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Seafarers International Union, AFL-CIO, Washington, DC, December 8, 1971
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Seafarers International Union, AFL-CIO, Washington, DC, December 8, 1971
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The original documents are located in Box D32, folder "Seafarers International Union,
AFL-CIO, Washington, DC, December 8, 1971" of the Ford Congressional Papers: Press
Secretary and Speech File at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
REMARKS BY REP. GERALD R. FORD BEFORE THE SEAFARERS INTERNATIONAL UNION, AFL-CIO, AT
2000 "L" STREET, N.W. WASHINGTON, D.C., 12:30 P.M., DECEMBER 8, 1971.
affice Cryy
It was just over a year ago that President Nixon signed into law the Merchant
Marine Act of 1970. With that signature, he put into effect legislation that had
twin purposes:
- First, to bring back to our nation a strong, viable and profitable
privately-owned maritime industry.
-- Second, to develop for the United States a merchant fleet that would
guarantee that our country would have the oceangoing capacity to promote its
economy in times of peace, and to protect the vital flow of materials in times of
conflict.
It is timely and appropriate to report to you now on what has been done--and
what is being done-to implement the Merchant Marine Act of 1970.
Every major provisionof the Act has been carried out, including all the
innovative features that give a new dimension and scope to this Nation's maritime
policies.
I would be less than candid if I told I am fully satisfied with the
progress made to date. In one important area progress has fallen short of
expectations. It was the intention to award contracts for the subsidized
construction of 19 new merchant ships during fiscal year 1971 -- the first year
of the new program. A total of only 12 new ships were ordered.
But while the new construction contracts encompassed only 12 ships, the
award of contracts covering the subsidized conversion of 11 existing ships into
fully containerized vessels also was made during the past fiscal year. Signifi-
cantly, nearly all of the containership conversions will be completed within
12 months from the contract award dates. New construction contracts awarded
FORD & LIBRARY 9ERALD
during the year call for delivery dates rAnging from two to three years from the
Digitized from Box D32 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
-2-
time of contract signing. But I the lines undertaking the conversions will be
able to place highly productive vessels in service in a relatively short period
of time.
Nor should it be overlooked that while our new construction plans fell
short of the mark, subsidized shipbuilding and conversion contracts awarded
in fiscal year 1971 exceeded $390 million a record high. Of this amount,
$171 million will be borne by the government, the largest construction subsidy
commitment made in any single year since the inception of the subsidized
program thirty-five years ago.
Several factors have contributed to the less than anticipated volume of
new construction contracts: The expected surge of orders for liquid and dry
bulk carriers was undermined by the softening of the bulk charter market.
Additionally, the generally poor earnings of American-flag lines and the
resulting difficulty in lining up investment capital at reasonable interest
rates hindered many operators planning new construction.
We do not regard these impediments as long-term. We believe that
American shipyards are crossing the threshold to one of the largest
commercial shipbuilding markets in the industry's peacetime history.
Now let us look at some of the many accomplishments under the
1970 Act:
1. Construction and operating subsidies for two combination
oil/bulk/ore vessels were awarded. These are the first bulk
carriers to receive both forms of Federal assistance.
LIBRARY
-3-
2. The first new operating differential subsidy agreement
with a liner operator in 10 years was executed.
3. The Maritime Administration is effectively exercising its
strengthened authority under the new law to monitor and
regulate the shipments of government-impelled cargoes. It has
put into effect three new rules designed to provide more
equitable treatment and participation of American-flag operators.
These cover reporting requirements for the shipper agencies,
fixing of the U.S.-flag share of such cargoes before the
foreign-flag allocations, and measuring the movements in terms
of freight revenues as well as tonnage. Additional regulations
governing such shipments are expected to be put into effect in
the near future.
4. To assist the shipping and shipbuilding industries to
increase their productivity, a fourfold increase in the
Maritime Administration's research and development programs
and funding levels has been achieved. Additionally, a
National Maritime Research Center has been established at
the U. S. Merchant Marine Academy. Primary emphasis is being
placed on R&D projects which offer the promise of near-term
application of advanced technology.
QERALO FORD HERRY
-4-
5. To assist American-flag operators to garner a larger
share of this Nation's foreign trade cargoes, the Maritime
Administration has established an Office of Market Development.
A netwo of seven field offices are now located on the East,
Gulf and West Coasts and the Great Lakes to promote shipper
patronage of our merchant marine. Additionally, a continuing
flow of detailed data on foreign trade shipments is provided
to the American-flag lines to help them to identify and capitalize
on marketing opportunities.
Let's look now at the future prospects of the maritime industry.
