[Senate Hearing 119-300]
[From the U.S. Government Publishing Office]
S. Hrg. 119-300
SEA CHANGE:
REVIVING COMMERCIAL SHIPBUILDING
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HEARING
before the
SUBCOMMITTEE ON COAST GUARD, MARITIME,
AND FISHERIES
of the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 28, 2025
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available online: http://www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
62-921 PDF WASHINGTON : 2026
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
TED CRUZ, Texas, Chairman
JOHN THUNE, South Dakota MARIA CANTWELL, Washington,
ROGER WICKER, Mississippi Ranking
DEB FISCHER, Nebraska AMY KLOBUCHAR, Minnesota
JERRY MORAN, Kansas BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska EDWARD MARKEY, Massachusetts
MARSHA BLACKBURN, Tennessee GARY PETERS, Michigan
TODD YOUNG, Indiana TAMMY BALDWIN, Wisconsin
TED BUDD, North Carolina TAMMY DUCKWORTH, Illinois
ERIC SCHMITT, Missouri JACKY ROSEN, Nevada
JOHN CURTIS, Utah BEN RAY LUJAN, New Mexico
BERNIE MORENO, Ohio JOHN HICKENLOOPER, Colorado
TIM SHEEHY, Montana JOHN FETTERMAN, Pennsylvania
SHELLEY MOORE CAPITO, West Virginia ANDY KIM, New Jersey
CYNTHIA LUMMIS, Wyoming LISA BLUNT ROCHESTER, Delaware
Brad Grantz, Republican Staff Director
Nicole Christus, Republican Deputy Staff Director
Lila Harper Helms, Staff Director
Melissa Porter, Deputy Staff Director
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SUBCOMMITTEE ON COAST GUARD, MARITIME, AND FISHERIES
DAN SULLIVAN, Alaska, Chairman LISA BLUNT ROCHESTER, Delaware,
ROGER WICKER, Mississippi Ranking
JOHN CURTIS, Utah BRIAN SCHATZ, Hawaii
BERNIE MORENO, Ohio GARY PETERS, Michigan
TIM SHEEHY, Montana TAMMY BALDWIN, Wisconsin
C O N T E N T S
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Page
Hearing held on October 28, 2025................................. 1
Statement of Senator Sullivan.................................... 1
Statement of Senator Blunt Rochester............................. 3
Statement of Senator Cantwell.................................... 4
Statement of Senator Cruz........................................ 28
Statement of Senator Young....................................... 32
Jesse Vecchione, Regional Business Development Leader,
Americas, Weathernews, Inc., prepared statement............ 32
Dustin Walper, CEO, Valstad Shipworks, prepared statement.... 33
United Steel, Paper and Forestry, Rubber, Manufacturing,
Energy, Allied Industrial and Service Workers International
Union (USW) and the International Association of Machinists
(IAM Union), prepared statement............................ 34
USA Maritime, prepared statement............................. 36
Transportation Institute, prepared statement................. 38
Letter dated October 28, 2025 to Hon. Dan Sullivan and Hon.
Lisa Blunt Rochester from Brandon Farris, Vice President,
Government Affairs, Steel Manufacturers Association........ 40
Letter dated October 28, 2025 from Jan Sramek, Founder & CEO;
Craig Hooper, Director, Defense Industrial Base; Justin
Esch, VP Business Development, California Forever.......... 40
Roberto Llames, President, SMART Development Institute (SDI),
prepared statement......................................... 42
Gary Aucoin, President, SCHOTTEL, Inc., prepared statement... 43
Billy Thalheimer, Co-founder and Chief Executive Officer,
REGENT Craft, Inc., prepared statement..................... 44
Passenger Vessel Association (PVA), prepared statement....... 45
Robert Sheen, President and COO, Ocean Shipholdings, Inc.,
prepared statement......................................... 46
Sam Salustro, Senior Vice President of Market and Policy
Strategy, Oceantic Network. prepared statement............. 48
Brad Ford, Executive Vice President, Plate and Structural
Products, Nucor Corporation, prepared statement............ 52
Navy League of the United States, prepared statement......... 53
Nathan Sandel, Director of Education and Community
Development, Nauticus, prepared statement.................. 56
New American Industrial Alliance, prepared statement......... 57
Marine Engineers' Beneficial Association, AFL-CIO (M.E.B.A.),
prepared statement......................................... 58
Rear Admiral James Watson (USCG, ret.), on behalf of the
Maritime Accelerator for Resilience (MAR) and the authors
of Zero Point Four, prepared statement..................... 59
Letter dated October 21, 2025 to Hon. Ted Cruz and Hon. Maria
Cantwell from James H. I. Weakley, President, Lake
Carriers' Association...................................... 64
Ryan Lynch, President and CEO, Hanwha Shipping, prepared
statement.................................................. 65
David Kim, CEO, Hanwha Philly Shipyard, prepared statement... 66
Ted Stilgenbauer, President and Chief Operating Officer,
Heartland Fabrication, prepared statement.................. 67
Patrick Kelly, Chief Executive Officer, Fraser Industries
LLC, prepared statement.................................... 69
Dan Thorogood, President and CEO, Fairwater, prepared
statement.................................................. 69
Elizabeth Kennedy, Director of Government Relations,
Activate, prepared statement............................... 70
Letter dated October 27, 2025 to Hon. Dan Sullivan from Mike
Culbertson, President and CEO, Corpus Christi Regional
Economic Development Corporation........................... 71
Craig Koehne, Regional Manager, DNV Maritime Region Americas
and Steven Sawhill, Director, U.S. Government and Public
Affairs, DNV USA Inc., prepared statement.................. 71
David Levy (Austin, TX), Software Executive, Maritime
Technology Sector, prepared statement...................... 73
Dave Matsuda, Founder, Small Shipyard Grant Coalition,
prepared statement......................................... 74
Sean Kline, President and CEO, Chamber of Shipping of America
(CSA), prepared statement.................................. 76
Mikal B Enact a modified version of the SHIPS for America Act to
establish a national maritime strategy that aligns demand,
workforce, infrastructure, and supply chains, and that restores
industrial resiliency across commercial and government
shipbuilding and repair. This should be paired with stable,
predictable Navy and Coast Guard shipbuilding and maintenance
plans that reward design stability, disciplined change control,
and productive government-industry partnership and innovative
contracting structures.
Uphold and faithfully enforce the Jones Act to maintain the
domestic market that sustains our commercial shipyards and
mariner base. Ensure that agency interpretations and rulings
reinforce, not erode, the law's core requirements.
Leverage and align trade actions with industrial strategy.
USTR's Section 301 findings confirm that foreign non-market
practices burden U.S. commerce and suppress healthy
international competition. Align responsive actions with
domestic investment in yards, equipment, and suppliers, and
encourage allied coordination to reduce shared dependencies and
bottlenecks.
Update how we measure output. Direct agencies to incorporate
annual U.S. shipbuilding reports and other domestic datasets
alongside OECD GT/CGT series in official assessments, so that
appropriations, infrastructure planning, workforce pipelines,
and supply-chain investments are calibrated to the full U.S.
production landscape.
Stabilize acquisition practices that enable industry
investment. Use multi-year procurement where appropriate, align
funding profiles with realistic schedules, and adopt
acquisition structures--advanced procurement, incremental
funding, block buys--that provide credible, multi-year demand
signals for both commercial and government programs.
These steps will expand opportunities across the full spectrum of
U.S. yards--from large complex-ship builders to mid-tier and small
shipyards--unlocking private investment in modernization, accelerating
productivity improvements, and strengthening the supplier base that
both commercial and defense customers depend on.
Conclusion
American shipyards build some of the most advanced vessels in the
world. Our men and women deliver for our Navy, our Coast Guard, and our
domestic commercial markets every day. But we are contending with a
global commercial market skewed by decades of foreign non-market
intervention and by international statistics that omit much of what
America actually builds.
The Jones Act remains the cornerstone of our maritime security; the
SHIPS for America Act is the strategic blueprint we need to restore
balance, rebuild commercial capability, and secure the maritime
industrial base for the long term.
This is a moment for policy clarity and national purpose. If we
want credible sealift, resilient supply chains, competitive naval
shipbuilding, and a skilled maritime workforce ready when the Nation
calls, we must build ships in America and we must do so at scale.
SCA and its members stand ready to work with this Subcommittee and
the Congress to enact the SHIPS for America Act, reinforce the Jones
Act, and ensure that America's shipyards have the stable demand and
strategic direction to deliver the ``sea change'' this hearing
contemplates--one that revives commercial shipbuilding and strengthens
our national security for decades to come.
Thank you for the opportunity to testify. I look forward to your
questions.
Senator Sullivan. Great. Thank you, Mr. Paxton. Mr. Vogel.
STATEMENT OF JEFF VOGEL, VICE PRESIDENT--LEGAL,
TOTE SERVICES, LLC
Mr. Vogel. Good morning, Chairman Sullivan, Ranking Member
Blunt Rochester, Senator Cantwell, Senator Baldwin, Senator
Young. Thank you for the opportunity to testify on the urgent
need to revise America's commercial shipbuilding industry.
The United States has always been a maritime nation, and
the shipbuilding industry is the backbone of our national and
economic security. It provides high-paying jobs and delivers on
commercial and government demand for vessels. However, we face
a stark reality. The U.S. produced just 0.04 percent of the
world's vessels last year, while China delivered over half of
the global fleet. This is not because Americans lack ingenuity
or shipbuilding skill. This disparity is the direct result of
foreign government market manipulations and decades of
insufficient support at home to address the threat of foreign
maritime dominance.
Congressional support through marquee legislation such as
the Jones Act and Merchant Marine Act of 1936 has kept our
industry alive, supporting over 105,000 jobs and contributing
nearly $12 billion to our annual GDP. But to truly restore our
shipbuilding strength our Nation must take decisive action to
address heavily subsidized foreign competition and provide a
clear demand signal for U.S.-built ships.
U.S. shipbuilding innovation is not our weakness. It is our
strength. TOTE Services is proud to have led the way. In
partnership with NASSCO Shipyard in California, TOTE delivered
the world's first liquified natural gas-powered container ship,
which established the international market standard. TOTE
Services also managed the construction of North America's first
LNG bunker barge, supporting the demand for U.S. LNG to fuel
vessels in domestic and international trade.
We also pioneered the vessel construction manager
acquisition strategy for government shipbuilding. By applying
commercial principles and removing bureaucratic barriers, the
vessel construction manager acquisition strategy has delivered
government ships from commercial shipyards on time and under
budget, saving taxpayers billions, mitigating government risks,
and revitalizing struggling shipyards. In doing so, we have
produced the next generation of mariner training vessels, the
National Security Multi-Mission Vessels, which has resulted in
a stark increase in enrollment at our state maritime academies.
To rebuild our government fleet and reinvigorate our
commercial shipyards Congress must expand the vessel
construction manager acquisition strategy across agencies, and
ensure that billions in appropriated shipbuilding funds from
the One Big Beautiful Bill Act are swiftly allocated, using an
experienced vessel construction manager.
In addition, Congress and the Administration can encourage
private investment by modernizing regulations and supporting
build charter agreements. I have outlined these proposals in my
written testimony. If enacted, such changes would allow
American companies to use private capital for the rapid
commercial construction of non-combatant government ships that
ensure our national security.
The SHIPS for America Act of 2025 and the forthcoming
Maritime Action Plan are critical to implementing improvements
to the shipbuilding industrial supply chain. Within this
context, I urge you to support tax incentives for shipyard
investment, including in U.S. territories, and ensure that
alternative marine fuels are not disadvantaged by outdated tax
rules. These steps will strengthen our industrial base and
restore American shipbuilding dominance.
I appreciate this Subcommittee's efforts to restore our
critical U.S. shipbuilding industrial base. Thank you for your
leadership and commitment to this vital industry. Again, thank
you for the opportunity to testify today. I am happy to answer
any questions.
[The prepared statement of Mr. Vogel follows:]
Prepared Statement of Jeff R. Vogel, Vice President--Legal,
TOTE Services, LLC
Good morning, Chairman Sullivan, Ranking Member Blunt Rochester,
and distinguished members of the Subcommittee. Thank you for the
opportunity to testify today on the challenges and opportunities in
reviving the U.S. commercial shipbuilding industrial base. The United
States is a maritime nation. Since our country's inception, we have
relied upon our domestic maritime industry to support our national and
economic security. The commercial shipbuilding industry is the backbone
of our maritime strength, constructing innovative vessels to meet the
demands of our domestic trade and employing a skilled workforce to
support both commercial and government shipbuilding programs. However,
for decades this critical industry has been undervalued, allowing
foreign competitors to seize upon comparative economic advantages and
distort the market with significant government subsidies. The U.S.
commercial shipbuilding industry is not subsidized; it builds vessels
to meet market demands. This unfair competition has been left American
commercial yards in a challenging position, with only a handful of
shipyards delivering less than one percent (1 percent) of the world's
fleet. I am encouraged, however, by the recent bipartisan focus on
addressing this critical national and economic security vulnerability.
My testimony today will highlight some of the opportunities that this
Committee and the Administration have in restoring our international
shipbuilding dominance.
Current State of Commercial Shipbuilding
There is no denying that the U.S. commercial shipbuilding industry
finds itself in a challenging position. According to statistics from
the United Nations Trade and Development (``UNCTAD''), the U.S.
produced 0.04 percent of the world's vessels delivered in 2024.\1\ By
contrast, China delivered 54.57 percent of the world's fleet last year.
This grotesque market gap is the direct result of two forces: (1) the
Chinese government's state-directed industrial planning and integration
between
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\1\ UN Trade and Development, Ships built by country of building,
annual (rev. June 10, 2025), available at: https://
unctadstat.unctad.org/datacentre/dataviewer/US.ShipBuilding
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These challenges are not new. From the inception of our country,
through the Civil War, the U.S. was a dominant force in international
shipbuilding, with the cost of American-built vessels being 25 percent
to 50 percent cheaper than international competitors due to our vast
timber resources.\2\ However, with the advent of steel vessel
construction, this competitive advantage was lost and the U.S.
precipitously began to lose market share to international competitors
that enjoyed lower labor rates and government subsidies.
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\2\ William John Williams, Shipbuilding and the Wilson
Administration: The Development of Policy, 1914-1917, available at:
https://apps.dtic.mil/sti/tr/pdf/ADA218028.pdf.
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Notwithstanding these comparative economic challenges, our country
has always recognized the critical importance of sustaining a robust
commercial shipbuilding industry. This has led to focused legislative
efforts, such as the Merchant Marine Act of 1936, which recognizes that
``[i]t is necessary for the national defense and the development of the
domestic and foreign commerce of the United States that the United
States have a marine . . . composed of the best-equipped, safest, and
most suitable types of vessels constructed in the United States and
manned with a trained and efficient citizen personnel.'' \3\ In a
similar manner, the Jones Act has been the lifeblood of the U.S.
commercial shipbuilding industry, ensuring that we have maintained a
shipbuilding industrial base despite the efforts of foreign competitors
to pervert the economic framework.
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\3\ 46 U.S.C. Sec. 50101(a)(4) (emphasis added).
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As a result of these focused legislative efforts, we have sustained
a viable commercial shipbuilding industry, which directly provides over
105,000 high-paying jobs, $9.9 billion in labor income, and $12.2
billion in gross domestic product.\4\ Currently there are 154 private
shipyards in the United States, spread across 29 states and the U.S.
Virgin Islands, that are classified as active shipbuilders. In
addition, there are more than 300 shipyards engaged in ship repairs or
capable of building ships but not actively engaged in shipbuilding.\5\
From this foundation, a strong shipbuilding industrial base can be
reborn if the government provides the appropriate demand signal for
commercial and government vessels.
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\4\ Maritime Administration, The Economic Importance of the U.S.
Private Shipbuilding and Repairing Industry (March 30, 2021).
\5\ Id.
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However, as highlighted by recent U.S. Trade Representative
(``USTR'') actions, the U.S. shipbuilding industry is facing an
unprecedented challenge in the form of China's focused efforts to
distort international shipbuilding markets. As established by the USTR,
``[c]onsistent with its policies to support and grow the Chinese
shipbuilding industry into the dominant shipbuilder in the world, the
Government of China has poured hundreds of billions of dollars into its
industry since 2000.'' \6\ Through a mix of direct investment,
favorable financing by government-owned banks, credit programs, tax
benefits, equity infusions, and steel and supply chain distortions, the
Chinese government has undertaken ``acts, policies, or practices that
are unreasonable and discriminatory and that burdens and restricts U.S.
commerce.'' \7\ The imposition of port fees on Chinese built and
flagged vessels seeks to address this imbalance. Receipts from port
fees imposed on Chinese built and flagged vessels into a specific
Maritime Security Trust Fund (as envisioned by Section 201 of the SHIPS
for America Act of 2025, S.1541) will support specific reinvestment
into U.S. shipbuilding and have a multiplier effect towards restoring
market balance.
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\6\ USW, Petition for Relief, China's Policies in the Maritime,
Logistics, and Shipbuilding Sector (March 12, 2024).
\7\ USTR, Report on China's Targeting of the Maritime, Logistics,
and Shipbuilding Sectors for Dominance (Jan. 16, 2025).
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Innovation and the Vessel Construction Manager Strategy
A constant criticism levied at the U.S. commercial shipbuilding
industry is that it fails to innovate to keep pace with its heavily
subsidized foreign competition. This criticism is not accurate. In
2015, TOTE Maritime Puerto Rico proudly accepted delivery of the
world's first liquefied natural gas (``LNG'') powered containership,
the Isla Bella, from General Dynamic NASSCO. TOTE Services further
oversaw the design and construction of the first North American LNG
bunker barge, the Clean Jacksonville. Through these efforts, and
additional investment to repower our existing vessels, TOTE's entire
fleet in both the Alaska and Puerto Rico trade lanes are fueled by LNG.
As usual, where U.S. innovation leads the world follows, with LNG-
fueled container ships now making up over 56 percent of the entire
global orderbook.\8\
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\8\ Global Maritime Hub, LNG-fueled Container Ships make up over
half of the entire orderbook (May 16, 2025) (citing Alphaliner),
available at: https://globalmaritimehub.com/lng-fueled-container-ships-
make-up-over-half-of-the-entire-orderbook.html.
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In a similar manner, TOTE Services has led government shipbuilding
innovation in U.S. commercial shipyards. The National Defense
Authorization Act for Fiscal Year 2017 directed the Maritime
Administration (``MARAD'') to construct the next generation of mariner
training vessels (the National Security Multi-Mission Vessel
(``NSMV'')) ``using commercial design standards and commercial
construction practices that are consistent with the best interests of
the Federal Government.'' \9\ More importantly, Congress directed MARAD
to ``provide for an entity other than the Maritime Administration to
contract for the construction of the [NSMVs].'' \10\ This direction has
led to a spectacular success in modern American shipbuilding--
leveraging private enterprise and commercial best practices to
construct government vessels more efficiently and effectively than
traditional government-led approaches. TOTE Services, as the
Government's first Vessel Construction Manager (``VCM''), and in
coordination with TOTE Services' subcontractor Hanwha Philly Shipyard,
Inc., (``HPSI'') has overcome the faults of the legacy Government
shipbuilding model. By removing Government bureaucracy and overseeing
construction based on a commercial shipyard subcontract, TOTE Services
is preparing to deliver the third NSMV on a fixed-price and on-time
basis, far exceeding the results of any other Government shipbuilding
program, as illustrated by Table 1.
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\9\ Pub. L. No., 114-328, Sec. 3505(d), 130 Stat. 2776.
\10\ Id. at Sec. 3505(f).
