THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, November 11, 1994 TAG: 9411110006
SECTION: FRONT PAGE: A22 EDITION: FINAL
TYPE: Editorial
LENGTH: Short : 48 lines
Newport News Shipbuilding chairman W. R. ``Pat'' Phillips Jr. hailed the signing last week of a $152 million contract for construction of two double-hulled Greek tankers as the start of a ``renaissance in American shipbuilding.''
May that be true, for the sake of the sole shipyard able to build super attack-aircraft carriers and all other competent U.S. shipbuilders - and the regional economies, including Hampton Roads, where they are major contributors.
The contracts call upon Newport News Shipbuilding to deliver the tankers within 26 months. The buyer retains an option to purchase two more.
The tankers are the first commercial vessels ordered from a U.S. shipyard by a foreign buyer since 1957. Because of their high costs, U.S. shipyards have long been unable to compete effectively in the global market for commercial-ship contracts against government-subsidized foreign shipyards. Had it not been for Navy contracts during the Cold War, American shipyards would have largely vanished.
The United States no longer needs a 600-ship Navy, which was the Pentagon's goal in the twilight years of the Soviet empire. If American shipyards are to survive, they will have to drum up lots of business from the private sector.
Newport News captured the tanker contract in part because of federal loan guarantees - indirect subsidies - flowing from legislation passed last year. Meanwhile, a pending international agreement barring most governmental aid to shipbuilders promises to place American shipyards on a less-unequal footing with foreign shipyards.
It is to be hoped that agreement can be reached on ending subsidies. While the shipyard needs some help getting over the end of the Cold War, it will ultimately have to compete on price and quality, just as all other businesses have to do.
Thank goodness. Congress - reflecting national sentiment - has scant enthusiasm for maritime subsidies. Coupled with Newport News Shipbuildings' coup, the prospect of a more-or-less-level playing field for shipbuilders worldwide seemingly portends a time in the near future when subsidies will be as unnecessary as they are unpopular. by CNB