As Imentioned earlier, I believe that in terms of commercial ship
construction, the shipyard industry is entering one of the most dynamic peace-
time periods in its history.
Our forecasts indicate that U. S. foreign trade tonnage will rise by as
much as 80 per cent in this decade from an annual movement of 470 million
tons in 1970 to more than 800 million in 1980.
Traditional liner type commodities are expected to increase by more
growth
than 25 per cent in this period, although much of the
will be in the
bulk category which is expected to be moved in shipload lots by nonscheduled
carriers. As a consequence, I see the high-revenue tonnage moved by liner-type
vessels holding relatively constant, approximating 55 to 60 million tons
annually during this decade. The replacement of vessels in liner trades will
continue to be an important part of the shipbuilding program.
-5-
It is the projected increase of our bulk trade movement that offers
a major new market for American shipyards, now that bulk carriers are eligible
for construction and operating subsidies.
By 1980, we expect the bulk movement to exceed 650 million tons,
reflecting a 56 per cent increase in the dry bulk movement and an 83 per cent
increase in the liquid bulk tonnage. Virtually all of the latter represents
petroleum imports to contend with this nation's mounting energy crisis which
becomes more critical with each passing year.
By the mid-1980's foreign imports are expected to account for
two-thirds of our petroleum supply. To put this into perspective, to transport
these imports will require as much tanker tonnage as now exists in the combined
world fleet 153 million deadweight tons.
With the subsidy assistance now available for such ships, American
shipyards and shipping companies will be able to capitalize on this marketing
opportunity. Present indications are that we will approve construction
subsidy applications for at least eight 225,000 deadweight ton tankers this
fiscal year. These will be the forerunners of what promises to be a sizable
number of these very large crude carriers in our fleet.
In terms of the expected increase in liquified natural gas imports, it
is estimated that as many as 80 LNG tankers of the 120,000 cubic meter size
will be required to meet domestic demands for this clean burning fuel. Here
again, a substantial number of these ships may be built in this country and
operated under the U. S. flag.
FORD & LIBRARY GERALD
-6-
The LNG market isn't one that might materialize in a few years. It
exists today. For a number of years many gas companies in the Northeast have
refused to accept any new additional industrial customers because of their
inability to obtain sufficient supplies from domestic producers.
Recently,
the Washington Gas Light Company serving the Nation's Capital and
the surrounding Maryland and Virginia suburbs adopted a similar policy.
So there is ample evidence of the need to bring in overseas gas supplies.
Late in October, MarAd received subsidy applications from Transportation
Techniques, Inc., for the construction of three LNG tankers. And a few days
later the El Paso Natural Gas Company announced plans to construct six LNG
carriers in U. S. yards, at an estimated cost of $70 million each, to import
Algerian gas.
So far this fiscal year, however, only one contract under the shipbuilding
program has been actually signed, this one for the conversion of one conventional
freighter into a containership at a total cost of $9.5 million.
Another type of bulk carrier which should figure importantly in the
subsidized shipbuilding program is the oil/bulk/ore ship, or OBO. Two of
these combination liquid and dry bulk vessels of 80,000 deadweight tons have
been ordered to date, and it is expected subsidy applications for two in the
160,000-ton size will be approved in the near future.
Another promising market for the shipbuilders is represented by the
Alaskan oil discoveries. While no decision has been rendered as yet by the
Department of Interior on the Alyeska pipeline linking the oil fields on the
North Slope with the port of Valdez on Alaska's South Coast, the energy
-7-
crisis confronting this Nation should dictate a go-ahead. A favorable decision
is expected to generate the construction of more than 30 large tankers ranging
in size from 125,000 to 250,000 tons, all of which will have to be built in
U. S. yards under the Jones Act provision.
To complete the shipbuilding outlook, I think it should not be overlooked
that the domestic shipping segment offers additional promising prospects for
new ship construction. The long standing famine of new commercial ship
construction on the Great Lakes has been broken, with three bulk carriers
and one tug-barge combination presently building or on order. Because of an
enormous fleet obsolescence problem and as a result of the liberalization of
the tax-deferred construction reserve fund eligibility and expanded mortgage
insurance program provided by the 1970 Act, we expect to see a strong volume
of shipbuilding activity on the Great Lakes.
considerable
In conclusion, we have made
progress in implementing the Merchant
Marine Act of 1970. The building of these new ships will help restore this
Nation's merchant marine to its former preeminence. In the process, substantial
employment opportunities for labor will be created in the marine supply
industries, at sea and in the shipyard.
We have difficult problems to overcome, but this Administration is
following a course which will againbring us to a leadership position on the seas.
