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PHC Jeff Hilton, U. S. Navy, (above right), in recognition for his contributions of outstanding photography to Proceedings, receives from Jim Barber a framed USNI print of the USS Iowa (BB-61), on which he served from March 1984 until March of this year. Chief Hilton now teaches at the U. S. Naval School of Photography in Pensacola. The print was presented at a reception following the Institute’s recent joint seminar held with the Naval Aviation Museum Foundation in Pensacola.
for four quarterly issues; non-members pay $24.
Interested? USNI members will receive applications for 1988 Naval History subscriptions in the mail this month. If you don’t want to wait, we invite you to call our toll-free member service line— (800) 233-USNI (outside of MD) or 2243378 (in MD).
New Naval Institute Press Books
Robert Erwin Johnson, a maritime historian who has written three popular books for the Naval Institute, including Far China Station, adds a new title to our list—Guardians of the Sea: A History of the U. S. Coast Guard, 1915 to the Present. The first comprehensive study of the Coast Guard to be written, it offers a fascinating look at a service with peacetime duties that have proved just as important as its participation in two world wars.
The Ships of John Paul Jones by the talented marine artist William Gilkerson, also making its appearance this month, is introduced in conjunction with a major exhibition of Gilkerson’s work at the Naval Academy Museum. This exquisite book includes more than 60 illustrations and presents an engaging record
In a discussion where the panelists could not even “agree ... on what time of day it is,” as one speaker said, no easy solutions emerged to reverse the decline of the U. S. Merchant Marine. But the sense of urgency—the sense that something must be done now—was obvious in the speakers’ passion. The debate centered on the problems that have contributed to the industry’s decline, among them: foreign competition, the tension between the industry’s commercial viability and military requirements, the current maritime policy (or lack of one), and the availability of sufficient cargo to support a Merchant Marine that can meet military requirements. Retired Navy Rear Admiral Carl Seiberlich, the seminar’s moderator and now the Director of Military Programs with American President Lines, focused on the Merchant Marine’s dilemma in his opening statement: “We’re in a position where we have a mobilization requirement that must be met in an affordable way, with the least possible risk. This is the
balance, I think, that has to be achieved.”
Seven panelists spoke to a packed house at the National Defense University at Fort McNair in Washington, D. C. As Admiral Seiberlich said, “Many of you in the audience know every bit as much about the subject as the panel does.” The speakers represented virtually all viewpoints of the troubled industry. They were: Ed Welsh, chief counsel of the House Committee on Merchant Marine and Fisheries, standing in f°r the committee’s chairman, Representative Walter Jones (D- NC); David H. Klinges, president of Bethlehem Steel Corporation’s Maritime Construction Group; Philip J. Loree, chairman of the Federation of American Controlled Shipping, representing U. S. companies that own or operate ships flying foreign flags; Frank Drozak, president of the Maritime Trades Department of the AFL-CIO; Representative Helen Bentley (D-MD), member of the House Committee on Merchant Marine and Fisheries; John Gaughan, Administrator of the Maritime Administration (MarAd) at the Department of Transportation; and Vice Admiral Walter T. Piotti, Jr., U. S. Navy, Commander, Military Sealift Command.
Admiral Seiberlich’s opening comments set the stage for the other speakers’ presentations. The Merchant Marine, he said, is in the uncomfortable situation of being dependent on
Law
provides that “Only Regular Mem-
Several Hollywood luminaries—
including Tony Curtis, June Allyson, and Cliff Robertson—were present to comment on their naval service and the naval films in which they had performed. The keynote speech was delivered by 31-year Naval Institute member Admiral William J. Crowe, Jr., U. S. Navy, Chairman, Joint Chiefs of Staff.
Author Herman Wouk accepted the Foundation’s first Lone Sailor Award, to be presented annually to naval veterans in recognition of outstanding achievements following their naval service. Wouk’s address included a quote from a fictional Proceedings article written by one of his characters in War and Remembrance.
The U. S. Navy Memorial will acknowledge the contributions of every man and woman who has served the U. S. Navy. We encourage USNI members to support the efforts of the Memorial Foundation.
Navy Memorial Foundation Gala
The Naval Institute was well-represented at the Navy Memorial Foundation’s recent black-tie gala benefiting the U. S. Navy Memorial, now under construction in Washington, D. C.
The theme of the event, “Hollywood and Washington Salute the U. S. Navy,” had been suggested by a Foundation staffer who was impressed by the Naval Institute’s 1987 calendar, Hollywood and the U. S. Navy. Enlargements of many of the photos from the calendar were prominently displayed in the reception areas.
for election to the offices of President, Vice President, and Director of the Naval Institute.”
