Port of Baltimore The port of Baltimore is presently employing about 6,000 to 7,000 production workers. Baltimore also comprises one of our major repair sections and will require at M-day minus 3 months, close to 11,000 people merely to staff the present facilities, and 17,000 people if all the reserve facilities were to be reactivated. Gulf coast On the gulf, the situation is even worse. All major yards are at one-third or less of their required mobilization nuclear strength. Port of Los Angeles In the port of Los Angeles all major yards are less than one-half of nuclear mobilization strength. The situation is the same throughout the country. Yard after yard with very few exceptions have from one-tenth to one-half of minimum nuclear production employment. Our largest yards are the worst hit, such as Bethelhem-Quincy; Bethlehem-Sparrows Point; Alabama Dry Dock; and Todd. Our small yards look as if they are going out of business. In the early hectic days of World War II, employees from these small yards were working one shift and going on the other shift to the large yards. Today, most of these small yards are down to little more than maintenance workers and watchmen. Shipbuilding and repair requires a large proportion of skilled workers. During World War II, over half of all shipyard employees were classified as skilled workers or supervisory employees. About 40 percent were classified as semiskilled and less than 10 percent unskilled. Welders, shipfitters, machinists, carpenters, shipwrights, pipefitters, electricians, chippers, and calkers, and painters made up the largest shipyard occupations. These skilled forces take years to train. Although, during World War II, female participation in shipbuilding was encouraged and women reached a peak of 11 percent of all workers in the industry; this development could only come later on, when the work could be broken down to the necessary extent to allow women to participate in it. Also, the employment of women was possible only on standardized work and was not feasible to any great extent in naval shipyards or repair yards. When shipyards have as little work as they have at present, and employment requirements rise even for a minor emergency (such as Korea), one has immediately to expand the labor market, which adds immeasurably to defense manpower shortages. The Korean emergency increased employment in the yards by over 60 percent, and this increase was accompanied by critical shortages of loftsmen, layers-out, and boilermakers. What would happen in the event of all-out war is frightening to contemplate. Respectfully submitted. JOHN J. GROGAN, President. EXHIBIT A.-THE EFFECT OF WAR ON PRIVATE SHIPYARD EMPLOYMENT The feast-or-famine nature of the shipbuilding industry can be traced in the industry's employment fluctuations from World War I through the Korean hostilities. "The shipbuilding program of the First World War was far greater than any nation had ever before attempted within a comparable period. In private shipyards, employment-which in prewar years had been about 50,000, and by 1916 had attained 75,000 in 1918-19 reached a peak of more than 400,000. expansion in private yards was, therefore, about eightfold." 1 The By 1923 the total number of workers in private United States shipyards had declined to 68,000. For the next 15 years, the only marked fluctuation occurred in the depression. "***The shipbuilding industry, like others, was depressed in the early 1930's, but not as much below the level of the immediately preceding years as in the case of many industries for which the late twenties had been years of much activity." 2 Nevertheless, employment in private shipbuilding and repairing dropped below 40,000 in 1932 and 1933, and even below 30,000 for some months in 1933. The depression totals were lower than those for pre-World War I years. "Recovery began early, however, when under authorization of the National Industrial Recovery Act the President on June 12, 1933, allotted $238,000,000 for the construction of 32 naval vessels. By 1934, employment in private ship 1 History of Shipbuilding Stabilization, The Industrial College of the Armed Forces, Washington, D. C., June 1947, p. 50. 2 Op. cit., p. 10. yards had increased one-fourth; and by 1936 it had regained its predepression level." 3 World War II brought an expansion to the shipbuilding industry that far exceeded any previous employment fluctuations. Private yards increased their employment fiftyfold between the depth of their depression in 1933 and the height of their wartime activity in 1943. ***As late as 1939 *** the industry, though considerably larger than at any time since 1922, still ranked only 20th in employment among the Nation's industries. In the 4 years between 1939 and 1943, employment increased to 1,720,000 [total of private and navy yards], or more than 14 times the 1939 level. The shipbuilding industry became the greatest of any single American industry, surpassing in employment not only every other manufacturing industry, but coal mining, building construction, railroads." 4 Looking at key dates in this 4-year period, we find private employment at the following levels: June 1940, beginning of the defense program. 1942, year of greatest expansion 5 97, 200 366, 400 761, 700 1,397, 700 Employment started to decline in 1944, but the greatest number of layoffs occurred in 1945.5 In fact, the decline in 1945 resembled rather closely the rise in 1942. The following 5 years meant a steady reduction in the number of private shipyard workers, until 1950 brought the industry back to its 1939 level. The postwar low occurred in May 1950, when only 66,200 shipbuilders were at work. Immediately afterward, the outbreak of hostilities in Korea occurred, in June 1950. Shipyard employment boomed again; while hardly on the scale of World War II operations, employment doubled between the 1950 low and the Korean peak in December 1952 of 135,300. But once more, in 1953, thousands of shipyard workers received their layoff notices, and the steady fall continued—at an even greater rate-in 1954. TABLE 1.