Hussein May Help U.S. Shipping

You may never have heard of a tiny, southwest Pacific island group called Vanuatu that was once known as New Hebrides and became an independent nation in 1980, with a population of just 115,000.

But then you probably don’t own a shipping company either.

If you did, you would know that Vanuatu has joined Liberia, Panama, the Bahamas and a few other countries that for years have been selling “flags of convenience,” which, along with drastic cuts in U.S. shipbuilding, have helped break the once-proud U.S. maritime industry. Due to some tricky maritime laws, it is highly profitable for American shipping companies to buy the use of the flags of those small countries, which have no fleets of their own. Flying the flags lets the companies escape most U.S. taxes, even minimal safety and health rules and almost all fair labor standards.

Shipping companies in other countries too save a small fortune every time one of their vessels sails under the “protection” of a flag of convenience.

The U.S.-owned companies also avoid paying wages and benefits earned by American sailors who work under American flags.

The flag-switching game has caused a devastating reduction in the number of ships flying the American flag, dropping it to 379 today from more than 5,000 after World War II.

The number of jobs for U.S. sailors has dropped in just 20 years from nearly 40,000 to about 9,000, which means there isn’t much left of the sailing side of our merchant marine industry.

Our sailors cannot live on the low wages paid to most foreign workers. Today, nearly 80% of all unlicensed seamen on merchant ships of the world are from Asia, mostly the southeastern part--not because they are the best but because they are the cheapest and the most easily exploited.

Maritime unions of several countries have managed to get agreements with many large shipping companies that theoretically set minimum wages. While companies frequently cheat on the agreements, the amount foreign sailors are supposed to get shows why the flags of Vanuatu and other small nations are so attractive to shipping firms. A foreign seaman is supposed to get $275 a month for working on an American-owned ship flying a flag of convenience. The pay jumps to $1,569 a month for those working on a ship flying the U.S. flag.

The shipbuilding side of our maritime industry is also pretty much a thing of the past. There is only one oceangoing ship that will fly an American flag now under construction in the United States. It is being built in San Diego.

Last year, the once-flourishing Todd Shipyard in San Pedro, which employed more than 6,000 at its peak, closed after 72 years, unable to compete against low-wage, government-subsidized foreign yards. Todd’s San Pedro yard wasn’t even able to compete against the few remaining U.S. shipyards, mostly because there was constant strife between managers and workers.

With the help of the Industrial Union of Marine and Shipbuilding Workers, the former Todd workers now have a chance to reopen at least part of the San Pedro facility under an employee stock ownership plan set up by retired Navy Adm. Stuart F. Platt and a union financial consultant, Brian Freeman.

But the City of Los Angeles, which owns the property and equipment, isn’t ready to help Todd’s former workers lease the property for a small sum initially and then buy it outright later. Instead, the city agreed to let a group of former Todd managers first try to negotiate an agreement to take over the operation. The former managers don’t want a yard owned by the workers, and they are convinced that their plan is more viable than an employee-owned one, says the managers’ human resources director, John Cherensky, who was captain of the battleship USS Missouri until June.

Freeman, the employee adviser, said the yard failed under the leadership of the ex-managers, and he predicts that they won’t be able to finance their deal and that that will leave the field open for the employee ownership plan.

One way or another, it looks as though the shipyard may be in business again soon--after the financial battle ends between the managers following the former Navy captain and the workers led by the retired admiral.

One reason for that happy prospect, and perhaps a brighter future for the industry in general, is that the crisis over Iraq’s aggression in the Gulf has stimulated renewed concern over the deplorable state of our maritime industry. Saddam Hussein has helped publicize how unprepared we are to use our own ships and crews in a military emergency.

But there is also need for revitalizing the industry for commercial reasons. America is still the largest trading nation in the world, but U.S. ships flying the American flag carry only 3.9% of our own waterborne commerce. Forty-five percent is carried by ships shamefully flying those flags so convenient and profitable for shipping companies and so economically disastrous for American workers.

Other foreign ships carry the rest of our waterborne commerce under their own flags. Congress is now considering legislation to curb the exploitative use of flags of convenience, but passage won’t come easily.

Even more difficult will be to regain our shipbuilding prowess, which was lost for many reasons--such as foreign governments’ direct subsidies to their shipbuilders, foreign government guarantees for low-interest loans, outright state ownership of shipyards and favorable tax laws. Such advantages are rare in this country.

These factors are entangled in the latest round of global trade negotiations, which are bogged down badly. However, thanks in part to the aggression of Saddam Hussein, there is a new awareness in this country of the need to revive our meager shipbuilding industry and provide decent jobs for those who want to sail in our merchant marine fleet.