the other from practically all the members of the House Merchant Marine Committee, Tollefson, Allen, Shelley, Mailliard, Garmatz, King, Latham, O'Neill, Pelly, Osmers, and Wigglesworth, all members-point out that if there should be a suggestion that there was some ambiguity of the language or the question of these ships, as to their type, that surely it was the intent of Congress that these were to be special-purpose ships. That is the whole tenor of these letters which will be in the record. I have said on many occasions, again reading the testimony before our committee here on this matter, that it was our intention that these be considered in that respect and the statement of Senator Saltonstall, as I recall it on the floor-I will get that for the record-was clearly what you have stated here based upon this testimony. Mr. PETTIS. I agree that the testimony was given in an atmosphere that these were special ships for military. Admiral Denebrink pointed out the situation that they were faced with in getting these tankers with the different petroleum products in them to bases that the Armed Forces and the services had throughout the world, not just on the continental United States but in a great many foreign nations where we have bases of various kinds. The CHAIRMAN. Go ahead, Mr. Pettis. Mr. PETTIS. Our shipways are empty and our workers laid off while there is a running fight going on within the administrative branch of the Government of the United States as to the method of getting these vessels underway. We have seen that at the original hearings testimony was given to indicate that these vessels would not meet tanker competitive requirements after the 10-year charter period. We, ourselves, think that the size limitation and the speed increase makes these vessels much more expensive to build per ton than other types of tankers. We urge this subcommittee to take into consideration the fact that the Navy has declared tankers essential to national defense, and that this particular type of tanker is the type that is needed. If we should have a national emergency and these tankers are not contracted for, the cost of building during the emergency will be more than 10 times the cost of considering these present vessels "special purpose" for the purpose of mortgage insurance only. Further, we think that the amendments to the original bill, that were written in on the Senate floor, have made the risk of loss for the Government extremely slight. The charter rates cannot permit recovery by the owner of more than two-thirds of vessel cost, and the Government may take over the tanker at the end of the charter period at depreciated or market value, whichever is lower. The CHAIRMAN. You are speaking there of the Williams amendment? Mr. PETTIS. That is right. The CHAIRMAN. On the floor? Mr. PETTIS. Yes, sir; added on the Senate floor. The CHAIRMAN. Thank you, Mr. Pettis. Do you have any questions? Senator PASTORE. No questions. The CHAIRMAN. Thank you, Mr. Pettis. D Our next witness is Mr. Hutchings, of the A. F. of L., metal trades. At this point in the record I want to put in the record a telegram from the Metal Trades Council, San Francisco. (The telegram is as follows:) Senator WARREN G. MAGNUSON, SAN FRANCISCO, CALIF., April 19, 1955. Senate Office Building, Washington, D. C. We are informed that contracts for Maritime Administration tankers can be awarded if Maritime Administration can be persuaded to act on the intent of the legislation authorizing these tankers. Those Congressmen and Senators who acted on this bill have recently stated in a letter that if they had been asked in earlier hearings, they would have stated it as their legislative intent that these ships are special-purpose tankers which would permit Government guaranty of 100 percent of 87.5 percent of the mortgage. We are further informed private interests are ready to furnish the remaining 12.5 percent for these tankers. If Maritime Administration can be persuaded to rule that these tankers are in fact special-purpose tankers in accordance with the provisions of the bill, we are informed negotiations for construction could commence immediately, and the contract could be signed in a month's time, which would afford much-needed new ship construction on the west coast. THOMAS A. ROTELL, Acting Secretary, Bay Cities Metal Trades Council. STATEMENT OF JAMES A. BROWNLOW, PRESIDENT, METAL TRADES DEPARTMENT, A. F. OF L., AS READ BY PAUL R. HUTCHINGS, DIRECTOR OF RESEARCH, METAL TRADES DEPARTMENT, A. F. OF L. The CHAIRMAN. Mr. Hutchings, do you have a prepared statement? Mr. HUTCHINGS. Yes, sir, we have a prepared statement. My name is Paul R. Hutchings, director of research, metal trades department, American Federation of Labor, fourth floor, American Federation of Labor Building, Washington, D. C. The CHAIRMAN. The statement is brief enough so that I think you can probably read it. Mr. HUTCHINGS. Thank you. In advance of reading it, may I state that I am appearing here on behalf of James A. Brownlow, the president of metal trades department, who had anticipated the opportunity of being with you this morning, but the short notice of this hearing and a previous our-of-town commitment made it impossible. I might