Great Lakes Shipbuilding and Government Programs to Promote the Industry

GOAL: Support programs to increase commercial shipbuilding and repair at Great Lakes yards.

BACKGROUND: Shipyards with large-scale capability are in Sturgeon Bay, Marinette and Superior, Wisconsin; Toledo, Ohio; and Erie, Pennsylvania. Small drydocks and/or ship repair facilities are located in Cleveland, Toledo, Milwaukee, Detroit, Rogers City (Michigan), and Sault Ste. Marie (Michigan).

Great Lakes shipyards are fully capable of building all types of commercial and military vessels. The only real limitation on vessel construction is the locks in the St. Lawrence Seaway, which preclude construction of the largest warships and oceangoing tankers and cargo vessels. Nonetheless, Great Lakes shipyards have built 1,000-foot-long vessels for service on the Great Lakes and support vessels for the U.S. Navy and U.S. Coast Guard. In fact, the most powerful icebreaker on the Lakes, the MACKINAW, the Coast Guard’s primary icebreaking asset on the Great Lakes, was built at a Wisconsin shipyard.

This is a very busy period for Great Lakes shipyards. In addition to maintaining and modernizing the Lakes fleet to the tune of $70-plus million each winter, several yards are actively engaged in commercial and military construction. In fact, one yard has a vessel backlog that extends into 2019. Another yard is engaged in serial production of Littoral Combat Ships for the U.S. Navy.

Great Lakes shipyards recently have made a number of improvements to better service their customers. One yard in Wisconsin added a 7,000-ton floating drydock. Another yard in Wisconsin continued to add hundreds of feet of sheet pile berthing dock to allow it to service more vessels, as well as heavy lift equipment and preventative maintenance assessment tools.

There are just a few U.S. government programs to aid shipyards. The Title XI Ship Loan Guarantee Program is a government guarantee of the loan to build the ship. The capital cost of vessels and the cyclical nature of vessel construction mean financial institutions are unfamiliar with the industry and are thus hesitant to invest in vessel construction at affordable rates. Title XI Ship Loan Guarantee Program of the Maritime Administration makes vessel financing available at affordable interest rates by providing a government guarantee of 87.5 percent of a 20-year commercial vessel construction loan. In recent years Title XI has guaranteed more than $8 billion in commercial vessel construction projects in the United States, which, in turn, have generated tens of thousands of highly skilled, good-paying jobs nationwide.

BENEFITS TO GREAT LAKES REGION: Great Lakes shipyards employ more than 2,700 men and women, and the wages they provide top $125 million per year.

ACTION: Support Title XI Ship Loan Guarantee Program and Capital Construction Fund. The minimum appropriation for Title XI should be at least $100 million. Support trade negotiations and/or legislation to end foreign government subsidies to shipyards. Advocate and support Federal tax policies that encourage modernization of both plant and equipment for shipowners and shipyards by the use of investment tax credits.