Senate Subcommittee Meeting Focuses On Shipbuilding

The Senate Committee on Commerce, Science & Transportation’s Subcommittee on Coast Guard, Maritime and Fisheries addressed shipbuilding needs in an October 28 hearing titled “Sea Change: Reviving Commercial Shipbuilding.”

In opening comments, Chairman Dan Sullivan (R-Alaska) said shipbuilding is a national security issue that the United States “has let slide for way too long.” He cited President Donald Trump’s recent “Executive Order on Restoring America’s Maritime Dominance” and said he was eager to review the policies, investments and reforms that are to be presented next month within the Maritime Action Plan required by the order. This plan, he said, will help “restore U.S. shipbuilding competitiveness and secure our maritime future.”

Discussion included a suggestion to reexamine the Jones Act but not to repeal it, the importance of workforce development and building the maritime sector “for the long haul” through thoughtful pay and benefit packages and funding for construction of tugs, towboats and ferries and not just larger vessels, for quicker benefits.

Sen. Todd Young (R-Ind.) said Capitol Hill now has the three critical elements in place necessary to spark change: White House leadership, appropriated money and bipartisan legislation. When these fundamentals are in place, Young said, ideas can move to action.

The hearing included testimony from four maritime experts: Matt Paxton, president, Shipbuilders Council of America; Jeff Vogel, vice president of legal, TOTE Services; Salvatore Mercogliano, PhD, professor, Campbell University; and Tuuli Snow, talent acquisition and engagement manager, Snow & Company, Inc.

Paxton highlighted the importance of the Jones Act for security and providing a stable market; domestic shipbuilding providing national security; the need for legislation like the SHIPS for America Act to set a national maritime strategy, rebuild commercial capacity and restore resiliency throughout the maritime sector; and recognition that U.S. shipbuilders are disadvantaged by other nations’ subsidies and industrial support.

These “non-market practices,” Paxton said, have created an economic situation and context in which it’s impossible for privately financed American yards to compete. He referenced the U.S. Trade Representative’s Section 301 report describing how China targets shipbuilding dominance through top-down industrial planning. “The result is a textbook case of foreign non-market behavior smothering competitive market outcomes,” he said.

Emulate Private Sector Practices

Vogel said that U.S. shipbuilders can rebuild via new policy initiatives that will strengthen and make manufacturing processes more efficient. He cited TOTE’s experience working with Hanwha Philly Shipyard Inc. (HPSI) to produce the U.S. Maritime Administration’s (MarAd) next-generation National Security Multi-Mission Vessels (NSMV) used for mariner training by the maritime academies. With the NSMV project, TOTE Services was selected as the first vessel construction manager. This arrangement provided opportunities to deliberately reduce government bureaucracies and oversight. Now, the third NSMV will be delivered “on a fixed-price and on-time basis, far exceeding the results of any other government shipbuilding program,” he said.

Vogel asked senators to “explore new ways to encourage private investment in the U.S. shipbuilding industrial base.” Commercial solutions, Vogel said, can introduce new practices into the U.S. shipbuilding industry, restoring American shipbuilding dominance.

‘Re-Examine’ The Jones Act

Mercogliano, in addition to working in the academic field, is a former merchant marine deck officer who worked afloat and ashore for the U.S. Navy’s Military Sealift Command. He teaches at the Merchant Marine Academy, and he has a YouTube channel called “What’s Going on with Shipping?”

One of his top suggestions was to reflag vessels to promote American registry, which he said should include a “re-examination of the Jones Act—not to repeal it, but to modernize its application.” Reflagging, he said, will require “several complementary actions,” including cargo preference laws, government contracts and tax rebates.

He also suggested that since large, blue-water vessels take years to construct, it is important to focus on “modernizing the domestic fleet of tugboats, towboats and ferries.” He said this fleet is aging, posing economic and security risks, and that too few tugs contributed to the mv. Dali hitting the Francis Scott Key bridge in Baltimore and causing it to collapse. Mercogliano said, “A national program to replace and modernize these vessels could provide an immediate boost to domestic shipyards and workforce development while enhancing port safety and resilience.”

Better Workforce, Better Bottom Line

Tuuli Snow is an executive with Snow & Company, which she said is one of the last independent boatbuilding companies in Seattle, “a city that used to be the home of dozens of shipbuilders.” The company builds pilot boats, fishing vessels and tugs. It is building 53 workboats for the Navy. Last year, it built the first hybrid vessel for the Department of Energy.

Snow’s comments focused on workforce development and retention. Five years ago, her company had 30 employees, but now it has more than 100.

“A lot of our growth has been due to a deeply innovative change I have made in focusing on hiring from non-traditional avenues,” she said. “We hire veterans, immigrants, refugees, individuals coming out of prison or starting work release and seek people from communities that have traditionally been overlooked or excluded from the maritime industry.”

She told the subcommittee, “I play for the maritime long haul, not just our company, investing my time and energy into building a better industry, not just a better business.”

Snow said too many people are unaware of the opportunities in shipbuilding at the same time that many young people are choosing a trade or skilled craft right after high school, rather than in college. Many older skilled workers are ready to retire, but there aren’t enough young workers ready to take their places, she said. Snow compared this situation to an hourglass: heavy on entry level and heavy on expert, but less concentrated in mid-level tradespeople.

Snow asked the subcommittee to focus on education for young workers, adults looking to learn new skills and in marginalized communities. This focus, she said, “will breathe new life, creativity and innovation into this industry.”