1994 US INDUSTRIAL OUTLOOK Chapter 21 Shipbuilding and Repair The Navy's proposed FY 1994-99 shipbuilding program will average only 8 ships per year, compared with an average of 19 ships annually in the 1980's. New commercial orders are unlikely at the major shipyards. However, the second-tier shipyards--small or medium-size facilities--face better prospects because of the variety of vessels they are building for use on the inland and coastal waterways. Repair work will continue to be an important source of income for U.S. shipyards. Before reading this chapter, please see "Getting the Most Out of Outlook '94" on page 1. It will answer questions you may have concerning data collection procedures, factors affecting trade data, forecasting methodology, the use of constant dollars, the difference between industry and product data, sources and references, and the Standard Industrial Classification (SIC) system. For a discussion of other topics related to this chapter, see chapters 7 (Construction Materials) and 40 (Transportation Services). World Market The number of ships on order or under construction for the world market declined in 1993. As of mid-year, the world orderbook for merchant vessels 100 gross tons (gt) and over consisted of 2,133 vessels, totaling 35.1 million gt. This reflects a decline of 11.5 percent from the 2,410 vessels on order a year earlier, and a decrease of about 15 percent in gross tonnage from 41.4 million gt of vessels. The higher tonnage decrease is due largely to a decline of about 4 percent in the average size of merchant ships on order, from 17,180 gt to 16,434 gt. Japan continues to lead the world in merchant shipbuilding. In mid-1993, it accounted for more than 31 percent of the gross tonnage of merchant ships on order, followed by South Korea (about 20 percent) and China (about 5 percent). Denmark, which was third in 1992, fell to fifth place in 1993, with approximately 4 percent. The United States was 27th, having only 0.2 percent of the gross tonnage on order. U.S. shipbuilders have had to contend with substantially reduced levels of domestic ship procurement reserved under Federal law. U.S. Shipbuilding The value of work completed by U.S. shipyards in 1993 totaled $9.8 billion, down nearly 4 percent in constant dollars from 1992. The continuing depressed state of the commercial shipbuilding industry in the United States and the winding down of military procurement have caused some U.S. shipyards to close or enter into bankruptcy proceedings during the past few years. The benchmark used for tracking the U.S. shipbuilding industry has been the active shipbuilding base (ASB), defined by shipyard capability and business criteria. Because of the significant reduction in new construction of ships, especially 1,000 gross tons and over, the ASB has been replaced by a base consisting primarily of shipyard capability. The new benchmark is the U.S. major shipbuilding base (MSB), defined as privately owned shipyards that are open and have at least one shipbuilding position, either an inclined way, a side-launching platform, or a building basin capable of accommodating a vessel 122 meters in length or over. With few exceptions, these shipbuilding facilities also are major repair facilities with drydocking capability. Under the new definition, there were 19 major shipbuilding facilities in the United States on October 1, 1993 (14 shipyards in the former ASB). According to the U.S. Department of Labor, aggregate employment in shipbuilding and repair was 109,000 in 1993, down from 123,000 the year before. The MSB shipyards employ about 73 percent of the total work force of the shipbuilding and ship repair industry. The remaining 27 percent are in the 550 additional establishments (with 10 or more employees) classified under SIC 3731 (Shipbuilding and Repairing). Not included in SIC 3731 are nine Government-owned shipyards, which do not engage in new construction, but rather overhaul and repair Navy and Coast Guard ships. The Maritime Administration (MARAD) provides indirect assistance to U.S. shipowners through the Federal Ship Mortgage Insurance (Title XI) and Capital Construction Fund programs. The Federal Government guarantees repayment of private sector mortgage-loan obligations for operators' purchase of ships from U.S. shipyards. Also, MARAD permits U.S. operators to establish a capital construction fund. The operator can use tax-deferred dollars in the fund for qualified withdrawals to procure new or reconstructed vessels from U.S. shipyards. Most importantly, the Federal Government provides significant direct support to the industry through the purchase and repair of ships, and the procurement of goods and services from a large number of shipyards and related industries. Principal contracting Government agencies include the