The Nominating Committee will present its slate of nominees to the Board of Control in September. The Constitution and By-Laws, Article VIII, Section 1, also provides that “Additional nominations may be made by members so desiring, provided that requests therefor shall be signed by twenty-five (25) Regular Members in good standing.” Nominations should be mailed to the Executive Director, U. S. Naval Institute, Annapolis, MD 21402.
ers and Regular Life Members of the nstitute who are regular officers on the active list of the U. S. Navy, Marine Corps, and Coast Guard shall be eligible
1988 Nominating Committee
The Board of Control has appointed he following Nominating Committee for the 1988 election of Naval Institute offi- eers and directors:
Chairman: Vice Admiral Joseph Metcalf HI, U. S. Navy Member: Rear Admiral John S. Oisher, U. S. Navy Member: Captain William D. Hahn, 0. S. Navy
Recorder: Lieutenant Commander Rusty Acree, U. S. Navy Regarding eligibility, Article VIII, ection 2, of the Constitution and By-
0 the ships that played a significant role m ^°hn Paul Jones’s memorable career. Our first full-color calendar, The Navy e?ds You!, U. S. Navy Poster Art of the 'ventieth Century, and The Mariner’s ocket Companion for 1988 are fully escribed in the brochure mailed with this ■ssue. Perfect gifts, these calendars are useful and reasonably priced.
Pr°fit, like any other commercial enterprise, but also response, like the reserve forces and the National Guard, for immediate mobilization in case of a conflict. In the past, u- S. policy has been based on cabotage, cargo preference, tariff reductions, subsidy and other incentives. Today, he con- [mued, there is a great debate on what the policy should be both to help the Merchant Marine, and to reconcile the con- dicting economic demands of the various interests. The admiral then introduced the first panelist.
Welsh emphasized that any maritime policy will have a c°st. The Reagan administration, however, claims “that a Policy can be constructed without significant intervention, financial or otherwise, by the federal government, and without ‘mposing costs on shippers or consumers.” The administra- Pon has, for example, ended construction differential subsidies and repealed the Title XI shipbuilding loan guarantee Program. These actions and others have shifted the costs of jhe Merchant Marine to the consumers and to the Defense (department, which must spend billions of dollars to augment >ts own sea-lift fleet.
Without an administration policy, said Welsh, Congress has been left to devise its own programs. Among these is the Maritime Auxiliary Sealift and Training Act (MAST), a bill currently pending that would, among other things, take the money allocated to acquire and maintain the ships and train the people for the Ready Reserve Force (RRF) and instead transfer it directly to commercial U. S.-flag ship operators.
Welsh noted that there are other congressional initiatives on the table. “But so long as the administration stubbornly in- s'sts that a maritime policy can be cost free, we will have lit- Pe room to be optimistic. . . . Are you listening, Mr. President? Six-and-a-half years has been a long time to wait.”
Echoing Welsh’s criticisms of the Reagan administration, Klinges detailed the plight of the U. S. shipbuilder. From October 1982 to October 1986, the number of shipyards decreased by one-third and the number of shipyard workers by almost one-fourth. The shipbuilding market in this country has almost collapsed, he said, pointing to a drought in new commercial construction contracts since 1984 that will extend into 1988. Why? Klinges said that the main reason is foreign competition, especially with Asian nations. High foreign government subsidies—28% in the European Community—and lower wages abroad have “permitted the pendulum to swing to the Orient, where some 60% of all ship contracts are placed today.”
Although the 600-ship Navy has provided much business for the shipyards—about 90% of their workload—the construction of these ships has not kept the industry fully employed. This is because Navy contracts are concentrated in but a few shipyards; 87% of 1986 construction funds were spent in just three yards. The rest of the shipbuilding mobilization base has been in precipitous decline. “We’re in a complete laissez-faire position,” said Klinges, “in which there is to be no public support to do other than build the 600-ship Navy. Period.”
The next speaker, Loree, also stressed the role of competition in the decline, but from a different perspective. The problem, he asserted, is that the industry has “lost sight of the fact that we’re in the commercial business of supplying shipping services to the shipper.” But in peacetime, commercial shipping is not a growth business. The industry must get “leaner and meaner,” he said. “There is a decline because the rest of the world is becoming more competitive and Americans are not. . . . ”
One positive point that Loree made was that in the last decade, U. S. carrying capacity has increased from 15 million deadweight tons to 21 million deadweight tons—“not bad, considering the rest of the world has been going the other way.”
As for the tension between the military and commercial requirements of the industry, Loree compared the Merchant Marine to a bakery, where “the Army boys” complain about the “fancy [delivery] trucks” and tell the bakery to use armored personnel carriers, even though the bread might get stale, “because when the time comes, we’re going to need the trucks.”