-Total employment in shipbuilding and ship repair, private yards, 1923–54 Source: Bureau of Labor Statistics, U. S. Department of Labor. Averages for individual years have been compiled as follows: 1923-38: Averages computed by Shipbuilders Council of America, published as table 20. Total Employment in United States Shipyards in the Construction and Repair of Naval and Merchant Vessels, Annual Report, Apr. 1, 1953. 1939-50: Averages published in "Shipbuilding and Repair," Employment and Payrolls, Detailed Report, BLS, May 1951, p. 13. Monthly figures for 1942: Table 1. Total Employment on Construction and Repair of Naval and Cargo Vessels. January 1923-December 1944, Wartime Employment, Production, and Conditions of Work in Shipyards, BLS Bulletin No. 824, 1945. Monthly figures for 1945: Table 20. Annual Report, Shipbuilders Council of America, 1953. 1951-53: Averages published in table A-2, employees in shipbuilding and repairing, Monthly Labor Review. 1954: Average computed from monthly figures in table A-2, Monthly Labor Review, March 1955. Ibid. Mr. PETTIS. The 2d session of the 83d Congress passed a special measure to permit the Military Sea Transportation Service to negotiate long-term leases for 15 high-speed tankers which were to be built by private companies. These vessels were required by the Department of the Navy, and contracts were to have been awarded by January of 1955. The letter inviting bids, which was issued by MSTS on October 20, 1954, called for them by November 1954. Since November 1954, the awarding of these tanker contracts has been postponed three successive times, presently to May 1, 1955. On March 15, 1955, we wrote to the House of Representatives Committee on Merchant Marine and Fisheries and the Senate Committee on Interstate and Foreign Commerce protesting the second postponement. We are now appearing before the Senate protesting the third postponement. It almost looks as if none of these tankers will ever be built. In a letter to Secretary of Commerce Sinclair Weeks of March 8, 1955, and in our letter to your committee of March 15, we stated that we had been given to understand that one of the reasons for the postponement of the letting of contracts for the charter vessels was that the administration refused to consider these as special purpose vessels which could receive 100 percent mortgage insurance under the terms of the 1954 amendments to the Merchant Marine Act. The letter inviting the bids, which was issued by the MSTS on August 20, provided that these vessels were to have certain specific characteristics. The characteristics required, which were somewhat unusual, were smaller size ships, longer hulls, with higher speeds for the size, than are usually constructed for commercial usage. Further, the designs required have independent cargo systems capable of handling four different kinds of petroleum or petroleum products. A scrutiny of The Bulletin of the American Bureau of Shipping for February 1955 shows that most of the tankers being built today with the required horsepower are much larger than 25,000 deadweight tons. The three Cities Service Oil Co. tankers being built at the Bethlehem Steel Co., Sparrows Point Shipyard, are over 32,500 tons. Most of the tankers being built abroad are running from 30,000 to 35,000 tons. Therefore, the requirement for speed and for capacity is not important, and could easily be met in a larger vessel with no increase in cost ratio; but the speed requirement coupled with a limitation upon deadweight tonnage and size, would seem to increase hull cost and total cost far in excess of the normal cost per deadweight ton required to build a larger vessel of the same speed. On March 21, we received a reply from Secretary of Commerce Sinclair Weeks which stated that: On the basis of this study, it has been concluded that the use of mortgage insurance authorized by title XI, Merchant Marine Act of 1936, as amended, is required if the Navy program is to proceed in a timely fashion. However, we do not believe that Government assumption of the entire mortgage risk would be in consonance with the philosophy advanced in Public Law 781, the latest amendment to title XI of the above-mentioned act. Even though there were numerous representations in support of 100 percent mortgage-insurance coverage when this amendment was under consideration, Congress enacted the lower 90 percent maximum insurance coverage. While Public Law 781 does permit 100 percent insurance on special-purpose vessels, we are not convinced that tankers constructed under the Navy program, half the estimated economic life of which would be covered by Government charters, require insurance coverage to this extent, nor do we believe that the application of the 90 percent limitation would preclude the conclusion of any contracts under the program. The CHAIRMAN. When you say "March 21," that is this year? In other words, the tankers will not be considered as special-purpose. vessels for the purpose of mortgage insurance. The CHAIRMAN. In other words, the Secretary says he does not believe that the limitation would preclude the conclusion of any contracts under the program, and he comes to that conclusion on March 21, which is how many months since we passed the bill? Mr. PETTIS. You figure that up, Senator. The CHAIRMAN. It is quite a long period of