Naval Sea Systems Command, the Military Sealift Command, the Army Corps of Engineers, the U.S. Coast Guard, the National Oceanic and Atmospheric Administration (NOAA), the National Science Foundation, and MARAD. The U.S. ship construction subsidy program has not been funded since 1981. Negotiations within the Organization for Economic Cooperation and Development (major industrial countries), aimed at eliminating all subsidies to the shipbuilding and ship repair industry, collapsed in April 1992 after nearly 3 years. However, negotiations resumed in September 1993 on various aspects of a draft agreement to terminate shipbuilding and repair subsidies. Topics included export credits, injurious pricing (i.e., ship dumping), and home credit schemes. In addition to the United States, participants in the meetings are Japan, South Korea, Finland, Norway, Sweden, and the European Commission, representing the 12 members of the European Community. At the same time, the U.S. Congress is considering bills which would penalize countries or persons involved in foreign shipbuilding subsidies. Penalties include the limitation of sailings or cargo carried to the United States; refusal of clearance to enter this country; denial of vessel entry into the United States; and imposition of fees of between $500,000 and $1 million for violations. Military Ship Construction During the 1980's, the U.S. Navy commenced the largest combatant ship construction program in peacetime history (nearly $100 billion was appropriated). In 1993, the Navy's ship construction projects continued to dominate the workload in U.S. shipyards. During October 1992-September 1993, 18 Navy vessels of 1,000 light displacement tons (ldt) or larger were ordered from U.S. private shipyards, while 24 other Navy vessels were delivered. As of October 1, 1993, Navy vessels on order or under construction of 1,000 ldt or larger totaled 94 ships, of which 25 are scheduled to be delivered by the end of 1994. They are being constructed in 12 privately owned U.S. shipyards (Table 1). However, as a consequence of a severely diminished ship construction budget, the Navy's program will be sharply reduced during the remainder of this decade. Most U.S. shipyards do not have the experience or expertise required to construct sophisticated naval combatant vessels. The Navy's T-ship projects, however, are providing some work for three private U.S. shipyards that traditionally have relied on commercial ship construction. These projects are for the building of civilian-manned Navy auxiliary ships under the control of the Military Sealift Command. As of October 1, 1993, there were 10 T-ships on order or under construction, down from 14 the previous year. During 1993, Navy programs continued to account for about 90 percent of the employment at those shipyards performing new Navy construction and repair work. About 90 percent of Navy shipbuilding funds have been concentrated in only five private shipyards. Commercial Ship Construction In 1993, the U.S. shipbuilding industry received no new orders for ocean-going commercial ships. As of October 1, 1993, the U.S. orderbook for commercial shipbuilding consisted of one ship--a 24,000 dwt, 160-meter sulfur carrier under construction at McDermott scheduled for delivery in July 1994 (Figure 21-1). Another vessel, the American Queen, which is being built by McDermott's shipyard, is 3,195 gt, well over the 1,000 gross-ton criterion for this category, but it is not ocean-going. However, it is a significant shipyard contract of $60 million and will become the largest paddlewheel boat ever built. Passenger and Cruise Vessels U.S. shipyards have not been involved with any major construction, conversion, or overhaul projects of ocean-going passenger cruise ships since 1991. Many U.S. shipyards, however, have been increasingly involved in the design and construction of passenger, cruise, dining, and gaming vessels to be employed on the U.S. coastal and inland waterways. These projects have been generated by the enactment of state legislation permitting riverboat gambling and the Flower Banks National Marine Sanctuary Act, which allows gambling and gaming devices on board U.S. flag ships on "cruises to nowhere." Atlantic Marine has completed refurbishing the former Royal Viking Sky into the latest "love boat," named the Golden Princess. This P&O cruise vessel is 28,000 gt and carries 830 passengers. Although not classified as a passenger/cruise vessel, Nichols Bros. Boat Builders has delivered the Kona Aggressor II, the latest catamaran dive boat. The vessel is 24 meters long, has full accommodations for dining and recreation, has five state rooms, and includes a dive platform aft. The vessel is one of several being used in charter operations in eight different Kona coast locations. Service Marine