U.S. Shipbuilding Industry Gets $1-Billion Boost : Aid: Loans are intended to help firms compete globally. San Diego’s Nassco to get $22.7 million.
Fulfilling a campaign promise during a 1992 visit to the West Coast’s only remaining private shipyard, President Clinton on Tuesday announced $1 billion worth of federally guaranteed loans designed to revitalize the shrunken U.S. shipbuilding industry.
The loans, aimed at helping domestic shipbuilders compete internationally and wean themselves from military contracts, include $22.7 million for National Steel & Shipbuilding Co. of San Diego.
The San Diego shipyard has 3,500 people working on a $2.5-billion backlog of Navy projects, and the loans will not lead immediately to more jobs, general counsel Sam Timmons said. But he said the money will pay for the equipment needed to make Nassco competitive with Japanese and Korean builders in bidding for commercial jobs.
Most of the loan money will go to shipyards in Louisiana and Virginia that expect to sign contracts to build ships for foreign customers. No U.S. shipyard has exported a commercial vessel since the mid-1950s.
McDermott Shipyard in Louisiana is in line to receive $726 million in loans to build 30 container ships for Saracen Group of Geneva, Switzerland. Newport News (Va.) Shipbuilding would get a $133-million loan agreement to build four oil tankers for Fleves Shipping of Piraeus, Greece.
Those deals require approval from the Transportation Department’s Maritime Administration, which is expected. Approved along with the San Diego project is a $132-million contract to Coastal Ship Inc. of Houston for two U.S.-flag barges.
The loan program was made possible by an act of Congress and nearly $100 million in federal appropriations last November. Tuesday’s announcement identified the first beneficiaries.
The loans will come from private banks but will carry federal guarantees that lower the cost to the borrowers by 10%. The government guarantees are similar to those routinely available to foreign shipyards and will create a more even playing field for U.S. shipbuilders, said John Stocker of the Shipbuilders Council of America, a trade group based in Arlington, Va.
U.S. shipyards once received government subsidies, but those were discontinued in the early 1980s under the Reagan Administration. That and defense cutbacks have caused a decline in U.S. shipbuilding jobs to 100,000 currently from 180,000 in 1979. Over that period, the number of U.S. shipyards building complete vessels has dwindled to 15 from 95, Stocker said.
Because of foreign yards’ competitive advantage, U.S. yards have all but conceded the international shipbuilding market to foreign firms over the the past few decades.