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Maritime Trades Department, AFL-CIO, Washington, DC, December 23, 1970
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Maritime Trades Department, AFL-CIO, Washington, DC, December 23, 1970
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The original documents are located in Box D30, folder "Maritime Trades Department,
AFL-CIO, Washington, DC, December 23, 1970" 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States of America his copyrights in all of his unpublished writings in National Archives collections.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.
Digitized from Box D30 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
MARITIME TRADES DEPARTMENT AFL-CIO AT
12 NOON, WEDNESDAY, DECEMBER 23, 1970,
AT 2000 "L" STREET, N.W., WASHINGTON,
D.C.
fast year H talked about what we
had I do -
IT Now IS INDEED we can A be PLEASURE proud accomplical what TO Ligentation BE has recliont lan +
the future
HERE WITH YOU TODAY.
offers.
THERE IS ONE TOPIC THAT
IMMEDIATELY COMES TO MIND AS I SPEAK TO
YOU THIS NOON -- AND THAT IS THE NEW
MARITIME PROGRAM WHICH PRESIDENT NIXON
SIGNED INTO LAW LAST OCTOBER 22.
IT MAKES LITTLE SENSE AT THIS
POINT TO TALK TO YOU ABOUT THE SOVIET
THREAT TO THE U.S. POSITION ON THE SEAS.
WE HAVE VOYAGED BACK AND FORTH ACROSS THAT
SUBJECT Emphalically, MANY TIMES BEFORE. We only brown Threat The grows
INSTEAD I WISH TO EXPRESS five must
ENTHUSIASM AND HOPE CONCERNING THE U.S.
meet challenge
MERCHANT MARINE AFTER YEARS OF MOURNING
FORD & LIBRARY GERALD
-2-
ITS DECLINE THROUGH WHAT WE ALL RECOGNIZE
AS APPALLING NEGLECT.
TODAY I CAN TELL YOU ABOUT CONCRETE
STEPS WHICH ARE BEING TAKEN TO REMEDY THE
DEVASTATING NEGLECT WHICH HAS LAID LOW THE
U.S. MERCHANT MARINE.
WE ARE FINALLY EMBARKING ON AN
AMBITIOUS NEW PROGRAM, AN EFFORT WHICH YOU
AND I AND OTHERS IN THE CONGRESS HAVE BEEN
URGING FOR YEARS.
The Question should
HOW ARE WE COMING WITH OUR MOVES
TO GENERATE THE LARGEST PEACETIME
SHIPBUILDING PROGEAM EVER UNDERTAKEN IN
THE UNITED STATES?
/
I CAN REPORT TO YOU THAT AS OF
NOW THE U.S. MARITIME ADMINISTRATION HAS
APPLICATIONS FOR CONSTRUCTION-DIFFERENTIAL
SUBSIDY INVOLVING THE BUILDING OF A
FORD
MINIMUM OF 128 SHIPS AND A MAXIMUM OF 156.
LIBRARY
-3-
OUR GOAL, AS YOU KNOW, IS TO BUILD 300 SHIPS
OVER A 10-YEAR PERIOD.
THE SHIPS WE HAVE APPLICATIONS
FOR INCLUDE 43 TO 48 ORE-BULK-OIL SHIPS
(OBOS), 17 TO 19 LASH (LIGHTER ABOARD SHIP)
VESSELS, 11 CONTAINERSHIPS, 29 TO 40 TANKERS,
AND 27 TO 37 OTHER SHIPS.
LET ME TAKE JUST A MINUTE TO
DISCUSS THE OBO. THIS IS A VESSEL WHICH
OFFERS CONSIDERABLE ADVANTAGE OVER THE
CONVENTIONAL BULK SHIP BECAUSE THE
POSSIBILITY OF OBTAINING BACK-HAUL CARGO
IS IMMEASURABLY GREATER.
THE MARITIME ADMINISTRATION AT
PRESENT IS CONSIDERING THE CONSTRUCTION OF
AN OBO TYPE VESSEL WHICH WOULD BE CAPABLE
OF TRANSITTING THE PANAMA CANAL. SUCH A
VESSEL WOULD BE 77 TO 79,000 DEADWEIGHT TQNS,
WITH A DRAFT OF 45 FEET LOADED.
