Mr. DREWRY. Just one further thing, Mr. Groton. You ment in the one case the 41/2-percent spread. Could you supply for record the spread in the other instances which you mentioned!! page 7 you spoke of the AGS's and then you inserted several d on page 8. I think it would be interesting to have the spread in t cases, which was rather narrow, too, was it not? Mr. GROTON. Yes. I can and will supply for the record the spr in those other cases.

Mr. DREWRY. With the percentage?

Mr. GROTON. I will do that.

Mr. DREWRY. That is all I have.

(The material follows:)

INTERNATIONAL BROTHERHOOD OF BOILERMAKERS & IRON SHIP BUILDERS

Hon. EDWARD A. GARMATZ,

Washington, D.C., August 2, 19

House Merchant Marine and Fisheries Committee,

House of Representatives,

Washington, D.C.

DEAR MR. CHAIRMAN: I wish to thank you for your kindness to me whe appeared before your Committee yesterday to testify in support of HR and its companion legislation.

As you will recall, Mr. Drewry requested that I furnish the Committee the actual percentage figures and money figures which were involved in American Ship/Navy contracts which were lost to Great Britain. The fi that I used in my presentation were those I received directly from Mr. W Jory, President of the Company. I would certainly assume that they w* the actual estimates used by his Company in submitting their bids.

I am enclosing a chart covering all competitive bids between the [ States and the United Kingdom up to the present. You will note that in t bid on 4/28/66, the British were 19% higher than Marinette Marine, From t on, their bids were low enough to get the work. I trust this is what Mr. Dres wants.

If I can be of further assistance, please do not hesitate to call on me.
With best wishes and warmest personal regards, I am,

Respectfully,

PAGE GROTON, Director, BISH

RESULTS OF BID COMPETITION BETWEEN UNITED STATES AND UNITED KINGDOM SHIPYARDS FOR US. M SHIPBUILDING CONTRACTS

1

The CHAIRMAN. Are there any other questions?

Thank you very much, Mr. Groton.

Mr. GROTON. Thank you.

The CHAIRMAN. Our next witness this morning is Mr. Edwin Hood, resident of the Shipbuilders Council of America.

TATEMENT OF EDWIN M. HOOD, PRESIDENT, SHIPBUILDERS COUNCIL OF AMERICA

Mr. HOOD. Good morning, Mr. Chairman and members of the comittee. In my capacity as president of the Shipbuilders Council of America-composed of shipbuilders and shiprepairers as well as allied uppliers in all sections of the country-I have been privileged to apbear before you on many past occasions, and again I appreciate the pportunity to present the views of our membership on matters of mportance and timely significance and to support the pending egislation.

The position stated here also has the endorsement of the Western Shipbuilding Association.

While the primary subject before you in this series of hearings is whether or not the Federal Maritime Administration should be an independent agency, it seems to us that there are certain relevant and underlying conditions which deserve at least equal attention. The concept of an independent agency in its fullest meaning would be ideal for the conduct of many governmental functions which are today submerged in the great mass of a centralized government, and the Maritime Administration is no exception.

Frequently, we become preoccupied with the location of a particular agency on the Federal organizational chart to the exclusion of the basic problem solutions which the established agency was intended to provide. But, I am confident we would all agree that organization and purpose are inextricably interdependent.

Regardless of location on the organizational chart, any agency, bureau, or department can perform satisfactorily-and effectively-so long as four mutually related factors are present-a clear national purpose with supporting policies, people and plans. To carry out a fixed national purpose or goal, precisely stated policies emanating from the highest level in the land, executed by qualified and enthusiastic people, and translated into prudent and realistic plans are a prerequisite to any meaningful action in any area of government.

With respect to maritime goals, there appears to be no disagreement as to what our national purpose is or should be. It has been set forth in the statute books, and reaffirmed many times by the Congress. Yet, every day of further procrastination in the areas of "policies, people and plans" can only result in a further decline of the American merchant marine-a fleet already so deficient that our national purpose is clearly not being met.

