Nassco Pins Its Hopes on Bill Before Congress : Competition: The shipbuilder says the legislation could prove to be the salvation of a dying industry.

Once a thriving domestic industry, U.S. commercial shipbuilding is now virtually extinct.

Of the 1,000 commercial cargo and passenger ships under construction around the world, only one is being built in a U.S. shipyard, and that one, a 713-foot container cargo vessel for Matson Navigation, is nearing completion at San Diego’s National Steel & Shipbuilding Co. yard on San Diego Bay.

Being the sole member of an exclusive club, however, is little consolation these days to Nassco, an old-line shipbuilding firm that has witnessed the near extinction of the U.S. industry and the concomitant rise of foreign yards, particularly in Japan, Germany and South Korea.

Considering its sinking commercial business and fearful of the effects of a shrinking defense budget on its work for the Navy, Nassco says it and 4,300 local jobs may fade into the same oblivion as 40 U.S. shipyards that have gone broke since 1981. Only Nassco and half a dozen other U.S. yards survive.

For those reasons, Nassco and the others are hopeful that a bill now before Congress will prove their salvation. The bill, which has already passed the House and been forwarded to the Senate, would prohibit all foreign ships built with government subsidies from entering U.S. ports. Only new foreign ships built after the law’s passage would be affected.

“If this bill passes the Senate, it will mean that the U.S. shipbuilding industry can survive the downturn in defense spending and become not just healthy but internationally competitive, because we will be exporting ships by the end of the decade,” said John Stocker, president of the Shipbuilders Council of America, an Arlington, Va.-based trade group whose membership is much diminished from past years.

Nassco chief financial officer Fred Hallett said his company is at a competitive disadvantage because virtually all major foreign governments subsidize their shipbuilding by paying 20% to 30% of the cost of a ship built on home soil. Such support has enabled Japan to capture a 40% market share of the shipbuilding industry and Germany a 20% share, Hallett said.

U.S. shipbuilders once enjoyed similar subsidies until President Reagan abolished them in 1981. Since then, it’s been a long slide down for domestic companies, which now control less than 1% of the international market, down from 10% in 1981. The once dominant Todd, Bethlehem and Lockheed shipyards are now but fading memories as builders of new ships.

According to Stocker of the Shipbuilders Council of America, the slide has cost 120,000 shipyard workers their jobs, leaving about 109,000 employees in the industry. That’s despite the fact that journeyman workers at Nassco earn $12 an hour, contrasted with the average of $14 an hour paid to Japanese workers and the $15 for German shipyard workers, Hallett said.

“We are not losing work to low-cost foreign shipyards, we are losing it to higher-cost subsidized foreign shipyards,” Hallett said. He conceded, however, that “their efficiency is greater, because we are building one ship at a time, and they are doing runs of 25 to 30 ships at once.”

The only reason Nassco won the Matson Navigation contract, Hallett said, is because the ship will sail a route from San Francisco to Hawaii and back. Under the Jones Act, Matson is required to contract only with U.S. shipbuilders to produce its ships that move totally within the United States. The $129-million ship is capable of transporting 1,650 containers, each measuring 24 feet in length.

But the Matson job is Nassco’s only commercial contract in sight, and the company is understandably concerned about its future once it completes work on the other ships in its backlog: three AOE class combat support ships for the Navy. The last of the three high-speed, 554-foot ships, all of which are under construction, will be delivered in mid-1994.

To lessen its reliance on the Navy, Nassco last year began marketing its own design for a double-hulled oil tanker, a ship that Nassco says will lessen the chance of oil spills. By law, oil companies are required to phase out non-double-hulled tankers starting in 1996, but Nassco is trying to persuade them to accelerate the conversion.

So far, Nassco hasn’t sold a single tanker with the new design, which the company began developing after the Alaskan spill by the Exxon Valdez oil tanker in 1989.

“We’ve been in continuing dialogue with shipping firms but, as yet, no orders have been placed,” Hallett said.

The bill going before the Senate, HR 2056, was introduced by Rep. Sam Gibbons, whose Tampa, Fla., district includes George Steinbrenner’s American Shipbuilding yard. Steinbrenner, who also owns the New York Yankees, is a strong backer of the legislation.