-4-
HIGHLY PRODUCTIVE VOYAGES CAN BE
MADE WITH A VESSEL SUCH AS THIS OBO. A SHIP
OF THIS KIND COULD LEAVE THE EAST COAST
WITH COAL BOUND FOR JAPAN, TRAVEL FROM
JAPAN TO THE PERSIAN GULF IN BALLAST, FROM
THE PERSIAN GULF TO EUROPE WITH OIL, AND
RETURN TO THE U.S. IN BALLAST IF NECESSARY.
MOSE OF THE OBOS FOR WHICH THE
MARITIME ADMINISTRATION HAS APPLICATIONS
ARE CAPABLE OF THIS KIND OF VOYAGE.
THE MARITIME ADMINISTRATION HAS
DRAFTED AND HAS SUBMITTED TO THE OPERATORS
AND SHIPBUILDERS A NEW CONSTRUCTI ON-
DIFFERENTIAL SUBSIDY CONTRACT FORM. THE
OPERATORS AND SHIPBUILDERS HAVE SENT BACK
THEIR COMMENTS. THE MARITIME ADMINISTRATION
WILL DRAFT FINAL FORMS AFTER CONSIDERING
THOSE COMMENTS. 2 trust there will be time consumming
N atherwise Time
GERALD R. LIBRARY FORD
IN PREPARING THESE FORMS, THE is the
nume
-5-
MARITIME ADMINISTRATION HAS SOUGHT TO KEEP
THE GOVERNMENT OUT OF DISPUTES BETWEEN THE
SHIPYARD AND THE SHIP PURCHASER WITH RESPECT
TO THE BUILDING OF THE SHIP.
THE MARITIME ADMINISTRATION ALSO
IS SETTING UP TAX DEFERRED FUNDS FOR THE
CONSTRUCTION OR RECONSTRUCTION OF VESSELS
FOR OPERATION IN THE FOREIGN TRADE, IN THE
NONCONTIGUOUS DOMESTIC TRADE, AND IN
DOMESTIC TRADE ON THE GREAT LAKES. THE
TAX AGREEMENT ON WHICH THESE FUNDS WILL BE
BASED IS CURRENTLY BEING FORMULATED.
THIS AGREEMENT WILL PROVIDE FOR
SUCH MATTERS AS DEPOSITS IN THE FUND,
WITHDRAWALS, INVESTMENT OF THE FUNDS, THE
CONSTRUCTION AND RECONSTRUCTION OF SHIPS,
AND THE DURATION OF THE FUND. INDUSTRY
COMMENTS WILL BE OBTAINED BEFORE THE FINAL
FORM IS DRAFTED.
DERALD R.FORD LIBRAR)
-6-
AS FOR OPERATING DIFFERENTIAL
SUBSIDIES, THE BULK CARRIERS ARE ELIGIBLE
UNDER THE NEW LAW AND SO FAR 11 COMPANIES
HAVE MADE APPLICATION.
THE OPERATING DIFFERENTIAL SUBSIDY
WAGE INDEX SYSTEM HAS BEEN THE SUBJECT OF
MUCH DISCUSSION BETWEEN THE MARITIME
ADMINISTRATION AND THE EXISTING SUBSIDIZED
OPERATORS. A DETAILED MANUAL OF
APPLICATION IS BEING PREPARED BY MARAD.
OFFICIALS THERE TELL ME IT SHOULD BE
POSSIBLE TO AMEND THE PRESENT CONTRACTS IN
LINE WITH THE INDEX BY EARLY NEXT SPRING.
H
AS WE MOVE TO IMPLEMENT THE NEW
MERCHANT MARINE ACT, ONE FACT IS
UNMISTAKABLY CLEAR. WITH THE GROWTH OF
U.S. TRADE DEPENDENT UPON EFFICIENT AND
REASONABLY-PRICED OCEAN TRANSPORTATION AND
GERALD LIBRARY
-7-
THE SECURITY OF THE NATION CONTINGENT UPON
THE MOVEMENT OF MEN AND SUPPLIES, THE
AMERICAN SHIPPING AND SHIPBUILDING RECORD
MUST BE DRASTICALLY IMPROVED.
IN OCTOBER 1969, PRESIDENT NIXON
PROPOSED A COMPREHENSIVE LONG-RANGE MERCHANT
SHIPBUILDING PROGRAM TO RESTORE THIS COUNTRY
TO A PROUD POSITION IN THE SHIPPING LANES
OF THE WORLD.