Industries delivered the Odyssey II, a 61-meter long, 800 passenger, dinner boat for service on Lake Michigan in the Chicago area. River boat gambling continues on the rise with new boats appearing in St. Louis, in Joliet, Illinois, and in the Gulf area. Harrahs acquired Joliet I, a 64-meter, yacht-style boat. The Alton Belle Casino is 48 meters in length and will work the St. Louis area. Pratt Industries, owners of casino and hotel properties, has contracted for Hollywood Casino I and II to work in the Chicago area. Also, Service Marine Industries is building a second vessel for Harrahs, Joliet II, a 64-meter paddlewheeler that will have three decks and accommodate 900 gambling positions. The vessels will be employed on the Illinois river in and around Joliet. The increase in cruise/gaming/passenger ship construction involves many second-tier shipyards, including Superior Boat Works, which has three gaming vessels on order for Lady Luck Casino/Hotel and Cactus Pete; McDermott Shipyard with one passenger vessel for Delta Queen Steamboat to be delivered in 1995; one casino/gaming vessel and one passenger/ferry on order at Steiner Shipyard, with the first one handed over in June 1993 and the second one to be delivered in January 1994; two gaming vessels on order at Leevac Shipyards for Players Riverboat Casino and President Riverboat delivered in January 1993 and November 1993, respectively; one dinner boat for Premier Yachts handed over by Service Marine Industries in April 1993, and two gaming vessels for Harrahs delivered in April and September 1993; and one passenger/cruise vessel on order for the American Canadian Caribbean Line to be delivered by Blount Industries in April 1994. Ship Repair The U.S. ship repair industry continues to be active. U.S. shipyards are competing aggressively in the domestic and foreign markets for ship repair and conversion work as a replacement for diminishing Navy orders. The U.S. Navy's primary resources for ship repair are 36 privately owned shipyards (down from 45 in 1992), 8 naval shipyards, and 2 Navy-owned ship repair facilities. U.S. shipyards, both large and small, are turning to commercial ship repair work because of the continuing decline in the Navy's new shipbuilding activities and a delay in hoped-for commercial shipbuilding orders. U.S. shipyards benefit from their location in the United States (the world's most important trading nation) because of the large volume of goods transiting U.S. ports. Therefore, location, timeliness of repairs, and competitive prices can give U.S. shipyards an edge over many foreign repair yards. In 1993, several U.S. shipyards reported an increase in their repair and conversion work. For example, using its vast resources, in only a 2-day shipyard availability period, Newport News Shipbuilding drydocked a cruise ship and installed a new propeller that was cast in its foundry. Few, if any, shipyards in the world could provide this quick a turnaround. In July 1993, MARAD awarded a $10 million contract to Marine Hydraulics International to convert the tanker Mt. Washington to an offshore petroleum discharge system (OPDS) ship. These vessels can discharge fuels for tanks and other military vehicles through up to almost seven kilometers of flexible discharge lines while anchored offshore. The conversion is scheduled for completion in December 1994. This is the fifth in a series of tankers converted into OPDS ships for the U.S. Government. The FY 1994 budget request for Navy ship repair and fleet modernization is $2.8 billion, a decrease of about 20 percent from the FY 1993 appropriation (Tables 2 and 3). The budget request is almost 31 percent lower than the FY 1992 appropriation, and 40 percent below the FY 1990 appropriation. Each year the Navy assigns ship repair and modernization work to either the public sector (U.S. naval shipyards) or to U.S. private shipyards. The majority of ship repair work is allocated directly to public yards. In addition, some of the work is open to competition between the two sectors. In 1993, the public and private competitors were allocated almost 8 percent of funds, compared with about 13 percent in 1990. The FY 1994 budget submittal requests that $397 million, or more than 14 percent of FY 1994 funds, should be allocated for this competition. Under competitive bidding, most submarine repairs have gone to the public shipyards, while the private sector has won the bulk of the contracts for surface ship repairs. In 1990, the Congress established a new set of procedures for military base closures (Title XXIX of P.L. 101-510). These procedures are valid for 5 years with closures being proposed every other year--1991, 1993, and 1995. The closure of Navy shipyard facilities during the next few years, as a result of recommendations by the Base Closure and