INDEPENDENT FEDERAL MARITIME ADMINISTRATION

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WEDNESDAY, JULY 19, 1967

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON MERCHANT MARINE OF THE

COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C.

The subcommittee met at 10:25 a.m., pursuant to recess in room 1334, Longworth House Office Building, Hon. Edward A. Garmatz (chairman of the committee) presiding.

The CHAIRMAN. The meeting will come to order.

We will continue the hearings on H.R. 159.

Our first witness this morning is Congressman Leggett of California, who has been a great supporter of the maritime industry.

STATEMENT OF HON. ROBERT L. LEGGETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. LEGGETT. Thank you very much, Mr. Chairman.

Preliminarily I want to compliment this committee on the fine work that you are doing with respect to reestablishment of the United States as a paramount maritime power. I think that the action of this committee is critical. You are to be commended particularly for scheduling hearings on this extremely important legislation-bills which would place our long-neglected U.S. merchant marine on a sound, sensible footing by creating an independent Federal Maritime Administration. My bill is one of the bills in which I join with the chairman as coauthor, H.R. 2822, and regardless of whose bill is acted upon I would like to present some of the principal arguments for prompt, favorable

action.

It has been said that the story of our merchant marine could be entitled "The Rise and Fall of the Savannah in 148 Years." It would be nice if we could say that we have truly progressed since the first U.S. ship Savannah sailed across the Atlantic to Europe in 1819.

Instead, however, we are compelled to report that until this committee intervened the nuclear ship Savannah was to be consigned to "mothballs" after visting only 40 ports and cruising but 130,000 miles. Now, thanks to the wisdom and persistence of this committee, at least we can say that the Savannah remains an active vessel in our sadly diminished merchant fleet.

In a way, the outlandish proposal to scuttle the Savannah is par for the course with today's American maritime program. Labor, management and the present and past administrations must bear their share of the responsibility for the current status of affairs.

Mr. Chairman, no one knows better than this committee the degree rel. of concern in the Congress, and among the American people, over orie Nation's dwindling status in the shipping lanes of the high seas.

I am quick to acknowledge that my concern with the merchan marine and the shipbuilding industry is somewhat provincial. As you may know, I represent the Fourth Congressional District of Califormis which contains the Mare Island Division of the San Francisco Bay Naval Shipyard. Out in the West we learned long ago that we can't be healthy in public shipbuilding unless we are healthy in priv shipbuilding. And to those who charge that shipbuilding know-hor has deteriorated in the United States, I would say look over the nu clear attack submarines Stonewall Jackson, Theodore Roosevelt, A drew Jackson, Kamehameha, Woodrow Wilson, and the latest, Moriano Guadalupe Vallejo (SSBN-659)-all built at Vallejo, which later ship we named after my hometown.

These submarines are true, precise, accurate, and durable instru ments of American foreign policy-and in their quietness and ea bility they have no peer in the free world or the Communist world. Last month in Vallejo we launched the SSN Gunnard, the 14th m clear sub and the 40th submarine built at Mare Island.

The secret of these undersea ships, however, is money-$35 to $ million each for the hulls and in excess of $100 million each for Gover ment-provided equipment. I could also cite the great ships produce by private yards, the nuclear attack carrier Enterprise and the nu frigate Bainbridge, for example. All of these ships are the best in th world and we know that they could be constructed in no other yard public or private outside of the United States.

It was my Mare Island yard during World War II that constructed 392 ships and repaired and overhauled a total of 4,560 ships, Mare Island is also the yard that launched the World War I destroyer Wa in 1612 days.

At the insistence of my Armed Services Committee, Secretary Nitz announced a few weeks ago that Kaiser Industries would shortly con plete a 5- to 7-year, $600 to $700 million naval ship modernization pro gram. Eight or nine naval shipyards will each achieve a 20th centur capability, and I think my home yard will receive modernization the order of maybe $72 million over a 5- to 7-year period.

Moving forward simultaneously with the naval shipyard improve ments I hope will be a modern merchant program for which the Cor gress has waited well over 2 years. Nearly every Member I know has feeling that we should be moving ahead with a radically new maritim program. How are we going to do it? So much has been written an said by so many people-some of it enlightening, some confusing.

