MARAD Releases Economic Report on U.S. Shipyards

The most significant restriction of the 1920 US federal Jones Act requires that “deep-bottom” ships used in commercial transport of cargo between American ports be built in the United States. A common but inaccurate argument in defense of the Jones Act in its current form is that this law protects the U.S. ship-building industry. In reality, there are so few Jones Act qualified ships built in the U.S. that repealing or modifying the Jones Act would have little if any impact upon the shipping industry, which predominantly builds non-Jones Act military and government agency ships. Michael Hansen, Grassroot Institute’s Jones Act Research Director and President of Hawaii Shippers’ Council highlights a government report which shows that in 2011 only 3 ships built in the US were for use in the commercial “Jones Act” market.

By Michael Hansen

The U.S. Maritime Administration (MARAD) released a report on June 19th describing the economic activity and impact of the U.S. shipbuilding and ship repair industry. The report, which was apparently written in house, is entitled “The Economic Importance of the Shipbuilding and Repairing Industry” and dated May 30, 2013, The report indicates the dominate role military capital ship construction plays in respect of the entire industry, and the vibrancy of the private inland waterways sector.

MARAD is an agency of the U.S. Department of Transportation (USDOT) charged with promoting the U.S. maritime industry. It has been referred to as the Jones Act Administration, for its statutory role in supporting the domestic maritime industry.

Although parts of the report aggregates data from the several sectors of the shipbuilding and ship repair industries, other parts breakout some of the data. The most obvious example is that parts of the report tend to lump together commercial and military shipbuilding and ship repair data.

However, the dominate role played by government shipyard work does emerge as the report does show that 60% of all shipbuilding and repairing revenue is from U.S. military sources. It is also reflected in thr geographic distribution of shipyard jobs presented by the report. The greatest shipyard employment in ten states, of which six are where major shipbuilding yards specializing in military construction are located (Maine, Connecticut, California, Virginia, Louisiana, and Mississippi).

As the report noted. “The federal government, including the U.S. Navy, U.S. Army, and U.S. Coast Guard, remains an important source of demand for U.S. shipbuilders. While only 15 of the 1,459 vessels delivered in 2011 were delivered to the U.S. government, nearly all (8 out of 11) of the large deep-draft vessels delivered were delivered to U.S. government agencies (seven to the U.S. Navy and one to the National Oceanic and Atmospheric Administration).”

In addition, the data includes the inland waterways. The inland waterways are the largest commercial sector of the U.S. maritime industry. This can be seen in the data in terms of the number of vessels constructed annually. For example, in the calendar year 2012, the report states the number of commercial push towboats, inland tank barges and inland freight and deck barges was 1,146 out of a total production of 1,260 vessel of all kinds including military construction.

According to the report, U.S. shipyard employment has been relatively stable over the past 12 years in the range of between approximately 90,000 and 105,000 people directly employed by U.S. shipyards. The latest data from 2012 indicates there were 98,072 shipyard jobs in the U.S.

The MARAD report reinforces the perception that the U.S. shipbuilding and repairing industry is heavily dependent on military capital ship construction that is performed in six of the eight major U>S. shipbuilding yards, and, on the commercial side of the business, the private inland waterways sector.

The report confirms that the number of commercial deep draft oceangoing ships constructed in U.S. for the restricted Jones Act trades where U.S. built ships are required remains abysmally low. These are the ships needed for employment in the noncontiguous domestic trades – Alaska, Guam, Hawaii and Puerto Rico – where alternative modes of interstate surface transportation are not available due to geography.

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