LEGISLATION INCORPORATING THE
PRESIDENT'S PROPOSALS WAS INTRODUCED BY ALL
MEMBERS OF THE HOUSE MERCHANT MARINE AND
FISHERIES COMMITTEE.
WE NOW ARE ABOUT TO SEE THE FIRST
FRUITS OF THAT LEGISLATION -- A NEW MARITIME
PROGRAM THAT WILL BUILD 300 MERCHANT SHIPS
OVER THE NEXT 10 YEARS AND WILL EXTEND
OPERATING SUBSIDIES TO ALMOST THE ENTIRE
FLEET.
GERALD FORD LIBRARY
-8-
THE NEW SHIPBUILDING PROGRAM WILL
TRIPLE THE CURRENT OUTPUT OF 10 SHIPS A
YEAR WHILE SLOWLY REDUCING THE GOVERNMENT'S
SUBSIDY FOR EACH NEW VESSEL FROM THE
CURRENT 55 PER CENT OF THE SHIPYARD PRICE
TO A MAXIMUM OF 35 PER CENT.
THE PURPOSE OF THE PROGRAM IS NOT
SIMPLY TO PRESERVE OUR MERCHANT FLEET BUT
TO MODERNIZE IT.
COST OF THE NEW PROGRAM OVER THE
NEXT 10 YEARS IS NEARLY $2.7 BILLION. THERE
MUST BE JUSTIFICATION FOR THAT KIND OF AN
OUTLAY -- AND THERE IS.
THE FOREIGN TRADE OF THE UNITED
STATES HAS REACHED TRULY STAGGERING
PROPORTIONS. IT NOW ACCOUNTS FOR
ONE-THIRD OF TOTAL WORLD TRADE AND IS
VALUED AT ABOUT $70 BILLION.
-9-
THERE WAS A TIME WHEN THE UNITED
STATES WAS REASONABLY SELF-SUFFICIENT IN
TERMS OF BASIC RAW MATERIALS. THAT TIME IS
GONE FOREVER. THE UNITED STATES CAN NO
LONGER RELY EXCLUSIVELY ON DOMESTIC SOURCES
FOR OIL, IRON ORE, BAUXITE, AND THE MYRIAD
OTHER RAW MATERIALS FROM WHICH INDUSTRY
FASHIONS THE GOODS OUR ECONOMY DEMANDS.
PRESENTLY, OUR LINER TRADE INVOLVES
THE CARRIAGE OF ABOUT 46 MILLION TONS
ANNUALLY, WHILE OUR BULK TRADES ACCOUNT FOR
ALMOST 350 MILLION TONS.
AT THE END OF THE PRESIDENT'S
PROJECTED 10-YEAR SHIPBUILDING PROGRAM, OUR
LINER TRADE WILL HAVE INCREASED TO PERHAPS
60 MILLION TONS A YEAR, AND OUR BULK TRADES
WILL HAVE INCREASED TO BETWEEN 550 MILLION
AND 600 MILLION TONS.
FORD LIBRARY & GERALD
-10-
IF AMERICAN-FLAG SHIPS ARE NOT
BUILT TO TRANSPORT A REASONABLE PERCENTAGE
OF OUR EXPANDING FOREIGN TRADE, WE WILL BE
TOTALLY DEPENDENT UPON FOREIGN SHIPPING
INTERESTS TO MOVE THOSE GOODS. WE CANNOT
AFFORD THAT DEPENDENCE.
WE KNOW THAT FREIGHT RATES IN THE
WORLD SHIPPING MARKET ARE SUBJECT TO
TREMENDOUS ESCALATION WHENEVER NORMAL
TRADING PATTERNS ARE UPSET. THE CLOSING OF
THE SUEZ CANAL WAS THE CLASSIC EXAMPLE OF
THIS IN RECENT TIMES.
A COUNTRY WHICH BECOMES
INCREASINGLY DEPENDENT UPON FOREIGN RAW
MATERIALS IS IN DOUBLE JEOPARDY IF IT LOSES
COMPLETE CONTROL OVER THE MEANS OF INSURING
THE FLOW OF THOSE RAW MATERIALS.
WE MUST, THEREFORE, HAVE A MERCHANT
MARINE WHICH INSURES THAT AT LEAST OUR
FORD LIBRARY
-11-
MINIMUM NEEDS CAN BE MET.