We have had task force reports and Maritime Committee reports al all of these thoughts have been capsulated so many times it is difficu to expound a new idea to resolve the problems of building foreign forming an independent Federal Maritime Administration or upgra ing the number of ship deliveries.

Frankly, I believe that there is enough steam or nuclear propulsion the maritime industry to insist on and stimulate the creation of a ne American maritime industry, of space program proportions. We have been thinking large but we are budget programed small at the Feder

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level. I don't need to tell this committee that the Maritime Administration received a total support of $303 million for 1966, $230 million for 1967, and $305 million is scheduled for 1968. It was announced recently that the 1968 funds were up $25 million from 1967 and that amounts were included for 13 new vessels to join our subsidized fleet. This is in the budget. This kind of a replacement program begins no place, ends no place, and will do little to abate bloc obsolescence.

For ship construction to provide for national defense features in the form of construction subsidy this year we have the monumental sum of $106 million and I am sure someone will claim that the $143 million included in the 1968 budget is excessive. Certainly these kinds of budgets are exactly in line with testimony given by Defense Secretary Robert McNamara before my House Armed Services committee and, of course, he testified before your committee. Five years ago his words were as follows:

From a purely military point of view the Reserve Fleet, plus vessels in service, plus the construction program previously outlined appear adequate to our needs. . . . I do not wish to overstate the military requirement thereby providing an umbrella under which a huge shipbuilding program for the Merchant Marine can be justified.

Personally, I think Mr. McNamara is the best Defense Secretary we have had and the best in the business, but on this issue, along with some others, I think he is dead wrong.

We all considered it rather ironic that after making the statement I just quoted the Secretary then should decide to move full steam ahead this year with a program for construction of the so-called fast deployment logistics ships at a cost of $2 billion plus.

To quote Mr. McNamara again, in criticizing our domestic capability to build ships, he said:

Not only does it cost twice as much to build a ship in this country, it also takes twice as long.

He said the reason is not higher labor costs nor less skilled workers so much as the fact that American shipyards are and I quote him again-"generally technically obsolete compared to those of northern Europe and Japan."

I dispute what the Secretary says, but if he is accurate I think he and the Department of Defense are to blame for compressing our American shipbuilding industry from a capability of better than 1,000 ships per year at the end of World War II to last year's dismal record-13 merchant ships delivered and 16 ships ordered by and in American yards.

Outside of submarines, until the release of the nuclear guided missile frigate DLGN authorized 2 years ago, the Navy has not lain the keel of a true capital ship during the last two administrations. This policy has allowed our skilled naval shipbuilding levels to degenerate at one point to 75,000 men while private shipbuilding levels were near 100,000 men.

We have had in years past a true "survival of the fittest" in American shipbuilding with the Government forcing companies to bid at cost and under cost so that they were harpooning each other and the naval shipyards in the competition. We have closed two naval shipvards.

Needless to say, with rare exceptions there have been no contra with profits fat enough for modernization programs. And with t Government spending 85 percent of the shipbuilding dollars in the United States it is no wonder that there has been a severe degree of ed status quo in the industry.

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How ironic it was for the Secretary of Defense to make statements that he did and then to propose a $2 billion FDL shipbuilding predi gram which included $100 million for a new shipyard in the co tract. In my personal indictment of the FDL proposal, I said:

Far better it would be to build a fleet with a function; that is, a true, moder: | fast merchant fleet that would be available on priority call to the Departme of Defense. It is my information that such a fleet could be constructed fr private merchant marine operation in private shipyards and could be available on call to the Department of Defense.

And I would point out the Seabarg and Lash and other ships wit which I am sure that the committee is perfectly familiar; not FDL but certainly ships which could partially discharge the function. The Department would pay an annual rental for the preemptive righ which financial guarantee I am informed would be adequate for pr vate financing and construction.

The proposed pending FDL submission (by Litton Industries, Lockheed an General Dynamics) could be used to develop the required merchant fleet with the full FDL capability. This type of program has real merit. The work wo be spread to all private shipyards or to one on a competitive bid.

No new shipyards would be constructed.