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The VCM was a catalyst for the revitalization of a struggling
shipyard. At the time of subcontract award in April 2020, HPSI had
approximately 80 employees, no order book, no government shipbuilding
experience, and was on the brink of closure. By applying commercial
principles, and placing non-construction responsibilities directly on
the VCM, HPSI has been able to concentrate on its strength--
shipbuilding. The result is that HPSI is once again a thriving
commercial shipyard, with additional commercial orders from multiple
customers on contract, a production workforce of over 2,000, and a
promise of billions of dollars in investment from its new ownership.
Moreover, the VCM acquisition strategy has saved the U.S. taxpayer
billions of dollars, proving that U.S. shipyards can be cost-
competitive when bureaucratic barriers are removed and a proper demand
signal is in place. Indeed, ``during the design development period,
Naval Sea Systems Command experts said using Navy shipbuilding
requirements and Department of Defense contracting processes to build
the [NSMV] likely would result in an estimated final cost of $750
million to $1.2 billion per ship.'' \11\ By using the VCM process, the
actual delivered price per vessel is approximately, $314 million,
saving taxpayers nearly $4.5 billion from NAVSEA's highest estimate.
Moreover, TOTE Services has instilled discipline into the design and
construction process to limit costly and disruptive design changes on
the NSMV program. Post-contract changes by MARAD have increased the
total program cost by only 0.38 percent, as shown in Table 2, which is
unmatched in Government shipbuilding.
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\11\ Doug Burnett, A Better Way to Build Ships, U.S. Naval
Institute Proceedings, Vol 148/1/1,427 (Jan. 2022). See also S. Rept.
119-39 (July 15, 2025) (``The VCM acquisition strategy, as demonstrated
by the Maritime Administration's National Security Multi-Mission
Vessels (NSMV) program, has yielded significant cost savings and
operational efficiencies. The NSMV, built using commercial design and
contracting processes, has achieved a cost of approximately $300.0
million per ship, compared to an estimated $750.0 million to $900.0
million per ship, if the Navy were to use traditional Navy shipbuilding
requirements and Department of Defense contracting processes. By
utilizing off-the-shelf commercial technology and streamlined
contracting using a third-party entity, the VCM approach reduces
bureaucratic overhead, accelerates delivery schedules, and ensures
vessels meet mission requirements without the cost premiums associated
with military-specific standards.''
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To rebuild not only the commercial shipbuilding industry, but also
the aging Government non-combatant fleet, the VCM contract structure
must be applied across Government shipbuilding programs for the Navy,
Coast Guard, Missile Defense Agency (``MDA''), and others. TOTE
Services greatly appreciates the Senate's support of the VCM model (see
supra, note 11) and the provisions of the National Defense
Authorization Act for Fiscal Year 2026, S.2296, which would direct (a)
the Navy to contract with a VCM to construct the medium landing ship
(``LSM'') and light replenishment oiler (TAO-L), and (b) MARAD and MDA
to contract with a VCM to construct two replacement missile
instrumentation range safety vessels. By expanding the VCM model across
agencies, Congress can ensure that non-combatant vessels will be
delivered with budget and schedule stability, maximizing the output of
commercial shipyards.
The Need for a Steady Demand Signal
Faulty economic analysis consistently plagues the assessment of the
U.S. shipbuilding industry. False equivalences are used to compare the
cost of building a single ship in the United States against the costs
of building a series of dozens of ships in Korea or China. As in every
industry, economies of scale result in significant price reductions
and, in turn, lead to reinvestment and innovation. For decades, this
demand signal has not existed in U.S. shipyards. The result is that
U.S. owners of vessels engaged in international trade rely on (often
heavily subsidized) foreign shipyards. The trend can change through the
establishment of a steady demand for U.S.-constructed vessels.
I am encouraged by the actions of Congress under the One Big
Beautiful Bill Act, Pub. L. No. 119-21, which appropriated funding for
numerous shipbuilding programs, including $3.5 billion for Arctic
Security Cutters, $1.8 billion for LSMs, $816 million for light and
medium icebreaking cutters, and $530 million for MDA missile
instrumentation range safety vessels. Each of these platforms can be
constructed by U.S. commercial shipyards, using commercial designs and
best practices that mitigate risk for the Government as the customer.
Together with the proven VCM contracting structure, this funding will
be a strong foundation for reinvigorating the industrial base. I urge
the Administration to move swiftly in allocating these appropriated
funds and awarding a contract to an experienced VCM that can quickly
and effectively get U.S. commercial shipyards to work.
I also invite this Subcommittee, along with the Senate Armed
Services Committee, to explore new ways to encourage private investment
in the U.S. shipbuilding industrial base. Companies like TOTE, and its
parent company Saltchuk, are ready to put private capital to work with
the appropriate support from Congress. For example, MARAD's Ready
Reserve Force (``RRF'') is in desperate need of recapitalization, with
an average age of over 45 years. This fleet is critical to our national
security, transporting (in combination with the U.S.-flag commercial
fleet) approximately 90 percent of combat unit equipment for the Army
and Marine Corps during deployments. As evidenced by a recent
Department of Defense Office of Inspector General report, efforts to
recapitalize the fleet via the purchase of used vessels have failed,
with only 5 of the 26 necessary ships being purchased, and efforts to
build ships under the legacy (i.e., non-VCM) Government shipbuilding
methods stalled due to high estimated costs.\12\ The report encourages
the Government to ``revise the strategy based on known limiting
factors, and develop viable milestones based on those factors to ensure
the Navy is capable of meeting readiness requirements in the event of a
contingency.'' \13\
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\12\ Department of Defense Office of Inspector General, Evaluation
of U.S. Navy Efforts to Recapitalize Surge Sealift Vessels (Report No.
DODIG-2025-116) (June 20, 2025).
\13\ Id.
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To that end, I encourage this Committee to expand MARAD's authority
to enter into build-charter and contractor owned-contractor operated
(``COCO'') agreements (e.g., by exempting the agency from the faulty
capital lease scoring criteria under OMB Circular A-11, Appendix B).
Revising the capital lease scoring criteria can accelerate the
recapitalization of the RRF fleet, with an initial series construction
of at least ten (10) roll-on/roll-off vessels. Under such a model,
private companies such TOTE/Saltchuk can use private capital to
construct the vessels under the commercial agreements in commercial
shipyards, with security of long-term charter or operating agreements
with the Government. These actions would drive down taxpayer costs,
quickly deliver critical national security assets into operation,
mitigate Government financial risk, and reinvigorate the U.S.
commercial shipbuilding industry.
SHIPS for America Act and Maritime Action Plan
Building on this Committee's demonstrated commitment to restoring
American maritime leadership, several complementary initiatives now
stand poised to accelerate the revitalization of U.S. shipbuilding. The
SHIPS for America Act, S.1541, together with the forthcoming release of
the Maritime Action Plan (``MAP'') in accordance with Executive Order
14629: Restoring America's Maritime Dominance, reflect the forward-
thinking leadership that will revive U.S. shipbuilding and usher in a
new era of industrial innovation, strengthening our national defense,
driving economic growth, and reinforcing homeland security through a
modern maritime industrial base. TOTE Services supports the proposed 25
percent tax credit for U.S. shipyard and component manufacturing
investment and encourages this Committee to ensure that the provision
includes investments in U.S. territories such as Puerto Rico and the
U.S. Virgin Islands. These incentives could help accelerate much-needed
reinvestment into our commercial shipyards, further aided by the
envisioned Maritime Security Trust Fund, to enable receipts from the
USTR's port fees to be used for shipyard investments. To further ensure
that investments are made in support of innovative technologies, I
further urge Congress to pass the Maritime Fuel Tax Parity Act (S.549/
H.R. 2925, also Section 709 of the SHIPS Act), which modernizes the tax
code to by putting alternative petroleum-based fuels on the same
footing as traditional fossil fuels as part of an all-of-the-above
energy strategy to fuel domestic vessels.
Finally, as discussed above, the VCM acquisition strategy and
build-charter/COCO model directly address many of the SHIPS Act and
Executive Order stated goals, including reducing foreign shipbuilding
dependency and improving procurement efficiency. By using commercial
solutions, many of the inefficiencies that have plagued the U.S.
shipbuilding industry can be quickly resolved, restoring American
shipbuilding dominance.
Again, thank you for opportunity to testify today. I appreciate
this Subcommittee's focused efforts on restoring our critical U.S.
shipbuilding industry and I am happy answer any questions of the
Subcommittee members.
Senator Sullivan. Thank you, Mr. Vogel. Dr. Mercogliano.
STATEMENT OF SALVATORE MERCOGLIANO, Ph.D., PROFESSOR, CAMPBELL
UNIVERSITY
Mr. Mercogliano. Good morning, Chairman Sullivan, Ranking
Member Cantwell, Ranking Member Blunt Rochester, and members of
the Committee. Thank you for the opportunity to testify on a
subject that has defined my professional and academic career.
I am a Professor at Campbell University in Buies Creek,
North Carolina. I am a graduate of the New York Maritime
Academy, a former deck officer in the U.S. merchant marine,
working both afloat and ashore for the U.S. Navy's Military
Sealift Command. After swallowing the anchor, I earned an M.A.
in Maritime History and Nautical Archaeology from East Carolina
University and a Ph.D. from the University of Alabama, where my
dissertation examined the role of American shipping in national
defense. I also serve as an Adjunct Professor at the U.S.
Merchant Marine Academy, teaching a graduate-level course in
Maritime Industry Policy, and in 2021, I launched the YouTube
channel, What's Going on With Shipping?
As an active participant and observer of the U.S. maritime
industry, I have witnessed its long decline. The SHIPS Act is
the most significant maritime reform effort since the Merchant
Marine Act of 1970. Along with measures such as the U.S. Trade
Representative's Section 301 port fees and President Trump's
executive order on shipbuilding, this legislation represents a
critical step toward transforming the United States from a
purely naval power into a true maritime power with a
revitalized commercial sector.
Twice in the 20th century, America launched major
shipbuilding efforts. The first, led by Edward Hurley during
and after World War I, produced a large fleet and inspired the
Merchant Marine Act of 1920, better known as the Jones Act,
which laid the foundation for the first National Maritime
Strategy.
The second effort came with the Merchant Marine Act of
1936, which introduced operating and construction differential
subsidies for vessels in international trade and funded the
building of 500 ships over 10 years. This effort created the
industrial base necessary for the Two-Ocean Navy Act and
enabled the United States to transport the ``Arsenal of
Democracy'' from the home front to the battlefront.
The SHIPS Act and related measures represent a long-overdue
``Merchant Marine Act of 2025.'' While ambitious--especially
the goal of building 250 ships in 10 years--it is essential if
we hope to rebuild our maritime capacity. However, achieving
these goals requires rebuilding the supporting infrastructure.
A key step is facilitating the reflagging of vessels, as
seen with the container ship CMA CGM Phoenix and the LNG tanker
American Progress, and promoting the benefits of American
registry. This should include a careful re-examination of the
Jones Act, not to repeal it, but to modernize its application.
Reflagging ships will require several complementary
actions. First, the Maritime Security Program and Tanker
Security Program should be expanded to offset higher U.S.
operating costs. Second, consistent cargo flows must be secured
through cargo preference laws, government contracts, or
incentives for private shippers. For example, offering tax
rebates to companies that ship goods on U.S.-flagged vessels or
reducing tariffs on goods transported aboard American ships
would help level the playing field. These policies would also
benefit island and noncontiguous states and territories that
rely heavily on Jones Act shipping.
Third, the benefits of U.S.-registry vice open registries,
such as Panama, Liberia, and Marshall Islands, should be more
pronounced with protection afforded by the U.S. Navy against
threats like the Houthis and the providing of war risk
insurance to mitigate the costs to operate in contested
regions.
While large, blue-water vessels take years to construct, a
near-term opportunity lies in modernizing the domestic fleet of
tugboats, towboats, and ferries. Much of this fleet is outdated
and aging, posing both economic and security risks to the
Nation. Insufficient tug capacity, for instance, contributed to
the Dali incident in Baltimore. A national program to replace
and modernize these vessels could provide an immediate boost to
domestic shipyards and workforce development while enhancing
port safety and resilience.
Equally important is investment in advanced maritime
technologies that could once again place the U.S. at the
forefront of innovation. The Shipping Act of 1916 spurred
adoption of oil-fired boilers, freeing U.S. ships from
dependence on coaling stations and challenging British
dominance. During World War II, prefabrication techniques
revolutionized shipbuilding and made mass production possible.
Today, the United States has an opportunity to lead again, this
time through technologies, perhaps such as small modular
nuclear reactors for maritime propulsion.
Finally, I strongly urge passage of the SHIPS Act to
establish a Maritime Security Advisor to lead this effort, and
a Maritime Trust Fund for financing. Expanding the Investment
Tax Credit, Title XI loan guarantees, and Shipbuilding Finance
Incentives would redirect American capital from foreign
shipbuilding toward domestic production. In addition, the
proposed Centers for Maritime Innovation could support
research, workforce training, and policy enhancement.
Finally, reviving the U.S. maritime industry is not merely
an economic or industrial challenge. It is a matter of national
security and global competitiveness. The SHIPS Act provides the
vision and framework needed to rebuild our shipbuilding base,
reestablish a robust merchant marine, and ensure that the
United States remains a maritime nation capable of sustaining
its global role.
Thank you for the opportunity to discuss this issue. I look
forward to your questions.
[The prepared statement of Mr. Mercogliano follows:]
Prepared Statement of Professor Salvatore R. Mercogliano, Ph.D.,
Campbell University
What's Going on With Shipping?
Chairman Sullivan, Ranking Member Blunt Rochester, and Members of
the Committee, thank you for the opportunity to testify on Reviving
Commercial Shipbuilding--a subject that has defined my professional and
academic career.
I am a Professor and Chair of the Department of History, Criminal
Justice, and Political Science at Campbell University in Buies Creek,
North Carolina. I am also a former deck officer in the U.S. Merchant
Marine, working both afloat and ashore for the U.S. Navy's Military
Sealift Command. After swallowing the anchor, I earned an M.A. in
Maritime History and Nautical Archaeology from East Carolina University
and a Ph.D. from the University of Alabama, where my dissertation
examined the role of American shipping in national defense. I also
serve as an adjunct professor at the U.S. Merchant Marine Academy,
teaching a graduate-level Maritime Industry Policy, and in 2021, I
launched the YouTube channel What's Going on With Shipping?
As an active participant and observer of the U.S. maritime
industry, I have witnessed its long decline. The SHIPs Act, introduced
by Senators Kelly and Young, is the most significant maritime reform
effort since the Merchant Marine Act of 1970. Along with measures such
as the U.S. Trade Representative's Section 301 port fees and President
Trump's Executive Order on Shipbuilding, this legislation represents a
critical step toward transforming the United States from a purely naval
power into a true maritime power with a revitalized commercial sector.
Twice in the twentieth century, America launched major shipbuilding
efforts. The first, led by Edward Hurley during and after World War I,
produced a large fleet and inspired the Merchant Marine Act of 1920--
better known as the Jones Act, which laid the foundation for the first
national maritime policy. The second effort came with the Merchant
Marine Act of 1936, which introduced operating and construction
differential subsidies for vessels in international trade and funded
the building of 500 ships over ten years. This effort created the
industrial base necessary for the Two-Ocean Navy Act and enabled the
United States to transport the ``Arsenal of Democracy'' from the home
front to the battlefront.
The SHIPs Act and related measures represent a long-overdue
``Merchant Marine Act of 2025.'' While ambitious--especially the goal
of building 250 ships in ten years--it is essential if we hope to
rebuild our maritime capacity. However, achieving these goals requires
rebuilding the supporting infrastructure.
A key step is facilitating the reflagging of vessels, as seen with
the CMA CGM Phoenix and the LNG tanker American Progress, and promoting
the benefits of American registry. This should include a careful re-
examination of the Jones Act--not to repeal it, but to modernize its
application. Reflagging ships will require several complementary
actions. First, the Maritime Security Program (MSP) and Tanker Security
Program (TSP) must be expanded to offset higher U.S. operating costs.
Second, consistent cargo flows must be secured through cargo preference
laws, government contracts, or incentives for private shippers. For
example, offering tax rebates to companies that ship goods on U.S.-
flagged vessels or reducing tariffs on goods transported aboard
American ships would help level the playing field. These policies would
also benefit island and non-contiguous states and territories that rely
heavily on Jones Act shipping. Third, the benefits of U.S.-registry
vice open registries--such as Panama, Liberia and Marshall Islands--
should be more pronounced with protection afforded by the U.S. Navy
against threats like the Houthis and the providing of war risk
insurance to mitigate the costs to operate in contested regions.
While large, blue-water vessels take years to construct, a near-
term opportunity lies in modernizing the domestic fleet of tugboats,
towboats, and ferries. Much of this fleet is outdated and aging, posing
both economic and security risks. Insufficient tug capacity, for
instance, contributed to the MV Dali incident in Baltimore. A national
program to replace and modernize these vessels could provide an
immediate boost to domestic shipyards and workforce development while
enhancing port safety and resilience.
Equally important is investment in advanced maritime technologies
that could once again place the U.S. at the forefront of innovation.
The Shipping Act of 1916 spurred adoption of oil-fired boilers, freeing
U.S. ships from dependence on coaling stations and challenging British
dominance. During World War II, prefabrication techniques
revolutionized shipbuilding and made mass production possible. Today,
the United States has an opportunity to lead again--this time through
technologies such as small modular nuclear reactors for maritime
propulsion.
Finally, I strongly urge passage of the SHIPs Act to establish a
Maritime Security Advisor to lead this effort and a Maritime Trust Fund
for financing. Expanding the Investment Tax Credit, Title XI loan
guarantees, and Shipbuilding Finance Incentives would redirect American
capital from foreign shipbuilding toward domestic production. In
addition, the proposed Centers for Maritime Innovation could support
research, workforce training, and policy development.
Reviving the U.S. maritime industry is not merely an economic or
industrial challenge--it is a matter of national security and global
competitiveness. The SHIPs Act provides the vision and framework needed
to rebuild our shipbuilding base, reestablish a robust merchant fleet,
and ensure that the United States remains a maritime nation capable of
sustaining its global role. Thank you for the opportunity to discuss
this vital issue. I look forward to your questions.
Senator Sullivan. Thank you. Final witness, Ms. Snow.
STATEMENT OF TUULI SNOW, TALENT ACQUISITION AND ENGAGEMENT
MANAGER, SNOW & COMPANY, INC.
Ms. Snow. Thank you. My name is Tuuli Snow. My family owns
and operates one of the last independent boatbuilding companies
in Seattle, Washington. In a city that used to be the home of
dozens of shipbuilders, this is quite a feat. We build work
boats, pilot boats, fishing vessels, and tugboats, in addition
to a contract we hold to build 53 workboats for the U.S. Navy.
Last year we built the first hybrid vessel in the U.S.
Department of Energy's fleet, and we are currently building a
set of first-of-their-kind electric tugs for a company in Long
Beach, California. Small shipyards like ours are essential to
supporting the maritime economy.
Five years ago, Snow & Company had 30 employees, and this
year we have just over 100. This is not par for the course in
terms of hiring. Shipyards across the U.S. are struggling to
attract and maintain talent for a few reasons, most of which
include ignoring vast labor markets.
A lot of our growth has been due to a deeply innovative
change that I have made in focusing on hiring from non-
traditional avenues. We hire veterans, immigrants, refugees,
individuals coming out of prison or starting work release, and
seek people from communities that have traditionally been
overlooked or excluded from the maritime industry.
I often say, ``I play for the maritime long haul, not just
for our company,'' investing my time and energy into building a
better industry, not just a better business. Historically, in
nature, and across the globe, we have seen that a more diverse
ecosystem is often a more fruitful one. More sustainable, more
creative, and more effective.
A great barrier to entering the maritime community is
exposure. People are unaware of what is out there. Many believe
that you have to go to sea in order to get a maritime job,
because they don't know any other aspects of this industry.