also say that we have limited our statement directly to what we construed to be what was desired of us at this meeting. The metal trades department of the American Federation of Labor welcomes this opportunity to appear before your subcommittee in connection with its consideration of procedures for expediting the ship-construction program authorized by the Congress in 1954. The metal trades department was chartered by the American Federation of Labor in 1908 and is composed of 15 affiliated and 2 cooperating international unions, with some or all of their members employed in the metal-working industry. The present total membership of these affiliated and cooperating unions stands in excess of 3% million. There is no need to emphasize to this subcommittee the extremely distressed state which our American merchant shipbuilding industry is in. Only 6 days ago the Maritime Administration released its April 1 estimate of employment in privately owned American shipyards engaged in constructing oceangoing merchant vessels. Total employ ment in these yards on April 1 was estimated at only 4,500 persons engaged in constructing oceangoing vessels. It is unnecessary for us to detail to this subcommittee the extent to which our American shipbuilding industry and its workers have suffered because of the tremendous number of ship construction orders which American companies and their affiliates have placed in foreign shipyards. One recent survey summary indicated that more than 300 vessels of over 6 million deadweight tons were built or contracted for in foreign yards since the end of World War II. The shipbuilding programs approved by the Congress last year included various measures designed to bolster our badly sagging shipbuilding industry, preserve a mobilization nucleus of its skilled work force and thus also serve to improve our national defense. It will be recalled by members of this subcommittee that last fall, upon the adoption of the various shipbuilding programs the Acting Maritime Administrator estimated that these programs would give direct employment to over 35,000 shipyard workers for about 1 year, and with total wages estimated at more than $149 million. The 35,000 man-years of work which the Maritime Administration estimated these programs would provide is still a long way from being achieved. If we consider contracts signed, and use the Maritime Administration's man-year estimates, making such prorations as are necessary, we find that as of this date, contracts signed under all of the programs approved by Congress for fiscal 1955 will provide an estimated total of 6,671 man-years of work in the shipyards. This is less than 20 percent of the total estimated work to flow out of the combined programs. The CHAIRMAN. In other words, it only increased the 4,500 persons by a small amount of 2,000? Mr. HUTCHINGS. That would be correct to the extent that there has been the overlap completed. Let us look for a moment briefly, at the specific programs where the least progress is shown to date. The passenger cargo ship program which included the replacement of 4 passenger cargo vessels, 2 for Moore-McCormack Lines and 2 for Grace Lines, was estimated by Maritime to provide 8,275 manyears of work and wages which would total about $35,200,000. To the best of our knowledge, these ships as yet have not gone out for bid. Even if they go out for bid before May 1, allowing a bidding period of 90 days, it would appear that contracts could not be signed before sometime in August, almost 1 year after Congress approved this program. Almost one-fourth of the total man-years of work which the Maritime Administration estimated in the fiscal 1955 program is involved in these four passenger cargo ships. Congress appropriated about $26 million for the tanker trade-in program, under which the Maritime Administration encourages private firms to trade in tankers which are 10 years old and to use the funds received for such trade-ins toward the purchase of new highspeed tonnage. The Maritime Administration estimated that the funds appropriated would permit the trading in of 20 tankers and the building of about 10 new ones. Maritime also estimated that this program would provide about 7,400 man-years of work. Up to the present time exactly three new tankers have been firmly announced, resulting from this trade-in program. These are the three which Cities Service has contracted to build at Bethlehem Steel's Sparrows Point yard. Using Maritime's original estimate, only about 2,220 man-years of work have thus far been assured under this program as it has developed to date. The Navy tanker program, sponsored by the Military Sea Transportation Service, provided for the construction of 19 high-speed, 25,000-ton tankers of a type which would include defense features permitting them to be used as auxiliaries of the American combat fleet in emergencies. The Congress authorized 4 of these tankers to be built by the Navy and the remaining 15 to be constructed by the operators with private funds and put under long-term charter to the Navy. The Maritime Administration estimated that the construction of these 19 tankers would provide a total of 12,400 man-years of work in our shipyards. The award of