The future of US shipbuilding

The future of US shipbuilding

Commercial shipbuilding in the United States was once a mighty force. Following World War II, the industry began kicking out dozens of ships each year, and this created jobs in shipyards and on ships.

Shipbuilding was, and still is, an industry protected by the Jones Act. The law says that any ship carrying goods between U.S. ports must be built in an American shipyard. Thus, any new commercial shipbuilding order is bound to benefit U.S. workers.

Here at Out2Sea, we know that the American merchant fleet is getting old. We fully support a strong domestic shipbuilding industry that creates jobs for merchant mariners and workers on shore. We also believe a strong shipbuilding industry is important for our country’s economic and national security interests.

So why the decline in US shipbuilding?

Up until the 1980s, American commercial shipbuilding dominated the global market. Our nation built many of the ships that criss-crossed the globe. Now, US ships claim a puny one percent of the international market.

So what changed? For starters, U.S. domestic policy noticeably shifted in the 1980s. When the Reagan administration took power in 1981, it ended government subsidies to U.S. shipbuilders. To be fair, the idea was to open the industry up to the free market, not to gut the commercial shipbuilding sector.

shipyard

A strong shipbuilding industry is crucial to both national security and the economy.

But unfortunately, the administration didn’t secure similar action from other nations that were building ships at the time. This left the U.S. shipbuilding industry in an awkward situation: it suddenly had to compete against several countries who were subsidizing their shipbuilders.

Shipbuilding decreased drastically in the United States as a result. It was accompanied by another important (and tragic) decline: the number of seafaring jobs. The U.S. Merchant Marine witnessed its international commercial traffic fall from 50 percent market share in the 1950s, to five percent at the end of the 1980s.

Can commercial shipbuilding recover?

Today, most large U.S. shipyards are engaged in building warships for the Navy. And according to military websites, the Trump Administration has prioritized the building of more naval ships, which could be a boon to shipyard jobs.

But commercial shipbuilding has not received the same preferential treatment, and as a result, many of the major shipyards now have one major client: the U.S. government.

While restoring post-1980s subsidies may not be practical, there are other actions that can determine the future of commercial shipbuilding and push the industry in a positive direction. Any boost to American shipbuilding would have ripple effects throughout the economy. Studies have found that each job created in shipbuilding and repair supports 2.7 jobs nationally.

Cargo preference requirements – similar to those of the Jones Act, but much more far-reaching – could be the boon we need. And with a strong American economy, there are many reasons to believe that cargo preference requirements could help US workers.

The natural gas boom in America is destined to make our nation not only energy-independent, but also a major exporter of liquefied natural gas (LNG). In fact, LNG exports have already begun.

Pending legislation in Congress like the Energizing American Shipbuilding Act (H.R. 5893) could give American shipbuilding the boost it needs. This legislation demands that by 2040, 15 percent of exported LNG travels on U.S. ships.

Legislation like this, when applied to one industry, could make a splash in the commercial shipbuilding sector. But when applied to other sectors, it could make waves. As a model for future policy, it could expand American shipbuilding and create jobs all across the maritime sector.

The lack of a strong shipbuilding industry has forced mariners to work on older ships. Read our coverage about the dangers of older ships by checking out our monthly e-magazine.

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