They don't realize you could be a project manager, or a naval
architect, an electrical engineer, or even a nurse. This isn't
a career path that was introduced to them in kindergarten,
middle school, or high school. People don't see the same
opportunities and career pathways as other industries. I enter
communities, neighborhoods, and towns in Washington to share
the great opportunities in this industry and hopefully
encourage more people to join it.
There has been a huge boom in young people returning to
trade school and traditional apprenticeships in the last 2 to 5
years. There is less public shame than in the recent past,
where technical colleges have been viewed as less valuable than
other 4-year universities. People complete these technical
programs or apprenticeships with an active and applicable skill
set, ready to enter the workforce, and bearing significantly
less debt. In apprenticeship programs, young people are paid
while learning these valuable, and necessary, skills. This is a
change we greatly need but has made a gap in skills visible.
We have hundreds of maritime experts that are ready to
retire and a new workforce excited to learn, but this makes our
expertise an hourglass shape, heavy on entry level and heavy on
expert, but less concentrated in mid-level tradespeople.
Investment in our youth is absolutely vital, and this hourglass
shows, so is investment in working adults. Opportunities to
learn new trades and skills, opportunities to be mentored and
trained, opportunities that should be granted to those we
traditionally ignore.
There is a common misconception that you must speak English
to have an impactful job in the United States, which I have
repeatedly proved to be inaccurate. Two years ago, I had a
Ukrainian refugee reach out to me via e-mail stating he could
not speak English, but he could weld, and he wanted to apply at
our company. I invited him in for an interview and weld test,
which the hiring manager was initially very sure would not work
out due to his lack of English. About 30 minutes later, after
his weld test was complete, the hiring manager came back to me
and said, ``If I do one thing right this year, it will be
hiring this man, because he is incredible.'' After passing his
E-Verify check, we started him immediately. That individual now
leads a team of Ukrainian and Russian refugee fabricators and
welders. He is one of our highest paid production employees,
proving to us that you do not need to speak English to work
hard with exceptional results. In a time when we have immediate
access to technology that can translate quickly and
effectively, taking a chance on skilled non-English speakers
seems like an obvious opportunity to me.
Building a good team is one thing and keeping it is
another. To keep our employees happy, healthy, and present, and
to attract young talent, we provide 100 percent employer-paid
health insurance, with 80 percent for any dependents the
employee has. Most businesses can't or just won't do this, but
we see it as a necessity to build a strong team. We feel the
cost is made up for and reflected in the high quality products
we produce.
Shipping and shipbuilding are absolutely essential to the
livelihood and strength of our country and economy. My request
today, from all of you, is for an investment in the maritime
industry. An investment in industrial lands to protect
businesses like ours. Allocation of funds to small shipyard
grants. Investment in youth and education to grow this sector
for decades to come. Investment in the health and welfare of
our employees. Investment in adults looking to learn new skills
that will inflate our diminishing workforce. And an investment
in marginalized communities that will breathe new life,
creativity, and innovation into this industry.
Thank you. I look forward to your questions.
[The prepared statement of Ms. Snow follows:]
Prepared Statement of Tuuli Snow, Talent Acquisition & Engagement
Manager, Snow & Company, Inc.
Hello, my name is Tuuli Snow. My family owns and operates one of
the last independent boatbuilding companies in Seattle, Washington. In
a city that used to be the home of dozens of shipbuilders, this is
quite a feat. We build work boats; pilot boats, fishing vessels, and
tugboats, in addition to a contract we hold to build 53 workboats for
the U.S. Navy. Last year we built the first hybrid vessel in the U.S.
Department of Energy's fleet, and we are currently building a set of
first of their kind electric tugs for a company in Long Beach,
California. Small shipyards like ours are essential to supporting the
maritime economy.
5 years ago, Snow & Company had 30 employees and this year we have
just over 100. This is not par for the course in terms of hiring.
Shipyards across the U.S. are struggling to attract and maintain talent
for a few reasons, most of which include ignoring vast labor markets. A
lot of our growth has been due to a deeply innovative change I have
made in focusing on hiring from non-traditional avenues. We hire
veterans, immigrants, refugees, individuals coming out of prison, or
starting work release, and seek people from communities that have
traditionally been overlooked or excluded from the maritime industry.
I often say, ``I play for the maritime long haul, not just our
company'' investing my time and energy into building a better industry,
not just a better business. Historically, in nature, and across the
globe, we have seen that a more diverse ecosystem is often a more
fruitful one. More sustainable, more creative, and more effective. A
great barrier to entering the maritime community is exposure. People
are unaware of what is out there. Many believe that you have to go to
sea in order to get a maritime job, because they don't know any other
aspects of this industry. They don't realize you could be a project
manager, or a naval architect, an electrical engineer, or even a nurse.
This isn't a career path that was introduced to them in kindergarten,
middle school, or high school. People don't see the same opportunities
and career pathways as other industries. I enter communities,
neighborhoods, and towns in Washington to share the great opportunities
in this industry and hopefully encourage more people to enter it.
There has been a huge boom in young people returning to trade
school and traditional apprenticeships in the last 2-5 years. There is
less public shame today than in the recent past, where technical
colleges have been viewed as less valuable than other 4 year
universities. People complete these technical programs or
apprenticeships with an active and applicable skill set, ready to enter
the workforce and bearing significantly less debt. In apprenticeship
programs, young people are paid while learning these valuable, and
necessary, skills. This is a change we greatly need but has made a gap
in skills visible. We have hundreds of maritime experts that are ready
to retire and a new workforce excited to learn, but this makes our
expertise an hourglass shape, heavy on entry level and heavy on expert,
but less concentrated in mid-level trades people. Investment in our
youth is absolutely vital, and this hourglass shows, so is investment
in working adults. Opportunities to learn new trades and skills,
opportunities to be mentored and trained, opportunities that should be
granted to those we traditionally ignore.
There is a common misconception that you must speak English to have
an impactful job in the United States, which I have repeatedly proved
to be inaccurate. Two years ago, I had a Ukrainian refugee reach out to
me via e-mail stating he could not speak English, but he could weld,
and he wanted to apply at our company. I invited him in for an
interview and weld test, which the hiring manager was initially very
sure would not work out due to his lack of English. About 30 minutes
later, after his weld test was complete, the hiring manager came back
to me and said ``if I do one thing right this year, it will be hiring
this man. He is incredible.'' After passing his E-Verify check, we
started him immediately. That individual now leads a team of Ukrainian
and Russian refugee fabricators and welders. He is one of our highest
paid production employees, proving to us, you don't need to speak
English to work hard with exceptional results. In a time when we have
immediate access to technology that can translate quickly and
effectively, taking a chance on skilled non-English speakers seems like
an obvious opportunity to me.
Building a good team is one thing and keeping it is another. To
keep our employees happy, healthy, and present, and to attract young
talent, we provide 100 percent employer paid health insurance, with 80
percent for any dependents the employee has. Most businesses can't or
won't do this, but we see it as a necessity to build a strong team. We
feel this cost is made up for and reflected in the high quality
products we produce.
Shipping and shipbuilding are absolutely essential to the
livelihood and strength of our country and economy. My request today,
from all of you, is for an investment in the maritime industry. An
investment in industrial lands to protect businesses like ours.
Allocation of funds to small shipyard grants. Investment in youth and
education to grow this sector for decades to come. Investment in the
health and welfare of our employees. Investment in adults looking to
learn new skills that will inflate our diminishing workforce. And an
investment in marginalized communities that will breathe new life,
creativity, and innovation into this industry.
Thank you.
Senator Sullivan. Great. Thank you very much, Ms. Snow.
Let me begin with the questioning with just a various
obvious question. What went wrong? What went wrong? I mean,
there are so many areas where in my view we kind of, critical
minerals is the latest and greatest we are seeing. My state has
incredible critical minerals, but our own Federal Government,
no offense, a lot of times on the other side of the aisle, they
just shut down the ability to produce any critical minerals,
and we outsource all of it to China.
So we have got a big problem. China is dominating this
sector like they do critical minerals, like they do. We fell
asleep at the switch, and we produce less than one percent of
commercial shipping. What went wrong and how do we fix it? Very
tight. I know this is a dissertation, professor, but if you can
keep this very tight. Some people blame the Jones Act. What
went wrong? We have got a giant problem. Our main adversary is
kicking our tail on this issue. What went wrong and how do we
fix it? Mr. Paxton. Keep it succinct.
Mr. Paxton. Yes, sir. We moved away from some industrial
policies that we had in the 1970s. We moved away from that. We
moved toward government shipbuilding, which was the right thing
to do at the time, during the Cold War, 600-fleet Navy. We had
the peace dividend in the 1990s. We decided that global free
trade was a given, that we did not have to worry about freedom
of the seas, which we know is not the case anymore. And so we
went to flags of convenience, and we got a cheap product out of
China, and we took it.
Senator Sullivan. Mr. Vogel.
Mr. Vogel. Chairman, I would absolutely echo what Mr.
Paxton said. We made the decision to move away from investing
and creating that demand signal for this industry. It is
impossible for a U.S. shipyard to compete on sort of a one- or
two-vessel basis versus----
Senator Sullivan. Is that because the Chinese subsidize
everything? I mean, look, the Finns produce icebreakers very
efficiently. You saw the President, the President of Finland,
came up with an agreement. I mean, is it just the subsidies of
foreign nations, or is it something that we are doing wrong
back here?
Mr. Vogel. So I think it is a two part. I think it is both
the subsidies. We are operating at a level that is similar to
or above where Finland is in terms of overall output. But
certainly there are challenges. The regulatory requirements
that we have placed on government shipbuilding have taken
commercial shipyards out of the market.
Senator Sullivan. So our own Federal Government's red tape,
which crushes everything in this country, is a big part of the
problem?
Mr. Vogel. Yes, Chairman. And for us using something like
the vessel construction manager model has helped us to remove a
lot of that red tape, allow commercial shipyards to get back
in. We saw the success at Philly Shipyard, taking that yard
from 83 employees now to over 2,000 production employees, just
by removing a lot of that bureaucratic oversight and allowing
the yards to----
Senator Sullivan. That has major investments from a foreign
shipbuilder right now. Correct?
Mr. Vogel. That has resulted in those investments.
Senator Sullivan. Are you OK with that?
Mr. Vogel. So, yes, I would love to see that be----
Senator Sullivan. We can learn from the Japanese and
Koreans, in my view.
Mr. Vogel. We absolutely can, and the Koreans have created
an industry that faces a lot of the same challenges in terms of
cost of labor. But we have better natural resources, as you
have said, sir. So we should be taking those lessons,
incorporating them, and I think there is a lot to be learned
from our allies.
Senator Sullivan. And Professor, what went wrong? You are a
Jones Act supporter. I have read all your materials. What went
wrong, though? Why are we in this giant disadvantage, hugely
dangerous disadvantage relative to our main adversary, who
cheats and subsidizes. We all know that. But what went wrong?
Mr. Mercogliano. Well, in 1934, 1935, we built two
commercial ships each of those years. Within a 10-year span we
were able to build 1,000 ships in 1943.
Senator Sullivan. Right.
Mr. Mercogliano. At the end of World War II, we controlled
63 percent of the world's merchant fleet, and we made a
conscious decision then to begin a process of rebuilding not
just our allies' merchant fleets but their shipyards, and even
our enemies, Japan and Germany at the time. And we decided to
focus on the naval and military application. It was our
decision that really led to the growth of global trade from----
Senator Sullivan. By the way, one point I just want to
make. When people say, ``Hey, in America we can't build
ships,'' yes, really? Go look at a nuclear submarine. Pretty
darn impressive. No one can build ships like we can, aircraft
carriers, as well. So we can build ships.
Mr. Mercogliano. Yes, sir.
Senator Sullivan. But on the commercial side we can't. We
are not. Or we are getting out-competed. Correct?
Mr. Mercogliano. We made the decision in the 1980s to kind
of shift our shipyards over to building a 600-ship Navy, which
at the end of the Cold War went from a 600-ship Navy to a 300-
ship Navy. And so we had already sent that capability overseas
to Korea, to Japan, to Europe. And now what we see is China
taking that lead. Five percent of shipbuilding was in China in
1999. Today it is over 60 percent. And this is an issue that we
realized, after the fact, that it is not just building Navy and
military ships, but we need those commercial ships in the
shipyards to provide that residual base for shipyard workers,
for capacity. You cannot do what Freedom's Forge talks about
without that inherent capability, that commercial----
Senator Sullivan. Sorry. Sorry to interrupt, but I want to
get one more question in for Mr. Vogel. I am a big supporter of
the energy sector. It is a great strategic advantage for
America. It certainly helps my state. It helps the whole
country when we are the dominant energy producer on the planet.
We export LNG all over the world. We are going to continue to
do that. Should there be some kind of tie, maybe within 10
years, to say to some of our LNG producers, ``Hey, if you are
going to ship LNG all over the world should that be on
American-built ships?'' It cannot happen overnight. The oil and
gas industry does not like that idea, because they do not think
we can build them, quickly, efficiently, costly. What do you
think? You have kind of done some of that already.
Mr. Vogel. Yes, Chairman. I absolutely support that
concept, and as we have seen from the USTR action it is
certainly a critical part of balancing with both sort of the
carrot and the stick. We have the capability. We have the
ingenuity to build the world's best LNG fleet here in the
United States. I fully support creating that cargo base, and
with that demand signal we will be able to build those ships in
the United States.
Senator Sullivan. OK. Senator Blunt Rochester.
Senator Blunt Rochester. Thank you, Mr. Chairman, and
again, thank you to our witnesses. In Delaware, I was fortunate
to serve as Secretary of Labor. And so for me the whole issue
of jobs and people being able to live their purpose and get a
great skill is vital. So I was pleased to hear that we are
shifting, and people's perceptions of what great jobs are is
really a focus right now. I love the focus on the trades,
manufacturing.
And as former Secretary of Labor, I want to emphasize how
critical our maritime and shipbuilding workforce is for our
industrial base. Without the skilled men and women in these
trades, we cannot build the ships, maintain the fleets, or
sustain our competitiveness on the global stage.
It is interesting, as I was sitting here, my sister, who is
kind of like the family historian, sent me a document from our
great-grandfather, who actually worked at the Philly Navy Yard.
And the document, actually, Matthew Miller, World War I
registration, and he was at Merchant and Miners, Pier 24, on
Delaware Avenue.
So again, I really appreciate the focus on the future of
this country and our security, and I want to ask you, Ms. Snow,
not that most of us here are older, but you seem to come from a
younger generation. If you could talk about younger generation
industry leaders who are looking at recruitment and engagement
in a different way than in 1902, when my grandfather got the
opportunity. Are current training and apprenticeship programs
keeping pace with what the workforce needs are?
Ms. Snow. I do not think so. Thank you for the question. I
think that there could be a lot more investment in trade
programs and trainings and also apprenticeships. A lot of
businesses cannot afford to hire people just to teach and not
be on their workforce as well. So investment in the ability for
a company to have their own internal apprenticeship program
would really expedite the process of getting trade skills into
our work.
Senator Blunt Rochester. If any of the other members want
to answer the question about apprenticeships or workforce, I
would be happy to hear.
Mr. Paxton. Yes, Senator. I would say it is a badge of
honor that a lot of our shipyards, at their own expense,
implement apprenticeship programs, with no guarantee at the end
of it that they will employ that person, highly competitive
market for shipyard employees. And so that apprenticeship
program could see that person going elsewhere. Highly
trainable. Highly hirable.
And we do this on a regional basis. We work with our
community colleges. We work with our trade schools. And I think
it was said earlier there is a focus now on, it is not
necessary to get that 4-year degree. Go to trade schools.
Senator Blunt Rochester. Thank you. Dr. Mercogliano, you
have written extensively about how the U.S. maritime sector
depends on foreign supply chains for key components and
materials. What vulnerabilities stand out to you most in our
current U.S. shipbuilding supply chain, and what steps could
the Federal Government take to build more secure domestic
source base? I am fortunate to work with Senators Cantwell and
Blackburn on strengthening our supply chains, so I would love
to hear from you on that.
Mr. Mercogliano. Well, I would defer to Matt, who might be
able to talk about that in a little bit more detail. I can say
that my conversations with shipbuilders and looking at the
supply chain is we have seen continual disruptions across the
supply chain recently. And particularly, obviously, in steel
and, more importantly, specific manufactured parts and
specialized parts in shipping is the key that we see
vulnerabilities happening.
Right now, if you look, for example, at anything from pumps
to machinery, our group supply chain in the United States is
very vulnerable. They are down to sometimes one small
manufacturer that is building parts for both commercial and
naval vessels. And we have seen that down to the third level,
below the shipyards, below their suppliers. So that creates a
lot of vulnerability, which means if we cannot produce it in-
house, in the United States, we have got to source it from
overseas. And the disruptions we are seeing in the global
supply chain and competition for those resources by other
shipbuilders out there--Japan, Korea, and particularly China--
makes it very vulnerable for us. And it is one of the reasons
why you will hear my associates here talk about creating those
infrastructures here in the United States and not be depending
on those foreign sources.
Senator Blunt Rochester. I know I have 8 seconds left, but
again, thank you so much for taking the time. And I will follow
up with many of you questions for the record. Thank you. I
yield back.
Senator Sullivan. Thank you. We now have our Chairman, and
I would like to let him say a few words and ask some questions.
It is great to have the Chairman of the Committee, Senator
Cruz, here. Mr. Chairman, the floor is yours.
STATEMENT OF HON. TED CRUZ,
U.S. SENATOR FROM TEXAS
Chairman Cruz. Thank you, Mr. Chairman. I appreciate it.
Welcome to each of the witnesses. I appreciate this hearing on
this very important topic.
Dr. Mercogliano, let me start with you. The SHIPS Act aims
to guarantee annual commercial ship production of 15 to 25
ships per year through subsidies disbursed by Maritime Security
Trust Fund, which would in turn be capitalized by various
revenue streams, including new tonnage taxes on international
shippers bringing goods into the United States and fines on
importers for failing to meet certain ship preferencing
requirements. China, South Korea, Japan, meanwhile, each
annually deliver hundreds of ships per year.
In the face of the advantage of economies of scale that
they have and the resulting lower costs they produce, prospects
for U.S. shipyards, which face a strained labor pool, high
input costs, and serious technological challenges compared to
East Asian competitors, the possibility of becoming
internationally competitive is, at a minimum, challenging.
Should we assume that large and recurring subsidies, and by
extension, annually increasing tonnage taxes and fines on
importers to fund them, will need to be an enduring feature of
U.S. policy to produce the kind of ship production envisioned
by the SHIPS Act?
Mr. Mercogliano. Historically, that is the way it has been
done. If you look at the shipbuilding process in World War I
and World War II it was done either through a large
appropriation that was put into a corpus, a body of money to
draw from, or it was through a subsidy process.
I will note that the U.S. is the fourth-largest investor in
commercial shipping worldwide, even though we have the 23rd-
largest merchant marine in the world. The question is how do we
get U.S. money to invest in American shipping by investing in
foreign shipping? And I think if we can tackle that hurdle then
we would not be as dependent on government funding for
shipbuilding, because we can get that investment into U.S.
ships.
Chairman Cruz. So how would you answer the questions that
you just posed? How do we get U.S. money to invest in
shipbuilding here at home?
Mr. Mercogliano. I think we need to change and look at how
Korea, Japan, and many other countries give either tax
deferments or opportunities for long-term loans so that you can
invest. You know, investing in a ship, you are not going to see
a ship for 4 to 5 years. What can we do to offset that,
especially for a shipping company, to minimize their downside,
their loss capability should cargo not appear. I mean, we could
do processes whereby ships could be turned back into the
government if there is no business for them, put into the
reserve fleet. Basically provide them a minimal loss coverage
so that there is more willingness to invest in that. The key
thing is getting incentives from Wall Street and venture
capitalists to get into this, so that we are not relying wholly
on the U.S. Government for funding.