Realignment Commission appointed by the President, could have an impact on both public and private shipyards. As of October 1, 1993, the commission has recommended the closure of Philadelphia Naval Shipyard, the Mare Island Naval Shipyard at Vallejo, California, and the Charleston Naval Shipyard. MARAD's National Defense Reserve Fleet (NDRF) provides a steady source of ship repair work. As of July 1, 1993, the fleet consisted of 238 merchant and 67 naval vessels. Many of these vessels can be activated to meet the shipping requirements of the United States in the event of a national emergency. A key element of the NDRF is the Ready Reserve Force (RRF), which had 96 ships in 1993. MARAD provides funds for the procurement and maintenance of this force, which is in a state of readiness to meet 5-, 10-, or 20-day activation schedules. All conversion, repair, and lay-up work on vessels purchased for the RRF program must be performed at U.S. facilities. For FY 1994, MARAD estimates (based on 90 vessels) that an average of $1.8 million per vessel will be expended for berthing and other costs associated with maintaining a ship in the RRF, of which about $500,000 will be spent on maintenance and repair. For FY 1995 and 1996, the maintenance and repair expenditure will increase to approximately $1 million per vessel, if implementation of the Department of Defense's Mobilization Requirements Study is fully funded. The RRF is projected to expand to 140 ships by the end of FY 1999, assuming normal funding. These additional 44 vessels will generate about $430 million (an average of about $10 million per vessel) worth of activation, conversion, and maintenance work for U.S. ship repair facilities during FY 1994-99. Work on these ships and the existing RRF program should increase the repair workload for U.S. private shipyards through the remainder of the decade. MARAD now is converting eight ships in several East Coast shipyards for future use by the U.S. Army as sealift assets, pre-positioned at a strategic location overseas. The eight ships--seven roll on/roll off (RO/RO) ships and one auxiliary crane ship--have been selected by MARAD from the RRF fleet to meet the Army's requirements to deploy a divisional unit of equipment, supplies, and ammunition to a remote theater of operation in a short period of time. The first ship was scheduled to deploy on November 1, 1993. Subsequent afloat pre-positioning force (APF) ships will be activated at 2-week intervals, with the final ship deploying on or about March 1, 1994. Deployment will consist of stopping in Europe to load military vehicles and equipment, followed by final APF pre-positioning. Second-Tier Shipyards Another important sector of the shipbuilding and ship repair industry consists of small and medium-size facilities--second-tier shipyards. They are primarily engaged in supporting inland waterway and coastal carriers. Their market is the construction and repair of smaller type vessels, such as tug boats, supply boats, ferries, fishing vessels, barges, and small military and Government-owned vessels. The larger second-tier shipyards can build and repair steel and aluminum vessels up to 183 meters in length. Moreover, the second-tier yards are fiercely competitive and innovative. In fact, some are competitive in the international marketplace and successfully build vessels for export, including: * Two shrimp trawlers for Kuwait were built by Bender Shipbuilding and Repair Company and were delivered in February and April 1993, with two more on order by Kuwait from Bender. * One SWATH vessel for Martin Automatic (United Kingdom) will be delivered in March 1994, by Nichols Bros. Boat Builders. * Two pilot launches for the Panama Canal Commission were delivered in February 1993 and May 1993 by the Trinity Marine Group. Atlas Marine Services was awarded a $10.8 million contract by Kvaerner Masa-yards of Helsinki, Finland, to deliver the galleys aboard the Carnival Cruise Lines' latest 70,000-ton superliners, M/S Sensation and M/S Fascination. Atlas will manufacture all the custom-made stainless steel galley equipment and will supply cooking and dishwater equipment for each of these ships. Atlas specializes in design and manufacture of food service equipment for maritime use. New construction activity, as reported by the American Waterways Shipyard Conference in its 1992 Annual Shipyard Survey, shows a decline of about 4 percent in power-driven vessels from 122 in 1991 to 117 in 1992, a 27 percent increase in river barges from 604 to 765, and a rise in offshore barges from 4 to 16. Second-tier shipyard repair activities declined in 1992. The survey showed a 24 percent decrease in the number of power-driven vessels repaired, from 7,712 to 5,827. The repair of fishing vessels declined 61 percent, and repair of towboats decreased 