2012 Position Paper
Construction and Repair of Commercial and Military Vessels at Great Lakes Shipyards
GOAL: Support programs to increase commercial shipbuilding and repair at Great Lakes yards.
BACKGROUND: Shipyards with large-scale dry-docking capability are in Superior and Sturgeon Bay, 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 ocean-going 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 newest icebreaker on the Lakes, the Mackinaw, which will be the Coast Guard's primary icebreaking asset on the Great Lakes for decades to come, was built at a Wisconsin shipyard.
The efficiencies of Great Lakes shipyards have brought new markets in recent years. Articulated tug/barge tankers for use on the U.S. East Coast and passenger ferries for New York City are examples of Lakes shipyards expanding into new markets. A Lakes yard recently completed a series of steel-deck barges for use on the East Coast. Construction of the first of two Platform Supply Vessels (PSVs) to serve offshore energy sources will soon begin.
Next spring the U.S.-flag Great Lakes fleet will welcome its newest member, an 845-foot-long articulated tug/barge unit with a per-trip carrying capacity of almost 38,000 tons currently under construction in Erie, Pennsylvania. Depending on the trade route(s) it serves, the vessel will carry 50 cargos or more each year, so in total, add at least 1.9 million tons of capacity to the fleet.
There are only two 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 $6 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 1,200 men and women, and the wages they provide top $50 million a 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.