Chairman Cruz. So why did we lose shipbuilding to begin
with? What are the challenges? What are the impediments that we
face to domestic shipbuilding?
Mr. Mercogliano. I think we did not lose shipbuilding. We
shifted our shipbuilding. We decided to focus on naval and
military and allow the commercial to go overseas, because we
viewed that that naval capability was a much larger capability
to have. And we assumed that there was going to be a residual
left over from that. However, what we saw happen, especially in
the 1980s and into the 1990s, with the end of the Cold War it
went from a 600-ship Navy to a 300-ship Navy, and all of a
sudden our capacity decreased. And we really did not foresee a
really coordinated effort by the Chinese to take over and
control shipping in a way that we really have never seen
before. Some people make the comparison to the British, but
China has done a pure vertical integration of all aspects of
shipping in a way unlike any other country has done.
Chairman Cruz. And let me open this up to the rest of the
panel. What steps do you think are most important to
reinvigorate the commercial shipbuilding industry here in the
United States? Mr. Paxton, we will start with you, and I will
give everyone a chance to answer.
Mr. Paxton. Thank you, Mr. Chairman. I think it comes down
to, sir, that sustained, long-term demand signal, that we are
serious about owning our own global logistics. Being dependent
on three shipping companies around the world for our trade
makes us a client state. That is a vulnerability. We are at a
national security--and we saw this during COVID, because this
Committee had to work on the Ocean Reform Act because China was
not taking our exports. We should own our global logistics to a
certain extent, and I think this concept of a strategic
commercial fleet under the SHIPS Act makes sense.
I would say, sir, there is a lot of capital sitting on the
sidelines. If there was a demand signal there, I see private
industry coming to the shipbuilding industry. You see it in the
autonomous space with Saronic and Blue Autonomy. These things
are happening, and they are happening in your state, as well,
sir.
Chairman Cruz. They are, indeed. Mr. Vogel.
Mr. Vogel. Mr. Chairman, I would absolutely say creating
that demand signal for private investment, removing the
regulatory constraints that we have on commercial shipyards can
work together to rebalance the international shipbuilding
market.
Chairman Cruz. When you say regulatory constraints, what,
in particular, are impediments that if removed would unleash
shipbuilding?
Mr. Vogel. Mr. Chairman, I think they are twofold. As Dr.
Mercogliano said, we moved into government shipbuilding. But
there are a huge number of government ships that can be built
on a commercial model basis, using things like vessel
construction manager, getting us out of sort of the legacy
shipbuilding, using all the constraints of Federal acquisition,
instead relying on commercial practices and commercial
suppliers in order to build up our capacity. And we need to
focus on the full supply chain. We need to focus on engine
manufacturers that we have, including in your state, support
them so that they can reduce their costs and ultimately reduce
the cost of ships.
Companies like TOTE and our parent company, Saltchuk, are
ready to put private capital to use, as well. There are
platforms out there, like the roll-on, roll-off vessels, that
need to be recapitalized in our ready reserve force, like the
cable laying ships that we need for the Navy, that could be
paid for with private capital if we had the right charter
agreements in place and that right assurance of that long-term
investment from the government to operate those vessels.
Chairman Cruz. Ms. Snow, briefly.
Ms. Snow. Allocations of funds to small shipyard grants and
to training programs and apprenticeship programs across the
U.S.
Chairman Cruz. Thank you.
Senator Sullivan. Thank you, Mr. Chairman. Senator
Cantwell.
Senator Cantwell. Thank you, Mr. Chairman. Following up on
that point, Ms. Snow, you listed a whole line of things that
you guys have done, various ships. How does the Shipyard Grant
boost your capacity?
Ms. Snow. That is a great question. We are the recipient of
a MARAD Small Shipyard Grant, and that allowed us to buy a
deburring machine, a laser cutter, and a press break, which we
would have to outsource otherwise. So we now have made 15 to 20
more jobs within our business. We have also expanded the number
of things that we can do and build. So we can be open for 16 to
20 hours a day instead of 8 hours a day, because we have an
entirely new element to our business.
Senator Cantwell. So boosting those MARAD Small Shipyard
Grants is huge capacity building?
Ms. Snow. Yes.
Senator Cantwell. How many jobs would you say that helped?
Ms. Snow. For just this one specifically we hired 15 to 20
more people, and then it has changed the track of other
people's career paths, where they get to learn more and new
diverse things. It also would allow us to, if we received
another, would allow us to create our own in-house
apprenticeship program, where we could allocate those funds
specifically just for a teacher and educator.
Senator Cantwell. Thank you. Mr. Paxton, do we have the
capacity to build icebreakers?
Mr. Paxton. I do think we have that capacity. And you do
not have to take my opinion on that. An RFI went out asking the
question. MARAD asked, ``Would you bid on the icebreaker
contract?'' and seven shipyards came back and said they did. In
fact, two entities, unsolicited, put proposals in that could
deliver an icebreaker within the 4-year period of this
Administration.
Senator Cantwell. So we do not have to outsource to another
country?
Mr. Paxton. I do not think we do.
Senator Cantwell. Thank you for that. Everybody has
mentioned the finance program. Should we make a finance Title
XI or something like it apply to fishing vessels since they are
not eligible under Title XI? Mr. Vogel or Mr. Paxton.
Mr. Vogel. Absolutely, Senator. The fishing industry is a
critical customer for our commercial shipyards. Title XI can
help to really invigorate and accelerate the investments that
are made by commercial fishing companies in building new
capacity. A lot of our fleet is quite aged at this point and
needs to be recapitalized. Things like Title XI, providing the
loan guarantee, can really help to accelerate that
recapitalization.
Senator Cantwell. So you would just put fishing in there?
Mr. Vogel. I would absolutely support expanding the Title
XI authorization to include fishing, Senator.
Senator Cantwell. Great. Great. That is good to hear. And
then, you know, back to this price signal thing, you talked
about incentives, various tax incentives. Does somebody have a
viewpoint there of what needs to happen?
Mr. Vogel. Yes, Senator. I think there are two great
aspects of the SHIPS for America Act, and it has a separate
focus, really, on tax incentives. One, a 25 percent tax credit
for investment in shipyards can accelerate much of the
reinvestment that we need in commercial shipyards. And then the
fuel parity tax aspects, to ensure that companies that are
making investments in the newest technology are not unfairly
disadvantaged in competing in our domestic trades.
Senator Cantwell. Thank you. Well, that has been our
traditional tool, at the Federal level, so I am glad to see
that people want a demand signal. That was our goal with CHIPS
and Science, as well, to say that there is a demand signal to
innovate in the United States of America because of those
incentives.
Here we have a larger challenge to get that infrastructure
right and move forward. And Dr. Mercogliano, you mentioned that
shipping is national defense. Do you think that we need to do
more to integrate--I am not sure I heard many people say
anything about AI or blockchain technology--but isn't there a
way for the United States to move even faster? I see, Ms. Snow,
you shaking your head--to move faster on new innovation
technology to help with shipping logistics?
Mr. Mercogliano. I think so. Technology is the one
advantage that the United States has consistently brought to
bear that allows us to propel ourselves past competition. And
if we can incorporate that, I always argue that the greatest
innovation in shipping came from somebody outside the shipping
industry, Malcolm McLean, who came up with containerization. So
AI, you know, anything we can do to assist that I think is key
for us maximizing. The question is how do we integrate it into
the shipping aspect right now. Because again, a lot of AI and a
lot of those developers do not know anything about it, and we
are not doing a great job in bringing that technology into it.
Senator Cantwell. That is what I see in my state, and I do
not know, Ms. Snow, if you have a comment. My time is running
out. But I have seen the blockchain people come to the sector
with ideas, but then you have to get somebody in the sector. I
do think maybe a program that helps propel that along would be
something that people would take advantage of as opposed to
just kind of standing still when they hear about it. Right? We
need these two things to be married together.
Thank you very much, Mr. Chairman.
Senator Sullivan. Senator Young.
STATEMENT OF HON. TODD YOUNG,
U.S. SENATOR FROM INDIANA
Senator Young. Thank you, Chairman. Thank you for
prioritizing this important topic. Mr. Chairman, I ask for
unanimous consent to enter into the record 51 statements from
64 organizations, spanning industry, labor, and the broader
maritime community, expressing support for the SHIPS for
America Act. These statements reflect the broad bipartisan and
nationwide support for rebuilding U.S. shipbuilding capacity,
expanding our U.S.-flagged, oceangoing commercial fleet, and
ensuring the American workers remain at the heart of our
maritime strength.
Senator Sullivan. Without objection.
Senator Young. Thank you, sir.
[The information referred to follows:]
Prepared Statement of Jesse Vecchione, Regional Business Development
Leader, Americas, Weathernews, Inc.
Dear Chair, Ranking Member, Members of the Committee:
Thank you for the opportunity to submit this statement in support
of the SHIPS for America Act.
Who We Are
Weathernews Inc. is the world's largest commercial weather services
company supporting the maritime industry''. Since we are publicly
listed on the Tokyo Stock Exchange Market. supporting the maritime
industry. Headquartered in Japan, with 930 maritime customers across 32
offices in 21 countries, we provide weather intelligence for
approximately 84,000 voyages annually.
Weathernews has maintained operations in the United States since
the 1990s, now headquartered on the University of Oklahoma Research
Campus in Norman, OK. Our U.S. team of more than +70 professionals
works closely with NOAA, the National Weather Service, and the National
Hurricane Center. We support dozens of American commercial shipping
companies, energy firms, and port authorities.
Why We Have Standing
Our experience serving the global maritime industry gives us direct
insight into what makes nations competitive in maritime operations. We
see firsthand how American operators compete against international
counterparts, what tools and services they need, and where U.S.
maritime infrastructure--both public and private--must strengthen to
ensure American leadership.
Our Position
Weathernews strongly supports the SHIPS for America Act. This
legislation is essential for revitalizing domestic shipbuilding,
enhancing national security, and supporting the skilled maritime
workforce upon which American competitiveness depends.
The Foundation for Maritime Excellence
As a Japanese company with deep connections with the American
maritime industry, Weathernews has firsthand insight into how Japan has
built maritime dominance. President Trump's visit this week underscores
the strategic importance of our relationship with Japan. Japan's
maritime successes rest on a proven model: robust government
infrastructure combined with thriving private sector innovation.
Japanese shipyards, supported by strong public meteorological services
and maritime policy, have built competitive advantages that benefit the
entire economy. America can achieve the same through the right
combination of policy and partnership.
Weathernews does not compete with NOAA, NWS, and NHC--we complement
them. Government agencies provide foundational observational data,
forecast models, and public good services. Private companies add
specialized capabilities, 24/7 operational support, and targeted
innovation. Strong government infrastructure creates the foundation
upon which private innovation thrives, and private sector competition
drives excellence in service delivery. The SHIPS for America Act
strengthens this entire ecosystem by revitalizing domestic commercial
maritime, creating the foundation for both public services and private
innovation to deliver maximum value to American operators.
Our Recommendations
We strongly suggest the Committee to:
Pass the SHIPS for America Act expeditiously to signal
America's sustained commitment to maritime revitalization
Ensure sustained funding for maritime workforce development
programs--skilled mariners, naval architects, and shore
personnel are the foundation of operational excellence
Maintain and strengthen support for NOAA, NWS, and NHC as
the public infrastructure that enables the private sector to
innovate and serve maritime stakeholders effectively
Encourage public-private partnerships that leverage
government capabilities and private sector specialization to
maximize safety, efficiency, and American competitiveness
Conclusion
The SHIPS for America Act positions American maritime to reclaim
global leadership through the combination of advanced technology,
strong public infrastructure, and a skilled workforce. These elements
reinforce one another. Without domestic shipbuilding capacity, we lose
operational expertise. Without workforce investment, we lose the human
judgment that makes technology powerful. Without robust public
services, private innovation cannot flourish.
Weathernews is committed to supporting American maritime
revitalization as an industry partner that values both strong
government services and private sector innovation working together in
service of American interests.
We urge the Committee to promptly pass the SHIPS for America Act.
Respectfully submitted,
Jesse Vecchione,
Regional Business Development Leader, Americas
Weathernews, Inc.
______
Prepared Statement of Dustin Walper, CEO, Valstad Shipworks
Chair Sullivan, Ranking Member Blunt, and Members of the Committee:
Thank you for the opportunity to submit a statement.
My name is Dustin Walper, and I'm the CEO and founder of Valstad
Shipworks. We are a venture-backed startup focused on the application
of AI, robotics, and advanced manufacturing to the problem of American
shipbuilding.
Our goal is to build a dual-use ``Gigafactory for Ships'', applying
technologies from the automotive and aerospace industries to rethink
the way America builds ships for both commercial and military use.
Our position
Our organization strongly supports the SHIPS for America Act
because it recognizes the existential threat to U.S. maritime interests
posed by China.
We believe that strengthening the maritime industrial base is one
the most important challenges we face in an era of renewed great power
competition, impacting not only U.S. shipbuilding and workers but also
our ability to conduct commerce and project power in waters near and
far.
Analysis
I will be blunt: China poses the most serious maritime threat we
have ever faced as a nation.
The evidence for this is overwhelming:
Measured by deadweight tonnage (DWT), China's share of
global shipbuilding in 2024 was estimated at 53.3 percent\1\.
It also holds 67.3 percent\2\ of the orderbook for new orders,
suggesting increasing global dominance at the expense of allies
like Japan and South Korea.
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\1\ https://www.csis.org/analysis/china-dominates-shipbuilding-
industry
\2\ https://www.marineinsight.com/shipping-news/chinas-
shipbuilding-sector-sees-significant-growth-with-rise-in-vessel-
deliveries-and-new-orders/
China's shipbuilding capacity is estimated to be 232
times\3\ that of the United States, with a merchant fleet of
7,838 vessels vs. 185 US-flagged vessels\4\. The Chinese
merchant fleet can be repurposed to provide sealift capacity in
the event of a conflict over Taiwan.
---------------------------------------------------------------------------
\3\ https://www.twz.com/alarming-navy-intel-slide-warns-of-chinas-
200-times-greater-shipbuilding-capacity
\4\ https://cimsec.org/break-chinas-grip-on-shipping-with-the-
multilateral-maritime-alliance/
China has been rapidly expanding both shipbuilding capacity
and capability, with new shipyards like Xinneng Shipbuilding\5\
demonstrating integration of industrial robots, computer
vision, AI planning, and autonomous mobile robots like those
used in Amazon warehouses. Xinneng's website claims they can
produce 400+ inland vessels per year at their new 1,757 acre
facility.
---------------------------------------------------------------------------
\5\ https://xinneng-shipbuilding.com/
On these and other measures, China is far ahead on ships.
If we do not act now--and act decisively--we believe we could see a
reorienting of alliances in the Asia-Pacific region away from ``Pax
Americana'' towards a sinister new ``Pax Sinica''.
Recommendations
We applaud the administration's efforts to attract allied nations
like South Korea and Japan to invest in the U.S. maritime industrial
base.
We also believe that American innovators like Tesla and SpaceX
prove that domestic companies--including startups like ours--are
capable of truly astounding feats of reindustrialization.
Our recommendations are as follows:
Expand funding to explicitly include new shipyard
development. The U.S. has not built any major new shipyards in
decades, and in our view this must change--yards designed
specifically to make use of modern manufacturing automation are
the fastest, best way to significantly increase shipbuilding
capacity.
Invest heavily in automation & new technology. Ships made in
U.S. yards are significantly less labor-efficient than
comparable ships built in South Korea. To increase our total
output without placing unrealistic demands on the labor supply,
we must embrace automation and reduce labor hours required per
compensated gross ton (CGT).
Provide dedicated funding and/or supports for new domestic
entrants. We should incentivize private capital to invest in
the future ``SpaceX'' or ``Tesla'' of American shipbuilding.
Solutions that only focus on existing shipyards or foreign
shipbuilders risk neglecting the world-beating power of our
entrepreneurial ecosystem.
Accelerate the development of autonomy guidelines for US-
flagged ships. The future of America's maritime industry need
not look like the past. A clear mandate for commercial vessel
autonomy would drive rapid adoption of innovative technologies
and create new export opportunities for U.S. companies.
Conclusion
We urge the committee to pass the SHIPS for America Act without
delay. China is continuing to advance rapidly, and that capabilities
gap will only widen if we do not act immediately.
American dynamism is one of the most powerful forces for good the
world has ever seen. We have every confidence that, with the right
incentives and supports, the American people can rise to the occasion
and address the threat from China head-on.
______
Prepared Statement of United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers
International Union (USW) and the International Association of
Machinists (IAM Union)
Chairman Sullivan, Ranking Member Blunt Rochester, and Members of
the Subcommittee, thank you for holding this important hearing today.
We want to take this opportunity to express our strong support for
the bipartisan, bicameral SHIPS for America Act (S. 1541/H.R. 3151),
legislation that would help revitalize the U.S. shipbuilding and
maritime industry. We would also like to thank Senator Young and
Senator Kelly, and Representative Kelly and Representative Garamendi,
for crafting and introducing it.
For years, our members have been ringing the alarm while the
American shipbuilding sector eroded in the face of China's use of
unfair trade practices and five-year plans designed to dominate the
global maritime sector. As U.S. shipyards have shuttered, tens of
thousands of jobs have been lost, and highly trained dedicated workers
have been pushed out of a supply chain that is critical to the future
economic and national security of the Nation. The SHIPS for America Act
reflects a sorely needed dedication to rebuilding American shipbuilding
and the trained workforce required to meet the challenges of the
future.
Collectively, organized labor supporting this effort represents
tens of thousands of hard-working union members in the shipbuilding and
maritime sector. Our unions represent workers making commercial vessels
and working in naval shipyards, as well as in the production of steel,
engines, boilers, propulsion systems, glass, cables, pipes, fittings,
pumps, and other machinery, supplies, materials and components used on
commercial and military vessels. Our members work in the ports and on
our ships.
From Maine to Virginia to Mississippi to California and Hawaii, our
unions and their membership supply, build, maintain, repair and man our
Nation's vessels, and work at the ports and logistics facilities.
We know that the Chinese Communist Party (CCP) has directed over a
hundred billion dollars in state support to Chinese shipbuilding
companies, mandated preferences for ships built in China, discriminated
against non-Chinese ships, and created a global web of ports and
terminals owned by, or affiliated with, Chinese firms. Meanwhile, U.S.
shipyards have been devastated. Tens of thousands of jobs have been
lost as shipyards have closed and highly trained expert workers have
been forced out of the U.S. defense industrial base.
In the face of the CCP plans to dominate global shipbuilding,
logistics and maritime sectors, several unions jointly filed a petition
with the U.S. Trade Representative (USTR) under Section 301 of the
Trade Act of 1974, seeking an investigation into the CCP's strategic
conduct\1\. We are proud that we created the spark that has fueled
attention to, and action on, these critical issues.
---------------------------------------------------------------------------
\1\ https://ustr.gov/sites/default/files/
Section%20301%20Petition%20-%20Maritime%20Logis
tics%20and%20Shipbuilding%20Sector.pdf
---------------------------------------------------------------------------
In April 2024, USTR initiated an investigation and subsequently
issued its report concluding that China engages in non-market-economy
practices to dominate the maritime, logistics, and shipbuilding sectors
and that China's behavior is unreasonable and actionable given the
destructive effects and challenges it poses to U.S. interests\2\. We
support USTR's findings, which align with the allegations in the
petition, finding that the CCP's actions not only restrict U.S.
commerce but have had massive negative impacts for American workers and
the shipbuilding sector, logistics and maritime sectors.