13 percent, from 23,386 to 17,398. Repair of river barges decreased 26 percent, with repairs to hopper barges down 22 percent. Repairs of river tank barges decreased 30 percent, while repairs of offshore barges increased 25 percent, from 407 to 508. Capital Investment During FY 1993, the U.S. ship construction and repair industry invested an estimated $161 million in the upgrading and expansion of facilities. Much of this investment went to improve the efficiency and competitiveness of the Navy's construction, repair, and overhaul projects. In FY 1994, however, the industry is forecast to spend $144 million, according to MARAD data. The industry's estimated capital investments since 1970 have totaled $5.2 billion, and actual expenditures since 1985 have consistently exceeded those planned, except in 1990 (Table 4). Capital investments have included building basins, floating drydocks, cranes, automated equipment, and highly mechanized production systems. Emphasis has been on the introduction of modular techniques--the fabrication of large sub-assemblies and the pre-outfitting of ship components. Outlook for 1994 The value of the work completed by the industry is expected to decrease almost 7 percent in constant dollars. As of January 1994, only one merchant vessel (1,000 gt or over) is expected to be on order in U.S. shipyards as a result of the depressed U.S. commercial ship market. Navy shipbuilding, conversion, and repair, although at a largely reduced level, will continue to dominate the U.S shipbuilding and repair industry as long as commercial ship construction remains depressed. For FY 1994, the Navy has requested funds for the construction of 9 new ships all larger than 1,000 ldt. The budget request for Navy shipbuilding and conversion is $4.3 billion, nearly 27 percent less than was appropriated in FY 1993. In addition, both public and private shipyards will be affected by the FY 1994 Navy repair and modernization budget of $2.8 billion, which is 20 percent less than FY 1993 appropriations. Long-Term Prospects First-Tier Shipyards Navy shipbuilding and repair activity will continue to be the primary source of work for the major full-service shipyards for the foreseeable future. Employment in the MSB, however, will decline substantially as a consequence of the significantly reduced Navy shipbuilding program during FY 1992-97 (Figure 21-2). Along with the scheduled decommissionings and reductions in the Navy ship procurement program, the active fleet declined to 473 ships by the end of FY 1992, and to 450 ships as of June 30, 1993. A bottom-up review of the U.S. armed forces, released in September 1993 by the Secretary of Defense, advocates a U.S. naval force structure during the 1990's that can carry out two nearly simultaneous military regional conflicts. According to the Shipbuilder's Council of America, this means that U.S. naval forces could total 346 ships in the active fleet by 1999, including 11 active aircraft carriers, 1 reserve/training aircraft carrier, and 45-55 attack submarines. The U.S. Navy's plan for FY 1994-99 includes construction of 46 new ships costing about $36.3 billion (Table 5). The value of shipyard contracts is only about one-third of this budget; the remainder will go to such items as Government-furnished equipment placed aboard the vessels, and to Government program costs. The Navy's proposed FY 1994-99 shipbuilding program includes the construction of 11 sealift new construction vessels by the end of FY 1998. Two additional such vessels were included in the FY 1993 budget, for a total of 13. At an average of 8 ships per year, the Navy's 6-year shipbuilding program represents a 58 percent reduction in the quantity of ships to be procured, compared with the average of 19 ships annually for Navy programs during the 1980's. Reductions of this magnitude, combined with the lack of significant commercial shipbuilding orders, will have a severe impact on the few remaining large U.S. shipyards. As of September 1, 1993, MARAD had approved a total of six applications for Title XI financing in FY 1993. Five of the approvals involve the refinancing of outstanding debt; the remaining one was for the construction of a 24,000 dwt molten sulfur carrier for Sulphur Carriers. It is anticipated that this vessel will be delivered in July 1994 and that the Title XI guarantee will be for 75 percent of the construction cost, or $43.7 million. As of September 1, 1993, there were a total of 10 pending Title XI applications on file with MARAD. Four of these applications involve the refinancing of outstanding Title XI obligations. The remainder are for the construction of double-hull tankers, barge-mounted power plants, tank barges, a methanol plant ship, catamaran-hull RO/RO vessels, and a pipelaying vessel. In accordance with the Federal