Even if our Government were to decide today that the United States, in the interest of national security, must again be restored as a first-class maritime power, the first of the ships badly needed now would not be delivered in less than 2 years.

We of the shipyard industry, therefore, believe that continued debate of the organizational issue without immediate, positive action on the

fundamentals of "purpose, policies, people and plans" can make the present situation more retrogressive. Unless policies are enunciated. people assigned definite objectives, and plans formulated, organiza tional changes will matter little.

In support of the pending bills, however, let me add that the same basic concept was envisioned at the time of enactment of the Merchant Marine Act of 1936. Much of the architecture of that statute is visibly predicated on the philosophy that it was to be administered by an independent agency. And, there are parallels to be seen in conditions now and when the act was written.

Then, as now, our merchant fleet was not adequate to the needs of the Nation. Then, as now, our dedication to a fixed national purpose was somewhat less than complete. There was an uncertainty as to continuity of maritime policy. And, as today, there was insufficient implementation of existing laws.

History has repeated itself. As in 1936, our merchant fleet has been permitted to grow old. Better than two-thirds of our ships were constructed in World War II. Many are past the point of economic desirability and physical exhaustion. Our national defense reserve fleet, which furnished more than 700 ships during the Korean war, more than 150 during the Suez crisis, and 170 for Vietnam, is in even worse condition. Like the World War I Hog Islanders, our reserve of vessels is fast reaching a dead end.

We are caught in the strange paradox that as our foreign commerce increases and as our responsibilities for maintaining world peace increase in scope and distance from our shores, our merchant marine competence declines. The more seapower we need, the less we have!

Can the same analogy be made with respect to our national purpose in outer space and in the atomic energy field? I think not. The evidences to the contrary are overwhelming. Yet, I would remind you that the Atomic Energy Commission is an independent agency. I would remind you that the National Aeronautics and Space Administration is an independent agency.

Both are far-ranging operations with large facilities and annual budgets in the ethereal atmosphere of billions of dollars. Both have reached their present-day stature as independent agencies by reason of "purpose, policies, people and plans." Each to this point in time has had a high degree of encouragement from successive administrations and a high degree of support from both sides of the aisle in the Congress.

These two agencies would seem to constitute an impressive rebuttal to the argument which has been presented earlier at these hearings and elsewhere that independent agencies are drowned in the annual debate for the budget dollar. Obviously, they haven't been, because the de clared national purpose and policy-that the United States should lead the balance of the world in space technology and in the development of peaceful uses for atomic energy-has been effectively implemented by enthusiastic people through appropriate plans and programs.

Our space effort is perhaps a classic example of how an independent agency can succeed with the collective encouragement and blessing of the Congress, the White House, the Bureau of the Budget, and the American people. Under similar conditions, our national maritime effort could also succeed.

As a preface to discussing other matters which have been raised in ne course of your hearings, let me say that I have never heard the lightest suggestion that our nuclear power plants should be built broad. Nor do I recall any proposals from official sources that our stronauts be required to reach the moon aboard space vehicles manuactured in other nations. The logic of insistence on domestic products an be easily rationalized. And, it is not a convenient or expedient raionalization. Simply stated, we want to guarantee that our national purpose and policies in these sensitive fields are achieved with people, plans and programs as well as production facilities-under our own urisdiction.

Yet, the Congress is now being asked to endorse an entirely different standard for the construction of merchant ships to carry cargoes and material which are essential to our economic growth and national security. The differentiation may be only slight to some, but apparently to many Members of the Congress and to the overwhelming majority of the maritime industry, both labor and management, it is extremely meaningful.

U.S. shipbuilders are asked to approve the export of contracts and jobs to other countries. This request introduces doubt concerning the depth and longevity of our national purpose in maintaining, indeed restoring, the United States as a leading maritime power. This doubtfulness may be unfounded, but the evidences of fixed or consistent intentions on the part of successive administrations with respect to the construction of merchant ships have been sadly lacking over the past decade.