---------------------------------------------------------------------------
\2\ https://ustr.gov/sites/default/files/enforcement/
301Investigations/USTRReportChinaTar
getingMaritime.pdf
---------------------------------------------------------------------------
We commend the USTR and the Administration for acting on behalf of
American workers in the U.S. shipbuilding sector. USTR has subsequently
proposed a set of strong relief measures aimed at leveling the playing
field against the CCP's unfair trade practices and creating a path to
the restoration of our Nation's maritime capacity. These measures will
begin to rebalance the global market for the American shipbuilding
sector and its existing thousands of workers across the economy. They
will also lay a foundation for revitalizing our capacity in the
critical sectors covered by these measures.
We also support the Administration's Executive Order announced on
April 9, 2025 on Restoring America's Maritime Dominance\3\. The order
and the Maritime Action Plan and support for a Maritime Security Trust
Fund contained within are designed to address our growing dependence on
China to meet basic shipping and logistics needs.
---------------------------------------------------------------------------
\3\ https://www.whitehouse.gov/presidential-actions/2025/04/
restoring-americas-maritime-dominance/
---------------------------------------------------------------------------
The SHIPS for America Act will create the statutory framework
needed to rebuild and maintain American shipbuilding and maritime
manufacturing long into the future, when combined with the USTR 301
remedies and the actions laid out in the President's executive order.
All three vectors--Section 301, the Administration actions and the
SHIPS for America Act are vital to restoring our maritime strength.
By investing in workforce development while incentivizing the
construction of commercial vessels in U.S. shipyards, supported by an
upgraded robust maritime infrastructure, the SHIPS for America Act, and
the Maritime Security Trust Fund which it creates, will help revitalize
the U.S. shipbuilding industry, provide stability to a sector plagued
by boom-and-bust cycles and create thousands of jobs while enhancing
our Nation's economic and national security. It also recognizes the
critical need to expand our mariner workforce to ensure the U.S. has
skilled workers on our ships and are not dependent on other nations to
meet commercial and military needs. Indeed, more than eighty percent of
U.S. military cargo transits on commercial vessels and these U.S.
flagged ships are critical to meeting our Nation's needs.
We support the SHIPS for America Act and will continue to encourage
its swift consideration and passage. This legislation is vital to the
future of the industry and the workers we represent. We believe that
with the right policies in place, U.S. shipbuilding and maritime
capabilities can thrive, and the American people can benefit from a
newly restored position of American maritime leadership.
We look forward to continuing to partner with you and your
colleagues to promote the interests of U.S. workers and industry in
shipbuilding, industrial supply chains, and the maritime sector. We
urge you to consider and advance this critical legislation quickly. We
stand ready to work with Congress and the Administration as the process
unfolds.
______
Prepared Statement of USA Maritime
This statement is submitted on behalf of USA Maritime, the
coalition representing the U.S.-Flag international sailing fleet, made
up of ship operators, trade associations and labor organizations
owning, operating, crewing and advocating on behalf of the United
States Merchant Marine in international commerce.
Our members own, operate, crew or represent most of the U.S.-Flag
vessels currently operating in foreign commerce, including all ships in
the Maritime Security and Tanker Security Programs.
This hearing could not come at a more significant time in America's
maritime history. After decades of allowing the foreign competition to
overtake our maritime industry, especially the shipyard industrial
base, the attention of the American people and our government seems to
have finally been drawn back to its roots.
There is no more American industry than the maritime industry. From
the founding of the Republic, America has been a nation of the sea,
surrounded by water and dependent on trade for our wealth and well-
being. Despite that history, the last two hundred years of maritime
policy has struggled to find a consistent means of ensuring that
America's merchant marine remains afloat.
As we look around the world today, the need for a robust U.S.-Flag
international fleet capable of carrying a significant portion of our
waterborne commerce and to serve our national interests is paramount.
America faces numerous challenges abroad and at home that demand our
ability to move cargo over our oceans and inland waterways. And time
and history have proven that we cannot rely on foreign carriers to meet
our needs. Whether it's the supply chain issue we saw over the last few
years, or when foreign carriers have balked at moving cargo into
dangerous waters, we have ample evidence to confirm we cannot put our
faith in the idea that foreign carriers with foreign crews and ships
will always be there when we need sealift.
Now, more than ever, America needs to develop and implement
programs and plans, as well as provide the critical funding necessary
to fuel the renewal of our international sailing fleet.
This hearing is about reviving commercial shipbuilding. Our
shipbuilding industry is a vital national asset that we absolutely must
revive if we are to remain a first-class power in the world in the
future. Yet we must never forget that the building of a ship is the
first step in the process--it is not the end goal, it is the beginning.
Once that ship is built, it needs a crew to sail it, and it needs
cargo to move. Without a crew and without cargo, a ship is useless--an
unmoving, unprofitable, mass of steel that serves no purpose. If we are
to revitalize our shipbuilding industry, we must look at our entire
maritime industry, because each part works together to form a coherent
whole. Building ships that go nowhere and do nothing is pointless and a
waste of resources.
Thus, as we work to revitalize shipbuilding, we must work to ensure
that once those ships are built, they will have something to do.
USA Maritime remains a committed supporter of the bipartisan and
bicameral SHIPS for America Act. We look forward to working with
Congress as this legislation works its way through the legislative
process, and we hope to work with the sponsors and co-sponsors to make
it even better.
We have been pleased with the level of support and the level of
commitment demonstrated by the Trump Administration when it comes to
maritime. Their statements and quick action, including an Executive
Order on maritime, have put maritime at the forefront of our policy
debates. The President, Vice President and the rest of the
Administration have our sincere thanks.
The Administration has been focused on working to level the playing
field between America and our competition overseas. We support the
steps being taken by the Administration to combat unfair shipbuilding
practices by China. As the Trade Representative continues to work on
these issues, we urge the Administration that whatever steps they take
do not damage our existing maritime capabilities as we pursue the goal
of increasing our fleet and our percentages of global trade.
We must ensure that any steps we take to rectify China's unfair
policies do not have the unintended consequences of damaging existing
U.S.-Flag carriers and capabilities. We also urge that the government
take advantage of all the tools currently at its disposal to promote
and support our maritime industry. The traditional tools government has
used--cargo preference, foreign food aid, the Maritime Security and
Tanker Security programs--must be funded fully and administered
properly.
Furthermore, the Federal government must follow its commercial
first policy where the active fleet of vessels are used to carry
government cargoes before U.S. government vessels are used. Using
government vessels to carry government cargoes is short-sighted and
weakens the privately owned fleet that is essential to national
defense.
To be clear, various programs that currently exist represent the
bare minimum needed to keep our ships and mariners afloat and sailing.
Without full funding for MSP and TSP, we risk the ships and jobs that
we currently have in the industry. Without a Food for Peace program
that is actively moving cargo, ships that are currently within the
U.S.-Flag fleet will either go into long-term layup, putting their
crews out of work, or worse--those companies will be forced to leave
the U.S.-Flag, and those ships will likely never return. We urge the
administration to use the funding provided to the Food for Peace
program to ensure sufficient cargo is available to keep our existing
fleet sailing.
The Food for Peace issue highlights the most critical need for our
maritime industry: cargo. A ship without cargo is like a car without a
motor--not moving.
If you want to promote shipbuilding in the United States, you must
focus like a laser on the question of commercial cargo and how to get
it back on American ships. Do that, and most of the issues we face
become surmountable. Demand for ships driven by an abundance of
commercial cargo that wants to move on American ships will do as much,
if not more, for revitalizing American shipbuilding as any government
program could.
And it solves other problems, too. The more cargo our ships have to
move, the more ships we have and can sustain, and the more ships we
have and sustain means more jobs and an easier way of recruiting men
and women to go to sea.
No one wants to join a dying industry, wondering if the time and
money they spend on training and education will ever end up paying off.
But a thriving industry, one that has a future, is an industry that can
recruit and retain the best people. While we have made significant
strides in fixing our current mariner shortage, we cannot assume that
the problem will be solved. The best way to ensure we have enough
mariners to meet all our needs and to crew an even larger fleet is for
there to be sufficient cargo to generate the ships and the jobs needed
to keep those ships sailing.
At sea jobs are difficult and demanding, but they are also some of
the most rewarding, and our mariners get the best training and strong
support at home. These are solid, middle-class jobs that pull people
out of poverty, give them a chance at a good life, with a meaningful
career that makes a difference in their lives, their families lives,
and the lives of their fellow Americans.
The government has the power to help increase the amount of cargo
available for U.S.-Flag vessels to carry. The foremost step would be
the establishment of a tax incentive provided to shippers who move
their products on U.S.-Flag ships. In whatever form that comes, whether
as an enhanced deduction or as a tax credit, by providing an incentive
to ship American, Congress can help ensure sufficient cargo exists to
keep the new ships and crew envisioned in the President's Executive
order and the SHIPS for America Act moving.
The use of bilateral and multilateral trade agreements to secure
access to cargo for American ships is recommended. All too often, our
trade agreements have ignored maritime transportation. Including
maritime in our trade agreements can reserve a portion of the trade
between the two contracting states for American vessels--something we
used to do but have not done in far too long.
Finally, as the government has pivoted from free trade to fair
trade, we hope that any tariff policy adopted by the Federal government
includes provisions that provide a benefit to shippers who opt to use
American ships with American crews.
As we noted earlier, the best way to revive American shipbuilding
is to ensure there are customers to order those ships, men and women to
crew them, and cargo for them to move. Absent all of those things,
America's shipbuilding industry will remain in its present condition.
Doing nothing is, unfortunately, the easiest thing to do, and
something America has become particularly good at. But we cannot afford
to continue doing the same things we've always done and hope for a
different outcome.
To be clear--if we do nothing, America's ability to maintain its
merchant marine will continue to slowly erode until we become fully and
completely dependent on foreign interests to move our cargo and supply
our warfighters. This is an untenable situation, and one we cannot
allow to happen. Passage of the SHIPS Act, the continued full funding
of our maritime programs, the proper administration and usage of our
Food Aid programs and, most importantly, government action to increase
the cargo base will help keep the merchant marine afloat.
As always, the members of USA Maritime look forward to working with
Congress and the Administration as we all strive to protect American
national and economic security through trade on the sea.
______
Prepared Statement of the Transportation Institute
Chair Sullivan, Ranking Member Rochester, and Members of the
Committee,
Thank you for holding a hearing on the state of commercial
shipping, a critically important issue for our nation, and for the
opportunity to comment in support of this effort to strengthen American
commercial shipbuilding. The bipartisan, bicameral SHIPS for America
Act takes our Nation in the right direction of strengthening our
commercial capacity.
Transportation Institute has, for nearly sixty years, worked for a
strong American maritime capability. Transportation Institute closely
monitors the workings and decisions of the U.S. Congress and the wide
range of administrative agencies of the Federal and state governments
as they affect waterborne transportation. The Institute staff conducts
research and study projects on all maritime-related issues.
Transportation Institute issues a number of publications and other
materials designed to inform the public, the Congress, and the
government of important merchant marine matters.
Transportation Institute was established in 1967 as a Washington-
based, non-profit organization dedicated to maritime research,
education, and promotion. The Institute companies participate in all
phases of the Nation's deep-sea, foreign and domestic shipping trades,
and barge and tugboat operations on the Great Lakes and on the 25,000-
mile network of America's inland waterways. All our member companies
are of U.S. registry--crewed by American citizens operating under the
world's highest safety standards and proudly flying the American flag.
Transportation Institute supports the bipartisan effort of this
Congress and the Administration to restore the U.S.-flag merchant
marine and also our overall maritime industrial base through public
forums like this hearing and the SHIPS for America Act. The maritime
industry plays a unique role in the American ecosystem, affecting
national security, supply chain resilience, workforce, and trade.
America is a maritime nation, and both our national security and
economic prosperity are tied to our waterways and ability to engage in
trade freely across the global commons. American industry thrived
because it could move its goods worldwide and won wars on the strength
of its ability to deliver the goods to project power abroad. American
merchant fleets have been critical our Nation since its founding.
To strengthen commercial shipbuilding for international trade,
first must come increased cargo on U.S.-flag vessels. The 40,000
vessels operating in the domestic trade, and the incredible innovations
made by American shipbuilders, shows that with fair conditions to
compete for cargo, American shipping companies can thrive. Businesses
will invest in American-built commercial vessels when they know that is
the right long-term decision; vessels are expensive, lasting assets. To
build ships for international market, fair access to compete for cargo
must be assured through legislation and other government actions.
A number of factors, including inertia, unfair foreign competition,
and the loss of government support has led to the steady and
unrestrained decline of the size of the international-trading U.S.-flag
fleet, which has depressed workforce participation, made American
businesses vulnerable to supply-chain disruption, and affects military
readiness.
American businesses had a preview of a world without assured access
to shipping during the supply chain crisis following the pandemic.
American exports were left rotting on piers, as contracted, foreign
flag carriers abandoned their commitments to chase more profitable
shipments, as rates increased as much as 1,000 percent along some
routes. Meanwhile, U.S.-flag shippers, according to a study by EY,
committed to their routes.\1\
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\1\ https://dredgewire.com/new-ey-study-jones-act-shipping-more-
affordable-and-reliable-delivery-for-puerto-rico/
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The military understands the importance of a strong U.S.-flag
merchant marine. In every American conflict, the United States merchant
marine, and American mariners, have delivered the goods, sailing into
danger to support their fellow countrymen so ensure they had what they
needed to win the fight. U.S. Transportation Command (USTRANSCOM),
which manages the military's logistics, pays close attention to the
state of the commercial U.S.-flag international trading fleet, as they
are dependent on public-private partnerships, like the Maritime
Security Program and the Voluntary Intermodal Sealift Agreement, to
deliver the goods These vessels are upgraded and maintained by the
vessel owners, American companies thoroughly vetted by appropriate
background checks.
Not only do the actual vessels matter, but these companies also
provide access to their entire intermodal networks, which proved
critical to supplying material to troops in Afghanistan, when
USTRANSCOM had to find a way to deliver critical defense material to
our brothers and sisters in Afghanistan.\2\ Most significant to
Transportation Command and Military Sealift Command are the mariners.
The people who crew both these commercial vessels and government-owned
sealift vessels must be American mariners. Their bravery, devotion to
duty, and patriotism means that they are always willing to sail into
harms way to deliver what we need, unlike some allies we have depended
upon in the past.\3\ American mariners are proud to be called the
``fourth arm of defense'', as President Franklin Roosevelt called them.
Not only that, but the material these mariners move, and where it moves
to, are often national security secrets. Not just anyone can crew these
vessels for obvious reasons--it must be American mariners, all devoted
to our country. However, for these mariners to be available to work
when the military needs them--trained, ready, and with the appropriate
licenses--they must have regular, peacetime work as well, on board
commercial vessels.
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\2\ https://lexingtoninstitute.org/northern-distribution-network-
revolutionizes-afghanistan-wars-logistics/
\3\ According to Global Reach, there are 13 documented cases of
foreign-flag vessels refusing to sail into the Persian Gulf War.
Herberger, Vice Adm. A.J., Gualden, Kenneth C., and Marshall, Cdr.
Rolf. Global Reach: Revolutionizing the Use of Commercial Vessels and
Intermodal Systems for Military Sealift, 1990-2012. (2015). Naval
Institute Press. p. 109.
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Of course, nobody wants these vessels to be fully dependent on
government cargoes for peacetime work, so these companies must be
commercially viable in an international market. The international
shipping market is a challenging place to compete, as high American
regulatory standards and state-supported shipping companies like COSCO
distort the market. Therefore the role the government must play is
twofold: to create conditions in which shippers are incentivized to use
U.S.-flag vessels and to reduce regulatory burdens on U.S.-flag
vessels. The SHIPS Act does exactly that, all while ensuring that we
make the right investments into the workforce now so that enough people
are training and ready to work when the United States truly restores
its American maritime dominance.
There are many opportunities for this Nation to rebuild our
maritime power, in addition to passing the SHIPS Act and implementing
the President's Executive Order. Congress can include U.S.-flag
requirements on trade deals. Tariffs could include exemptions for goods
moved on U.S.-flag vessels. Shippers who choose to use U.S.-flag should
be financially incentivized to and widely celebrated for Shipping
American, just as Buy American is a source of pride for many. These
long term actions would create the appropriate conditions for shippers
to commit to booking their cargo on U.S.-flag vessels, and give vessel
owners the right signal to invest in American shipyards.
Congress's continued support for the Jones Act and to fully funding
the Maritime Security Program, Tanker Security Program, and Cable
Security Program, create a strong foundation from which to rebuild
America's maritime strength and ultimately strengthen commercial
shipbuilding for international trade.
______
Steel Manufacturers Association
October 28, 2025
Hon. Dan Sullivan,
Chairman,
Subcommittee on Coast Guard, Maritime, and Fisheries,
United States Senate,
Washington, DC.
Hon. Lisa Blunt Rochester,
Ranking Member,
Subcommittee on Coast Guard, Maritime, and Fisheries,
United States Senate,
Washington, DC.
RE: Hearing on Sea Change: Reviving Commercial Shipbuilding
Dear Chairman Sullivan and Ranking Member Blunt Rochester:
The Steel Manufacturers Association (SMA) appreciates the
opportunity to submit a statement for the record for the hearing
entitled, ``Sea Change: Reviving Commercial Shipbuilding.''
SMA represents electric arc furnace steelmakers, which account for
more than 70 percent of domestic steel capacity. Our members have a
nationwide geographic footprint and range in size from America's
largest publicly traded steel producers down to single facility,
privately-owned family businesses. They make essential products for
America's infrastructure, national security, and energy and
manufacturing sectors, including materials used in shipbuilding.
Once a leader in shipbuilding, the U.S. maritime industrial base
has atrophied--our country now produces only 0.1 percent of global
ships\1\. Meanwhile, China produces more than half of global commercial
ship tonnage, benefitting from state-sponsored technology and
infrastructure as typified by the state-owned China State Shipbuilding
Corporation\2\; and its global network of ports continues to grow.\3\
This severe imbalance threatens the supply chains on which Americans
depend, as well as our national security. A strong domestic
shipbuilding capability is essential to securing the U.S. maritime
industrial base and strengthening the merchant marine fleet.
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\1\ https://www.csis.org/analysis/are-us-policies-eroding-chinas-
dominance-shipbuilding
\2\ https://features.csis.org/hiddenreach/china-shipyard-tiers/
\3\ https://www.bloomberg.com/graphics/2025-china-ports/
?cmpid=BBD102125_TRADE&utm_medium=e-
mail&utm_source=newsletter&utm_term=251021&utm_campaign=trade
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Steel manufacturers strongly support the SHIPS for America Act and
related efforts to revitalize U.S. shipbuilding. The American steel
industry has more than enough capacity to produce and supply any growth
in demand for key shipbuilding inputs like steel plate. SMA's members
include longstanding suppliers of steel plate for both military and
commercial shipbuilding applications. These capabilities have only
expanded in recent years, as steel companies in America have invested
billions of dollars in new and expanded facilities, some of which have
been designed specifically to increase supply for shipbuilding
applications. The SHIPS for America Act will strengthen and enhance the
entire shipbuilding supply chain, which is critical to our national
security, while restoring critical manufacturing and supporting
American workers. We stand ready to supply American-made steel that
will help re-establish U.S. maritime dominance.
SMA thanks the Subcommittee for holding this important hearing and
urges support for the SHIPS for America Act to reestablish the U.S. as
a global leader in shipbuilding. Thank you for your consideration.
Sincerely,
Brandon Farris,
Vice President, Government Affairs,
Steel Manufacturers Association.
______
California Forever
October 28, 2025
Chairman Sullivan, Ranking Member Blunt, and Members of the
Committee,
Thank you for the opportunity to submit a statement for the record.