the 4 Navy tankers was announced November 17, 1954, with 3 of them going to Sun Shipbuilding and 1 to Ingalls Shipbuilding. With reference to the 15 tankers to be privately constructed and operated under long-term Navy charters, it was announced that MSTS had received proposals to construct 23 tankers, which proposals would be evaluated by mid-January of this year. This date was then postponed to March 1, and later to April 1. Up to the present time, there have been no definite charter awards announced. On the basis of Maritime's estimates, more than 10,000 man-years of work have been delayed on the tie-up of the 15 charter tanker portion of the program. The problem seems to lie in the financing of the construction and as to whether or not these vessels should be classified as "special purpose" vessels and eligible for Government mortgage insurance on 100 percent of 872 percent of the cost. The Maritime Administrator has announced that he will consider the application of Federal ship mortgage insurance up to only 90 percent of the 87% percent of the cost of these tankers. The question now seems to come down to whether we are going to get these vessels built and chartered to the Navy. It would seem to us that these high-speed, 25,000-ton tankers to be built to include defense features which would permit them to be regarded as auxiliaries of the American combat fleet, might well qualify as "special purpose" vessels. It has now been 5 months since MSTS received bids to build and operate these vessels. It is indeed regrettable that the shipbuilding industry and its workers, who are so direly in need of new ship construction work, should be kept from obtaining it because of differences of opinion as to whether such construction falls in the category of special purpose vessels. The Metal Trades Department on behalf of its affiliated and cooperating international unions urges that this subcommittee use its good efforts to assist in getting this program under way. We believe that an examination of each of the shipbuilding and ship-repair programs authorized in 1954 might well be made with a view to making certain that each of the programs is moving forward as rapidly as possible so that its beneficial effects will be reflected in employment and operations in the shipbuilding industry with a minimum of delay. Mr. Chairman, I have with me Mr. Maywood Boggs, international representative of the International Brothe of Boilermakers, Iron Shipbuilders, Blacksmiths, and Helpers of America. Mr. Boggs as well as myself will be happy to answer any of your questions. Also, I would like to present, with the approval of the subcommittee, the current issue of the American Federationist Magazine, specifically pages 13, 14, and 15, referring to an article prepared by President James A. Brownlow entitled "Why Should America Stand Last?" and which deals in some detail with the current picture, worldwide, on shipbuilding. The CHAIRMAN. We will be glad to have that for the committee's information. I have no questions to ask. I think your statement points out, as the statement of Mr. Pettis, that this situation is getting more and more serious. There should be some expeditious action to get these programs underway. Mr. HUTCHINGS. We certainly concur in that. Mr. BOGGS. May I add a word, Senator? The CHAIRMAN. Yes. Will you give your name? Mr. BOGGS. I am Maywood Boggs, of the International Brotherhood of Boilermakers. It was brought out in Mr. Pettis' statement that there are some 81,880 people employed in the private shipyards of the United States. I want to say that that largely comes about by a program of robbing Peter to pay Paul. The Navy's program is carrying that to a large extent. From a mobilization standpoint a decrease in naval shipyard employment, thereby increasing private shipyard employment by awarding naval contracts to private shipyards, does not increase the overall mobilization potential of the country. The CHAIRMAN. No. That figure would include, for instance, the 3 ships at Sun which if they had been built at the navy yard would be 6 of 1 way and half a dozen of the other. Mr. BOGGS. The policy of the administration in that regard, when you pinpoint it to private shipbuilding, may be misleading. People should understand that it comes about by a decrease in naval shipyard employment. The CHAIRMAN. Actually the point has to be remembered, from your figures, that in this huge industry there are only about 4,000 people employed in new ship construction. I do not have the figures but even smaller maritime countries I would think have 10 times as much, or more. Mr. HUTCHINGS. And that figure has been decreasing month by month. Maritime's figure 2 months ago was an estimate of 5,700 employed in private yard, new ship, oceangoing construction. A month ago it was 5,200. The current figure for April 1, released this past week, is 4,500. The CHAIRMAN. Mr. Strohmeier, I understand that you cannot come tomorrow, is that correct? Mr. STROHMEIER. Yes, sir. The CHAIRMAN. How long would you require? Mr. STROHMEIER. Mine would be very short. The CHAIRMAN. We can then hear you. after that. We will have to close Mr. STROHMEIER is vice president of Bethlehem Steel, shipbuilding division. |