SOMETHING THAT IS GENERALLY
OVERLOOKED IS THE FACT THAT THE DIRECT
INVESTMENT WE WILL MAKE IN OUR SHIPBUILDING
PROGRAM OVER THE NEXT 10 YEARS WILL BE
ALMOST ENTIRELY OFFSET.
THESE SHIPS WILL EARN ROUGHLY
$2 BILLION, MONEY WHICH WOULD OTHERWISE BE
PAID TO FOREIGN-FLAG CARRIERS.
OUR BALANCE OF PAYMENTS WILL,
THEREFORE, BE SUBSTANTIALLY IMPROVED BY OUR
SHIPBUILDING PROGRAM.
IN ADDITION, THE FEDERAL
GOVERNMENT WILL REALIZE BETWEEN ONE-HALF
AND THREE-QUARTERS OF A BILLION DOLLARS IN
INCREASED TAX REVENUE.
THUS THE NET COST OF THIS PROGRAM
OVER A 10-YEAR PERIOD WILL BE MINIMAL.
FORD
Bi Partner
& country
-12-
fabor 1
MENTIONED AT THE OUTSET THAT I
NOW SPEAK OF THE MERCHANT MARINE WITH HOPE.
IT IS THE LANDMARK MERCHANT MARINE ACT OF
1970 WHICH GIVES ME THAT HOPE. NOW THERE
IS GOOD CAUSE FOR OPTIMISM AS TO THE HEALTH
OF THIS NATION'S TRIED AND TRUE FRIEND,
ITS MERCHANT MARINE.
MILLIONS OF AMERICANS ARE AWARE
THAT THE MERCHANT MARINE HAS A VITAL ROLE
TO PLAY IN THE FUTURE GROWTH OF THIS NATION.
THEY KNOW THAT LONG BEFORE THERE
WAS A UNITED STATES FLAG THERE WAS AN
AMERICAN MERCHANT MARINE PLYING THE TRADE
ROUTES OF THE WORLD. THEY KNOW THAT THE
MERCHANT MARINE SERVED THE NATION VALIANTLY
DURING THE REVOLUTIONARY WAR, THE WAR OF
1812, WORLD WARS I AND II, THE KOREAN WAR
AND NOW THE VIETNAM WAR.
GERALD LIBRARY R. FORD
-13-
THE MERCHANT MARINE ACT OF 1970
RECOGNIZES THIS LONG AND PROUD HISTORY, AND
I CONGRATULATE YOU HERE TODAY. AMERICA
OWES THE MERCHANT MARINE A DEBT OF GRATITUDE.
I LOOK FORWARD NOW TO THE COMPLETE
REVITALIZATION OF THE MERCHANT MARINE AND
TO NEW DAYS OF GLORY FOR OUR GALLANT MEN
WHO GO DOWN TO THE SEA IN SHIPS.
-- END --
FORD is LIBRAR GERALD
Distribution Full
Galleries 5:00p.m. 12/21/70 m office Copy
mail p.m. 12/21/70
REMARKS BY REP. GERALD R. FORD, R-MICH.
REPUBLICAN LEADER, U.S. HOUSE OF REPRESENTATIVES
BEFORE THE MARITIME TRADES DEPARTMENT (AFL-CIO)
AT 2000 "L" STREET, N.W., WASHINGTON, D.C.
AT 12 NOON, WEDNESDAY, DECEMBER 23, 1970
FOR RELEASE AT 12 NOON WEDNESDAY
It is indeed a pleasure to be here with you today.
There is one topic that immediately comes to mind as I speak to you this
noon--and that is the new maritime program which President Nixon signed into law
last Oct. 22.
It makes little sense at this point to talk to you about the Soviet threat to
the U.S. position on the seas. We have voyaged back and forth across that subject
many times before.
Instead I wish to express enthusiasm and hope concerning the U.S.
merchant marine after years of mourning its decline through what we all recognize
as appalling neglect.
Today I can tell you about concrete steps which are being taken to remedy the
devastating neglect which has laid low the U.S. merchant marine.
We are finally embarking on an ambitious new program, an effort which you and
I and others in the Congress have been urging for years.
How are we coming with our moves to generate the largest peacetime shipbuilding
program ever undertaken in the United States?
I can report to you that as of now the U.S. Maritime Administration has
applications for construction-differential subsidy involving the building of a
minimum of 128 ships and a maximum of 156. Our goal, as you know, is to build
300 ships over a 10-year period.