Over the past decade, California Forever has invested more than a
billion dollars in acquiring over 100 square miles of property in
Solano County, California. As part of this acquisition, we have secured
exclusive control of 6.5 miles of strategically-located waterfront with
direct deep-water access to the Pacific Ocean. Through public-private
partnerships with the U.S. Government and maritime industrial base
stakeholders, we hope to build one of the world's largest and most
modern maritime industrial complexes, working at a scale that America's
international rivals will struggle to match.
California Forever strongly supports the SHIPS for America Act.
Coupled with the White House's April 9, 2025, Executive Order,
``Restoring America's Maritime Dominance,'' the Act can strengthen
domestic shipbuilding, bolster national security, and support American
workers. In aggregate, these measures will help secure the economic
future of our nation, help tens of thousands of unemployed workers in
the region find good jobs, and activate waterfront land that has long
been reserved for industrial development.
The SHIPS for America Act enables the big waterfront investments
America needs. Our nation's commercial shipbuilding capability has
languished while global rivals have expanded. Consider the example of
Changxing Island in China: a national shipbuilding center that last
year launched more vessels than the United States has produced in the
past 75 years. The proposed Solano Shipyard would be more than double
the size of that facility in land footprint (7,500 acres at full build-
out for Solano Shipyard, versus Changxing's 3,200 acres). If our
Nation decides to undertake a next-generation ``Manhattan Project'' for
shipbuilding, no location is better suited for this effort than the
Solano Shipyard.
Big waterfront investments require political leaders willing to
support new approaches to tough problems. California Forever is proud
to note that our greenfield shipyard is located in Solano County, near
California's 8th Congressional District, the home district for SHIPS
for America Act Sponsor, John Garamendi.
We hope that the Senate, in its hearing today, will emphasize that
the SHIPS for America Act, by building demand for new vessels,
providing funds for workforce development, and opportunities for
regulatory relief, supports both new and old shipyards alike.
New, greenfield shipyards like ours are unconstrained by prior
development, past pollution, technological obsolescence, and
residential encroachment. Modern, purpose-built facilities allow
maritime innovators and shipbuilders to fully exploit current
technologies, building new ships with far greater efficiency than aged,
often contaminated turn-of-the-century shipyards can permit.
While America's rivals have built on West Coast-based industrialist
Henry Kaiser's World War II shipbuilding lessons, combining large
greenfield, mass-production-oriented shipyards with an integrated
regional supply chain and local workforce, the United States has failed
to follow suit.
Until now.
With a nearly 7,500-acre shipyard reservation on the Sacramento
River, backed by a new city and an advanced manufacturing core,
California Forever offers America a new place to chart a new century in
the global maritime, combining affordable, modern housing and a trained
local workforce with the latest vessel manufacturing-oriented AI
systems and robotics technology.
The only thing missing is sustained demand for new U.S.-built
ships, and the SHIPS for America Act provides that--it gives
shipbuilders and U.S. government sponsors confidence that American
orders for new cargo ships will offset the cost of large investments
they must make in the U.S. waterfront.
With help from the SHIPS For America Act, California Forever can
start building a shipyard complex quickly--potentially as early as
2026. The tax credit for the construction of shipyard facilities
(Section 48.G) is a critical enabler for development, and we
respectfully urge that the legislation explicitly support the
construction of both new and existing shipyards.
During World War II, shipbuilding projects in Solano County spanned
the river basin. Critical Dry Dock components were built in both Solano
County and San Joaquin County. Ship modules for escort vessels were
built and then shipped in for assembly on the Solano County waterfront.
Modern shipbuilding is typically a regionally distributed effort
that integrates shipyards, module fabrication facilities, supply chain
vendors, workforce training hubs, and maritime logistics nodes. To this
end, SEC. 1400Z-3. TREATMENT OF MARITIME PROSPERITY ZONES AS
OPPORTUNITY ZONES should explicitly state that the Maritime
Administrator can designate a set of regionally interlinked census
zones as a single Maritime Prosperity Zone. This would facilitate
regional planning and development of the integrated waterfront
infrastructure America needs, rather than a mosaic of isolated and
unviable ``special projects''.
For example, in Northern California, a single Maritime Prosperity
Zone could encompass new and existing shipbuilding sites in Solano
County and throughout the adjoining counties of Contra Costa,
Sacramento, and San Joaquin, enabling development of America's first
integrated regional shipbuilding complex.
We respectfully request that the Senate:
Pass the SHIPS for America Act without delay, to provide the
demand signal and regulatory support needed to start building
the U.S. merchant fleet of tomorrow.
Ensure that the tax-credit provision (Section 48.G)
explicitly supports both the new build-out of greenfield
shipyards and the modernization of existing yards.
Amend Section 1400Z-3 to authorize MARAD to prioritize the
designation of regionally interconnected Maritime Prosperity
Zones.
Recognize that greenfield shipyards such as ours offer the
most efficient platform for deploying advanced manufacturing
technologies and achieving scale productivity--and that this
investment must be matched by policy, workforce, and
procurement commitments.
Sincerely,
Jan Sramek,
Founder & CEO.
Craig Hooper,
Director, Defense Industrial Base.
Justin Esch,
VP Business Development.
______
Prepared Statement of Roberto Llames, President,
SMART Development Institute (SDI)
Dear Chairman SEN Dan Sullivan; Ranking Member SEN Lisa Blunt
Rochester; and Members of the Subcommittee:
Thank you for the opportunity to submit this Statement for the
Record in support of the SHIPS for America Act. I commend the
Subcommittee for its leadership in strengthening our Nation's maritime
industry and advancing policies that restore America's shipbuilding
capacity.
I am Roberto Llames, President of the SMART Development Institute
(SDI), a nonprofit organization dedicated to building sustainable and
resilient communities through workforce and technology innovation.
SDI's mission is to align talent and innovation with national
priorities that promote economic growth and security. SDI's Shipbuild
Talent Hub initiative was established to help revitalize the U.S.
shipbuilding and maritime sectors by connecting American shipyards with
global engineering, technical, and training talent. This is not merely
an economic initiative--it is a matter of national security and
industrial readiness.
The SHIPS for America Act represents a decisive step toward
revitalizing America's maritime base. It aligns directly with the April
9, 2025 Executive Order, '' America's Maritime Dominance,'' which
called for a modernized shipbuilding workforce to meet the demands of
national security and economic growth.
The Workforce Challenge
The Government Accountability Office (GAO) recently reported that
``U.S. shipbuilders remain over budget and behind schedule due to
worker shortages for meeting the Navy's demands,'' noting that
shipyards continue to struggle to recruit and retain staff with the
technical skills needed for construction and repair. These workforce
and capacity constraints threaten the timely execution of national
shipbuilding goals and highlight the urgent need for a coordinated
strategy to expand training and strengthen technical capacity across
the maritime industrial base.\1\
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\1\ U.S. Navy Shipbuilding Is Consistently Over Budget and Delayed
Despite Billions Invested in Industry, GAO, April 8, 2025, https://
www.gao.gov/blog/u.s.-navy-shipbuilding-consistently-over-budget-and-
delayed-despite-billions-invested-
industry#: :text=The%20Navy%20initially%20
planned%20to,at%[email protected].
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The challenge facing America's shipbuilding industry is not just
about infrastructure or capital--it is fundamentally a workforce
problem. As the U.S. Naval Institute observed, ``while the physical
plant and financial capital hold great importance, human capital
determines the survival or collapse of a shipyard.''\2\ As shipyards
invest in modernization, physical assets can be rebuilt; a skilled
workforce cannot be reconstituted overnight. Furthermore, a recent
McKinsey & Company analysis underscores this same point, noting that
America's shipyards ``face myriad challenges--from talent gaps to
outdated operating models'' and that increasing output will require
addressing ``the strained supply of skilled-trade and engineering
talent.'' \3\
---------------------------------------------------------------------------
\2\ Tylet Pitrof, The Shipyard Shortage Is a People Problem, U.S.
Naval Institute, September 2024, https://www.usni.org/magazines/
proceedings/2024/september/shipyard-shortage-people-problem
\3\ Charting a new course: The untapped potential of American
shipyards, McKinsey & Company, June 5, 2024. https://www.mckinsey.com/
industries/aerospace-and-defense/our-insights/charting-a-new-course-
the-untapped-potential-of-american-shipyards
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Workforce Development and Augmentation
The domestic pipeline alone cannot meet the near-term demand for
skilled labor or instruction. Workforce development is constrained by a
shortage of qualified teachers who can train welders, machinists, and
other essential trades. To accelerate capacity building, the United
States must complement domestic training with workforce augmentation
that brings in experienced trainers and technical specialists from
allied nations.
These professionals can help sustain shipyard operations while
transferring knowledge to new American workers, strengthening the long-
term workforce base. This approach supports national security
priorities, fulfills congressional intent to revitalize the maritime
industry, and ensures that investments in training and modernization
deliver measurable results.
Policy Barriers: H-1B and National Interest Exception Requirements
Recent Executive Action imposing a $100,000 application fee per H1B
visa has significantly hindered the ability of shipyards, training
centers, and technical institutes to access the specialized expertise
needed to strengthen America's shipbuilding capacity. This decapitating
setback places the United States at a disadvantage just as Congress
considers the SHIPS for America Act for passage. While the Executive
Action included a National Interest Exception (NIE) provision to be
administered by the Department of Homeland Security (DHS), it has been
hindered by the ongoing government shutdown. The shipbuilding industry
must be granted an NIE as a matter of national security and economic
necessity.
Unless the $100,000 H1B application fee is rescinded and an NIE
established for shipbuilding, even if Congress passes the SHIPS for
America Act, its goals will remain constrained. Allowing allied nation
experts and instructors to contribute legally and securely will
accelerate workforce development, protect production timelines, and
advance America's national security.
Conclusion
The SHIPS for America Act offers a path to restore America's
shipbuilding strength, but legislation alone cannot rebuild the
Nation's industrial capacity. Its success depends on a workforce that
is skilled, supported, and ready to deliver. Congress must act
decisively to pass the Act, establish a National Interest Exception for
the shipbuilding industry, and remove the $100,000 H1B application fee
that blocks access to essential technical expertise. These actions will
ensure that America's shipyards, maritime training centers, and allied
partners can work together to achieve the goals of this vital national
initiative and protect our Nation's enduring security interests. Thank
you again to the Subcommittee for the opportunity to submit this
Statement for the Record and for your continued leadership in advancing
America's maritime strength and national security.
______
Prepared Statement of Gary Aucoin, President, SCHOTTEL, Inc.
Chairman Sullivan, Ranking Member Blunt Rochester, and Members of
the Committee, thank you for the opportunity to submit a statement for
the record and express our support for the SHIPS for America Act to
revitalize the U.S. commercial maritime industrial base. My name is
Gary Aucoin, and I serve as the president of SCHOTTEL, INC.
SCHOTTEL first began to operate in the United States in 1961, it is
a subsidiary of the German-based SCHOTTEL Group and is a leading
provider of marine propulsion systems and services to the U.S. maritime
industry. We are dedicated to our mission of enhancing vessel
efficiency, safety, and sustainability through innovation, domestic
partnerships, and workforce development. With facilities in Houma,
Louisiana, and support operations across the United States, SCHOTTEL is
committed to supporting American shipyards, vessel operators, and the
broader maritime workforce through the supply of advanced propulsion
technology.
SCHOTTEL works closely with U.S. shipbuilders and operators across
commercial, government, and defense markets. We are deeply invested in
the revitalization and longevity of our domestic maritime industrial
base and believe that the SHIPS for America Act is a necessary
catalyst.
SCHOTTEL strongly supports the SHIPS for America Act and its
objectives to rebuild domestic shipbuilding capacity, modernize
maritime infrastructure, and strengthen the Nation's supply chain
resilience. We recognize that a vibrant and technologically advanced
domestic maritime industry is crucial to U.S. national security and
economic competitiveness. This bill is a necessary investment in the
future of American shipbuilding. Our belief is strong in the face of
mounting challenges for the maritime industrial base.
Competition worldwide from highly subsidized shipbuilding
industries, particularly in China, has and continues to erode the U.S.
market share. In addition to the implications of ever-increasing global
competition, the U.S. must address its aging maritime infrastructure
and declining shipyard capacity. The nation's ability to meet
commercial and defense needs is constrained by a variety of factors
that the SHIPS for America Act would address.
As the maritime sector moves toward lower emissions and greater
efficiency, SCHOTTEL is playing a leading role in introducing hybrid
and electric propulsion systems for U.S.-built vessels. Federal support
for ship construction and modernization will accelerate the adoption of
these efficient technologies in the United States rather than overseas.
SCHOTTEL represents the kind of advanced manufacturing presence that
the SHIPS for America Act seeks to sustain and grow.
SCHOTTEL is proud to stand with American shipbuilders, mariners,
and maritime supporters in strong support of this legislation. SCHOTTEL
urges the committee to promptly pass the SHIPS for America Act to
ultimately strengthen our domestic shipbuilding sector. We thank the
Committee for the opportunity to share our perspective.
Respectfully,
Gary Aucoin,
President,
SCHOTTEL, Inc.
______
Prepared Statement of Billy Thalheimer, Co-founder and Chief Executive
Officer, REGENT Craft, Inc.
Chairman Sullivan, Ranking Member Blunt Rochester, and Members of
the Committee,
Thank you for the opportunity to submit this statement for the
record in strong support of the SHIPS for America Act. REGENT Craft is
a Rhode Island based maritime company developing next-generation
seagliders. Seagliders operate over the water and provide high-speed,
low cost coastal transportation to commercial and defense markets.
REGENT's mission is to revolutionize maritime mobility while
strengthening the U.S. industrial base, expanding economic opportunity,
and enhancing national and homeland security.
The United States has long relied on its maritime industrial base
as a cornerstone for global commerce, national defense, and economic
resilience. Yet decades of underinvestment have left America's
shipbuilding and repair capacity diminished, with critical supply
chains increasingly dependent on foreign sources.
REGENT is part of a new generation of American shipbuilding
innovators rebuilding domestic maritime capabilities. Our company
employs hundreds of skilled workers and partners with U.S. suppliers,
shipyards, and fabrication facilities to design and produce advanced
vessels that complement traditional maritime fleets. Our work directly
supports shipyard modernization, workforce training, and component
manufacturing, which are central tenants of the SHIPS for America Act.
As the CEO and co-founder of REGENT Craft, I strongly supports the
SHIPS for America Act and commends Congress for recognizing the urgent
need to revitalize U.S. shipbuilding capacity, maritime innovation, and
workforce development. Investment in the maritime industrial base is
critical for our economic and national security.
This legislation represents a critical step toward ensuring that
the United States can design, build, and maintain vessels within its
own manufacturing base. It creates pathways for advanced technologies,
like electric and hybrid propulsion, modular vessel construction, and
automation, to enter the domestic fleet.
The Act's focus on shipyard revitalization and apprenticeship
programs aligns with REGENT's workforce development partnerships, where
we are working alongside state governments to establish training
pipelines and create durable, high-wage maritime jobs. Sustained
investment through this legislation will ensure that these efforts
scale nationally and that the next generation of American shipbuilders,
technicians, and engineers are trained in emerging maritime
technologies.
By expanding domestic shipbuilding capacity and incentivizing the
use of U.S.-built hulls and components, the SHIPS for America Act
directly supports strategic sealift readiness and maritime defense
logistics. REGENT's Seagliders, which use maritime infrastructure and
operate under Title 46 vessel classification, can play a vital role in
distributed logistics, coastal mobility, and humanitarian response,
complementing defense and commercial fleets.
The Act's inclusion of programs for advanced propulsion and vessel
efficiency mirrors the innovation happening at REGENT and across the
maritime sector. Federal support for these technologies will not only
accelerate U.S. competitiveness but also position the United States as
a global leader in Advanced Maritime Mobility.
I urge the Committee to ensure sustained funding for workforce
training and shipyard modernization programs under the Act, prioritize
incentives for the integration of emerging maritime technologies,
including hybrid & electric propulsion, and wing-in-ground-effect
craft, and strengthen collaboration between the Department of Defense,
MARAD, and the Department of Transportation to align SHIPS for America
Act implementation with the National Maritime Strategy and the Coast
Guard's innovation agenda.
I applaud the Committee's leadership in advancing the SHIPS for
America Act and urges swift passage of this essential legislation.
Rebuilding America's maritime industrial base will strengthen our
national security, revitalize coastal economies, and ensure that
innovation in shipbuilding and vessel design remains a hallmark of
American ingenuity.
Thank you for your consideration and for your continued commitment
to the U.S. maritime sector.
Billy Thalheimer.
REGENT Craft, Inc.
______
Prepared Statement of the Passenger Vessel Association (PVA)
Chairman Sullivan, Ranking Member Blunt Rochester, and members of
the Subcommittee: The Passenger Vessel Association (PVA) appreciates
the opportunity to submit testimony in strong support of efforts to
strengthen and expand America's shipbuilding capacity. PVA represents
more than 500 operators of U.S.-flagged passenger vessels and their
supporting shipyards, naval architects, suppliers, and vendors. Our
members operate ferries, excursion vessels, dinner boats, and overnight
cruise vessels that carry more than 200 million passengers to and from
U.S. ports annually along the coast, on the Great Lakes, and on our
Nation's rivers and harbors.
The Role of Small and Mid-Sized Shipyards
U.S. flagged passenger vessels are designed and built almost
entirely in small and medium-sized U.S. shipyards, many of them family-
owned businesses that are vital to regional economies and workforce
development. Within the PVA membership, there are nearly 39 shipyards
in 17 states. These yards construct all types of passenger vessels that
fly the U.S. flag and are eligible for coastwise service; they also
build other types of American vessels. In addition, PVA boasts 15 naval
architects in nine states that envision and design vessels. See the
attached list of PVA members that are shipyard and naval architects.
PVA supports the Jones Act and the Passenger Vessel Services Act.
These laws ensure that American shipyards can produce a steady stream
of U.S. passenger and other types of vessels for the coastwise trades.
This segment of the commercial U.S. shipbuilding industry is thriving.
Because of these laws, the Administration does not face the uphill
battle to restore shipbuilding capability for small and medium yards,
as it does yards that build oceangoing vessels in international trade.
The Small Shipyard Grant Program, administered by the Maritime
Administration, has been helpful in sustaining this network. By
providing modest but strategic investments in equipment, training, and
infrastructure, the program has allowed small U.S. shipyards to
modernize facilities, improve efficiency, and retain skilled workers.
The Small Shipyard Grant program leverages Federal support for
local economic growth. Every Federal dollar invested generates many
more in private capital and sustained employment. PVA urges Congress to
continue and expand the Small Shipyard Grant Program to meet rising
demand, address inflationary costs, and ensure that small builders
remain part of America's shipbuilding future.
Ferry Construction as a Force Multiplier
In addition to shipyard grants, several Federal programs directly
support the construction of U.S. built passenger ferries--an essential
link in America's maritime transportation network.
The Federal Transit Administration's three ferry grant
programs (the Passenger Vessel Ferry Grant Program, the Ferry
Service for Rural Communities Program, and the Electric or No-
Emitting Ferry Pilot Program) have enabled communities across
the Nation to build new vessels and terminals that are modern,
efficient, and fully compliant with the Buy America Act. These
ferries not only expand public transportation but also sustain
high-quality shipyard jobs and create repeat orders that keep
skilled welders, electricians, and engineers employed.
The Federal Highway Administration's Ferry Boat Program,
which provides formula funding to states for ferry construction
and improvement, remains another key element in sustaining
small and mid-sized shipyards. Many states rely on this
consistent source of support to maintain vessel replacement
schedules and ensure safe, reliable service for rural and
island communities.
Together, these programs ensure that shipbuilding activity occurs
across the United States--not just in the major naval yards, but in the
smaller regional facilities that are the backbone of our domestic
maritime capability.
