Wednesday, April 30, 2008

Protectionist Legislation, The Jones Act

Ron Ault,
Metal Trades Department, AFL-CIO

Sometime I feel like Don Quixote, tilting at windmills. Fighting against the U.S. federal government, the combined might of four giant, multi-national corporations, the Maritime Labor Organizations, the U.S. Ship owners and a lot of heavy political hitters in the Philadelphia region could make you feel slightly paranoid. My wife tells me she wants me to increase my life insurance policy…such was the case last Thursday, April 17, 2008, when we appeared in Philadelphia federal district court in our lawsuit (PMTC v. Allen, et al.) against the U.S. Coast Guard whacky interpretation of the Jones Act that reverses the original intent of Congress and is plainly at odds with the requirements of the law. This is our third consecutive federal lawsuit against the Bush Administration on behalf of America’s workers.

Our lawsuit is really simple- The U.S. Coast Guard is allowing Aker Philadelphia Shipyard (we represent the workers) to partner with HMD (Hyundai Mipo Dockyards South Korean Shipyards) and jointly build the U.S. double hull Product Tankers (oil tankers). Aker basically builds most of the outer hull of these ships while HMD builds or buys everything else in South Korea and ships it over prefabricated and assembled to Aker Philadelphia Shipyard. Since we filed our lawsuit, General Dynamics National Steel Shipyard has developed a similar partnership with Daewoo South Korean shipyards also using South Korean prefabricated preassembled kit ships. This is contrary to the clear and plain language of the Jones Act.

The Jones Act (as described by the Coast Guard and its Justice Department lawyers) is an 80 year old “protectionist law” that protects American shipbuilding, American crews and American ship owners from foreign competition for port-to-port, U.S. coastal trade. The Jones Act requires U.S. flagged ships to be manufactured in the USA, assembled entirely in the USA, crewed by U.S. crews and owned by U.S. citizens. The purpose of the Jones Act isd to insure a robust U.S. Merchant Marine and U.S. Shipbuilding Industry in the event of national emergencies. For 80 years ships built for the Jones Act were made in the USA and assembled entirely in the USA. “PMTC v. Allen” is the first federal Jones Act lawsuit over the building of a U.S. vessel in the history of the Jones Act. Why? Because this is the first time anyone has “interpreted” the Jones Act to allow Hyundai Mipo Dockyards to build the guts of the ship, assemble all these foreign parts in their massive South Korea shipyards in huge “modules” of completed systems (hydraulics systems, Engine room systems, compressed air systems, complete deck winches and cranes with motors, cable and electrical controls, brake assemblies, etc. all painted and piped up, ready to operate. No U.S. assembly required.

I was saddened to witness the U.S. Department of Justice aggressively defending the Coast Guard’s actions in this case in federal court. One argument I heard was that the Coast Guard was advancing two of its three interests under the Jones Act by fostering a robust US Merchant Marine and a US Shipping interest at the expense of US Shipbuilding. The government indicated to the judge that the cost of building a ship in the US would be too high if it were built entirely in the US and that the Coast Guard had been making rules for many years that allowed U.S. Shipbuilders to use foreign parts to build Jones Act ships. They argued that these Korean built modules of completed assemblies (some weighing several tons and as big as 60 feet by 40 feet) were merely “parts” under the Coast Guard interpretation and as long as they were lowered into a hull in the U.S. for final “assembly” they met the requirements of the Jones Act. The Justice Department attorneys went on to argue that the Union should be happy that we are getting any work on new construction, that if we are successful in our lawsuit it might become too expensive to build Jones Act ships in the USA. And if the judge did find all this just too much to swallow, that she had to give deference to the Coast Guard’s interpretation of “manufactured in the USA and assembled entirely in the U.S.” unless she found that interpretation so outrageous as it was completely contrary to the law.

Why? Why is the Bush Administration so anti “Made in the U.S.A.” that they would go to such extremes as to disadvantage American business and reduce our national defense capabilities? This Administration has chosen again and again to give preference to foreign suppliers over American business:
• Sikorsky Aviation in New York was the lead defense contractor to build the new presidential helicopter (the next President will ride in it). However, the Bush Administration selected a European consortium headed up by an Italian corporation for the contract. Sikorsky’s helicopter was determined to be a better and safer helicopter than the Italian helicopter, but that did not matter. Neither did the requirements of Title 10, the “Buy American Act” that require goods and services for the U.S. military be purchased “made in the U.S.A.” whenever possible. This “Presidential Helicopter” is a military helicopter. In fact, under Bush the “Buy American Act” has been waived so often it is essentially unenforced. We buy our electronic chips for Navy sonar buoys from Communist China (funny, we can’t detect Chinese submarines with them), M-16 .223 ammo from Israel and other foreign countries while we lay off Remington ammo workers in Loneoak, Arkansas, and—still in today’s headlines—the European Airbus $4 billion initial contract for airborne refueling tankers (with an additional 40 billion dollars of contract options). In fact, we buy so much of our military hardware and supplies from foreign sources that we have lost the ability for a war time industrial surge capacity in America. America would not be able to defend herself if our foreign sources refused to sell us these essential manufactured military goods. We do not have stockpiles of these supplies any more…because we practice “just in time inventory”…- In the event of a shooting war, if our defense materials are not delivered in time we would have no choice but surrender our nation or pull the all out nuclear trigger of Armageddon. There is a passage in the Bible that says “there will be wars and rumors of war until the end of time.”

80 years ago a far sighted and patriotic Congress foresaw such a possibility and declared that it was in America’s strategic interests to have a robust U.S. Shipbuilding industry to protect our island nation in time of national emergency. They passed and the President signed the Jones Act into a law that has served this nation well. Indeed, shipyards are our nation’s defense arsenal. Obviously, the Coast Guard has lost sight of that purpose, we’re hopeful that the courts will put them back on the right track.
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paul the pirate (Yar!) said...

We can all hope that last week's victory against Seabulk is the beginning of a more aggressive policy towards cleaning up the Coast Guard's horrific record of watering down the Jones Act.

This issue is so far-reaching in the US marine trades, and you folks have so much populist support- I'm a little surprised that I haven't heard more noise from the AFL-CIO.

Based on the current US Shipping construction at NASSCO, and AHL's recent keel-laying at Atlantic Marine, I'd say that the USCG's comments about new construction being impossible in the US are not only outright wrong, but maliciously so. Granted, the USCG hasn't done anything right other than lifesaving, but the arrogance of whoever it is that they were able to find to represent them is astounding.

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Anonymous said...

This issue is so far-reaching in the US marine trades, and you folks have so much populist support- I'm a little surprised that I haven't heard more noise from the AFL-CIO.

no result so far.....


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