Credit Reform Act of 1990, MARAD may approve new Title XI loan guarantees starting in FY 1992 only to the extent appropriations have been obtained to cover the estimated risk cost of the project to the Government as well as administrative expenses of the entire program. The FY 1993 Appropriations Act provided $48 million to cover the risk costs for Title XI approvals during FY 1993, and $4 million for administrative expenses. The Supplemental Appropriations Act of 1993 makes the $48 million available beyond FY 1993 until it is spent. Congress has appropriated FY 1992 and 1993 funds to begin NOAA's fleet replacement and modernization program, a 15-year effort to revitalize the existing 22 ship scientific research fleet. The program has three major elements: conversion of surplus U.S. Navy T-AGOS 13 Class ships; repairs to extend the service lives of selected existing NOAA ships until new ships are available; and the building or leasing of new ships as the aging fleet is gradually retired. Contracts anticipated in FY 1994 include one repair job, one T-AGOS conversion, and a shipyard design competition for the first new construction ship. In July 1993, the Department of the Navy awarded contracts to two U.S. shipyards to acquire and convert five foreign-flag commercial cargo vessels into high-speed military supply ships for the Navy's Military Sealift Command. Work on these contracts is expected to be completed by late 1995. The combined $1.1 billion in contracts includes the detail design for the conversion of the RO/RO ships for strategic sealift. Five U.S. shipyards bid on the work. National Steel & Shipbuilding was awarded a $635 million contract for three ships to be acquired from Maersk Line of Denmark. Newport News Shipbuilding will convert two ships to be acquired from the East Asiatic Company of Denmark for $426 million. In September 1993, the Department of the Navy announced the awarding of a contract for strategic sealift ship detail design and construction to Avondale Industries. The contract is for one ship priced at $265 million, with options for five additional ships, for a total value of $1.3 billion. The contract is to be completed by April 30, 2001. Additional sealift shipyard contracts are anticipated. The Navy Department also announced the awarding of a contract to National Steel & Shipbuilding for another strategic sealift ship detail design and construction. The contract is for one ship priced at $269 million, with options for five additional ships, for a total value of $1.3 billion, with the same contract completion date. Since the Oil Pollution Act became law in August 1990, U.S. shipyards have filled orders for the construction of double-hulled barges for ocean service and the inland waterways. So far, no orders have been placed with U.S. shipyards for double-hulled oceangoing tankers to meet the requirements of the act. However, two U.S. oil companies, Texaco and Mobil, have solicited bids from U.S. shipyards for the possible construction of up to seven double-hull oceangoing tankers. It is not known how many tankers will be rebuilt, scrapped, or constructed as a result of the act. Many bulk vessels that were built before 1980 will require replacement beginning in the 1990's. In addition to normal replacement, the demand for new tankers will be spurred by the requirements of the Oil Pollution Act that mandate the phasing out, in stages beginning in 1995, of single-hull tank vessels serving U.S. trade. Major U.S. shipyards, formerly focused on Navy work, are now gearing up for opportunities to replace the aging fleet and to build or retrofit tanker tonnage as a result of the act. Shipbuilding forecasts generally indicate that the demand for commercial ships will increase significantly before the year 2000. The primary reason for this optimism is the need for new ships to replace the world's aging merchant fleet. Some forecasts also envision significant expansion of the world fleet by the end of the decade. The U.S. shipbuilding industry is receptive to whatever assistance can be provided by the Defense Conversion, Reinvestment, and Transition Assistance Act of 1992. Implementation of this act is the responsibility of the Advanced Research Projects Agency (ARPA), which recently dropped Defense from its name (formerly DARPA). ARPA has selected shipbuilding as one of 11 candidates for meeting future defense needs and having the potential for conversion to a commercial market. ARPA plans to assist U.S. shipyards and related industries to become competitive in international commercial markets, thereby preserving a viable shipbuilding infrastructure. Projects will address innovative ship design and construction processes and ship systems technologies, such as propulsion and auxiliary systems. To implement the act, $575 million was included