The ships we have applications for include 43 to 48 Ore-Bulk-Oil Ships (OBOS),
18 to 20 LASH (Lighter Aboard Ships) vessels, 11 Containerships, 29 to 40 Tankers,
and 27 to 37 other ships.
Let me take just a minute to discuss the OBO. This is a vessel which offers
considerable advantage over the conventional bulk ship because the possibility of
obtaining back-haul cargo is immeasurably greater.
The Maritime Administration at present is considering the construction of an
OBO type vessel which would be capable of transitting the Panama Canal. Such a
vessel would be 77 to 79,000 deadweight tons, with a draft of 45 feet loaded.
(more)
-2-
Highly productive voyages can be made with a vessel such as this OBO. A ship
of this kind could leave the East Coast with coal bound for Japan, travel from Japan
to the Persian Gulf in ballast, from the Persian Gulf to Europe with oil, and return
to the U.S. in ballast if necessary.
Most of the OBOS for which the Maritime Administration has applications are
capable of this kind of voyage.
The Maritime Administration has drafted and has submitted to the operators
and shipbuilders a new construction-differential subsidy contract form. The
operators and shipbuildings have sent back their comments. The Maritime Administration
now will draft final forms after considering those comments.
In preparing these forms, the Maritime Administration has sought to keep the
Government out of disputes between the shipyard and the ship purchaser with respect
to the building of the ship.
The Maritime Administration also is setting up tax deferred funds for the
construction or reconstruction of vessels for operation in the foreign trade, in the
noncontiguous domestic trade, and in domestic trade on the Great Lakes. The tax
agreement on which these funds will be based is currently being formulated.
This agreement will provide for such matters as deposits in the fund, with-
drawals, investment of the funds, the construction and reconstruction of ships, and
the duration of the fund. Industry comments will be obtained before the final form
is drafted.
As for operating differential subsidies, the bulk carriers are eligible under
the new law and so far 11 companies have made application.
The Operating Differential Subsidy wage index system has been the subject of
much discussion between the Maritime Administration and the existing subsidized
operators. A detailed manual of application is being prepared by Marad, and officials
there tell me it should be possible to amend the present contracts in line with the
index by early next spring.
As we move to implement the new Merchant Marine Act, one fact is unmistakably
clear. With the growth of U.S. trade dependent upon efficient and reasonably-priced
ocean transportation and the security of the Nation contingent upon the movement of
men and supplies, the American shipping and shipbuilding record must be drastically
improved.
In October 1969, President Nixon proposed a comprehensive long-range merchant
shipbuilding program to restore this country to a proud position in the shipping
lanes of the world.
(more)
-3-
Legislation incorporating the President's proposals was introduced by all
members of the House Merchant Marine and Fisheries Committee.
We now are about to see the first fruits of that legislation--a new maritime
program that will build 300 merchant ships over the next 10 years and will extend
operating subsidies to almost the entire fleet.
The new shipbuilding program will triple the current output of 10 ships a
year while slowly reducing the Government's subsidy for each new vessel from the
current 55 per cent of the shipyard price to maximum of 35 per cent.
The purpose of the program is not simply to preserve our merchant fleet but
to modernize it.
Cost of the new program over the next 10 years is nearly $2.7 billion. There
must be justification for that kind of an outlay--and there is.
The foreign trade of the United States has reached truly staggering
proportions. It now accounts for one-third of total world trade and is valued at
about $70 billion.
There was a time when the United States was reasonably self-sufficient in
terms of basic raw materials. That time is gone forever. The United States can no
longer rely exclusively on domestic sources for oil, iron ore, bauxite, and the
myriad other raw materials from which industry fashions the goods our economy
demands.
Presently, our liner trade involves the carriage of about 46 million tons
annually, while our bulk trades account for almost 350 million tons.
At the end of the President's projected 10-year shipbuilding program, our
liner trade will have increased to perhaps 60 million tons a year, and our bulk
trades will have increased to between 550 million and 600 million tons.
If American-flag ships are not built to transport a reasonable percentage of
our expanding foreign trade, we will be totally dependent upon foreign shipping
interests to move those goods. We cannot afford that dependence.
We know that freight rates in the world shipping market are subject to
tremendous escalation whenever normal trading patterns are upset. The closing of
the Suez Canal was the classic example of this in recent times.
A country which becomes increasingly dependent upon foreign raw materials
is in double jeopardy if it loses complete control over the means of insuring the
flow of those raw materials.
