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Shipbuilders Council of America
20 F Street NW, Suite 500
Washington, DC 20001
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SCA Weekly Report | September 9 - 13, 2019
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Register Now for the 2019 SCA Fall Membership Meeting
Registration for the 2019 SCA Fall Membership Meeting is still open. The meeting will take place at the Marriott City Center in Newport News, Virginia. Registration for the SCA meeting is $650 per attendee.
CONFIRMED SPEAKERS:
- Jennifer Boykin, President, Newport News Shipbuilding
- Mitch Waldman, Executive Vice President of Government and Customer Relations, Huntington Ingalls Industries
- Bryan Caccavale, Vice President of Strategic Sourcing, Huntington Ingalls Industries
- Nancy Sopko, Co-Director, Special Initiative on Offshore Wind
- Laura Morton, Senior Director, American Wind Energy Association (AWEA)
- Jim Bennett, Chief of the Office of Renewable Energy Programs, BOEM
- RADM William Greene, Director- Fleet Maintenance- U.S. Pacific Fleet, USN
FEATURED PANEL DISCUSSIONS:
- Offshore Wind Energy Panel
- Newport News Shipbuilding Supplier Panel
INVITED SPEAKERS:
- VADM Michael Gilday, Chief of Naval Operations, USN
A full schedule of events can be found HERE.
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Senate Appropriations Advances FY20 Defense Spending Bill
By a vote of 16-15, the Senate Appropriations Committee passed its mark of the FY20 Defense Appropriations bill. The bill provides $694.4 billion for the Department of Defense, $20.5 billion above the FY19 enacted level. The bill includes $622.5 billion in base funding, $70.7 billion for overseas contingency operations (OCO) funding in title IX of the bill, and $1.7 billion for emergency designated funding supporting disaster recovery efforts.
The bill recommends $24.4 billion for Navy shipbuilding, an increase of $600 million above the President’s request. In total, the bill funds the construction of 14 new battle force ships including:
- 2 Virginia Class Submarines
- 3 DDG-51 Destroyers
- 1 FFG(X) frigate
- 1 LHA
- 1 LPD-17
- 1 Expeditionary Fast Transport (EPFs)
- 2 TAO Fleet oilers
- 1 Towing, Salvage & Rescue Ships (T-ATS)
- 2 Large Unmanned Surface Vessel
The bill supports the revised acquisition strategy for the VIRGINIA Class submarine (VCS) Block V multi-year procurement contract, as agreed to by the Navy and shipbuilder:
- Recommends +$1.4 billion to fund fiscal year 2019 and 2020 VCS Block V multi-year procurement shortfalls;
- Recommends +$200 million in advance procurement in support of the option for a 10th VCS within the current multi-year procurement contract;
- Recommends +$100 million in Research, Development, Test and Evaluation, Navy for risk-reducing design work to support an option to add an 11th submarine to the multi-year procurement contract;
Additionally, the bill includes:
- $123 million for submarine industrial base expansion to increase capacity and create multiple suppliers for critical submarine components;
- $390 million for long lead materials for 3 DDG-51 destroyers in fiscal year 2021;
- $130 million for surface combatant supplier base;
- $16.9 million to restore CVN 75, USS HARRY S TRUMAN, refueling and modernization; and
- The transfer of funds requested in Research, Development, Test and Evaluation, Navy to Shipbuilding, Procurement, Navy for the procurement of Unmanned Surface Vessels.
A committee summary of the bill is also available HERE. An SCA Summary of the bill is available HERE.
Congress Readies Spending Stopgap as Shutdown Deadline Looms
Congressional leaders are trying to nail down the terms of their tide-me-over spending bill this week, with just nine legislative workdays left until federal funding expires and a government shutdown results. House appropriators have crafted a draft bill to extend funding past the Oct. 1 start of the fiscal year and plan to file that measure as early as Friday. While an end date has not been finalized, it is widely assumed that funding would be dragged out until Nov. 21, at which time lawmakers would have to either pass spending bills or advance yet another stopgap. Senate Majority Leader Mitch McConnell told reporters this week that leaders in the upper chamber have yet to decide whether they will try this month to pass their Defense and Energy-Water fiscal 2020 spending bills on the floor or whether they will head straight into informal conference negotiations with the House on those bills.
