There have been two Navy/MARAD studies of the U.S. mobilization base for shipbuilding. The first was promulgated in April 1978. The second which was an update of the first and done as a part of the President's Interagency Maritime Study has been completed and forwarded to the coordinators of the Interagency study for review. Although the input data for the second study was slightly changed, the basic overall conclusions remain the same. Essentially the studies indicate that current available U.S. Navy and private U.S. shipyard and labor resources would be marginally adequate to meet requirements during a 90-day intensive NATO-Warsaw Pact War. Drydock availability would be the constraining factor. Steel availability would not present a problem. In the case of a 90-day intensive war followed by 33 months of stalemate with low-level conflict, the studies indicate that shipyard labor and steel could be augmented to meet estimated demands. Facilities, principally building positions, would be a problem. There would be inadequate shipbuilding facilities to accommodate a workload similar to that generated by these assumptions.

b. The answer to this question contains classified information which we can supply if required. However, we understand that the Committee has been furnished a copy of the study.

c. The study is final for the specific assumptions addressed. However, the Navy has recently completed additional work that will further refine the basic data concerning shipping loss rates. Navy and MARAD are prepared to use the new data in_ accomplishing a joint revision of the study.

Question #5

On page 3 of your statement, you mention a recently completed Joint Study by the Maritime Administration and the Navy's Military Sealift Command concerning the civilian seafaring manpower requirements in peace and war in the 1978-1984 time frame.

about.

a.

b.

C.

Please generally describe what this study is all

What were the findings of the study?

What actions have been initiated, by whom, to improve our National Defense Reserve Fleet manpower posture?

Response:

a. Generally, the purpose of this study was to determine if sufficient mariners would be available to fulfill peacetime needs and to man the ships withdrawn from the RRF and the remaining NDRF in a contingency situation. Also there was a question concerning whether the available_crews could meet the activation schedule.

b. This study found that the peacetime workforce is sufficient to provide manpower for peacetime requirements and the NDRF if not decremented by training, leave, hospitalization, etc.

In minor emergencies, the RRF segment of the NDRF can be manned if priority is given and some vacations are curtailed. In national nonmobilization contingencies, the NDRF cannot be manned without priority and curtailment of vacations, retired personnel would be required. Cooperation would be required also as there is no legal mechanism to force employment. Under mobilization and with national emergency powers, MARAD can requisition ships but has no authority to force employment. Not all billets could be immediately filled and there would be problems with steward's department personnel. Our activation scheduled would have to be planned very carefully and adjusted as required from time to time.

C. MARAD has initiated actions with the appropriate labor unions. Therefore, we would defer to MARAD to provide you with a more detailed response. The Navy will be more directly involved when we take up the matter of activation schedules. We are currently planning a review with MARAD and other defense agencies of sealift availability and related procedures.

Question #6

On page 1 of your statement, you inform that "tankers, bulk carriers, and special purpose ships are also vital to our national security".

a.

What national security function do tankers and bulk carriers perform?

b. What do you mean by "special purpose ships", and what national security function do they perform?

Response:

a. We are dependent on imports of over 30 strategic_ materials essential to our economy. Thirty years ago we imported no more than 15% of our total resource needs. Today that has doubled and we would expect it to increase. Our USflag bulk fleet carries very little of our imports. Our USflag tankers carry only 4% of our vital imports. These imports are essential elements of our economy. If we are denied these imports, our national economy cannot provide our weapons and support for national defense. In addition, the private sector must be supported. This, then, is the national security function of tankers and bulk carriers.

b. Special purpose ships such as LNGS, chemical product carriers, ore carriers, and similar ships are essential in the support of our private sector economy and are thus vital to our national security. This is because over 30% of total resource needs must be imported.