Slide 1 - Shipbuilders Council of America

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					        Shipbuilders Council of
               America
                      National Ship Repair Industry
                            Conference 2011
                          February 28th – March 3rd




The national trade association for U.S. shipbuilders, ship repairers, and shipyard suppliers. Founded in 1920
      SCA at a glance….

• SCA is the largest and most broadly-based national
  trade association representing the U.S. shipyard
  industry. SCA members build, repair and service
  America's fleet of commercial vessels.
• SCA members constitute the shipyard industrial base
  that maintains and repairs Navy combatant ships and
  other government craft, as well as builds small and
  midsized vessels for the U.S. Coast Guard, U.S. Navy
  and other government agencies.
            Shipyard Membership
•   Alaska Ship & Drydock, Inc.             •Intercoastal Marine Repair LLC
•   Allen Marine Inc.                       •Intracoastal City Dry Dock
•   American Maritime Holdings, Inc.        •Kvichak Marine Industries, Inc.
•   Austal USA                              •Jeffboat
•   BAE Systems Ship Repair                 •LEEVAC Industries, LLC
•   BAE Systems Southeast Shipyards, Inc.   •Lyon Shipyard, Inc.
•   Bollinger Shipyards, Inc.               •Main Iron Works
•   Breaux's Bay Craft                      •Moose Boats, Inc.
•   C&C Marine Maintenance, Inc.            •National Maintenance & Repair, Inc.
•   Chesapeake Shipbuilding Corp.           •Nichols Brothers Boat Builders
•   Colonna's Shipyard, Inc.                •North Florida Shipyards, Inc.
•   Conrad Industries, Inc.                 •Pacific Ship Repair & Fabrication
•   Derecktor Shipyards                     •Pelican Shipyard
•   Detyens Shipyards, Inc.                 •Puglia Engineering, Inc.
•   Earl Industries, LLC                    •Rozema Boat Works, Inc.
•   Fincantieri Marine Group                •RSI Group, Inc.
•   Fishing Vessel Owners Marine Ways       •Signal International, LLC
•   General Dynamics NASSCO                 •Southwest Shipyard L.P.
•   Gladding-Hearn Shipbuilding             •Todd Pacific Shipyards Corp.
•   Gulf Marine Repair Corp.                •United States Marine, Inc.
•   Gunderson LLC                           •Vigor Industrial LLC
                                            •VT Halter Marine, Inc.
                    Affiliate Membership
•   ABS                                           •Newman Martin and Buchan Limited
•   Alcoa, Inc.                                   •NSC Technologies
•   Ameri-Force, Inc.                             •Nucor Bar Mill Group
•   AMI International                             •Perennial Contracting LLC A
•   Aon Risk Consulting Arthur J. Gallagher       •Railway Specialties Corporation
    Risk Management Services                      •SeaBright Insurance Company
•   Blank Rome LLP                                •Sheppard, Mullin, Richter & Hampton LLP
•   Bruce S. Rosenblatt & Associates, LLC,        •Signal Administration, Inc.
•   CavCom, Inc. Dupont Sustainable Solutions     •Synergistic Dynamics, Inc (SDI)
•   eWorthy Technology                            •The American Equity Underwriters, Inc.
•   ESAB Welding & Cutting Products               •Tri- Tec Manufacturing
•   Hiller Investments Incorporated               •US Joiner LLC
•   Hoffman, Silver, Gilman & Blasco, P.C.        •Virginia Ship Repair Association, Inc.
•   Integro Insurance Brokers James A. Kelley &   (VSRA)
    Associates                                    •VSE Corporation
•   Jamestown Metal Marine Sales, Inc.            •W&O Supply
•   The Lincoln Electric Company
•   Lockton Insurance Brokers, LLC
                   Overview
• Shipyard Industry Profile
  – Commercial Fleet
     • Contracts
     • Trends
  – Government Contracts and Procurement
     • Trends
  – Maintenance, Modernization and Repair
     • Impact of Continuing Resolutions on Defense Readiness
• Looking Forward
  – Jones Act, Short Sea Shipping, Offshore Renewable
    Energy