Senate Appropriators Set Topline Spending Levels for All Spending Bills
Senate appropriators this week adopted their funding levels for fiscal 2020 spending bills, setting up negotiations with the House as a deadline looms at the end of the month for Congress to act or face a shutdown. The full set of Senate GOP-proposed spending levels, including funding for the Overseas Contingency Operations:
— Agriculture-FDA: $23.1 billion
— Financial Services: $24.2 billion
— Commerce-Justice-Science: $78.9 billion
— Defense: $693 billion
— Labor-HHS-Education: $187.7 billion
— Homeland Security: $53.4 billion
— Energy-Water: $48.9 billion
— Interior-Environment: $35.8 billion
— State-Foreign Operations: $55 billion
— Transportation-HUD: $74.3 billion
— Military Construction-VA: $105.5 billion
— Legislative Branch: $5.1 billion
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National Security Advisor Bolton Resigns
On Tuesday, President Trump’s third National Security Advisor John Bolton offered his resignation from the White House. President Trump asked him to resign over serious disagreements regarding the handling of major foreign policy challenges including Iran, North Korea and Afghanistan. A former under secretary of state and ambassador to the United Nations under President George W. Bush, Mr. Bolton, 70, never fully subscribed to Mr. Trump’s courtship of Kim Jong Un of North Korea and privately expressed frustration that the president was unwilling to take more meaningful action to transform the Middle East in the service of American interests.
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Senate Appropriations: Transportation, Housing & Urban Development Markup
11:30 AM | September 17, 2019
Dirksen Senate Office Building
House Natural Resources Committee: Examining the Benefits and Potential Challenges for New Jersey's Growing Offshore Wind Industry
10:00 AM | September 16, 2019
Wildwoods Convention Center, 4501 Boardwalk, Wildwood, N.J.
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Babcock Wins Frigate Deal as UK Bids to Restore Shipbuilding Industry
Babcock International won a contract to design new Type 31 frigates on Thursday as Britain seeks to revive its once-mighty shipbuilding industry. The frigates will be assembled at Babcock’s facility in Rosyth, Scotland, and the program will support over 2,500 jobs across the Britain, including its supply chain. Babcock said detailed design work would start immediately, with manufacturing beginning in 2021 and finishing in 2027.
Northern Sea Route Shipping Expected to Quadruple by 2024
Russia expects shipping along the Northern Sea Route in to increase more than four-fold by 2024 compared to 2018 levels. The outlook was presented this week during a working meeting of the Northern Sea Route (NSR) Public Council held Vladivostok at the 5th Eastern Economic Forum. The working group included heads of both public and private organizations from Russia and shipping companies with interest in the NSR.
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U.S. House Considering Three Bills to Limit Offshore Drilling
The U.S. House of Representatives on Wednesday passed a bill to ban offshore oil and gas drilling off Florida, the first of three measures it is considering, which would also ban drilling off the Pacific coast and in Alaska’s Arctic National Wildlife Reserve. The measure passed 248 to 180, with the support of about 20 Republicans. The bills are not expected to gain traction in the Republican-led Senate, but the votes in the Democratic-led House of Representatives were meant to send a signal to Republicans who have supported rollbacks of environmental regulations on oil and gas.
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The unsung tale of 9/11’s maritime rescuers
New York Post – James Henry – 10 September 2019
Every September, Americans take time on the anniversary of 9/11 to share their memories of that fateful day, recall how they first learned the news and pay tribute to the heroes who answered the unexpected call of duty. In all, nearly 500,000 people were evacuated that day, more than the 339,000 rescued at Dunkirk. Some 150 different vessels, crewed by more than 800 American mariners, improvised and successfully executed this extraordinary feat of bravery. Long-standing maritime traditions — safety, commitment, courage — guided these heroes. And on that awful day, their aid — like that of so many brave first responders — proved indispensable. Fact is, this nation is blessed with many heroes willing to rush to help their neighbor, even at risk to themselves and without any desire to be singled out for their heroism.Our mariners demonstrated that with crystal clarity on 9/11. As a maritime nation, we should count ourselves fortunate.
Cabotage Sabotage? The Curious Case of the Jones Act
Hawaii Free Press – 11 September 2019
The rapid rise of the Asian shipbuilding industry over the last century has contributed to the closure of most American shipyards and to the decline in American built ships. Thus, the Jones Act requirements have become more onerous over time. The results show that the decline in Jones-Act-eligible vessels, instrumented for using shipbuilding in another high-income country, has reduced domestic waterborne shipments into U.S. states relative to other modes of transport and relative to waterborne imports. These findings are stronger in coastal states and for commodities that are typically transported via water.