The United States would not get into the merchant shipping business. The ships would be in full operation and operated under the regulations of the Military Sea Transportation Service or Navy Department maintaining perhap a partial FDL capability at all times. Taxpayers' money would be involved at a minimum. The base could be lain for a new modern merchant fleet and the fleet operation would not be construed as a hostile act.

The Merchant Marine Institute estimates that $2 billion, whe matched by an equal amount of private capital, could produce a 2a ship merchant fleet.

As I told the chairman of my Armed Services Committee in a lett I wrote to him shortly after the hearing:

... I, personally, believe that this is the chance of a lifetime for our committ to lay the groundwork for a Merchant Marine as a national defense requiremer' I don't think the Secretary has discharged his obligations in this respect a at all. I believe that if it is worthwhile for us to spend $20 billion to meet Russians on the moon, for which purpose we are not really sure, it is certa worth our while to spend one billion dollars a year to meet the Rusians on the high seas, which constitute four-fifths of the earth's surface.

I would like to see the United States undertake a sealift program of a bill dollar magnitude with the same enthusiasm that we undertake the Space Pr gram based primarily on a national defense requirement. Certainly, the inte gence which we would asquire by means of having large numbers of Ameri ships plying the international trade routes would be invaluable and could not satisfied by foreign crews manning “flag ships of convenience."

As a result of the conference between the House and Senate Ar Services Committees, the FDL program for fiscal 1966 and fiscal 19 was totally removed from the Defense budget.

It is interesting to note, however, that the House Armed Servi Committee commenting upon the FDL program which it propose to curtail substantially-commented in its report as follows:

The committee, therefore, in approving two of the five FDLS requested in this ar's budget does not commit itself to approval of the 30-ship program fore considering any further expansion of the FDL program beyond that commended in the proposed legislation, the committee will want to see an proved program submitted by DOD with respect to

(a) Modernization of naval shipyards.

(b) A strengthened American Merchant Marine.

(c) A continued assurance that none of the ships previously authorized will used in competition with the American Merchant Marine.

The importance to the maritime industry of the FDL program is he fact that Secretary McNamara for the first time is talking about sealift requirement being worth $2 billion. This was the first time at Defense talked of space magnitude dollars in a merchant shipping rogram.

You wonder why you need an independent agency. I would say just ook at the report and the bill that we enacted in the Congress yesteray and for all of the agencies outside of maritime, for railroads, for upersonic transport, for highways, a total of $1.5 billion. I say we eed this kind of money every year in merchant marine development nd if we are going to be fighting with four or five other agencies to hare a $1.5 billion budget I certainly don't think that the adminisration is offering us very much or much of a lure.

It would be tragic if the Defense Department now decided to live vith the congressional action and not to move forward in a new igh priority effort with a beefed up merchant marine to meet thé needs of defense as well as civilian shipping requirements.

It is my understanding that Under Secretary of the Navy Robert Baldwin now has a study favoring a 750 to 950 ship program, tied nto a Defense requirement, on Secretary McNamara's desk. I would hink that this committee ought to have that report because I think you would see some of the thinking in some parts of the Department of Defense which are looking forward to working with the merchant marine in developing a joint use type of ship.

I say if the Soviets can do it so can the United States-it is all a question of postulating a program. The United States with a $760 billion gross national product has twice the economic power of the Soviet Union by any measure of comparison.

California alone with a $90 billion GNP is equal to France, 10 percent ahead of Japan, and by 1975 our State will be leading the United Kingdom and West Germany.

Yet since 1962 the Great Society has built but 87 ships averaging about $100 million in annual Federal cost, whereas the Soviets built 502 merchant ships during the period at a cost of nearly $1 billion per year. As a result 80 percent of the Soviet fleet is less than 10 years old and 80 percent of the U.S. fleet is more than 20 years old.

The Soviets carry 70 to 85 percent of their own commerce. The United States, which accounts for 25 percent of all of the world's ocean commerce, carries but 7.7 percent of that trade in her own American-flag bottoms.

The Soviets employ 9,000 in oceanography while we employ 3,700. The Soviets last year caught 6.5 million tons of fish in near-American waters and also carried on a tremendous amount of intelligence simultaneously. We caught 2.3 million tons.

The Soviets have gone from 1.8 million tons of ocean shipping in 1950 to 9.8 million tons last year and have a projected 15 million tons