                                                               5
Shipyard Industry Profile
            Commercial Industry Profile
•   U.S. accounts for less than 1% of the world’s shipbuilding output.
     – In the global marketplace, U.S. shipbuilders do not represent a significant market for
         suppliers.
•   Employment levels on a steady decline:
     – The shipbuilding industry in the United States employs more than 400,000 people.
         Direct shipbuilding employment of approximately 85,000 people (was 180,000 in
         1981).
     – Subcontractors and manufacturers of shipboard equipment account for the remaining
         approximately 315,000.
•   U.S. Commercial Ships
     – 110 Jones Act ships for U.S. coastwise trade, 54% of the Jones Act fleet is greater than
         25 years old. 89 Foreign built US Flag ships.




                                                                                            7
                                                                **Data courtesy of NASSCO
    Commercial Shipyard Deliveries
                                                  2009             2010       Net +/-
 Deliveries

 Offshore Service Vessels                         46               29         -17

 Tugs and Towboats                                136              81         -55

 Passenger Vessels >50ft                          27               23         -4

 Commercial Fishing >50ft                         11               8          -3

 Other self-propelled >50                         10               19         +9

 Large Oceangoing Barges                          14               14

 Small Inland & Coastal Barges <5,000 GT          912              1002       +90


 TOTAL                                            1156             1176       +20

**These figures are approximate values. Source: www.shipbuildinghistory.com
     Commercial Trends and Challenges
•   Oil Pollution Act of 1990
     – Some of the recent backlog of shipbuilding orders has been the result of
        OPA 90 replacements.
     – Double-hull requirement must be met by 2012, after which the backlog
        drops off significantly.
     – In the end, nearly $5 billion in double-hull tankers and tank barge
        construction and conversion work will take place by 2015 to meet the
        double-hull requirement under OPA 90.

•   Outer Continental Shelf Oil and Gas Production/Exploration
     – Before the Deepwater Horizon Disaster, the Offshore Marine Services
       Association estimated it’s members would spend $3 billion on vessels
       for the offshore oil patch in the Gulf of Mexico.**
     – Defacto moratorium for offshore oil and gas development has hurt the
       shipyard industry in both new construction and repair.
     – Expanded oil and gas development in the Gulf, East coast, and Alaska
       uncertain.


                                               **Information courtesy of OMSA
                                                                                9
Commercial Shipyards are
Now More Important Than
 Ever to Navy and Other
 Government Programs
                 Commercial Shipyards Train and Employ
                 the Skilled Labor Necessary to Construct
                      Navy and Government Vessels.

“… Marinette Marine is expected to add 1,000 employees by
  the middle of 2013 to service the contract…” “Economic
  studies showed that the LCS program, running at the rate of
  two ships per year, could generate a total of 5,000 new jobs
  in Wisconsin, including direct employment and indirect
  employment by suppliers, and 2,500 in Michigan…”
       With Navy deal, Marinette Marine sees jobs doubling by mid-2013 | The Business Journal

“Austal USA is expected to more than double its US workforce
  to around 3,800 employees”
       Marinelog, January 2011
             Navy Procurement Schedule:
                 A Changing Model
50

45

40

35

30

25

20

15

10

5

0
         FY09              FY10              FY11                 FY12                         FY13


-Yearly procurement numbers include major U.S. warships
-Includes MSC and special mission ships (e.g., T-AKE, MLP, T-AGM)
-Includes Egyptian FMC                                                              Mid Tier Shipyards
-Does not include the ~100 average per year procurement of small
                                                                                    Big 4 Shipyards
            boats and craft for U.S. and Foreign navies
-Does not include aircraft carriers or submarines
                                                       *Slide Courtesy of PEO Ships Presentation to SCA, April 29, 2009
    Looking Ahead

Defense of the Jones Act
      Deepwater Horizon Disaster
 A misconception of the Gulf Oil Spill
 response was –
• Jones Act inhibited the clean up effort
• The White House turned away useful response
  vessels because of the Jones Act

• President Obama refused to waive the Jones
  Act as a favor to labor unions
       Defense of the Jones Act
• Jones Act means a skilled American workforce
  and strategic merchant marine to provide
  sealift capabilities.

