THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, August 3, 1994 TAG: 9408030403
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: STAFF AND WIRE REPORT
LENGTH: Medium: 56 lines
Newport News Shipbuilding and yards like them around the country could soon receive millions of dollars in federal subsidies to help them better vie with foreign competitors for commercial shipbuilding contracts.
On Tuesday, the House passed a $1.3 billion, 10-year bill to provide operating subsidies for a small U.S.-flag fleet. That bill also increased the shipbuilding loan guarantee program. The House also voted to provide about $300 million for a shipbuilding subsidy program to help shipyards make the transition to high-tech commercial shipbuilding.
``Our shipyards must become competitive in the world marketplace if wee hope to retain our nation's ability to build naval vessels,''said Rep. Herb Bateman, whose district includes the Peninsula. The subsidy program ``is vital to the future of shipyards like Newport News Shipbuilding,'' he said.
The subsidy program is the ``second tier'' of the government's commercial shipbuilding rescue effort, a spokesman for Bateman's office said.
The first part of the package, known as ``National Shipbuilding Initiative,'' was passed by Congress in November. It allows government loan guarantees for up to 87.5 percent of the amount financed for new vessel construction up to 25 years. The loans are obtained from private lenders or bond sales that carry a fixed interest rate.
Newport News Shipbuilding signed a letter of intent in late May
to build two double-hull product tankers for Eletson Corp. of Piraeus, Greece, with an option for two more. The 46,500-ton ``Double Eagle'' tankers were designed by the giant yard on the Peninsula.
Eletson is seeking $133 million in loan guarantees from the U.S. Maritime Administration for the construction of the tankers. While loan guarantees for ship construction have existed for years, it was only last fall that they were broadened to cover vessels built for foreign as well as U.S. ship owners.
More than $1 billion in new ship construction is pending under the federal loan guarantee program. The Newport News vessels will be among the first for foreign shipowners to be built in U.S. shipyards in almost 40 years.
The subsidy program passed by the House Tuesday would be an additional source of government support for yards like Newport News that are making the transition from military to commercial work. The Senate must pass the measure.
U.S. commercial shipbuilding withered away after President Reagan ended subsidies in 1981, at the same time foreign nations dramatically increased aid to their own yards. Over the past 10 years, only a single commercial oceangoing ship has been built in the U.S.; since 1980, more than 80,000 jobs have been lost in U.S. shipyards.
The loan and subsidy programs will help U.S. yards ``get up to speed,'' said Newport News Shipbuilding spokesman Jack Garrow. ``This will be very helpful for U.S. yards to break back into commercial shipbuilding,'' he said. by CNB