Strengthening America's Maritime Workforce
Rebuilding U.S. shipbuilding capacity is inseparable from
developing a robust maritime workforce. PVA members partner with
vocational schools and maritime academies to create career pathways for
welders, machinists, marine engineers, and captains. Continued support
for Federal shipyard and ferry programs sustains this talent pipeline
and ensures that American workers--not foreign competitors--will build
and operate the vessels that keep our economy moving.
Conclusion
The Passenger Vessel Association commends Chairman Sullivan and the
Subcommittee for focusing national attention on the future of U.S.
commercial shipbuilding. The Small Shipyard Grant program, the FTA's
three ferry promotional grant programs, and the FHWA Ferry Boat Program
are proven, effective tools that expand domestic industrial capacity,
create good-paying American jobs, and enhance national resilience.
We encourage Congress and the Administration to preserve the Jones
Act and the Passenger Vessel Services Act and to fully fund and
strengthen these grant programs as part of the broader effort to ``Make
Shipbuilding Great Again'' and ensure that America maintains a
competitive, secure, and sustainable maritime industry.
______
Prepared Statement of Robert Sheen, President and COO,
Ocean Shipholdings, Inc.
Chair Sen. Dan Sullivan, Ranking Member Sen. Lisa Blunt Rochester
and Members of the Committee,
We wish to thank the Chairman, Ranking Member and Members of the
Committee for the opportunity to submit a statement in support of the
SHIPS for America Act, which we believe is vital not only to our
national defense, but to the survival of the U.S. Merchant Marine and
our shipbuilding infrastructure.
Ocean Shipholdings, Inc., is a U.S. flag ship operator based in
Houston, TX, currently operating 17 vessels for the U.S. Navy's
Military Sealift Command and the Dept of Transportation's Maritime
Administration. We have operated both commercial and government owned
vessels under the U.S. flag since 1981. These vessels employ U.S.
citizen Merchant Mariners and support U.S. Navy operations worldwide as
well as provide the sealift required in the event of a national
emergency or activation in support of U.S. national interests.
We very strongly believe that the sealift resources of the United
States, both commercial and government owned are, in many cases,
antiquated and in desperate need of upgrade, refurbishment and/or
replacement. As strong supporters of the Jones Act, we believe in U.S.
built and operated vessels; however, the capability and number of U.S.
shipyards available to build new tonnage, the number and experience of
trained mariners to man our ships as well as the opportunity for
employment of U.S. mariners is severely restricted and not in
proportion to the foreign built and operated vessels which employ
foreign mariners and call every day at U.S. ports.
Our company strongly supports the SHIPS for America Act because it
strengthens domestic shipbuilding, enhances national security and
supports American workers. The U.S. shipbuilding industry and U.S.
flagged merchant fleet are currently on a downward spiral and soon
there will not be enough vessels to support national security or to
provide employment for U.S. shipbuilders and mariners.
Approximately 90 percent of the goods imported into the United
States are carried on ships. The U.S. is a maritime nation, in spite of
the fact that it has a minimal merchant fleet. At one time, U.S.
flagged merchant ships could be found everywhere on the planet, sadly,
this is no longer the case. The U.S. does not have sufficient ships to
carry U.S. goods overseas or to bring foreign goods back to the
country. In the event of a national crisis that requires sealift, there
are insufficient vessels and mariners to provide adequate support.
The U.S. has relied upon its merchant fleet since the beginning of
our country to support our national interests, support our allies and
provide experienced personnel to the U.S. Navy when such is required.
Currently, there is severe doubt that there will be enough shipyards,
ships, shipbuilders and mariners to support our national interests in a
crisis contingency. For example, and per the Bureau of Transportation
Statistics, in 2000 there were 282 commercial vessels over 1,000 Gross
Tons and excluding non-merchant types and/or U.S. Navy-owned vessels.
By contrast, in 2025, there are only 188 such vessels, a loss of nearly
100 vessels.
The U.S. Ready Reserve Fleet needs recapitalization, new U.S. flag
merchant ships need to be constructed in order to support our national
interests, both commercial and security related. The U.S. Navy has
identified that it requires a large number of tank vessels to support
fleet operations in the Pacific region should hostile operations
commence. This is troubling as there are very few commercial U.S. flag
tankers available to support the Navy as well as support the Jones Act
requirements along our coasts.
Similarly, the military has previously relied upon afloat
prepositioned vessels to store and provide military equipment and
supplies that would be needed in the event of hostilities. Currently,
the U.S. Army and Marines are shifting to a shore-based system for
prepositioning material, which has a fatal flaw in that they need ships
to deliver the material where it would be required. Without sufficient
U.S. bottoms to carry this material, it would be of very limited use to
the armed forces and could place our forces in extreme jeopardy.
Only through legislation such as the SHIPS for America Act, could
American shipyards be revitalized and expanded, new, modern, more
capable ships be built and jobs be created to support U.S. mariners.
The expansion of U.S. shipbuilding, U.S. flagged vessels and increased
shipbuilder and mariner jobs will directly support U.S. interests
nationally and internationally.
It is critical that the United States has a creditable merchant
fleet capable of supporting American commerce as well as providing
support for the Armed Forces when called upon to do so. The U.S. needs
shipbuilders and merchant mariners, but only through the building of
new ships and the creation of new jobs would a strong and resilient
merchant fleet be created.
Because of the critical condition of the U.S. Merchant Fleet, which
we view with concern, we are making the following recommendations:
1) We urge the Committee to ensure sustained funding for
shipbuilding workforce development programs.
2) We urge the Committee to support amendments that incentivize the
use of U.S. built vessels.
3) We urge the Committee to consider programs to publicize the
opportunities available for young people in the Merchant Marine
throughout the United States--these are high paying positions
with strong benefits and educational opportunities.
4) We urge the Committee to strongly endorse existing laws and
regulations which mandate government sourced cargo carriage
onboard U.S. flag ships.
5) Finally, we urge the Committee to recognize the effect on
national security of a healthy, fully engaged merchant fleet
capable of supporting national interests in times of crises and
conflict and to understand the effects should that not be the
case.
In conclusion, we strongly urge the committee to promptly pass the
SHIPS for America Act.
Sincerely,
Robert Sheen,
President and Chief Operating Officer,
Ocean Shipholdings, Inc.
______
Oceantic Network
October 28, 2025
Chairman Dan Sullivan,
U.S. Senate Committee on Commerce, Science, and Transportation
Subcommittee on Coast Guard, Maritime, and Fisheries,
Submitted electronically via e-mail
Re: Oceantic Comments for the Record of the ``Sea Change: Reviving
Commercial Shipbuilding''
Hearing on October 28th, 2025 in Support of the SHIPS for America Act
Dear Chairman Sullivan, Ranking Member Blunt Rochester, and Esteemed
Members of the Subcommittee,
On behalf of myself, my colleagues at the Oceantic Network, and our
more than 400 members, thank you for the opportunity to submit this
statement for the record in support of the SHIPS for America Act (SHIPS
Act).
The Oceantic Network is a 501(c)(3) nonprofit organization
dedicated to advancing the offshore energy market and building a
strong, locally driven supply chain. Since 2013, Oceantic Network has
connected businesses and governments to support policies that drive
industry growth while equipping companies with the education, tools,
and connections needed to succeed. With over 400 supply chain members--
including shipyards, vessel owner/operators, naval architects, engine
and component manufacturers, steel mills, and maritime colleges--the
Oceantic Network's mission is to ensure offshore wind and other
maritime renewable energy development strengthens the economy, expands
domestic manufacturing, enhances national security, and delivers
reliable, affordable clean energy to the American citizenry.
Offshore wind energy is already becoming one of the foundational
energy sources that coastal states depend upon, and maximizing the
economic benefits it offers--including economic development and
enhancing national security through stronger steel and maritime
sectors--coincides with the spirit of the SHIPS Act. For the past four
years, the U.S. offshore wind industry has been a major market for new
commercial oceangoing support and construction vessels, despite its
relative infancy. At present, 6 GW of power generation is under
construction, creating a demand for more than 70 newbuild and retrofit
vessels--a demand worth more than $1.8 billion in shipyard activity.
This is just a fraction of the overall market, with another 50+ GW
currently leased to private companies ready to begin development
activity, and with total demand from states exceeding 116 GW. The
pursuit of that full buildout and the harnessing of the subsequent
economic opportunity for vessel demand by new and/or expanded shipyards
falls directly in line with the established goals of the SHIPS Act and
President Trump's April 9th, 2025 Executive Order titled ``Restoring
America's Maritime Dominance'' \1\.
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\1\ The White House ``Restoring America's Maritime Dominance'',
April 9, 2025 (https://www.whitehouse.gov/presidential-actions/2025/04/
restoring-americas-maritime-dominance/)
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Oceantic Network supports the SHIPS Act because the fleet of Jones
Act-certified vessels is essential to building the energy
infrastructure needed to meet rising AI-driven power demand and ensure
a stable, affordable grid for American citizens. At our current rate,
the Department of Energy\2\ anticipates the U.S. will require
additional power capacity demand to increase by 132 GW, driven
primarily by the rise in AI and data centers. Offshore wind is a
proven, reliable energy source that can scale easily to meet this
demand with 6 GW of capacity under construction and another 10 GW
shovel-ready. Last year in its first full year of operation, America's
first commercial-scale project, South Fork Wind (132 MW) demonstrated
baseload energy generation ability by staying online 92 percent of the
time and achieved a 53 percent capacity factor in the first half of
2025\3\--on par with traditional energy sources\4\. This reliable
performance is achieved while also driving down ratepayer costs in New
England\5\ and Virginia\6\.
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\2\ Department of Energy/Berkley Lab 2024 Data Center Energy Usage
Report, December 20, 2024 (https://escholarship.org/uc/item/32d6m0d1)
\3\ ;rsted ``One year of South Fork Wind'' (https://us.orsted.com/
renewable-energy-solutions/offshore-wind/south-fork-wind-report)
\4\ U.S. Energy Information Administration ``Natural gas combined-
cycle power plants increased utilization with improved technology'',
November 20, 2023 (https://www.eia.gov/todayinenergy/
detail.php?id=60984)
\5\ CT Dept of Energy & Environmental Protection (https://
portal.ct.gov/deep/news-releases/news-releases--2025/deep-stoppage-of-
revolution-wind-project-will-increase-costs-for-ct-and-new-england-
ratepayers-make)
\6\ Dominion Energy Q2 2025 earnings call, August 1, 2025 (https://
s2.q4cdn.com/510812146/files/doc_financials/2025/q2/2025-08-01-DE-IR-
2Q-2025-earnings-call-slides-vTCII.pdf)
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Offshore Wind Has a Proven Record of Creating Shipbuilding Demand
Oceantic Network, by way of its in-house database Offshore Wind
Market Dashboard\7\ tracks contracts, investments, and jobs tied to
offshore wind vessel construction and operations. These figures are
collected from publicly available records or disclosed directly from
our members. The following are top-line numbers from the Dashboard:
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\7\ Oceantic Network Offshore Wind Market Dashboard (https://
oceantic.org/market-dashboard/)
Since 2020, more than $1.8 billion worth of domestic vessel
orders and shipyard upgrades has been kindled by U.S. offshore
---------------------------------------------------------------------------
wind development.
More than 170 U.S.-flagged, Jones Act-compliant vessels can
be documented as having performed work related to the U.S.
offshore wind industry.
Twenty-five shipyards in 14 states have built new or
retrofitted 43 vessels for the U.S. offshore wind industry with
a further 18 vessels under construction, on order, or optioned.
More than 3,500 shipbuilding jobs have been supported by
offshore wind vessel construction at only 6 of the above-
mentioned 25 shipyards, those where information was publicly
available or disclosed to Oceantic.
Four of the vessels launched this summer used a combined
30,000 tons of U.S. steel from Alabama, North Carolina, Texas,
and West Virginia.
The above facts are conservative to only what Oceantic can
accurately and independently verify. The 170 US-flagged vessels do not
include dozens of harbor tugs and port tenders, private research
vessels, or fishing vessels chartered for scouting and safety. The
shipbuilding jobs represent just some of the shipyards that have worked
in the industry, and many of those where Oceantic was unable to verify
figures are small, independent shipyards. Additionally, Oceantic cannot
accurately quantify upstream jobs at the U.S. steel mills and component
manufacturers across 30 states which feed shipyard supply chains, nor
can we accurately define the hundreds of jobs performed by U.S.
mariners aboard these vessels currently working at offshore wind
projects. A map is included at the end of this document visualizing
shipyards and steel that provided vessels for the offshore wind
projects currently under construction.
These figures represent the flurry of actively largely based on
just 6 GW of power generation; however much larger potential exists. A
50+ GW pipeline could bring the long-term demand needed to incentivize
investments in larger, nearly $1 billion dollar installation vessels. A
2022 National Renewable Energy Laboratory report\8\ suggests that
efficient and effective buildout will require five U.S.-flagged Wind
Turbine Installation Vessels (WTIVs), four U.S.-flagged cable lay
vessels (of which there are currently zero), and two U.S.-flagged scour
protection vessels (of which there is only one, launched this year). To
put context to the demand, this year there were nine foreign-flagged
WTIVs and comparable Heavy Lift Vessels (HLVs) operating in the U.S.
market to complete the 6 GW buildout against only Dominion Energy's
Charybdis, delivered from its Brownsville, TX shipyard in August\9\. In
2024, approximately 64 percent of the vessels operating at U.S.
offshore wind projects were U.S.-flagged, with the majority of capital-
class vessels being foreign-flagged solely because the U.S. does not
possess these kinds of vessels\10\. The demand for vessels will grow
with the increasing industry, and developers will turn either to our
domestic shipbuilders, or the opportunities will be lost to foreign
entities. As/if the U.S. produces more of the necessary vessels, as
listed above, the reliance on foreign-flagged vessels will diminish,
and the benefits will remain in the United States.
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\8\ NREL 2022, ``The Demand for a Domestic Offshore Wind Energy
Supply Chain (https://docs.nrel.gov/docs/fy22osti/81602.pdf)
\9\ Maritime Executive 2025, (https://maritime-executive.com/
article/first-u-s-built-wtiv-charybdis-arrives-in-virginia-to-begin-
installations)
\10\ Clarksons presentation at Oceantic's International Partnering
Forum (IPF), April, 2025
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A Healthy Offshore Wind Market Supports the Offshore Oil and Gas Market
Offshore wind utilizes much the same technology and supply chain as
the offshore oil & gas market. Yet, the demand for O&G-dedicated
vessels has entirely dried up and offshore wind has helped Gulf
shipyards and vessel operators weather the lapse in demand. Between
2022 and April 2025, there were zero U.S.-flagged Platform Support
Vessels (PSVs) built for the oil & gas industry\11\, whereas in that
time no fewer than 10 of these very vessels--or rough equivalents--
received upgrades to work for U.S. offshore wind, including three
complete retrofits; another three of these vessels are currently under
retrofitted. Two newbuild offshore wind-dedicated Service Operations
Vessels (SOVs), which are comparable to large PSVs, were launched in
this time as well, with a third expected to launch in the next few
months.\12\
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\11\ Clarksons IPF presentation, April, 2025
\12\ OSW Market Dashboard
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At a time when an increasing number of offshore O&G-dedicated
vessels are entering dry (read: long-term) storage as operators are
finding maintaining them in active fleets is too expensive for the
vessels' owners\13\, offshore wind is providing an extremely lucrative
revenue stream for Gulf operators. For example: last year at Revolution
Wind--the project most recently targeted with a Federal Stop Work
Order--the revenue for vessel operators exceeded $500 million across 50
vessels\14\. Oceantic anticipates growing demand in the offshore wind
sector as construction accelerates across three new projects and
projects already under construction enter the long-term operations &
maintenance phase\15\. At only 704 MW, Revolution is small compared to
incoming projects, with at least one project off New York and a few off
New Jersey expected to exceed 3,000 MW in size. If/when oil & gas's
demand for vessels returns, those vessels built for the offshore wind
industry can easily turn around and perform work for that industry. The
SHIPS Act is propagated on the backbone of industry demand, and the
U.S. offshore wind industry offers the clearest long-term demand signal
in the offshore energy space while heavily supporting a dual-usage
future.
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\13\ Clarksons IPF presentation, April, 2025
\14\ Clarksons IPF presentation, April, 2025
\15\ Clarksons e-mail to Oceantic, October, 2025
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Chinese Competition Threatens to Suffocate U.S. Shipbuilders
There is significant demand from the U.S. offshore wind industry
for newbuild, American vessels. The limiting factors are 1.) permitting
certainty, 2.) cost, and 3.) shipyard availability, two of which the
SHIPs Act proposes to tackle. At present, a vessel owner cannot justify
building WTIVs and other capital-class vessels in the United States.
For the same cost to build one vessel here in five years\16\, a vessel
owner could receive two WTIVs from Chinese shipyards, completed in
three years\17\ \18\. Developers want to use U.S.-flagged vessels, but
the lack of WTIVs means they are themselves unable to justify the cost
of delay in queueing for Charybdis without risking cost overflow. For
example: Charybdis, crewed by Americans, was supposed to install
turbines at Revolution Wind and Sunrise Wind\19\. Instead, delays meant
it was unavailable\20\, and developer ;rsted had to look
internationally to stay on time and on budget.\21\
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\16\ Offshore Engineer, ``First US-Built Wind Turbine Installation
Vessel Starts Sea Trials,'' (https://www.oedigital.com/news/522592-
first-us-built-wind-turbine-installation-vessel-starts-sea-trials),
February 2025
\17\ Offshorewind.biz, ``First Steel Cut for Cadeler's Third A-
Class Wind Foundation Installation Vessel,'' (https://
www.offshorewind.biz/2025/07/16/first-steel-cut-for-cadelers-third-a-
class-wind-foundation-installation-vessel/), July 2025
\18\ Cadeler, ``Cadeler Takes Delivery of First A-Class Vessel and
Enters New Strategic Chapter in Offshore Foundation,'' (https://
www.cadeler.com/news/cadeler-takes-delivery-of-first-a-class-vessel-
and-enters-new-strategic-chapter-in-offshore-foundations), September
2025
\19\ ;rsted, ``Dominion Energy, ;rsted and Eversource Reach Deal on
Contract to Charter Offshore Wind Turbine Installation Vessel,''
(https://us.orsted.com/news-archive/2021/06/contract-to-charter-
offshore-wind-turbine-installation-vessel), June 2021
\20\ CT Examiner, ``;rsted-Eversource Partnership Announces
Cancellation of Agreement for Charybdis (Updated),'' (https://
ctexaminer.com/2024/05/22/orsted-eversource-partnership-announces-
cancellation-of-agreement-for-charybdis/), May 2024
\21\ Heavy Lift News, ``Cadeler's Wind Scylla installs first wind
turbine for Revolution Wind Offshore Wind Farm in the US,'' (https://
www.heavyliftnews.com/cadelers-wind-scylla-installs-first-wind-turbine-
for-revolution-wind-offshore-wind-farm-in-the-us/), September 2024
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Oceantic supports creating a Maritime Security Trust Fund with $250
million annually for oceangoing vessel construction and $100 million
per year for small shipyards. Targeted cost relief, paired with
predictable schedules, is essential to de-risk orders and keep
construction onshore.