• Jones Acts means U.S. jobs.

• Jones Acts means National Security.
    PricewaterhouseCoopers Economic Study
         for the Transportation Institute

 Jones Act-related employment   499,676 jobs
 Economic output                $100.3 billion
 Value-added                    $ 45.9 billion
 Labor compensation             $ 29.1 billion
 Jones Act-related taxes        $ 11.4 billion
   Jones Act Industry Jobs (By State)
  State              Jobs
1) Louisiana         61,656
2) Texas              44,112
3) California         34,517
4) Washington         28,664
5) New York           28,578
6) Florida            27,249
7) Hawaii             23,225
8) Indiana           18,343
9) Illinois           18,027
10)Tennessee          16,625
     The Jones Act is Vital to
        National Security

“…The repeal of the Jones Act will
 erode U.S. shipbuilding industrial
 base, U.S. flagged vessel and U.S.
    Merchant Marine capacity,
   hampering our ability to meet
 strategic sealift requirements and
        Navy shipbuilding.”
     Statement of the US Navy, September 2010
        The Jones Act is Vital to
           National Security
“For decades, U.S. merchant mariners have
provided essential support for the U.S. Navy
  during times of war and national crisis.
Repealing the Jones Act would remove that
support at a time when we are fighting two
 wars and facing a continuing threat from
         international terrorism.”

Statement of the US Navy, September 2010
         The Jones Act is Vital to
            National Security
• “We simply cannot, as a nation, fight the
  fight without the partnership of the
  commercial maritime industry…Our
  nation’s organic sealift capability…would
  literally be useless without the support of the
  commercial maritime industry.”

--USTRANSCOM Commander General John
  W. Handy, USAF.
Looking Ahead

New Markets
       America’s Marine Highway

• A wide range of vessel designs have been proposed
  for Marine Highways markets including:
   – traditional tug-barge
   – articulated tug-barge both in container on barge and Ro-Ro
     varieties
   – Rail-on/rail off
   – high speed trimaran trailerships
   – high speed Ro-Ro monohulls
   – both larger and smaller traditional Ro-Ro’s
America’s Marine Highway
 “Green Transportation”




             *courtesy of americasmarinehighways.com
         America’s Marine Highway
• Roadblocks
   – The Harbor Maintenance Tax (HMT) was implemented in 1986 as a
     federal tax on freight cargo and cruise ship passenger tickets.
        • Exempting “coastwise” shipping from the HMT is projected to cost the
          federal government only a small fraction of this revenue, but would
          provide substantial encouragement to expand the use of coastal waterways
          for cargo shipping.
   – Lack of tax and investment incentives, landside infrastructure costs are
     currently prohibitive.
   – Lack of cross sector support
• Moving ahead…
    – Last Congress bills were introduced in both the House & Senate amending the
      Internal Revenue Code to exempt certain shipping from the harbor maintenance
      tax.
          Offshore Renewable Energy
• Emerging market in the United States as green energy
  becomes more of a focus.
   – Cape Wind, Blue North, as well as proposals off of New
     Jersey, Texas, Rhode Island and the Great Lakes
• The Obama Administration has made renewable energy,
  specifically offshore renewable energy part of its “green
  jobs” initiatives.
• Maryland and other States are passing laws to require a
  percentage of future energy sources come from renewable
  energy production.
• Offshore renewable energy is the first new Jones Act
  market in a generation.
                Thank You


To learn more about SCA please visit our Web site at
                www.shipbuilders.org

				
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