In 1950 and again in 1961 Administration reorganization of the Marita Commission/Administration weakened and depleted that organization. (z action took away its independent status and transferred it to the Comme Department, the other action split its identity and deprived it of any or authority. This must not be allowed to happen the third time. With the pasage of the Authorization Bill, the establishment of the M time Administration as an Independent Agency, and a shipbuilding pra the United States Merchant Marine could regain its strength and prestige The Industrial Union of Marine and Shipbuilding Workers of AmericAFL-CIO strongly urges that the Congress pass the legislation contained is t over 100 bills reestablishing the Maritime Administration as an Indepe Agency. Respectfully yours, ANDREW A. PETTIS. THE HOUSE MERCHANT MARINE COMMITTEE, Washington, D.C. EAST ORANGE, N.J., July 4, 196 GENTLEMEN: Information in the news and trade media indicates that corside?: ation is being given to authorize subsidized shipbuilding outside of the lite States and in this connection I respectfully present some comments perti: to the subject. Using statistics shown on pages 83 and 98 of the June, 1967 Marine Engineeri Log it is noted that the United States operates the largest number oceangy vessels but we rank only in tenth place as a shipbuilding Nation with Fran West Germany, East Germany, Italy, Japan, Norway, Sweden, United King and Russia exceeding our construction tonnage. Aside from domestic economic factors it seems out balance that we, the last ship operating nation are at such a low level as a shipbuilder. With construction of merchant ships in American yards at a low level con par to the activity in major shipbuilding countries it seems illogical to consider ste that will reduce our shipbuilding activity to a still lower level. Diverting construction to foreign shipyards will be reflected in decreas shipyard employment and American industry will also be affected in a sa manner as machinery and most of the extensive equipment applied in ship o struction will be procured outside of the American industrial structure. An active American shipbuilding industry supplied with equipment of domest production serves the multi purpose of American ships built in American yard with the money for labor and material spent in this country. Also, an acto shipbuilding capability is an important factor in our defense structure. It is understandable that some sectors within the shipping industry des construction in foreign yards due to lower costs and there is nothing to pre-f such construction. As a matter of fact, a large volume has in the past and current is under construction. The additional cost of American built ships has an overall benefit to T domestic economic structure and adds a measure of security to our country well. I firmly believe that American shipbuilding is of such importance to th overall welfare that it should be built up and construction work should not be permitted to be placed abroad. Very truly yours, JUSTIN WEIL, PE TRANSPORTATION ASSOCIATION OF AMERICA. Hon. EDWARD A. GARMATZ, Chairman, House Merchant Marine Subcommittee, DEAR CHAIRMAN GARMATZ: Since the question of where to place the Mariti. Administration in our Government's organizational structure is now being e sidered by your Subcommittee, I should like to express the views of the Tra”portation Association of America on this issue. The TAA Board of Directors has adopted the following policy position on the over-all question of centralization of non-regulatory transport functions within he newly created Department of Transportation: "The Transportation Association of America favors the establishment of a Cabinet-level Department of Transportation within which would be centralized the major non-regulatory transport functions of the Federal Government which the Executive Branch of the Government is empowered to administer. The Association strongly opposes any transfer to such a Department of economic regulatory functions, such as control over rates, entry, and routes, from the Civil Aeronautics Board, Federal Maritime Commission, and the Interstate Commerce Commission, which should be independent agencies directly responsible to the Congress." In line with the above policy, TAA is in favor of the transfer of the Maritime Administration from the Department of Commerce to the Department of Transportation. Our basic reason for being in favor of centralizing all of the Government's functions within the Department of Transportation is to provide for a more rational and balanced policy approach to the nation's over-all transportation problems. For the record, TAA is a national transportation policy organization made up of transportation users, suppliers, investors, and carriers of all modes who work together to develop national policy positions designed to maintain the strongest possible transport system in this country under private enterprise principles. If a formal record is to be made