in 1993 appropriations; $15 million will support applied research and development for commercial shipbuilding. Considerable additional funding is projected over the next 8 years. A maritime policy interagency working group coordinated by the National Economic Council (NEC) began deliberating in early 1993 on shipping issues. In May 1993, the NEC concluded it would need more time to reach consensus on U.S. shipping, and also decided to review separately U.S. shipbuilding to achieve a comprehensive plan to enable and ensure that domestic shipyards can compete effectively in the international shipbuilding market. The National Performance Review Document, issued in September 1993, recommends the establishment of an independent commission to provide "a detailed examination of the future of the maritime industry in the U.S. and the benefits derived by the taxpayers from maritime industry subsidies and related issues." Second-Tier Shipyards The enactment of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) may provide the single biggest Federal boost in years for the ferry business. ISTEA's purpose is to develop an efficient and environmentally sound national intermodal transportation system, including all forms of transit. ISTEA provides a flexible funding program; states, regions, and local agencies have the authority to decide whether funds should go for highways or transit, including ferries. The act specifies $151 billion for highways, transit, and safety programs over a 6-year period from FY 1993 to FY 1997; $31.5 billion is for transit systems. The ferry industry will benefit from the act's creation of a $100 million discretionary program from the Highway Trust Fund at an 80/20 (Federal/state) matching ratio. The Department of Transportation will pick up 80 percent of the cost. Some of the second-tier shipyards have a healthy and diverse orderbook. They are taking advantage of a booming market for new casino boats, towboats, drug interdiction crafts, ferries, research vessels, fireboats, petroleum barges, and a variety of smaller craft. In addition, the prospects are bright for the flow of new orders for the construction of excursion/dinner boats and gambling vessels. Data available to MARAD indicate that the second-tier shipyards are planning to continue to invest money in upgrading and improving their capital equipment. This should enable them to meet the expected demand for construction and repair services, as well as to increase productivity. The U.S. shipbuilding and repair industry should receive additional work in the years ahead as efforts are made to meet the requirements of both the Oil Pollution Act and the Clean Air Act amendments. The industry should be busy satisfying the demand for the construction of double-hull replacement tank vessels, ships, and barges, and the retrofitting of vapor recovery systems to existing vessels.--Daniel Seidman and Thomas H. Vodicka, Office of Ship Construction, Maritime Administration, U.S. Department of Transportation (202) 366-5841, October 1993. Additional References Maintenance, Repair and Modernization of U.S. Navy Ships; Ferries and Small Passenger Vessels in the U.S.; Assessment of the U.S. Navy Sealift Program; Five Year Outlook for the U.S. Marine Industry; and Impact of Fleet Downsizing on the Economics of U.S. Navy Ship Maintenance, IMA Associates, Inc., 600 New Hampshire Ave. NW, Suite 140, Washington, DC 20037. Telephone: (202) 333-8501. Marine Log, 52nd Annual Yearbook and Marine Review, June 1993, Simmons-Boardman Publishing Corp., 345 Hudson St., New York, NY 10014. Telephone: (212) 620-7263. Maritime Reporter and Engineering News, 1993 World Yearbook, June 1993, Maritime Activity Reports, Inc., 118 East 25th St., New York, NY 10010. Telephone: (212) 477-6700. Merchant Shipbuilding Return, Lloyd's Register of Shipping, 71 Fenchurch St., London, England EC3M4BS. Telephone: [44] (71) 709-9166. Outlook '93, Forecast and Review, Ocean Industry, February 1993, Gulf Publishing Co., P.O. Box 2608, Houston, TX 77252. Telephone: (713) 529-4301. Ship Construction, Ship Repair, Manpower and Labor Issues, Contracts/Financial (annual reports); and Shipyard Chronicle (newsletter), Shipbuilders Council of America, 4301 North Fairfax Dr., Suite 330, Arlington, VA 22203. Telephone: (703) 276-1700. 