And I
assure you that you will have the continuing support of members
of Congress on both sides of the aisle. They have shown by their overwhelming support
of the Merchant Marine Act and by their continuing interest in the maritime industry
that they do not intend to quit until the job is done.
######
D1 n. FORD BEFORE THE SEAFARERS INTERNATIONAL UNION, AFL-CIO, AT
2000 "L" STREET, N.W. WASHINGTON, D.C., 12:30 P.M., DECEMBER 8, 1971.
a office Copy
It was just over a year ago that President Nixon signed into law the Merchant
Marine Act of 1970. With that signature, he put into effect legislation that had
twin purposes:
-- First, to bring back to our nation a strong, viable and profitable
privately-owned maritime industry.
-- Second, to develop for the United States a merchant fleet that would
guarantee that our country would have the oceangoing capacity to promote its
economy in times of peace, and to protect the vital flow of materials in times of
conflict.
It is timely and appropriate to report to you now on what has been done--and
what is being done-to implement the Merchant Marine Act of 1970.
Every major provisionof the Act has been carried out, including all the
innovative features that give a new dimension and scope to this Nation's maritime
policies.
I would be less than candid if I told I am fully satisfied with the
progress made to date. In one important area progress has fallen short of
expectations. It was the intention to award contracts for the subsidized
construction of 19 new merchant ships during fiscal year 1971 -- the first year
of the new program. A total of only 12 new ships were ordered.
But while the new construction contracts encompassed only 12 ships, the
award of contracts covering the subsidized conversion of 11 existing ships into
fully containerized vessels also was made during the past fiscal year. Signifi-
cantly, nearly all of the containership conversions will be completed within
12 months from the contract award dates. New construction contracts awarded
GERALD FORD LIBRARY
during the year call for delivery dates rAnging from two to three years from the
-2-
time of contract signing. But I the lines undertaking the conversions will be
able to place highly productive vessels in service in a relatively short period
of time.
Nor should it be overlooked that while our new construction plans fell
short of the mark, subsidized shipbuilding and conversion contracts awarded
in fiscal year 1971 exceeded $390 million a record high. Of this amount,
$171 million will be borne by the government, the largest construction subsidy
commitment made in any single year since the inception of the subsidized
program thirty-five years ago.
Several factors have contributed to the less than anticipated volume of
new construction contracts: The expected surge of orders for liquid and dry
bulk carriers was undermined by the softening of the bulk charter market.
Additionally, the generally poor earnings of American-flag lines and the
resulting difficulty in lining up investment capital at reasonable interest
rates hindered many operators planning new construction.
We do not regard these impediments as long-term. We believe that
American shipyards are crossing the threshold to one of the largest
commercial shipbuilding markets in the industry's peacetime history.
Now let us look at some of the many accomplishments under the
1970 Act:
1. Construction and operating subsidies for two combination
oil/bulk/ore vessels were awarded. These are the first bulk
carriers to receive both forms of Federal assistance.
BERALD FORD LIBRARY
-3-
2. The first new operating differential subsidy agreement
with a liner operator in 10 years was executed.
3. The Maritime Administration is effectively exercising its
strengthened authority under the new law to monitor and
regulate the shipments of government-impelled cargoes. It has
put into effect three new rules designed to provide more
equitable treatment and participation of American-flag operators.
These cover reporting requirements for the shipper agencies,
fixing of the U.S.-flag share of such cargoes before the
foreign-flag allocations, and measuring the movements in terms
of freight revenues as well as tonnage. Additional regulations
governing such shipments are expected to be put into effect in
the near future.
4. To assist the shipping and shipbuilding industries to
increase their productivity, a fourfold increase in the
Maritime Administration's research and development programs
and funding levels has been achieved. Additionally, a
National Maritime Research Center has been established at
the U. S. Merchant Marine Academy. Primary emphasis is being
placed on R&D projects which offer the promise of near-term
application of advanced technology.
-4-
5. To assist American-flag operators to garner a larger
share of this Nation's foreign trade cargoes, the Maritime
Administration has established an Office of Market Development.
A netwo of seven field offices are now located on the East,
Gulf and West Coasts and the Great Lakes to promote shipper
patronage of our merchant marine. Additionally, a continuing
flow of detailed data on foreign trade shipments is provided
to the American-flag lines to help them to identify and capitalize
on marketing opportunities.
Let's look now at the future prospects of the maritime industry.
As Imentioned earlier, I believe that in terms of commercial ship
construction, the shipyard industry is entering one of the most dynamic peace-
time periods in its history.
Our forecasts indicate that U. S. foreign trade tonnage will rise by as
much as 80 per cent in this decade from an annual movement of 470 million
tons in 1970 to more than 800 million in 1980.
