New Legislation Aims to Revive America’s Shockingly Small Shipbuilding Industry

By Elizabeth Brotherton-Bunch
Jul 23 2019 |
A giant floating crane sits in front of Busan Shipbuilding & Offshore Co., Ltd., in Busan, South Korea. Although the U.S. once led the world in shipbuilding, nearly all new shipbuilding now takes place overseas, with South Korea accounting for about 37 percent of global ship construction. | Getty Images

America is painstakingly behind the rest of the world when it comes to making ships. It’s a problem.

The United States is in the midst of an energy boom and is exporting a lot of liquefied natural gas (LNG) to the rest of the world.

But there’s a problem: The U.S. doesn’t have enough American-made ships to transport it.

Well, it doesn’t have any, actually.

The good ‘ole U-S-A is entirely reliant on foreign-made vessels to transport its LNG exports. In fact, America is embarrassingly dependent on the rest of the world for ships in general. Only one-third of 1 percent of new commercial shipbuilding now takes place in the United States.

Legislation introduced Tuesday by Rep. John Garamendi (D-Calif.) and Sen. Roger Wicker (R-Miss.) aims to begin to address this problem by requiring that vessels built in the United States transport 15 percent of total seaborn LNG exports by 2041 and 10 percent of total seaborne crude oil exports by 2033.

Although the percentages are relatively small, the legislators say that this requirement will spur the construction of more than 40 ships — 28 LNG carriers and 12 oil tankers — creating thousands of good-paying shipyard jobs.

But just as importantly, it also would begin to shore up a gaping hole in our national defense.

“This legislation would strengthen our shipbuilding industry, support American maritime jobs, and ensure the United States has enough American-flagged, crewed, and built ships to transport its growing oil and natural gas exports in times of conflict,” Wicker said. “Our geopolitical rivals have invested heavily in their shipbuilding capacity, and the U.S. should keep pace.”

The United States once led the world in shipbuilding, making more than 75 commercial ships in 1975 alone. But in 1981, the U.S. stopped subsidizing its shipbuilding industry, turning things over to the free market.

There was a problem, however. Other countries continued to subsidize their shipbuilding industries, including in places like Japan, South Korea and Europe. The U.S. government, meanwhile, did nothing to enforce its new laissez-faire outlook on making ships.

Foreign shipbuilders were gifted a massive competitive advantage, and the U.S. commercial shipbuilding industry fell into a steady decline. South Korea now makes up 37 percent of global ship construction, Japan maintains 27 percent, and China makes up 21 percent, according to the Eno Center for Transportation.

The shipbuilding that does take place in the United States today is focused on building warships for the U.S. Navy or for ships that confine their operations to routes within the United States.

And that’s only because the Jones Act requires that all goods transported by water between ports be built in the United States and owned and crewed by U.S. citizens or permanent residents.

But even that effort is very small. The current U.S. merchant marine consists of about 175 vessels that are on average, 30 years old.

The new legislation — aptly titled the Energizing American Shipbuilding Act — is aiming to use the LNG and crude oil boom to begin to rebuild the U.S. strategic domestic shipbuilding and maritime industries.

“Rising U.S. exports of America’s strategic LNG and crude oil exports present a unique opportunity to create middle-class jobs by strengthening our nation’s crucial domestic shipbuilding, advanced manufacturing, and maritime industries—which are key to national security and our ability to project American military power abroad,” Garamendi said, noting that Russia enacted similar requirements for its oil and natural gas exports in 2018.

“American shipyards and mariners are ready for the job, and our bill ensures they are no longer expected to compete against heavily subsidized foreign shipyards in Korea, China, and elsewhere.”

The Alliance for American Manufacturing (AAM) is among the many organizations backing the bill. We think it is a win-win — not only will it strengthen a very neglected part of our national defense, it will create thousands of shipbuilding jobs and even more throughout the industrial supply chain.

“The recent growth in U.S. energy exports offers a unique opportunity to foster a robust and resilient shipbuilding industry to meet our maritime commerce and security needs while also providing a boost to our economy,” said AAM President Scott Paul. “We encourage Congress to pass this commonsense legislation.”