The Jones Act: The Merchant Marine Act of 1920 in the 21st century
WorkBoat – Max Hardberger – 10 September 2019
In commemoration of the 100-year anniversary of the Merchant Marine Act of 1920, WorkBoat magazine’s November cover story will be a point-counterpoint on the Jones Act. Correspondent Dale Dupont will summarize the arguments in favor of the Act and I’ll be outlining the adverse positions. There are certain to be broad-ranging discussions of the Jones Act in the coming months and years, in the halls of Congress and on our streets and waterways. Those in the workboat industry, including owners, insurers, masters, crewmembers and customers, have a vital role to play in bringing their perspectives to the table.
Jones Act Denies Domestic Ocean Shipments of Propane
Hawaii Free Press – Michael Hansen – 9 September 2019
Similarly to natural gas, there are several areas of the United States than cannot be supplied with domestic propane and petroleum gas (a mixture of propane and butane) due to the lack of pipelines. This includes New England, Puerto Rico and Hawaii. The Gas Company LLC d.b.a. Hawaii Gas imports LPG in bulk on foreign LPG carriers from foreign sources including from West Africa to Oahu, Kauai, Maui and Hawaii islands. An exemption from the Jones Act to permit foreign gas carriers to transport domestic LPG, LNG and liquefied ethane between domestic points in lieu of a Jones Act-eligible ship would improve the energy availability and lower the cost of energy for those areas of the country not serviced by pipeline.
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NOSAC Approves Final Report on OSV use in Disaster Response
Earlier this week, the National Offshore Safety Advisory Committee (NOSAC) approved recommendations to increase the ability of energy service vessels to assist in disaster response activities. The recommendations can be found in the final report entitled, “Use of Offshore Supply Vessels (OSVs) and other vessels in restoration and recovery efforts.” The report was produced by NOSAC’s Restoration & Recovery Activity Subcommittee. The report finalizes and builds upon an interim report approved by NOSAC in March. Those recommendations where submitted on an interim basis with the hope that they could be implemented prior to the 2019 hurricane season. The Offshore Marine Service Association (OMSA) said that both reports are the product of a proposal they made after Hurricane Maria in 2017.
Shipping Fears Low Sulfur Fuel Switch Could Lead to Accidents
The global shipping industry is about to undergo one of the biggest changes in its recent history with concerns lingering about just how safe the shift is going to be. Starting in January, vessels the world over will have to drastically reduce sulfur content in their fuel to comply with rules set out by the International Maritime Organization in London. The trouble is that there will be multiple new fuels that allow vessel owners to comply, where today there’s one predominant type. And, while having similar characteristics to one another, the 2020-compliant fuels can be made through different refining processes, meaning they shouldn’t be mixed. Incompatible fuel oil blends will create operational and logistical challenges but shipping companies should be able to obtain compatible, compliant fuels in most parts of the world.
Washington State Ferries’ Hybrid-Electric Newbuild Program Launched at Vigor
Washington States Ferries has officially launched its new hybrid-ferry newbuild program at Vigor’s Seattle shipyard. Washington’s legislature authorized a contract extension earlier this year for Vigor to build up to five 144-car Olympic class, hybrid-electric ferries over the coming years for the Washington State Ferries, the largest ferry system in the United States. Vigor expects to begin construction in late 2020, and delivery of the first ferry is anticipated late in 2022.
Great Lakes Awarded $141 Million in Dredge Contracts
Earlier this week, Great Lakes Dredge & Dock Corp. announced that it has been awarded several major dredging contracts totaling $141 million. The awarded work includes; Jacksonville (Fla.) Deepening Contract, Baltimore Harbor Maintenance and, Boston Harbor Maintenance.
Matson Pays the Highest Wages in Hawaii
Hawaii Free Press – Michael Hansen – 9 September 2019
The relatively high median compensation level is probably related to Matson’s high degree of unionization. In particular, their substantial number of waterfront employees who are members of the International Longshore and Warehouse Union (ILWU) including stevedores, wharf clerks, crane operators and office clerical staff. The ILWU has a very strong negotiating position with shipping and terminal owners as they represent virtually all the longshore and related workers on the U.S. Pacific Coast, Alaska and Hawaii.
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If you have any questions, please do not hesitate to contact Paula Zorensky on the SCA staff.
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