China’s building 1,700 ships to America’s 5.  Senators say it’s a security issue - video Dailymotion

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Watch China’s building 1,700 ships to America’s 5.  Senators say it’s a security issue - Straight Arrow News on Dailymotion

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00:00Once upon a time, America dominated commercial shipbuilding, but no more.

00:04Today, China, Japan, and South Korea reign supreme.

00:08Senators Todd Young and Mark Kelly are on a mission to reinvigorate an industry

00:12that sank in the United States generations ago and never recovered.

00:16This is a national security bill.

00:18The stakes are high.

00:22So the senators introduced the Ships for America Act,

00:25which seeks to not just galvanize commercial shipbuilding,

00:28but ensure the United States has the highly trained professionals needed to build and operate these vessels.

00:34You will not have a cost-effective and on-time naval shipbuilding enterprise

00:39if you do not have a strong commercial shipbuilding enterprise.

00:43So can these senators get their bills signed into law

00:46and bring American shipbuilding back to its former glory in just a few years?

00:50We can't fail.

00:54American shipyards, the envy of the world.

00:56Oh, wait, sorry. This is video from China, and they are crushing the United States.

01:01The Chinese build 1,700 ships per year.

01:05China, along with Japan and South Korea, dominate the industry,

01:08with 90% of all new ocean-going vessels.

01:11I need one hand to count how many ocean-going vessels the United States builds annually.

01:16Five.

01:17That's right, five.

01:18How did we get to this depleted state?

01:20Well, we took our eye off the ball.

01:23Other countries had prioritized shipbuilding for domestic political reasons,

01:28but more importantly, for national security reasons.

01:31They rightly understood that shipbuilding has national security spillover implications,

01:38and it's really important for a country to have shipbuilding capacity.

01:43Here's a timeline of America's shipbuilding decline.

01:45America truly was the envy of the world after World War II.

01:49The United States had more than 4,400 flagships of all types and sizes capable of carrying 57% of U.S. trade.

01:58The government sold many of those surplus vessels to shipping companies at great prices.

02:02That, combined with the United States' higher labor costs,

02:06dried up demand for new American ships, and the yards closed.

02:09By the 1970s, the United States was only building 15 to 25 new commercial ships per year.

02:15That dropped to five by the 80s, and it's where we remain today.

02:19There are only six shipyards in the United States building large commercial vessels.

02:24That includes Philly Shipyard, owned by Hanwha.

02:27The South Korea-based company supports the Ships for America Act

02:30and its stated goal of unlocking investment to build new shipyards

02:34and revive some of the 60 shipyards that have fallen out of service.

02:38What's it take to get a new shipyard up and running or bring one back into commission?

02:42It's a lot, but for frame of reference in World War II, and obviously that's a challenging time,

02:48we stood up six emergency shipyards in six months.

02:50So we can do it.

02:52It's a doable feat.

02:54Is shipbuilding more complicated than it was then?

02:56Yes.

02:56Are ships more complicated?

02:58Yes.

02:59But if you have the funding available, it's possible.

03:04But that is where you run into challenges.

03:06In the United States, a private shipyard has not been stood up

03:10without significant government assistance since the 19th century.

03:14So if we are standing up new shipyards in the United States,

03:17it's going to have to involve U.S. government support.

03:20Due to low demand, Philly Shipyard currently builds 1.2 ships per year.

03:24In an industry with tight margins, scaling up can have compounding effects.

03:28I'll make it simple math.

03:30If at Philadelphia you build 1.2 ships a year, any CapEx investment you make,

03:35your labor costs, they're spread off 1.2 ships a year.

03:39In Korea, we build anywhere from 35 to 50 ships a year.

03:42Now my CapEx investment is amortized out across those number of ships, the profit.

03:48My labor costs, which are not linear, are now spread out over 40 ships instead of 1.2.

03:54And it's not like 40 ships takes 40 times the labor of one ship.

03:58You're benefiting significantly.

04:00Here's how the Ships for America Act would help with that.

04:02It would create a maritime security trust fund,

04:05very similar to the highway and aviation trust funds.

04:08That money would be used to help shipyards and shipbuilding.

04:11It would create a program to establish a fleet of 250 U.S. flagged vessels in international commerce,

04:17establish tax and import duty incentives for shipping goods into the U.S. on American ships.

04:22It would also create incentives for Americans to make a career as a mariner,

04:26like public service loan forgiveness.

04:28The 310-page bill is a comprehensive overhaul of the American maritime industry.

04:34All right, so we're out here in the Chesapeake Bay,

04:36where there's about a half a dozen ships waiting their turn to get into the port of Baltimore.

04:40So this is probably a good time to explain what exactly is an ocean-going vessel.

04:44Well, to put it simply, it's a large ship that's capable of crossing the open ocean.

04:48They include container ships, bulk carriers, general cargo ships, passenger ships, oil tankers,

04:56and roll-on-roll-off vehicle carriers like the Lake Victoria.

04:59The objective is to not only train a bunch of people,

05:02but to build 250 ocean-going vessels in the next 10 years, which is pretty ambitious.

05:08In the very beginning of this video, Senator Young called this a national security bill.

05:13Here's a bit more context.

05:14It's also a bill about economic security and economic opportunity

05:18and making sure that we're independent of other countries for, you know, essential services like shipping.

05:28But more than anything else, this is a national security bill.

05:32So why do commercial ocean-going vessels matter to national security, specifically the military?

05:38A couple reasons.

05:39For starters, if the United States ever went to war, there would be what's called a sea lift.

05:43That's when troops, weapons, vehicles, and supplies are sent to the war zone

05:47on a combination of military and commercial vessels.

05:51It's an essential part of war logistics because sea lifts can carry substantially heavier payloads than air lifts.

05:57In fact, cargo ships could transport 90% of the military equipment needed overseas.

06:02Right now, we don't have that capacity.

06:05You can imagine a situation that, a military conflict that lasts for more than a few months.

06:12If that were to happen, we would not have the capacity under so many scenarios to repair the vessels that need to be repaired

06:22and to build new vessels.

06:23That ought to be alarming to every American.

06:26Another reason, cost and efficiency.

06:29Let's say I make a widget, I'm a member of the supply chain, goes into the naval ship.

06:34If that widget only goes into a naval ship, the amount of premium the U.S. government has to pay

06:39to keep me in business to exclusively supply that widget for the naval ship is much higher

06:45than if my widget goes into the naval ship and goes into these three classes of commercial ship

06:49and I have other lines of business that allow me then to price my product appropriately to the Navy

06:55because they're not the sole reason I exist.

06:58Anytime the government is the sole reason a supply chain member or even a prime,

07:04such as the shipbuilder themselves, exists, the U.S. government pays a premium.

07:08All right, so the sun is setting and it's time to head back to Doc's.

07:11So we'll leave you with this.

07:13If this bill were signed into law tomorrow,

07:15it would take years for United States shipbuilding to get to where these senators want it to be

07:20and it would also take an investment from the government of hundreds of millions of dollars.

07:25So this is going to be a long-term national commitment.

07:30I'm Ray Bogan for Straight Hour News.

07:32For more unbiased reporting straight from the Chesapeake Bay, download the SAN app.

China’s building 1,700 ships to America’s 5. Senators say it’s a security issue

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