Washington, D.C. — The following are opening remarks, as prepared for delivery, from Ranking Member of the House Committee on Transportation and Infrastructure Rick Larsen (D-WA) and Ranking Member of the Subcommittee on Coast Guard and Maritime Transportation Salud Carbajal (D-CA) during today’s joint hearing with the House Committee on Armed Services’ Subcommittee on Seapower and Projection Forces titled, "Revitalizing Shipbuilding and the Maritime Industrial Base."
More information on the hearing can be found here.
Ranking Member Larsen:
Thank you, Chairman Kelly, Chairman Ezell, Ranking Member Courtney and Ranking Member Carbajal for calling this timely hearing.
Navy and Coast Guard shipbuilding has been plagued by high costs and delays. The causes of these problems are twofold.
First, the Services make things difficult for shipyards. They begin construction with incomplete designs, make changes throughout construction and fail to produce timely and long-term Capital Investment Plans (CIP).
Without an understanding of future business opportunities, shipyards cannot invest in infrastructure or grow their workforce.
Second, the capacity to build large commercial vessels in the U.S. has shrunk to an unacceptable level. There is not enough consistent demand for new military vessels in the U.S. to support a robust shipbuilding industry, and the result is more risk and higher costs borne by the government.
In fact, I’m witnessing the effect of sporadic and unpredictable shipbuilding in my backyard at Everett Ship Repair. I look forward to hearing from the Navy on how it plans to sustain that shipyard and others in order to maintain sustainment capacity.
Due to foreign subsidies and the “flags of convenience” system, where shipowners are rewarded for hiring low-cost mariners and avoiding American taxes and regulations, the American-flagged internationally trading fleet has shrunk to 80 ships and accounts for less than 1% of the transportation of our imports and exports.
If we are to reverse the downward trends in shipping and shipbuilding, Congress and the Administration must act now.
I’m glad that we have the opportunity to discuss the SHIPS Act today with its two cosponsors, Chairman Kelly and Rep. Garamendi. Their bill comprehensively addresses decades of neglect across every facet of the maritime industry.
Most importantly, the SHIPS Act recognizes that, to be successful over the long run, we can’t just build vessels—we must create an environment where those vessels can compete for cargo on the open market.
Any policy to revitalize the maritime industry must start with the Jones Act—the bedrock of American shipbuilding.
The President claimed that fuel prices would be alleviated by his unnecessary waiver of the Jones Act, but we are seeing the reality at the pump.
Despite the Jones Act waiver covering more than 500 different products, there have been only 10 voyages under the waiver. That’s because American ships crewed by American mariners simply aren’t more expensive.
The breath of the waiver is too broad, its length is too long and extending it will not lead to lower gas prices for Americans.
If he is serious about lowering prices, the President would end the war in Iran.
The message from the Transportation and Infrastructure Committee is clear—the Jones Act is important to our national and economic security and it is here to stay.
While the President’s misguided Jones Act waiver undercuts our efforts to revitalize the maritime industry, he got some things right in the Maritime Action Plan (“MAP”).
Like the SHIPS Act, the MAP takes a comprehensive approach to make the American maritime industry truly competitive.
The MAP recognizes what this committee and I have been saying for years: we need to invest in our domestic shipyards. We do this by fully funding the loan and grant programs and creating incentives to keep the work flowing.
The Small Shipyard Grant Program and the Capital Construction Fund are two great examples of where these federal investments can reap exponential rewards.
However, let me be clear. I support the Small Shipyard Grant Program, not an “all-shipyard” program as the MAP proposes.
Now is not the time to blindly invest federal dollars into large shipyards. We need to ensure that federal efforts will sustain the commercial industry which will, in turn, deliver military vessels at competitive prices.
I was recently at the Port of Everett for the christening of the Defiant, a first-of-its-kind autonomous maritime platform with the potential to transform the way ships are designed, built, and maintained.
The Defiant represents a change in shipbuilding that benefits communities like Everett. Shipbuilding can be maintained in smaller shipyards, bringing economic investments to small businesses and local ports.
I look forward to hearing from the panel today to discuss these initiatives and how we can best position our efforts in the industry.
I yield back.
Ranking Member Carbajal:
Good afternoon, and thank you, Chairman Kelly and Chairman Ezell, for calling today’s joint hearing.
As a member of both CGMT and HASC, I am excited to talk about revitalizing our maritime industrial base, not just for military shipbuilding but also for the entire commercial maritime sector.
I have said it before, and I will say it again. If we want to be a dominant maritime power, we must act now. As demonstrated by COVID, droughts in the Panama Canal and now the President’s misguided Iran war, our maritime supply chain is delicate and we cannot remain reliant on foreign shipping lines—some of which are adversarial state-owned enterprises.
We’re currently facing a critical deficit in the number of U.S. Shipyards, U.S. mariners, and U.S. vessels. This hearing highlights just how far behind the curve we are in terms of production and market share.
Despite significant Congressional funding, the U.S. Coast Guard and the U.S. Navy have faced challenges in procuring new vessels.
To lower prices and meet deadlines, the Navy and the Coast Guard need to do better. Long term planning, complete designs and limited change orders are industry standard in commercial shipbuilding and, not surprisingly, construction is cheaper and deadlines are met.
While there is something to be said about the two services’ own internal procurement issues, an equally pressing problem is that the current state of our U.S. Shipyards simply cannot keep pace with the demand.
Often times the Coast Guard loses out on shipyard work because bigger Navy contracts push them out of the production line. The Coast Guard cannot continue to fund unproven shipyards with no return on investment. The Coast Guard’s budget simply isn’t capable of absorbing the losses.
It is our responsibility in Congress to find solutions to these problems.
The Jones Act is the foundation of the United States maritime industry. At its core, it is designed to protect the U.S. commercial shipbuilding industry and requires any vessel participating in coastwise trade to be United States-owned, United States-crewed, and United States-built. The law is especially important in this context because it ensures an ability to carry our domestic commerce and build ships.
We have an opportunity now more than ever to leverage the Jones Act and other programs that bolster the U.S. flagged fleet to create incentives that will sustain the industry long-term.
I appreciate Chairman Kelly and Rep. Garamendi’s leadership on the SHIPS Act as it is a comprehensive jumpstart to growing the American maritime industry.
If the United States wants to recover lost ground and maintain the steady state flow of goods, we must continue to prioritize the Maritime Security Program, Tanker Security Program and increase to Cargo Preference. We must also increase our investment in programs such as the Port Infrastructure Development Program, the Small Shipyard Grant Program, the Federal Ship Financing Program and the Capital Construction Fund.
Growing our shipyard industrial base must be a top priority. Our commercial mariners and our military depend on reliable shipyards to build and repair vessels. There needs to be a consistent book of business for the shipyards to keep the industry stable and to keep the workforce proficient.
With the Administration’s priorities laid out in the Maritime Action Plan, momentum is on our side. The SHIPS Act deserves our attention because it is a vehicle for immediate action that will have an immediate impact.
I am hopeful that this hearing can shed light on how we can make immediate positive changes to the maritime industry. The U.S. must return to a global competitor in shipping and shipbuilding.
Thank you, and I yield back.
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