THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, November 24, 1995 TAG: 9511230005
SECTION: FRONT PAGE: A18 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 69 lines
Talk about a major slump: No U.S. shipbuilder has delivered an oceangoing vessel to a foreign buyer since 1960.
The largest U.S. shipyard, 2 1/2-mile-long Newport News Shipbuilding, has been making state-of-the-art warships, notably silent submarines and the most advanced nuclear aircraft carriers in the world. But the military is shrinking, and the $50 billion-a-year commercial ship market beckons. A mere percentage point of that global market equals a half-billion bucks.
American shipbuilders have a shot at being competitive again in the world commercial market, thanks to a new federal loan-guarantee program that enables foreign and domestic ship buyers to borrow for less if their ships are built in the United States. Other factors in this nation's favor are a weak dollar, the fact some American shipyards have been modernized and rising wages in Japanese and German shipyards. The Wall Street Journal reported that hourly wage and benefit costs in U.S. yards average $20, compared with $33 in Japan and $38 in Germany. The bad news is that the comparable figure for Korea is $11.
In one sense, Newport News Shipbuilding is overqualified for building commercial ships. ``We have to go from building a Maserati to a Ford Taurus,'' said William Fricks, the shipyard's chief executive.
But with the reward potentially so sweet, the Tenneco Inc.-owned shipyard, where employment has dropped from nearly 30,000 to 19,000 over five years, is investing $68 million to modernize its facilities. Its new steel fabrication facility contains the latest robotic welders. It extended a drydock from 560 feet to 2,200 feet, in order to simultaneously build tankers and aircraft carriers. The investment surely will lead to more good jobs.
Working in Newport News Shipbuilding's favor is the acknowledged fact that it builds the most technically advanced ships in the world. Working against it is its reputation for building only Navy ships and subs.
But that's changing. As staff writer Christopher Dinsmore has reported, Newport News Shipbuilding has been aggressively marketing a 600-foot, double-hulled tanker known as the Double Eagle. The shipyard may soon reach an agreement with MARITRANS Inc., a Philadelphia-based tug and barge operator, to build several tankers, with the potential for making more than 20.
Double Eagle orders should be boosted by a 1990 federal act requiring that tankers delivering oil to U.S. ports have double hulls. Newport News Shipbuilding has an order from a Greek shipper for four Double Eagles, plus two other orders for up to 16 more tankers awaiting approval of federal loan guarantees.
America's car manufacturers once seemed doomed by high-tech foreign competition and their own greed and stupidity. They've stormed back, though of course they never went 35 years without exporting a commercial car.
Perhaps the best news on the waterfront is that the federal government seems to have noticed that a commercial shipbuilding capability is vital. The new loan-guarantee program is evidence of that. Also, government negotiators recently reached a multilateral agreement among the main shipbuilding nations to discontinue government subsidies of commercial shipbuilding and repair. In other words, the playing field is leveling.
Without American-owned ships plying the oceans, America's competitive advantages could end at the water's edge, as other nations charge high rates to transport our exports overseas.
If Newport News Shipbuilding, the area's largest civilian employer, can achieve a mix of military and commercial contracts, its future will be less uncertain. Some industries, like shipbuilding, are too important to be left to survive or die as they may. by CNB