Such multiple production of the same type of ship in a single yard permitted repetitive processes and extensive prefabrication in quantity, ultimately resulting in lower unit costs and decreased man-hours and decreased time of construction per unit than would otherwise be possible.

But at best, such a procedure is a far cry from mass production as we know that term industrially in this country. Mass production involves the use of the production line with the techniques associated therewith, and its successful application is contingent upon several factors. First, there must be an extensive market to absorb the product or products in great volume and consistently, and, second, there must be a continuous and adequate flow of all the items required to assemble and complete the product or products. Any interruption in that supply line is fatal.

Ship construction does not lend itself to this procedure for many reasons, namely, the market does not exist in sufficient volume to justify it, the product is very large and heavy, and hence, for seagoing ships at least, it is not practical to move it on a production line, it takes a long time to construct, part ashore and part afloat, it is relatively very expensive, the various components are many in number, some of them most complicated, and a relatively great amount of specially skilled labor, both hand and machine, is required. Shipbuilding, as a matter of fact, is somewhat of a unique industry, unlike any other industry, involving special facilities, special tools, special skills, and a know-how that can be acquired nowhere else except in a shipyard.

I mention this matter of mass production because of the generally erroneous conception of its application to shipbuilding. We can do again what we have done before, and perhaps better than it was done before, but there will be no mass production of large vessels.

The shipbuilding and ship-repairing yards and their allied industries have a vital stake in the future of the American merchant marine. If this country maintains a strong, healthy, and adequate merchant marine, which it can do only through the means of a consistent and continuing replacement program, the shipbuilding yards can take care of themselves. They ask no special dispensation, merely the opportunity to compete for the new merchant ships which are indispensable to the national welfare and the national security. That work coupled with such naval construction as there may be in the way of capital ships, should keep them going at a reasonable level. The allied marine industries will likewise participate in such a program and thus keep their facilities and organizations intact and reasonably prosperous. The ship-repair yards will have the opportunity to service an adequate merchant marine, supplemented by such Government repair and conversion work, particularly naval, as they are given an opportunity to compete for.

Both shipbuilding yards and repair yards naturally will endeavor to supplement their respective workloads by obtaining whatever foreign-flag work may be available. However, the future does not hold much promise for foreign-flag work, particularly ship construction. In the past few years, the proportion of foreign-flag ship construction under way in American yards has been unusually heavy. That has been due to several factors. There has been a worldwide demand for tanker tonnage. Foreign shipyards have been congested with work,

with backlogs of orders covering deliveries up to, in many cases, 1956, and with schedules delayed on account of material and equipment shortages. Foreign owners eager for tonnage were willing to pay American prices to obtain early deliveries which they could not get elsewhere.

As a matter of fact, foreign orders have been largely instrumental in keeping American shipbuilding yards going in recent years. The workload has consisted of those orders, plus some domestic tanker orders, and the Maritime Administration's Mariner program. Chart 24, submitted to this committee by the Maritime Administration, graphically illustrates the impact of foreign orders on the overall shipyard workload. That is assuming that some program was inaugurated.

Senator POTTER. I assume the foreign shipyards are also expanding their shipbuilding facilities, are they not?

Mr. SANFORD. To the extent they can afford to do so. They foresee a day of reckoning and they cannot afford to go too far on that expansion, because orders are slackening up worldwide.

Senator POTTER. Do you plan that these foreign orders will continue to be a factor in the American

Mr. SANFORD. No; I do not think so. I am just coming to that. Shipyards in this country have been handicapped, however, in obtaining orders for foreign-flag ships, and could have obtained more orders than they actually did had it not been for such handicaps. There is no present justification for their existence.

In brief, the situation is as follows: The Shipping Act of 1916, as amended by the act of July 15, 1918, provides that when the United States is at war or when the President has declared a national emergency, it is unlawful to contract for a vessel to be constructed in the United States for foreign account without first obtaining the approval of the Maritime Administration. That approval is contingent upon the assumption of certain obligations by the buyer, most of them onerous, which foreign owners naturally are reluctant to assume. In addition the lapse of time usually required to ultimately obtain the necessary approval, even if the buyer agrees to accept the obligations imposed upon him, has been so great that, in certain cases, the negotiations for a contract have been terminated by the prospective buyers in disgust and the orders placed elsewhere, outside the United States. There is ample justification for the limitation imposed by the statute in case of war or real national emergency, possibly even when there is an acute shortage of material such as we have had in the recent past, particularly if all available material is required for vessels under order for American-flag account.

However, no such situation exists at present nor has existed for the past year, but, nevertheless, the President's emergency proclamation of December 16, 1950, which is still in effect, automatically keeps in operation restrictions on ship construction for foreign account, Irrespective of the fact that orders for ship construction, and particularly for foreign-flag ship construction, are urgently needed by the shipyards.

In view of this situation, the council has drafted a proposed joint resolution to terminate the effectiveness of section 4 of the act of July 15, 1918. This resolution would operate to terminate the present application of the national emergency, insofar as restrictions

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on foreign-flag ship construction in this country are concerned. It does not affect the statute itself which will again be available in the event of the occurrence of the contingency provided for therein.