1992 Annual Shipyard Survey, American Waterways Shipyard Conference of the American Waterways Operators, 1600 Wilson Blvd., Suite 1000, Arlington, VA 22209. Telephone: (703) 841-9300. Trends and Forecasts: Ship Building and Repairing (SIC 3731) (in millions of dollars except as noted) Percent Change (1989-1994) Item 1987 1988 1989 1990 1991 1 9921/ 19932/ 19943/ 88-89 89-90 90-91 91-92 92-93 93-94 Industry Data Value of shipments4/ 8,504 8,793 9,640 10,856 10,849 9 ,912 9,802 9,476 9.6 12.6 -0.1 -8.6 -1.1 -3.3 Value of shipments (1987$) 8,504 8,562 9,052 9,887 9,652 8 ,725 8,385 7,831 5.7 9.2 -2.4 -9.6 -3.9 -6.6 Total employment (000) 120 120 119 121 121 114 102 96.0 -0.8 1.7 0.0 -5.8 -10.5 -5.9 Production workers (000) 90.5 89.5 87.9 91.0 90.1 85.7 77.2 72.1 -1.8 3.5 -1.0 -4.9 -9.9 -6.6 Average hourly earnings ($) 12.16 12.30 12.31 12.59 12.97 1 3.67 14.15 14.65 0.1 2.3 3.0 5.4 3.5 3.5 Capital expenditures 150 145 146 210 228 215 161 144 35.2 8.8 8.6 -5.7 -25.1 -10.6 Product Data Value of shipments5/ 8,343 8,630 9,530 10,741 10,700 9 ,775 9,666 9,345 10.4 12.7 -0.4 -8.6 -1.1 -3.3 Value of shipments (1987$) 8,343 8,403 8,948 9,782 9,519 8 ,605 8,269 7,723 6.5 9.3 -2.7 -9.6 -3.9 -6.6 Trade Data Value of imports -- -- 145 14.8 14.4 50.9 242 -- -- -89.8 -2.7 253.5 375.4 -- Value of exports -- -- 313 434 321 652 478 -- -- 38.7 -26.0 103.1 -26.7 -- 1/Estimate, except exports and imports. 2/Estimate. 3/Forecast. 4/Value of all products and services sold by establishments in the ship building and repairing industry. 5/Value of products classified in the ship building and repairing industry produced by all industries. SOURCE: U.S. Department of Commerce: Bureau of the Census; International Trade Administration (ITA). Estimates and forecasts by ITA. U.S. Trade Patterns in 1992 Ship Building and Repairing SIC 3731 (in millions of dollars, percent) Exports Imports Value Share Value Share Canada and Mexico 17 2.6 Canada and Mexico 4 7.5 European Community 83 12.8 European Community 12 24.4 Japan 4 0.5 Japan 0 0.2 East Asia NICs 42 6.5 East Asia NICs 14 26.6 South America 205 31.4 South America 2 3.7 Other 301 46.2 Other 19 37.5 World Total 652 100.0 World Total 51 100.0 Top Five Countries Value Share Value Share Venezuela 160 24.5 Norway 15 30.1 Saudi Arabia 89 13.7 Singapore 13 26.3 Nigeria 66 10.1 France 11 21.3 United Kingdom 49 7.6 Canada 3 6.6 Guatemala 48 7.4 Australia 2 4.9 See "Getting the Most Out of Outlook '94" for definitions of the country groupings. SOURCE: U.S. Department of Commerce: Bureau of the Census; International Trade Administration. Table 1: Military Ships Under Construction, October 1, 1993 Symbol Type Number AOE Fast combat support ship 4 CG Guided missile cruiser 1 CVN Aircraft carrier (nuclear-powered) 2 DDG Guided missile destroyer 23 LHD Amphibious assault ship (multi-purpose) 3 LSD Dock landing ship 3 MCM Mine countermeasures 2 SSN-21 Attack submarine (nuclear-powered) 2 SSN-688 Attack submarine (nuclear-powered) 9 SSBN Ballistic missile submarine (nuclear-powered) 4 AGOR Oceanographic research ship 1 TAKR Fast sealift 2 WAGB Ice breaker 1 T-AGOS-23 Ocean surveillance ship 1 T-AGS-60 Ocean survey ship 3 T-AO Fleet oiler 4 Total military ships 65 SOURCE: U.S. Department of the Navy. Table 2: U.S. Navy Repair and Modernization Budgets of Active and Reserve Ships, FY 1990-94 (in millions of dollars) Item 1990 1991 1992 1993 1994 Public yards 2,913.8 2,521.9 2,719.1 2,390.3 1,595.8 Private yards 1,734.5 1,310.8 1,339.3 1,104.3 802.1 Competition (*) (*) (*) (*) 393.5 Total 4,648.3 3,832.7 4,058.4 3,494.6 2,791.4 *Data included in public and private yard budget numbers. NOTE: Does not include other program costs. SOURCE: U.S. Department of the Navy, based on FY 1994 Congressional Budget. Table 3: Navy Shipbuilding and Repair Budgets, FY 1990-94 (in millions of dollars) Item 19901/ 19911/ 19921/ 19931/ 19942/ Navy shipbuilding and conversion 11,541.2 8,751.2 6,713.3 5,853.2 4,294.7 Navy repair and modernization 4,648.3 3,832.7 4,058.4 3,494.6 2,791.4 Total 16,189.5 12,583.9 10,771.7 9,347.8 7,086.1 1/Appropriated. 2/Requested. SOURCE: U.S. Department of the Navy, based on FY 1994 Congressional Budget. Table 4: Capital Investments by the U.S. Shipbuilding and Repair Industry, FY 1985-94 (in millions of dollars) Fiscal Year Actual Planned Expenditures Expenditures 1994 -- 144 1993 161* 142 1992 215 129 1991 228 91 1990 210 250 1989 196 65 1988 145 70 1987 150 50 1986 225 105 1985 252 159 *Estimate. SOURCE: U.S. Department of Transportation, Maritime Administration. Table 5: Projected Ship Construction by the U.S. Navy, FY 1994-99 (in number of units) Ship Type* 1994 1995 1996 1997 1998 1999 Total CVN -- 1 -- -- -- -- 1 SSN -- -- -- -- 1 -- 1 DDG-51 3 3 4 4 3 4 21 LX -- -- 1 -- 2 2 5 T-AGOS -- -- 1 1 -- -- 2 T-AGS (Ocean) 1 -- 1 -- -- -- 2 ADC(X) -- -- -- -- 1 -- 1 AOE -- -- -- -- -- 1 1 AGOR 1 -- -- -- -- -- 1 Fast sealift 4 2 2 2 1 -- 11 Total 9 6 9 7 8 7 46 *Explanation of most symbols is in Table 1. LX is landing ship. ADC (X) is an auxiliary vessel under design. SOURCE: U.S. Department of the Navy, President's Budget as of September 22, 1993. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistics Division's Jan. 1994 NATIONAL TRADE DATA BANK (NTDB) CD-ROM, SuDoc C1.88:994/1/V.1 Processed 02/16/1994 by RCM (UM-St. Louis Libraries)/ USIO0026 .