time. Mr. PETTIS. And without work in the shipyards. At the original hearing on S. 2788, before the subcommittee of the Committee on Armed Services of the Senate, 83d Congress, 2d session, Vice Adm. Francis C. Denebrink, Commander, Military Sea Transportation Service, made a number of statements. He was questioned by Chairman Leverett Saltonstall as to whether or not he was convinced that these tankers will be made satisfactory for companies like the Standard Oil of New Jersey and the big companies, if and when the charter parties of the United States Government run out. Admiral Denebrink's answer was as follows: I think that you have a very good point there, and I must be very candid with you in this: The trend in the modern commercial tanker is toward vessels of larger size. There are currently on order ships in the neighborhood of 45,000 deadweight tons. Recently in your State they launched a ship, the World Glory, of 48,000 deadweight tons. The large commercial oil companies favor those ships. In other words, the problem of size was and probably would be a deterrent factor in the use of these tankers after the charter ran out. Chairman Saltonstall then pointed out that the modern oil-fuel carrier was a little slower and a good deal deeper than the tankers being contemplated for charter construction. Admiral Denebrink agreed and went on to say: We have, in our opinion, in stipulating the specifications for this ship, gone to the maximum which we can in good conscience go to in the thinking of their potential employment in the military. We want 18 knots sustained sea speed principally as a defense requirement. We want 32-foot maximum draft, fully loaded, because 85 percent of the ports in the world can only be entered by ships of 27-foot draft. Now we can get into the ports which we are currently utilizing with ships of 32 feet. You will notice that we stipulated not more than 84-foot beam. Many tankers are in the neighborhood of a hundred feet, but we have many tight pockets that we have to get into, and 84 feet is the most that we feel we can handle The question of size, therefore, was a matter of military consideration and was not determined upon consultation with the industry. As a matter of fact, during the original hearings, Richard Lovelace, port engineer, National Bulk Carriers, testified that the tonnage limitations in the bill were not in the best interest of the American merchant marine, and that a larger tanker would be of much greater value from a competitive viewpoint because at the time of the Navy charter end, foreign competitors would have much larger ships. 62776-55- -5 Mr. Lovelace testified that the modern trend was to larger and larger tankers. He also testified that the Navy speed requirements were two knots faster than the larger vessels presently being operated. Senator PASTORE. Did I understand you correctly, Mr. Pettis, that the reason for your argument three paragraphs above the bottom of page 2 The question of size, therefore, was a matter of military consideration and was not determined upon consultation with the industry do you forward that argument in order to prove that therefore they were special-purpose vessels? Mr. PETTIS. Yes, sir; I do. Senator PASTORE. That is the argument you are trying to make? Mr. PETTIS. Yes, sir. Senator PASTORE. The mere fact that all these requirements were made by the military, without consultation with anyone else, in itself proved that it was a special-purpose vessel? Mr. PETTIS. That is very true when you couple it in with the fact that at the end of a 10-year charter period, when the charters would end, those companies which would have built those and chartered them to the Navy, would then have to compete in the commercial market without any background of charters to assure them of work after the 10-year period. Senator PASTORE. In spite of these requirements the Department still took the position, through Secretary Weeks' letter, that these were not special-service vessels and for that reason were not entitled to the 100 percent coverage? Mr. PETTIS. That is very true, sir. The CHAIRMAN. I do not think there was any argument questioning that these ships were tailored to the Navy's needs. Mr. PETTIS. Absolutely. All the testimony so indicated. The CHAIRMAN. All the testimony was to that effect. Mr. PETTIS. Yes, indeed. Without objection. At the same hearing, Gordon Duke, of the Southeastern Oil Co., Jacksonville, Fla., testified against the restriction of vessel tonnage to 25,000 tons and stated that a substantial number of oil companies would not be interested in a vessel of that size after 10 years. When Admiral Denebrink was recalled to the stand after the testimony of Messrs. Lovelace and Duke, he was specifically asked by Chairman Saltonstall whether or not the Navy would have objections to an increase in the proposed size of the vessel to 32,000 tons instead of 25,000 tons. At that point, Admiral Denebrink stated: "The Navy Department wants these vessels of a special type as to size and speed." Evidently the refusal of the Maritime Administration and the MSTS to consider these vessels as special purpose vessels, for the purpose of mortgage insurance, is going to kill this tanker program. The largest part of the shipbuilding program for this year was to have been the construction of these tankers. Only 4 of these 20 vessels, those being build by the Navy, are now under construction. The 15 charter tankers are not being built. The tanker trade-in program is also bogged down. The CHAIRMAN. At that point, without reading these letters in full, addressed to the Maritime Commission and the Secretary, one from the Senator from Maryland, which was concurred in by myself, and |