The language of the draft of the proposed joint resolution is attached hereto as exhibit J together with a detailed explanation of all the circumstances involved (exhibit K) which I shall not attempt to read to this committee. I do, however, commend this proposed joint resolution to the committee and trust that you will give it the consideration to which we believe it is entitled, and, if you think well of it, take the necessary steps to have it introduced and acted upon. Mr. DREWRY. Have you discussed this proposed resolution with the Department of Commerce?

Mr. SANFORD. I have not.

Mr. DREWRY. Do you have any idea as to their feelings on the matter?

Mr. SANFORD. I do not think they would have any objection, but that is an assumption on my part. I would want to talk with them before I could tell you exactly.

Senator POTTER. I assure you, Mr. Sanford, we will take that under advisement. I personally would be very sympathetic to a resolution of that kind, or anything that would help the shipyards take up the slack particularly now with no orders on deck, until possibly we can get a long-range shipbuilding program under way.

Mr. SANFORD. You see, it only goes to a temporary situation. There is nothing in the way of permanent legislation at all.

Mr. DREWRY. That is what I had in mind.

Mr. SANFORD. I would be very happy to discuss it with Maritime. I am going down there today or tomorrow. I would be happy to talk to Mr. Rothschild about it and the other commissioners, also Francis Greene.

Mr. DREWRY. It takes time to get a report from the Department of Commerce.

Mr. SANFORD. Yes, I know.

Restrictions on foreign business are not applied to other types of industries in the United States. Why should the shipbuilding industry be saddled with them in normal times, particularly in times when it needs the work in order to exist? If there were a Government shipbuilding program requiring all the available capacity of the shipyards, the situation might be somewhat different. No protest would have been filed had such been the case.

Mr. DREWRY. Mr. Sanford, on the question of the needs for American shipbuilding, wouldn't whatever controlled materials plan that was in effect have served sufficiently to see that the priority went to American construction rather than foreign, irrespective of this 1918 statute?

Mr. SANFORD. I do not believe it would necessarily have gone quite that far. That would have been one way of having a control. There is no question about it. Of course, the NPA did have the power to say that either you get it or you do not get it.

Mr. DREWRY. I would think its policy would be directed toward American construction.

Mr. SANFORD. Our plan in NPA was to get materials for Americanflag shipping, let alone foreign-flag ships.

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The passage of such a resolution now may be somewhat like locking the barn after the horse is stolen, as the damage has already been done. However, the justification is sound, and it should be done. Conditions may change.

However, at the moment, future prospects for foreign orders are somewhat bleak. The world demand for tonnage is slackening off and there have been cancellations of existing orders, both here and abroad. As the workload eases up in foreign shipyards, particularly now that Italian, German, and Japanese shipyards are back in the picture, foreign owners will be most reluctant to pay American prices if they can secure reasonable deliveries elsewhere. So it appears that American shipbuilding yards in the future will have to rely almost altogether on American-flag operators or on the Federal Government for new ship-construction orders.

That fact merely highlights the necessity for a comprehensive, consistent, and continuing ship-replacement program if American shipyards are to survive and if the merchant marine itself is to survive. The survival of both is essential to the national economy and to the national security.

I hope that this statement proves to be of some help to this committee in its efforts to reach sound conclusions on the merchant marine and maritime industry as a whole.

Mr. Chairman, I ask that exhibits A through K be made a part of the record.

Senator POTTER. Without objection, they will be made a part of the record at this point.

(The exhibits referred to are as follows:)

LIST OF EXHIBITS

Exhibit A: Gross tons of steel self-propelled merchant ships delivered each year by private shipyards, by types, 1941-52. Exhibit B: Table showing gross tonnage and number of steel self-propelled merchant vessels (by types of ships) built in the private shipyards of the United States and delivered in the years 1941-52 (includes only vessels of 2,000 gross tons and over).

Exhibit C: Displacement tons of steel naval vessels delivered each year by naval and private shipyards, 1941-52.

Exhibit D: Table showing the number and displacement tonnage of steel combatant and auxiliary naval vessels built in the shipyards of the United States and delivered in the years 1941-52 by geographical regions.

Exhibit E: Yearly average of employment in naval and private shipyards of the United States engaged in construction and repair of naval and merchant vessels. Exhibit F: Quarterly average number of employees in the principal private coastal ship repair yards of the United States, 1939-53.

Exhibit G: Large seagoing or inland waters merchant vessels under construction or on order June 1, 1953, together with percent representing unfinished work (vessels 1,000 gross tons and over).

Exhibit H: Naval combatant and large auxiliary vessels under construction or on order in private yards, June 1, 1953.

Exhibit I: Naval combatant and large auxiliary vessels under conversion in private yards, June 1, 1953.

Exhibit J: Proposed congressional joint resolution to terminate the application of section 4 of the act of July 15, 1918.

Exhibit K: Proposed explanation of necessity for the congressional joint resolution to terminate the application of section 4 of the act of July 15, 1918.

EXHIBIT A

GROSS TONS OF STEEL SELF-PROPELLED MERCHANT SHIPS DELIVERED