PRESS RELEASE
FROM THE METAL TRADES DEPARTMENT (AFL-CIO)
815 16th St NW • Washington, DC 20006
FOR RELEASE: January 12, 2007
CONTACT: RONALD AULT, PRESIDENT
(202) 508-3705/ OR GREG KENEFICK (410) 263-7134
Metal Trades Department (AFL-CIO) Sues Coast Guard to Block Kit Ships
The Metal Trades Department of the AFL-CIO has sued the U.S. Coast Guard to block controversial rulings that violate the 80-year-old Jones Act to allow U.S. shipbuilders to mass produce so-called “kit ships.”
The suit, filed today in the U.S. District Court for the Eastern District of Pennsylvania, charges that a ruling issued on May 24, 2006 and affirmed on November 15, 2006 by the Coast Guard’s National Vessel Documentation Center, ignores the requirements of the Jones Act that stipulate that ships moving between U.S. ports must be “built in” the U.S. The Documentation Center’s rulings effectively authorized plans by Aker Shipyards Philadelphia (APSI) and NASSCO, a division of General Dynamics, to produce a series of tankers that are assembled from thousands of parts and modules imported from Korea. “If these ill-considered, illogical and unacceptable regulations remain in place, America will lose its shipbuilding industry completely,” declared Metal Trades Department
President Ron Ault.
U.S. shipbuilders now account for less than one percent of the world market share. Aside from an anemic flow of orders from the U.S. Navy, the nation’s six major shipbuilders have been counting on a surge in demand for modern double-hulled tankers to replace an outdated fleet delivering commodities to U.S. ports. The Coast Guard’s interpretation of the Jones Act now puts that prospect in jeopardy, Ault explained.
The Metal Trades Department estimates that 55,000 skilled shipbuilding workers it represents are directly imperiled. Another 250,000 jobs supported by U.S.-based marine equipment suppliers—pipe and chain manufacturers, specialty steel mills, valve producers, and manufacturers making propulsion equipment and specialty fittings—would quickly collapse.
“The American shipbuilding industry is the last remaining piece of heavy manufacturing still performed in the United States. Because of its high degree of specialization and the proportions of its products, it is efficient and capable of doing much more than it does today—possibly even building large containment vessels for nuclear plants for export. Yet, it could disappear overnight—along with vital institutional memory and skills. Aker and NASSCO got into this process willingly, but the remaining yards will be forced to follow or die,” Ault said.
Aker and NASSCO each entered into partnerships with two of Korea’s giant shipbuilding companies—Hyundai Mipo and Daewoo Shipbuilding, respectively. The terms of those contracts provide proprietary Korean designs for new tankers, along with stipulations that require the U.S. partners to exclusively use bow and stern assemblies, piping, winches, even entire engine rooms and crew quarters supplied by the Korean partners. On September 19, 2006, Aker launched the first in a series of 10 kit ships it plans to lease through one of its subsidiaries.
According to the lawsuit, “the preassembly and pre-outfitting of equipment modules and piping systems in foreign facilities is inconsistent with the plain language of the Coast Guard’s regulation, which... requires a vessel to be assembled entirely in the United States in order to qualify as ‘United States built.’ The preassembly and pre-outfitting of equipment modules and piping systems at foreign facilities is also inconsistent with the Jones Act, which was enacted specifically to protect the capability of the United States, and, by extension, United States shipyards and their employees, to produce commercial vessels, such as product tankers.”The Metal Trades has also called into question the Coast Guard’s timing in issuing regulations that enabled Aker and possibly NASSCO to begin these projects ahead of the effective date of new global safety standards issued by the International Association of Classification Societies. Any ships contracted before April 1, 2006 are exempt from the new rules.
Last November, the Coast Guard Documentation Center was named in a lawsuit filed by the Shipbuilders’ Council of America (SCA) and Pasha Hawaii Transport, challenging a decision to allow Matson Lines to refit three transport vessels in China at a cost of $45 million. Ironically, Aker is one of the 36 corporate members of the SCA. The Metal Trades also called upon lawmakers and policy officials at the local, state and federal level to investigate if Aker is in compliance with a regional compact with the Philadelphia Shipyard Development Corporation requiring Aker to provide training and shipbuilding jobs and to cultivate a network of suppliers and subcontractors in
Philadelphia and surrounding regions in return for $500 million in subsidies provided when the shipyard was converted from the old Philadelphia Naval Shipyard into the hands of private investors.
Formed in 1908, the Metal Trades Department is a constitutional department of the AFL-CIO. It acts as an umbrella organization, negotiating collective bargaining agreements under the National Labor Relations Act in multi-union private sector shipbuilding industrial, mining and petrochemical operations throughout the U.S. The Department provides the same services to affiliate unions in federal facilities.
# # #
KIT SHIP FACT SHEET
Kit Ships: New concept in ship construction using pre-assembled modules, assemblies and materials manufactured in Korea and transported via container ships to U.S. shipyards for final assembly—essentially bolting and welding. To date, only Aker Philadelphia and NASSCO in San Diego are engaged in this process.
Jobs at Stake: More than 55,000 direct-employed workers at U.S. shipyards. Another 250,000 employed through a marine supplier network located in virtually every state in the nation.
Safety: The Metal Trades Department has questioned whether these ships will comply with newly-adopted global construction and safety standards from the International Association of Classification Societies.
Jones Act: Passed in 1920 limits coast wise trade exclusively to ships “built in” the
United States. The Coast Guard is responsible for promulgating regulations related to the Jones Act and interpreting policy flowing from it.
Strategic national security significance of domestic shipbuilding industry (from a 2005 report by the Armed Services National Defense University):
“The commercial shipbuilding sector gets significantly less attention than the naval
shipbuilding sector, but is just as vital to the national security. Commercial ships not only guarantee access to vital transportation capability, but provide industrial base sustainment and a surge capability for ship construction. They supplement the shipbuilding industry with trained personnel, maritime engineering experience and an existing supply base. The outlook for our commercial yards is dire.”
The Metal Trades Department:
Founded in 1908, the Metal Trades Department is a constitutional department of the AFL-CIO. Acts as an umbrella organization, negotiating collective bargaining agreements under the National Labor Relations Act in multi-union private sector shipbuilding industrial, mining and petrochemical operations throughout the U.S. The Department provides the same services to affiliate unions in federal facilities.
Represents 500 employees at Aker, 55,000 shipyard workers nationwide.
NASSCO: Shipyard workers are represented by the International Brotherhood of Boilermakers and the International Association of Machinists.
Aker Philadelphia Shipyards Inc. (APSI): is the successor to Kvaerner, located at the site of the former Philadelphia Naval Shipyard.
The 1997 Compact: between the Philadelphia Shipyard Development Corp. and Kvaerner (now Aker) provided $500 million in subsidies to train local workers in shipbuilding and to develop a network of suppliers and subcontractors within the region.
Market Share: U.S. shipbuilders account for less than 1 percent of world shipbuilding market share.
# # #
Metal Trades Department, AFL-CiO • 815 16th Street, NW •Washington, DC 20006
Phone: 202-508-3705 • Fax: 202-508-3706 • email: metaltradesweb@gmail.com