“You can ... sit here and moan and groan ’til the Potomac freezes over,” concluded Loree, but “nothing politically is going to fly that, overnight, is going to change everything. . . . You’ve got to get back into the real world.”
“Phil and I don’t agree on anything,” opened Drozak, the next speaker, to audience laughter. He contrasted the U. S. and the Soviet fleets: the U. S. merchant fleet is 16th largest in the world, with only 360 active deep sea ships carrying less than 5% of U. S. cargo. At the end of World Drozak and Loree War II, the country had more
than 3,000 ships. The Soviets, on the other hand, have the second largest fleet in the world and, moreover, the most militarily useful. Their ships are built with strengthened decks, tie-downs adequate to accommodate military vehicles, provisions for chemical warfare, and enhanced communications that far exceed merchant communication requirements. Their ships are smaller than the U. S. ships, making theirs more suitable for using ports that have greater navigational constraints.
The military inadequacy of U. S. merchant ships is such that without a reversal, said Drozak, the United States “will be almost totally dependent on foreign-flag shipping to sustain the U. S. economy at the time of war.” Unfortunately the European shipping industry, he noted, is far from healthy. The British are in particular trouble; they could not execute another Falkland Islands operation today.
Although the U. S. Government has acknowledged the problem and the President has appointed a Commission on Merchant Marine and Defense to seek facts and form opinions, the Commission will not issue its final recommendations until December 1988. That may be too late, Drozak said. The industry needs adequate cargo. “The time to do something is now.”
This sense of urgency could also be heard in the presentation of Representative Bentley, who arrived late because of a congressional vote.
Commenting on the size of the crowd and the level of emotion on the panel, she said, “I didn’t realize there was so much interest in the Merchant Marine. We wouldn’t be having the troubles we’re having if this was really true interest. I’m wondering how many are here because they got away from the office for half a day and in an air-conditioned room.”
Continuing in this accusatory tone, Bentley said that there has been no maritime policy for 37 years. But there are many laws already on the books, especially the cargo preference statutes, that, if enforced, “would go a long way to restore the health” of the U. S.-flag fleet. These laws, however,
“are continually being . . . violated by a number of you right
Klinges, Bentley, and Welsh
here in this room. ... I will say to those persons . . • you can be very proud of yourself that you’ve contributed to the decline of the American flag and, therefore, have added to the lack of national security in this country.”
Not only has national security suffered, Bentley said, but so has national solvency. Seventy cents of each dollar spent on U. S. maritime transportation remain in our economy, this is not true on foreign-flag ships, whose foreign crews do not pay U. S. taxes. Without compliance with the cargo pre erence statutes, MarAd estimates that more than 10,000 Americans will lose their jobs.
The Merchant Marine, she reminded the audience, with its shipbuilding, steel, and machine tools, is part of the U. S. industrial base. After World War II, the Soviets credited the U. S. industrial base with their victory. But times have changed, she said, and, according to one admiral, the U. S. Navy cannot buy many items domestically. Shoes, for example, are purchased abroad, because, said the admiral,
“they’re cheaper in Korea.” “You’re right,” Bentley responded. “But so are navy admirals cheaper in Korea.”
Representing the Reagan administration, John Gaughan disputed Welsh, Klinges, and Bentley, when he said that the current administration does indeed have a maritime policy- 1 support his case, he pointed out several examples, including the transfer of MarAd from the Department of Commerce to the Department of Transportation—in order to create a single focal point for maritime matters in the executive branch—-and the Shipping Act of 1984, which reformed government regulations on ocean liners that ship in foreign trades and introduced “competition and innovation into [this] segment of the industry.”
Gaughan also discussed a new policy paper on an operational differential subsidy reform package that had been developed and was awaiting the Secretary of Transportation’s signature to become effective. Since the time of the seminar, the secretary has forwarded the proposal to Congress. Although the details of the policy were unavailable, Gaughan did say that it presents a reform subsidy program that allows flexibility for U. S. carriers to compete globally, but maintains a cost discipline. This policy “would go a long way toward providing the necessary support ... to maintain a stronger fleet.”
Other examples of Reagan’s maritime policy, he noted, include support for the Jones Act, support for existing cargo preference, and aggressive action against foreign trade barriers and discriminatory practices.
“The luxury of ignoring the obvious decline ... is gone,” said Gaughan. The industry has ample opportunities, he continued, but to succeed, “maritime carriers must learn to compete against their foreign-flag competitors, and to spend less time fighting among themselves.”