of the current hearings on this policy issue, we request that this letter be made a part of thereof. DEAR MR. DOWNING: Your comments regarding construction of American flag merchant vessels abroad, as reported in Traffic World, 22 July 1967, page 20. make a lot of sense, in my opinion. It is a subject which, for lack of time and money, we did not touch in our study of national transportation policy for the Senate. (Senate Report 445, 87th Congress) I cannot understand the absence in public print of what should be a basic element in this discussion. If we need a merchant marine under our flag it must be obvious that we must have a shipyard capability in being for construction and repair in emergencies. The first is not viable without the second. Since legislative history shows we want an ocean shipping industry for various reasons including national security, the corollary is we must support an adequate shipyard industry. This may seem an oversimplification. Events, however, have demonstrated the undependability of allies. Aside from this point I hope Secretary Boyd is successful in his proposal to consolidate maritime activities other than economic regulation into the DoT. If for no other reason, the emergence of jumbo jet aircraft such as the C5A; containerization; and the like, will force consideration of ocean freight in context with air freight and domestic and foreign surface freight. Transportation can no longer be pigeonholed by mode despite the desires of parochial interests for captive policy makers. It would seem feasible to place the Maritime Administration in DoT without in any way affecting existing law regarding qualification for U.S. registry, sabotage, etc. We should not negate the purpose of the DoT because some profess fear of what Mr. Boyd or a successor might advocate but which can only be done by the Congress. To do so disparages the control of Congress over policy matters. Sincerely, JOHN P. DOYLE, Major General, U.S. Air Force (Retired). Hon. EDWARD A. GARMATZ, LABOR-MANAGEMENT MARITIME COMMITTEE, Chairman, Merchant Marine and Fisheries Committee, House of Representatives, Washington, D.C. DEAR MR. GARMATZ: Supplementing our documentation and testimony befor your Committee of recent date, we should like to address ourselves further the matter of building ships foreign for U.S. operation, as well as to the matte of a separate U.S. shipyard subsidy. It is our considered judgment that the Congress should promote a progra.. that will bring into being a large number of new ships in a relatively short peri of time. Neither an absolute prohibition against foreign building nor a to disregard of the legitimate needs of U.S. shipyards for government support w. resolve the dilemma in which the maritime industry, as well as the governmen currently finds itself. We should seek a program of ship construction in US yards that will insure a viable industry for national security. Until an official study and determination can be made of a required shipyar workload, provision should be made for subsidy support of U.S. yards permit construction of 30 ships a year over the next five years as a firm co mitment of the government. With a program of shipyard support of such maga tude, U.S.-flag operators will undoubtedly procure their ships in the Univ. States at world prices, and, therefore, there would be no reason to continue th absolute restriction on overseas procurement of ships by operators, since the could only act as a restraint in the growth of the U.S. merchant marine. Ships constructed outside the United States under these conditions should eligible for U.S.-flag operation in the foreign commerce with all normal privilege including cargo preference trade. The Congress, under an authorization enactment (S-340) should authorize an annual level of shipbuilding subsidy support to guarantee a healthy industr The national interest demands a prompt resolution of this matter, including adequate but separate support for the shipbuilding and ship operating inds tries. The development of a federal program for shipyards should not be allowe to affect legitimate ship operating needs nor thwart the attainment of an effective operating merchant marine. In further support of our position in this matter, we attach the specif detailed section of a recent document entitled "Program Imperatives for Strengthening the U.S. Merchant Marine", dealing with separate support for U.S. shipyads. This document was used by the AFL-CIO Maritime Committ in testimony before both Houses of Congress. It represents also the Lalet Management Maritime Committee point of view. If we can be of further assistance in any way, please call upon us. SEPARATE SUPPORT FOR U.S. SHIPYARDS View shipbuilding in the United States as a distinct industry separate and apart from the operating merchant marine. Provide necessary government subsidy directly to the shipyards without i volvement of the ship operators who order the construction of vessels, Provide direct Federal support for