We must, therefore, have a merchant marine which insures that at least our
minimum needs can be met.
(more)
-4-
Something that is generally overlooked is the fact that the direct investment
we will make in our shipbuilding program over the next 10 years will be almost
entirely offset.
These ships will earn roughly $2 billion, money which would otherwise be
paid to foreign-flag carriers.
Our balance of payments will, therefore, be substantially improved by our
shipbuilding program.
In addition, the Federal Government will realize between one-half and
three-quarters of a billion dollars in increased tax revenue.
Thus the net cost of this program over a 10-year period will be minimal.
I mentioned at the outset that I now speak of the Merchant Marine with hope.
It is the landmark Merchant Marine Act of 1970 which gives me that hope. Now there
is good cause for optimism as to the health of this Nation's tried and true friend,
its Merchant Marine.
Millions of Americans are aware that the merchant marine has a vital role to
play in the future growth of this nation.
They know that long before there was a United States flag there was an American
merchant marine plying the trade routes of the world. They know that the merchant
marine served the Nation valiantly during the Revolutionary War, the War of 1812,
World Wars I and II, the Korean War and now the Vietnam War.
The Merchant Marine Act of 1970 recognizes this long and proud history, and
I congratulate you here today. America owes the merchant marine a debt of
gratitude.
I look forward now to the complete revitalization of the merchant marine
and to new days of glory for our gallant men who go down to the sea in ships.
# # #
REMARKS BY REP. GERALD R. FORD, R-MICH.
REPUBLICAN LEADER, U.S. HOUSE OF REPRESENTATIVES
BEFORE THE MARITIME TRADES DEPARTMENT (AFL-CIO)
AT 2000 "L" STREET, N.W., WASHINGTON, D.C.
AT 12 NOON, WEDNESDAY, DECEMBER 23, 1970
FOR RELEASE AT 12 NOON WEDNESDAY
It is indeed a pleasure to be here with you today.
There is one topic that immediately comes to mind as I speak to you this
noon--and that is the new maritime program which President Nixon signed into law
last Oct. 22.
It makes little sense at this point to talk to you about the Soviet threat to
the U.S. position on the seas. We have voyaged back and forth across that subject
many times before.
Instead I wish to express enthusiasm and hope concerning the U.S.
merchant marine after years of mourning its decline through what we all recognize
as appalling neglect.
Today I can tell you about concrete steps which are being taken to remedy the
devastating neglect which has laid low the U.S. merchant marine.
We are finally embarking on an ambitious new program, an effort which you and
I and others in the Congress have been urging for years.
How are we coming with our moves to generate the largest peacetime shipbuilding
program ever undertaken in the United States?
I can report to you that as of now the U.S. Maritime Administration has
applications for construction-differential subsidy involving the building of a
minimum of 128 ships and a maximum of 156. Our goal, as you know, is to build
300 ships over a 10-year period.
The ships we have applications for include 43 to 48 Ore-Bulk-Oil Ships (OBOS),
18 to 20 LASH (Lighter Aboard Ships) vessels, 11 Containerships, 29 to 40 Tankers,
and 27 to 37 other ships.
Let me take just a minute to discuss the OBO. This is a vessel which offers
considerable advantage over the conventional bulk ship because the possibility of
obtaining back-haul cargo is immeasurably greater.
The Maritime Administration at present is considering the construction of an
OBO type vessel which would be capable of transitting the Panama Canal. Such a
vessel would be 77 to 79,000 deadweight tons, with a draft of 45 feet loaded.
(more)
-2-
Highly productive voyages can be made with a vessel such as this OBO. A ship
of this kind could leave the East Coast with coal bound for Japan, travel from Japan
to the Persian Gulf in ballast, from the Persian Gulf to Europe with oil, and return
to the U.S. in ballast if necessary.
Most of the OBOS for which the Maritime Administration has applications are
capable of this kind of voyage.
The Maritime Administration has drafted and has submitted to the operators
and shipbuilders a new construction-differential subsidy contract form. The
operators and shipbuildings have sent back their comments. The Maritime Administratio
now will draft final forms after considering those comments.
In preparing these forms, the Maritime Administration has sought to keep the
Government out of disputes between the shipyard and the ship purchaser with respect
to the building of the ship.