The final speaker was Admiral Piotti. He said that 96% of the 25 million tons of cargo that the Navy ships each year travels in U. S. bottoms. The rest goes on other ships because U. S. shipping is unavailable or will not meet the military required delivery date.
With 40 of our 42 allies overseas, Piotti said, more than 90% of all wartime cargo must be transported by ship. This underlines the significance of the military-Merchant Marine partnership to the U. S. forward defense strategy. And in the next conflict, said the admiral, there will be no catch-up period. It will be a “come-as-you-are event. Quite frankly, if called today ... I think we’d be forced to come to the fray partially clothed.”
The theme of military-versus-commercial utility that both Admiral Seiberlich and Mr. Loree emphasized was repeated by Admiral Piotti. The innovations that are commercially attractive, he said, such as containerization, larger ships, and smaller crews, have serious military drawbacks. This, added to the numerical decline of the U. S. merchant fleet, has forced the Navy to institute stopgap measures aimed at enhancing the number of strategic sealift assets, improving theater closure rates, and increasing the military utility of the present and future inventory of U. S.-flag ships. These programs include: creation of an afloat maritime prepositioning force, fast sea-lift squadrons, and the Ready Reserve Force; as well as development of sea-lift enhancement features such as sheds and flat racks to handle outsized military cargo and allow it to fit into existing ships, and of offload systems and lighterage to ensure self-sustainability.
A lively question-and-answer session followed the formal presentations. Loree and Drozak clashed over the issue of the effective U. S.-flag fleet—the flags of convenience. Drozak reiterated Bentley’s point that the flags-of-convenience ships “don’t pay any taxes to the United States.” He also called attention to the International Transport Workers Federation (ITF)—“you know what the ITF is, don’t you, Phil?”— resolution, which states that no seaman from a foreign country can be forced to go into any warlike zone, that if he does volunteer he must be paid double, and that if he does not volunteer he must be paid while he stays home. Although it has not passed yet, Drozak asserted that it will in October; “So don’t come and tell me and tell the public that we can depend on the flag of convenience to back us up and support the national security of this country or any other country.”
Loree responded to both of these points. “In terms of the owners,” he said, “we’ve been paying taxes—surprise!—for years.” I testified in 1979 that “more money was coming from U. S.-controlled than coming from the U. S. flag. You don’t pay taxes unless you make a profit, Frank.” As for the ITF resolution, Loree answered that the United States has “not had a single problem with the crews on these ships [in the Persian Gulf], which go in daily. It’s a very dangerous, dangerous situation, and I knock on wood when I say that not a single one has been fired upon yet.”
Drozak challenged Loree to get “every one of your crew members to tell me . . . [that] they are prepared to carry mi
itary goods into the war zones.
. . . And if they do, you win the argument. If they don t, by God, we win. Because they will not do it. . . . You ^ bullshit people too much.’
At this point, Admiral Seiberlich stepped in and recognized additional questions from the floor.
Admiral Piotti was asked whether the Navy’s protection of foreign flags and flags-of- convenience shipping would, in the long run, hurt or help the U. S. Merchant Marine.
Piotti responded that the threat and the prohibitively expensive insurance rates required to operate in the Persian Gulf prevented U. S. liners from carrying cargo within the Gulf. Heretofore, U. S. naval protection was not accorded the U. S. flag fleet. “The owners view that the carriage of carg0 is still too costly in their own bottoms, and they will continue to go by foreign flag feeders for carriage up there.”
The seminar ended on an encouraging note from an audience member, who said, “Things can be done . . . but it takes ... a fairly united industry, an active coalition of pe0” pie in Congress, and a supportive administration.” Admiral Seiberlich agreed, saying later that “for the first time in 25^ years, everybody has decided that something must be done- Everyone agrees that there is a crisis. Seiberlich noted an observation made by Secretary of the Navy James Webb at the Merchant Marine Academy graduation at Kings Point, that in Chinese, the word “crisis” is two symbols: one stand for danger and the other for opportunity. The challenge for the industry and the government, it seems, is to cooperate both to solve the crisis and to use the opportunity to the industry’s—and the nation’s—advantage.
Thus ended the formal seminar, but not the discussion. The group adjourned to a reception at the Fort McNair Officer’s Club, where the debate—sometimes reserved and focused, sometimes more heated—continued over drinks until after eight o’clock that evening. —Follin ArmfieK*
A transcript of the seminar is available for $10.00 by writing to the USNI Membership Department or by calling (301) 268-6110 in Maryland or 1-800-233-USNI in other states.
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Keeping your weight at a moderate level may scale down your risk of heart attack. So maintain a healthy diet and lighten up on your heart.
American Heart Association
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