You have been told that the maritime program the administration would like the Congres to approve contemplates the construction of 30 ships per year in U.S. shipyards and a not clearly defined additional number in foreign shipyards, though as was developed at your hearing last Tuesday, the arithmetic of the latest proposal is most confusing. The most recent figures specify about 12 ships to be built annually in the yards of other countries.

Again, while no such 30:12 ratio applies with respect to reactors and space vehicles, it is important to emphasize that the U.S. shipyard industry has today the capability to build more than those 42 ships per year without an overstimulation of capacity. This estimate has been confirmed through studies by an independent research group.

On the other hand, who can say whether or not we have overstimulated our capacity to build space vehicles? Some experts contend that too much of our technical resources and professional manpower are being devoted to this effort, and that the real impact will not be felt for years. Even so, it is important to recognize that we went into a national space program with only limited specialized production facilities, without a reservoir of specially trained technicians, and without any concrete ideas as to how far we might have to go in both areas.

You have been told, by administration spokesmen, that if the Congress "were to say there would be no building foreign, then it, the administration, would have no hesitancy or difficulty in carrying out the provision of that law." To this, it hardly seems necessary to point out that existing law-the Merchant Marine Act of 1936, as

amended-prescribes that there shall be no foreign building and that all vessels whose operations are to be subsidized with American taxpayers' funds or are to receive other preferential statutory privileges will be constructed in U.S. shipyards

While that portion of the law which prohibits foreign building of subsidized U.S. ships has been carried out, successive administrations have been most ineffective in meeting the basic purpose of the law-to build, maintain and operate a strong, modern U.S. Merchant Marine.

The fears of our membership with respect to foreign building are predicated on this kind of evasion of the law of the land. If the option of foreign building were written into law, as has now been advocated by the Secretary of Transportation, an opportunity for expedient avoidance of U.S. building would be ever present for utilization.

Already, there has been testimony before you concerning "the competing demands for the Federal dollar," and those "competing demands," as has been demonstrated, could in the future override under special circumstances the well-intentioned motives and commitments of the past. As a case in point, the prescribed ship replacement program for the subsidized operators is now about 100 ships behind schedul by reason of an insufficient level of Federal appropriations-a situa tion which has been cumulative and which can no doubt be attributed to "competing demands for the Federal dollar."

Furthermore, it is our considered belief that any program calling for the construction of 10 ships in U.S. yards for every four ships to be built in foreign yards, or vice versa, could lead to considerable confusion and administrative delay. Under this ratio, how could an operator who is to receive Federal subsidies or other governmental financial assistance anticipate whether his ship would be built here or abroad?

In the latter event, how could he anticipate in which foreign country his ships might be built-a factor which could significantly affect price, delivery, and financing? How could he know with any degree of certainty whether the redtape inherent in any such arrange ment will be surmounted in sufficient time to insure that his ships will be available when needed? How could he arrange his financing on any thing but a contingency or tentative basis? Will he be permitted to use tax-free construction reserve funds for foreign contracts? How can he be confident that foreign-built ships will conform to all U.S. regula tory requirements, Maritime Administration specifications and Ameri can standards without significant increases in prices? These are pertinent questions which have yet to be answered.

The former Maritime Administrator, the Honorable Nicholas Johnson, in testimony before your committee on April 7, 1964, provided some interesting observations on how many other countries disdain a mixture of domestic and foreign shipbuilding. He said:

Major shipbuilding nations generally build all, or almost all, of their tonnag for operation under their own country's flag. Ships which are to fly the flag of France, Italy, West Germany, Japan, and the United Kingdom are almost all built within those countries. Norwegian flag operators buy substantial tontage outside Norway evidently because Norway does not have sufficient shipbuild capacity to build all of the ships that will fly the Norwegian flag.