The Maritime Administration also is setting up tax deferred funds for the
construction or reconstruction of vessels for operation in the foreign trade, in the
noncontiguous domestic trade, and in domestic trade on the Great Lakes. The tax
agreement on which these funds will be based is currently being formulated.
This agreement will provide for such matters as deposits in the fund, with-
drawals, investment of the funds, the construction and reconstruction of ships, and
the duration of the fund. Industry comments will be obtained before the final form
is drafted.
As for operating differential subsidies, the bulk carriers are eligible under
the new law and so far 11 companies have made application.
The Operating Differential Subsidy wage index system has been the subject of
much discussion between the Maritime Administration and the existing subsidized
operators. A detailed manual of application is being prepared by Marad, and officials
there tell me it should be possible to amend the present contracts in line with the
index by early next spring.
As we move to implement the new Merchant Marine Act, one fact is unmistakably
clear. With the growth of U.S. trade dependent upon efficient and reasonably-priced
ocean transportation and the security of the Nation contingent upon the movement of
men and supplies, the American shipping and shipbuilding record must be drastically
improved.
In October 1969, President Nixon proposed a comprehensive long-range merchant
shipbuilding program to restore this country to a proud position in the shipping
lanes of the world.
(more)
-3-
Legislation incorporating the President's proposals was introduced by all
members of the House Merchant Marine and Fisheries Committee.
We now are about to see the first fruits of that legislation-- new maritime
program that will build 300 merchant ships over the next 10 years and will extend
operating subsidies to almost the entire fleet.
The new shipbuilding program will triple the current output of 10 ships a
year while slowly reducing the Government's subsidy for each new vessel from the
current 55 per cent of the shipyard price to maximum of 35 per cent.
The purpose of the program is not simply to preserve our merchant fleet but
to modernize it.
Cost of the new program over the next 10 years is nearly $2.7 billion. There
must be justification for that kind of an outlay--and there is.
The foreign trade of the United States has reached truly staggering
proportions. It now accounts for one-third of total world trade and is valued at
about $70 billion.
There was a time when the United States was reasonably self-sufficient in
terms of basic raw materials. That time is gone forever. The United States can no
longer rely exclusively on domestic sources for oil, iron ore, bauxite, and the
myriad other raw materials from which industry fashions the goods our economy
demands.
Presently, our liner trade involves the carriage of about 46 million tons
annually, while our bulk trades account for almost 350 million tons.
At the end of the President's projected 10-year shipbuilding program, our
liner trade will have increased to perhaps 60 million tons a year, and our bulk
trades will have increased to between 550 million and 600 million tons.
If American-flag ships are not built to transport a reasonable percentage of
our expanding foreign trade, we will be totally dependent upon foreign shipping
interests to move those goods. We cannot afford that dependence.
We know that freight rates in the world shipping market are subject to
tremendous escalation whenever normal trading patterns are upset. The closing of
the Suez Canal was the classic example of this in recent times.
A country which becomes increasingly dependent upon foreign raw materials
is in double jeopardy if it loses complete control over the means of insuring the
flow of those raw materials.
We must, therefore, have a merchant marine which insures that at least our
minimum needs can be met.
(more)
-4.-
Something that is generally overlooked is the fact that the direct investment
we will make in our shipbuilding program over the next 10 years will be almost
entirely offset.
These ships will earn roughly $2 billion, money which would otherwise be
paid to foreign-flag carriers.
Our balance of payments will, therefore, be substantially improved by our
shipbuilding program.
In addition, the Federal Government will realize between one-half and
three-quarters of a billion dollars in increased tax revenue.
Thus the net cost of this program over a 10-year period will be minimal.
I mentioned at the outset that I now speak of the Merchant Marine with hope.
It is the landmark Merchant Marine Act of 1970 which gives me that hope. Now there
is good cause for optimism as to the health of this Nation's tried and true friend,
its Merchant Marine.
Millions of Americans are aware that the merchant marine has a vital role to
play in the future growth of this nation.
They know that long before there was a United States flag there was an American
merchant marine plying the trade routes of the world. They know that the merchant
marine served the Nation valiantly during the Revolutionary War, the War of 1812,
World Wars I and II, the Korean War and now the Vietnam War.
The Merchant Marine Act of 1970 recognizes this long and proud history, and
I congratulate you here today. America owes the merchant marine a debt of
gratitude.
I look forward now to the complete revitalization of the merchant marine
and to new days of glory for our gallant men who go down to the sea in ships.
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