research and development programs dea ing with construction practices and management systems specifically designe to promote efficiency, productivity, and the ability to meet worldwide competitive What is needed is a large-scale infusion of modern ships of various types in the Merchant Marine. The present basis and method for administering shipras subsidies and the failure of the maritime industry to get adequate support for shipyards--make this virtually impossible. Shipbuilding subsidies are intended to enable shipyards to build ships and des liver them to operators at competitive world prices. Under present law, the mu ber of merchant vessels built each year is limited by the amount of Government subsidy provided for shipyards. The procedures imposed by Government on these are built, are needlessly wasteful, complicated, and restrictive. Basic changes he system are needed. he shipbuilding industry is a vital element of our national security. The needs he shipbuilding industry, however, are not necessarily synonymous with the Is of the U.S.-flag Merchant Marine. Programs and policies for shipyards and operations need to be weighed and fostered separately-so that each can be blished with its own indisputable realm of interest. The present commingling overnment policy for these separate-although indirectly related-industries npeding the progress of a U.S.-flag fleet and at the same time is failing to ire a healthy nucleus shipyard capability to build commercial ships. easures urgently needed to correct this situation include: 1) Adoption of a national policy and program for the support of an adequate building industry for commercial-type ships-separate and apart from the cy governing the U.S.-flag operating fleet; 2) Application of construction subsidies directly to shipyards cost differals, without involvement of ship operators, and in such a manner that will inate the Government as a third party to shipbuilding contracts, thereby blishing between the shipbuilder and the ship operator a relationship as arate and distinct as the one that exists between the aircraft manufacturing I the airline industries; 3) An authoritative determination by the Government of a shipyard workload ded to implement national policy in its relation to the shipbuilding industry. pproximately 85% of the operating fleet and 100% of the reserve fleet are her totally obsolete or on the verge of becoming so. The only practical solution large-scale infusion, over an extended period, of new and modern ships into merchant marine. Central to such a solution is the need to accelerate commercial shipbuilding lers by U.S.-flag operators. Under existing United States law, the only economlly possible way for U.S.-flag operators to order new and modern ships is to ply for a Construction Differential Subsidy to permit a U.S. shipyard to build vessel at competitive world prices. Further, as the law is administered, only 300 ships owned by operators receiving Operating Differential subsidies are alified to be built or replaced in this manner. As a result, this is the only segnt that had made substantial progress under the provisions of the 1936 Act, t even the replacement of these ships is hampered by the administration of the t. Unless there is a change in the law or its administration, the remaining 600 ssels in the U.S.-flag fleet have no way open to them to obtain replacements at rld competitive prices. When it is understood that the purpose of construction-Differential Subsidy is equalize shipbuilder's costs with those of his foreign competitors to permit m to sell ships at world competitive prices: it becomes clear that the U.S.-flag ip operator has been involved needlessly in builder vs owner relationships that ve no relationship to ship operations nor are they beneficial to the ship operar. The need of the United States for a basic shipbuilding capability and the need r an effective U.S.-flag Merchant Marine are indirectly related--but no more an Boeing Aircraft Company is related to American Airlines. They have been lowed to become so intermingled under present law, however, that the inade iate appropriations for shipyard subsidies have become a stranglehold on the erating merchant marine. The proposition of separating and distinguishing U.S. Government support for ipyards from the support needed for a U.S.-flag operating Merchant Marine as been recommended and endorsed by the Presidential Maritime Advisory ommittee. The same proposal has also been made by the American Merchant astitute (and other maritime groups). This is, in fact, a common-sense ap roach to a principal Merchant Marine problem, 2 (Whereupon, at 12:20 p.m., the subcommittee was recessed subject o the call of the Chair.) Report of President's Maritime Advisory Committee, November 22, 1965 (Revised Nov. 7) Ship Construction. Page 44. A New Maritime Policy-American Merchant Marine Institute. Ship Construction. age 5. NOTE.-Much of the comments in this section are adopted from a paper by Admiral Vilfred McNeil. |