Traditional liner type commodities are expected to increase by more
growth
than 25 per cent in this period, although much of the
will be in the
neo-bulk category which is expected to be moved in shipload lots by nonscheduled
carriers. As a consequence, I see the high-revenue tonnage moved by liner-type
vessels holding relatively constant, approximating 55 to 60 million tons
annually during this decade. The replacement of vessels in liner trades will
continue to be an important part of the shipbuilding program.
FORD & LIBRARY GERAL
-5-
It is the projected increase of our bulk trade movement that offers
a major new market for American shipyards, now that bulk carriers are eligible
for construction and operating subsidies.
By 1980, we expect the bulk movement to exceed 650 million tons,
reflecting a 56 per cent increase in the dry bulk movement and an 83 per cent
increase in the liquid bulk tonnage. Virtually all of the latter represents
petroleum imports to contend with this nation's mounting energy crisis which
becomes more critical with each passing year.
By the mid-1980's foreign imports are expected to account for
two-thirds of our petroleum supply. To put this into perspective, to transport
these imports will require as much tanker tonnage as now exists in the combined
world fleet 153 million deadweight tons.
With the subsidy assistance now available for such ships, American
shipyards and shipping companies will be able to capitalize on this marketing
opportunity. Present indications are that we will approve construction
subsidy applications for at least eight 225,000 deadweight ton tankers this
fiscal year. These will be the forerunners of what promises to be a sizable
number of these very large crude carriers in our fleet.
In terms of the expected increase in liquified natural gas imports, it
is estimated that as many as 80 LNG tankers of the 120,000 cubic meter size
will be required to meet domestic demands for this clean burning fuel. Here
again, a substantial number of these ships may be built in this country and
operated under the U. S. flag.
BERALD FORD LIBRARI
-6-
The LNG market isn't one that might materialize in a few years. It
exists today. For a number of years many gas companies in the Northeast have
refused to accept any new additional industrial customers because of their
inability to obtain sufficient supplies from domestic producers.
Recently,
the Washington Gas Light Company serving the Nation's Capital and
the surrounding Maryland and Virginia suburbs adopted a similar policy.
So there is ample evidence of the need to bring in overseas gas supplies.
Late in October, MarAd received subsidy applications from Transportation
Techniques, Inc., for the construction of three LNG tankers. And a few days
later the El Paso Natural Gas Company announced plans to construct six LNG
carriers in U. S. yards, at an estimated cost of $70 million each, to import
Algerian gas.
So far this fiscal year, however, only one contract under the shipbuilding
program has been actually signed, this one for the conversion of one conventional
freighter into a containership at a total cost of $9.5 million.
Another type of bulk carrier which should figure importantly in the
subsidized shipbuilding program is the oil/bulk/ore ship, or OBO. Two of
these combination liquid and dry bulk vessels of 80,000 deadweight tons have
been ordered to date, and it is expected subsidy applications for two in the
160,000-ton size will be approved in the near future.
Another promising market for the shipbuilders is represented by the
Alaskan oil discoveries. While no decision has been rendered as yet by the
Department of Interior on the Alyeska pipeline linking the oil fields on the
North Slope with the port of Valdez on Alaska's South Coast, the energy
FORD & LIBRARI OERAL
-7-
crisis confronting this Nation should dictate a go-ahead. A favorable decision
is expected to generate the construction of more than 30 large tankers ranging
in size from 125,000 to 250,000 tons, all of which will have to be built in
U. S. yards under the Jones Act provision.
To complete the shipbuilding outlook, I think it should not be overlooked
that the domestic shipping segment offers additional promising prospects for
new ship construction. The long standing famine of new commercial ship
construction on the Great Lakes has been broken, with three bulk carriers
and one tug-barge combination presently building or on order. Because of an
enormous fleet obsolescence problem and as a result of the liberalization of
the tax-deferred construction reserve fund eligibility and expanded mortgage
insurance program provided by the 1970 Act, we expect to see a strong volume
of shipbuilding activity on the Great Lakes.
considerable
In conclusion, we have made progress in implementing the Merchant
Marine Act of 1970. The building of these new ships will help restore this
Nation's merchant marine to its former preeminence. In the process, substantial
employment opportunities for labor will be created in the marine supply
industries, at sea and in the shipyard.
We have difficult problems to overcome, but this Administration is
following a course which will againbring us to a leadership position on the seas.
And I
assure you that you will have the continuing support of members
of Congress on both sides of the aisle. They have shown by their overwhelming support
of the Merchant Marine Act and by their continuing interest in the maritime industry
that they do not intend to quit until the job is done.
######