The international backdrop underscores the urgency to support
American shipyards. In 2023, Chinese yards accounted for roughly 90
percent of global WTIV builds (33 of 37)\22\--during that time U.S. was
in the middle of constructing one--completely outpacing Western
shipyards. In 2024, a report by the U.S. Naval Institute identified 20
large Chinese yards and 140 drydocks. Oceantic Industry knowledge and a
2021 MARAD report ``The Economic Importance of the U.S. Private
Shipbuilding and Repairing Industry'' identify that there are only a
few U.S. shipyards producing oceangoing commercial vessels, and only a
fraction of those shipyards is capable of producing a vessel like a
WTIV\23\. Most of America's drydocks are in yards that exclusively work
on Navy contracts. The General Dynamics NASSCO shipyard in San Diego is
the only shipyard that has enough docks and produces commercial
vessels\24\, but it restricts itself to container ships and tankers in
between its contracts for the Navy. Herein lies the purpose of the
SHIPS Act, as exemplified by offshore wind's difficulty. The industry
demand for large capital-class vessels was both an opportunity and a
challenge for shipyards like Seatrium AmFELS shipyard (now
Karpowership) in Brownsville and Hanwha Philly Shipyard in
Philadelphia, the latter of which built the U.S.'s only subsea rock
installation vessel--the second largest vessel in the fleet after
Charybdis. Furthermore, even if it wanted to build a WTIV, NASSCO's
largest drydock is 174 feet wide, while Charybdis is 184 feet wide\25\,
an additional compound on the scarcity.\26\
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\22\ Hellenic Shipping News, ``Chinese Shipyards See Demand for
Offshore Wind Installation Vessels,'' November 2023, (https://
www.hellenicshippingnews.com/chinese-shipyards-see-de
mand-for-offshore-wind-installation-vessels/)
\23\ MARAD ``The Economic Importance of the U.S. Private
Shipbuilding and Repairing Industry'', March 30, 2021 (https://
www.maritime.dot.gov/sites/marad.dot.gov/files/2021-06/Econo
mic%20Contributions%20of%20U.S.%20Shipbuilding%20and%20Repairing%20Indus
try.pdf)
\24\ General Dynamics NASSCO Company Information (https://
nassco.com/about-us/company-overview/company-information/)
\25\ London Maritime Academy ``Virginia Welcomes the First
American-Built WTIV Charybdis to Start Installations'', September 23,
2025 (https://www.lmitac.com/news/virginia-welcomes-the-first-american-
built-wtiv-charybdis-to-start-installations)
\26\ General Dynamics NASSCO Company Information (https://
nassco.com/about-us/company-overview/company-information/)
---------------------------------------------------------------------------
There are also broader strategic considerations. Large offshore
wind vessels are highly capable platforms with potential dual-use value
across energy infrastructure and national security. The jack-up
technology present in Charybdis is the same displayed by Chinese
amphibious assault landing barges first reported in January of this
year\27\. As previously stated, in the time that the United States
built one of these vessels, the Chinese completed 33, with more on
order. Many of these vessels are Chinese owned and operated--84 in
total capable of installing turbines\28\.
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\27\ Naval News ``China Suddenly Building Fleet Of Special Barges
Suitable For Taiwan Landings'', January 10, 2025 (https://
www.navalnews.com/naval-news/2025/01/china-suddenly-building-fleet-of-
special-barges-suitable-for-taiwan-landings/)
\28\ Bloomberg ``There Aren't Enough Ships to Install Giant
Turbines Across Asia'', February 1, 2023 (https://www.bloomberg.com/
news/articles/2023-02-01/asia-faces-shortage-of-ships-to-install-
offshore-mega-wind-farms?sref=lDgLmqjg)
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China's expanding domestic fleet has contributed to its own
offshore wind buildout. To date, the Chinese have installed 42.7 GW of
offshore wind energy generating capacity, more than half of the
offshore wind for the entire world\29\. This additional grid space
allows them to fuel their own AI development. If America wants to
compete with a severely advantaged Chinese AI sector, then we must
close the vessels gap and build the offshore wind industry. Otherwise,
we will be racing with our shoelaces tied together.
---------------------------------------------------------------------------
\29\ Global Energy Monitor ``China's solar and onshore wind
capacity reaches new heights, while offshore wind shows promise'' July,
2025 (https://globalenergymonitor.org/report/chinas-solar-and-onshore-
wind-capacity-reaches-new-heights-while-offshore-wind-shows-promise/
#: :text=
China's%20coastal%20provinces%20collectively%20outlined,the%20country's%
20total%20offshore
%20capacity.)
---------------------------------------------------------------------------
The Next Generation American Workforce
Building the offshore wind merchant marine provides transferable
skills to mariners and shipwrights alike. Union workers aboard heavy
lift vessels, transport vessels, or support vessels can transfer their
abilities to the oil & gas industry and the commercial shipping
industry. Welders, carpenters, millwrights, and electricians building
America's fleet can easily adapt from shipyards to construction,
infrastructure, and more. Oceantic supports the modernized workforce
development provisions in the SHIPS Act, because we believe a highly
skilled American maritime workforce is both exportable and demandable.
In 2024, the first cohort of U.S. offshore wind workers--members of
Pile Drivers Local 56--were exported for work at projects in Europe
aboard DEME's installation vessel Orion\30\ These men are examples of
the international demand for skilled offshore workforce, one that the
U.S. can provide if prioritized.
---------------------------------------------------------------------------
\30\ E&E News ``In a first, U.S. offshore wind workers install
turbines in Europe'', March 14, 2024 (https://www.eenews.net/articles/
in-a-first-us-offshore-wind-workers-install-turbines-in-europe/)
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The standards imposed by the offshore wind industry are the highest
in the maritime sector. As offshore wind's buildout builds the domestic
workforce, not only do more Americans have access to above-medium-
household-income jobs but also the skills necessary to reach beyond
this sector. A modernized workforce is a competent one, and a competent
workforce builds both the infrastructure demanded of it and the next
generation of competent workers, with the effects compounding
continuously.
Additional Recommendations for the SHIPs Act
The SHIPS Act should be expanded to include added incentives for
Heavy-Lift Vessels (HLVs) and Anchor Handling Tug Supply (AHTS)
vessels. Oceantic recommends an additional 10 percent tax credit and
government loan priority for these dual-use vessels. Dual-use vessels
are those that can perform both commercial services and military
missions.
HLVs, for example, can commercially carry monopiles or offshore oil
& gas drilling rigs, and in military service they also can transport a
battle-damaged destroyer\31\ or submarine out of theater or transport
multiple barges or landing craft into theater. To qualify for dual-use
incentives, an HLV should be semi-submersible to at least 40 ft (12 m)
of water over the deck and have minimum dimensions of 770 ft (235 m)
overall length, beam of 180 ft (55 m), and molded depth of 50 ft (15 m).
---------------------------------------------------------------------------
\31\ U.S. Transportation Command ``MV Blue Marlin to lift, move USS
Cole'', October, 2000 (https://www.ustranscom.mil/cmd/
panewsreader.cfm?ID=28888CAE-5056-A127-59 DCA60757A
43E07&yr=2000#: :text=WASHINGTON%20(USTCNS)%20%2D%2D%2D%20Heavy%20lift,r
ise%20to%20meet%20the%20destroyer.)
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Likewise, oceangoing AHTS vessels capable of towing and installing
floating turbine platforms can also deploy, recover, and relocate
mobile drilling units and floating production, storage and offloading
(FPSO) vessels commercially used in the offshore oil & gas industry,
and military FPSOs as might be used to support forward basing and joint
logistics over the shore. AHTS vessels also can be used to tow damaged
capital ships, and they typically are equipped with equipment to fight
fires at sea and act as standby vessels during offshore operations. To
qualify for dual-use incentives, an AHTS vessel should have a minimum
bollard pull of 242 to 275 short tons (220 to 250 metric tons) and a
back deck area of at least 8,000 to 8,600 square feet (750 to 800
square meters).
By further incentivizing construction of these dual-use vessels,
not only does the SHIPS Act promote more strongly the buildout of our
commercial offshore energy resources; it also advances our Navy's
expeditionary warfare and humanitarian aid capabilities.
Conclusion
The U.S. offshore wind industry is on a clear and deliberate path
toward a strong, self-sufficient domestic supply chain. It has a
quantifiable demand that has already sparked significant investment in
U.S. commercial shipbuilding, and its vessels are adaptable to every
other maritime need. The SHIPS Act will support this service. A strong
offshore wind merchant marine must be established for both national
energy and military security, and to do so requires Federal kindling
into the Nation's shipyards. America must capitalize on the
opportunity.
Sincerely,
Sam Salustro,
Senior Vice President of Market and Policy Strategy,
Oceantic Network.
______
Prepared Statement of Brad Ford, Executive Vice President, Plate and
Structural Products, Nucor Corporation
Chair Wicker, Ranking Member Schatz, and Members of the Committee,
thank you for the opportunity to submit this statement on an issue of
vital importance to the American economy, American national security,
and the American steel industry. I am Brad Ford, Executive Vice
President for Plate and Structural Products at Nucor Corporation
(``Nucor''). With approximately 33,000 teammates at 300 locations
throughout North America, Nucor is the largest and most diversified
steel producer in the United States.
As a major supplier of steel to both civilian and military
shipbuilding customers, Nucor understands the critical links between
robust civilian shipbuilding capacity and the ability to produce
sufficient tonnage for military applications in the event of a
conflict. Nucor has supplied steel plate for both large commercial
vessels and for some of the most advanced military shipbuilding and
maritime applications. This includes steel plate for multiple Ford
class aircraft carriers, Virginia and Columbia class submarines, guided
missile frigates, and amphibious assault ships.
Unfortunately, in recent decades, the U.S. position in the global
shipbuilding industry has been whittled away by competition from
heavily subsidized, state-led industries in countries like China. The
United States Trade Representative recently conducted an investigation
under Section 301 of the Trade Act of 1974 into China's Targeting of
the Maritime, Logistics, and Shipbuilding Sectors for Dominance. It
found that, as a result of numerous unfair acts, policies, and
practices,
China's market share in the global shipbuilding industry increased
from just 5 percent in 1999 to more than 50 percent as of 2023, while
deliveries from U.S. shipyards all but disappeared.\1\ This has had
ripple effects throughout the supply chain, including in the steel
industry, which has lost a significant source of downstream demand as
domestic shipbuilding capacity closed down.
---------------------------------------------------------------------------
\1\ Report on China's Targeting of the Maritime, Logistics, and
Shipbuilding Sectors for Dominance, Section 301 Investigation, U.S.
Trade Representative (Jan. 16, 2025) at vii.
---------------------------------------------------------------------------
The American steel industry, however, remains capable of supplying
the steel required to support a reversal of trends in American
shipbuilding. In recent years, Nucor has been undertaking a $14 billion
investment plan to ensure that it can produce the steel needed for any
application, anywhere in the American economy. These investments
include a $1.7 billion state-of-the-art plate mill in Brandenburg, KY,
and a $280 million modernization of Nucor's plate mill in Tuscaloosa,
AL. Along with our plate facility in Hertford County, NC, Nucor has the
combined capacity to produce 3.5 million tons per year, all of which is
made from start to finish in the United States by American workers. As
noted above, these mills have long supplied plate for both civilian and
military shipbuilding, including large commercial vessels and some of
the Navy's most advanced warships.
According to data collected during the U.S. International Trade
Commission's recent sunset review, the American industry had around 8.3
million tons of steel plate production capacity in 2021, while
operating at less than 70 percent capacity utilization.\2\ This means
that it could supply around three million additional tons per year.
While these numbers are several years old, they are still a reasonably
accurate snapshot of the industry's position today. If anything, they
underestimate the domestic industry's capabilities because they do not
include Nucor's Brandenburg mill, which began operations in 2022.
---------------------------------------------------------------------------
\2\ Carbon and Alloy Steel Cut-to-Length Plate from Austria,
Belgium, Brazil, China, France, Germany, Italy, Japan, South Africa,
South Korea, Taiwan, and Turkey, Inv. Nos. 701-TA-560-561 and 731-TA-
1317-1328 (Review), USITC Pub. 5399 at C-9 (Table C-1).
---------------------------------------------------------------------------
As a critical link in domestic shipbuilding supply chains, Nucor
has previously expressed its support for both the SHIPS for America Act
and for the U.S. Trade Representative's actions in response to China's
unfair acts, policies, and practices. We reiterate that support here.
Concerted government action to incentivize American shipbuilding
capacity will be needed to revitalize domestic shipbuilding supply
chains. While the steel industry has sufficient capacity to support
these efforts, building resilience throughout the supply chain requires
ensuring that new shipbuilding demand is supplied by American steel
producers. This means tying, to the greatest extent possible, any
incentives for new shipbuilding capacity to the use of steel that is
melted and poured in the United States.
Thank you for the opportunity to submit this statement for the
record. Nucor is prepared to submit any additional information that the
Subcommittee may require.
______
Prepared Statement of the Navy League of the United States
Chair Sullivan, Ranking Member Rochester, and Members of the
Committee,
Thank you for the opportunity to submit this statement for the
record on this important hearing on the state of the American
commercial shipbuilding industry. The Navy League of the United States
appreciates the Subcommittee's leadership on strengthening the U.S.
maritime industrial base.
The Navy League of the United States is a nonprofit, civilian
organization that supports strong, well-equipped U.S. sea services (the
Navy, Marine Corps, Coast Guard, and U.S.-flag merchant marine) and a
robust maritime industrial base. Our membership includes active-duty
and retired military and maritime professionals, industry leaders,
shipbuilders, maritime policy experts, and patriotic citizens who share
a deep commitment to America's sea services. We regularly engage with
workforce, industrial base, and sealift-readiness issues that affect
national security and economic resilience, publishing a Maritime Policy
Report to fulfill our mission to support the services, educate the
public on the need for strong sea services, and advocate to national
leaders on the needs of the services. Our fundamental belief is that
the United States is a maritime nation whose national security and
global prosperity depend on assured access to the global commons, the
seas.
We are grateful that our national leaders have decided to seriously
consider the health of our maritime industrial base. The Navy League
strongly supports the efforts of the President's Executive Order and
the bipartisan SHIPS for America Act because it reinvests in domestic
shipbuilding capacity, improves surge sealift and sustainment
resilience, and preserves skilled American maritime jobs. Revitalizing
the commercial maritime industrial base is critical to national
security, economic competitiveness, and supply chain stability.
A healthy commercial shipbuilding and repair sector provides the
robust industrial base that the Department of Defense and Department of
Homeland Security need during crises. Most shipyard jobs are dedicated
to government shipbuilding or the domestic Jones Act market. The
foundation of Jones Act shipyard jobs, which the Navy League has long
supported, must be built upon to restore our commercial shipbuilding
for international trade.
Domestic yards and a trained workforce shorten mobilization
timelines for surge shipbuilding and repair. Decades of underinvestment
and inconsistent funding for military shipbuilding have reduced the
pool of skilled shipfitters, welders, naval architects, and marine
engineers. Targeted investment in apprenticeship programs, community-
college partnerships, and tuition support will restore capability more
quickly and cost-effectively than rebuilding lost skills later. The
Navy League is proud of its support for the Sea Cadets, as exposing
youth to the importance of the sea services and the maritime industry
creates a lifelong interest in maritime careers. The SHIPS Act makes
multiple investments in workforce development.
Shipyards anchor regional economies and sustain supplier networks
that produce gear and components critical across defense and commercial
sectors. Assured cargo and incentives for U.S.-built commercial vessels
will generate private-sector confidence to invest in retooling,
automation, and workforce training.
Most significantly, dependence on foreign-built tonnage and
components increases strategic risk. Incentivizing U.S. construction
and domestic sourcing for critical components (hull sections,
propulsion, navigation/electronics) reduces exposure to geopolitical
disruption. The time to act is now: since the 1960s, 14 U.S. shipyards
that constructed ships for the Navy have closed, and three have left
the defense industry. Only one new shipyard has opened. As a result,
just eight shipyards, owned by five prime contractors, build large Navy
warships and Coast Guard cutters today.
The commercial shipbuilding industrial base also has similar
concerns. Several of the larger classes of surface combatant and
auxiliary ships have been built in only one or two shipyards. As a
result, price and technical competition are limited, and the ability to
increase production to meet future requirements is constrained without
major infrastructure investments. Low throughput rates have also caused
major cost increases from domestic suppliers, which also may need
financial support to ensure domestic or allied sources of critical
components and weapon systems.
The ship repair industrial base presents its own set of problems.
The Navy's four government-owned shipyards are incapable of keeping up
with the current nuclear ship repair demand, and they need major
capital investments to upgrade infrastructure and modernize workflows.
Also, additional drydocks are needed, and some must be upgraded to
accommodate the large Virginia payload module and Columbia-class
submarines. To address these deficiencies, the Navy established the
Submarine Infrastructure Optimization Program (SIOP), initially
programming $21B in expenditures over 20 years. However, recent bids
indicate that much more funding will be needed, and the likelihood of
increased submarine production will require acceleration of this
effort. The movement of some nuclear ship repairs to commercial yards
has not gone as planned, and it will require additional time and
expense before they can accommodate the additional workload. The lack
of dry-dock facilities has hampered conventional ship maintenance and
repair. Investment to expand such capabilities will require new
acquisition strategies that ensure stable workloads to justify such
expenditures. All shipbuilding is related; a wider industrial base like
that created by the SHIPS Act will have benefits for government
shipbuilding.
This situation calls for a new maritime transportation strategy
that generates future sealift requirements and capabilities to support
the new National Defense Strategy focused on peer competition with
Russia and China. That strategy also must generate sufficient U.S.-flag
shipping to provide economic security during peacetime economic
competition and during wartime conflict in a contested environment
where attrition is inevitable. It also needs to include domestic
commercial shipbuilding/repair to address wartime attrition of
commercial and Naval vessels, battle damage repair, and maritime labor
issues, shipyard and shipboard. It must encompass all other aspects of
the U.S. maritime industry, the U.S. Marine Transportation System from
port infrastructure to maritime cybersecurity in support of U.S.
national and economic security. Without this domestic supporting
infrastructure, the U.S.-flag merchant marine and military sealift
capabilities would not be capable of supporting our national and
economic maritime security.
Per our Maritime Policy Strategy, the Navy League recommends:
Fully supporting the immediate passage of the SHIPS for
America Act. Many of its provisions are fully aligned with the
recommendations provided below.
Administration promptly releasing the National Maritime
Transportation Strategy as called for in the FY2023 National
Defense Authorization Act and including implementing policies
and funding in future budget submissions if not included in the
SHIPS for America Act.
Maintaining and defending the Jones Act. Weakening the law
would negatively impact national and economic security by
diminishing the seafaring and shipbuilding industrial bases.
Robust support for the Maritime Security Program. Congress
should authorize and appropriate increased funding to account
for post-COVID-19 inflation to keep these 60 ships under the
U.S. flag.
Full funding to account for actual costs and COVID-19
inflation for at least the authorized 20 vessel Tanker Security
Program (more depending on TRANSCOM requirements included in
the yet to be released Center for Analysis study produced to
inform MARAD's forthcoming National Maritime Strategy) and for
a two-ship Cable Security Program.
Full funding for the RRF to match combatant commander
readiness and capacity requirements as specified by reports
that are called for in the FY 2026 NDAA bills.
Strong U.S. cargo-preference laws. We support increasing the
requirement to 100 percent of all government funded cargoes to
be carried on U.S.-flag ships (additional bulk ships
legislatively permitted to accommodate the requirement) to
increase the number of U.S.-flag ships and the mariners needed
to operate them, as well as enactment of the Energizing
American Shipbuilding Act for the carriage of domestic sources
of LNG and crude oil. (Both included in the SHIPS for America
Act).
Building dual-use vessels. The Navy and MARAD should work
rapidly on recapitalizing the RRF by operationalizing the dual-
use vessel concept on AMH (commercially owned and operated
U.S.-flag, U.S.-built militarily useful ships operating on the
U.S. coastwise trades) or propose another viable alternative
such as allowing the operation of ships built under the
currently authorized 10-ship sealift vessel program in the
coastwise domestic trades where there is no existing commercial
service. These active RRF alternatives should be included in
the SHIPS for America Act.
Full funding for RRF recapitalization, a responsibility that
Congress shifted from Navy to MARAD, using best commercial
practices for both new construction and used ship acquisitions
to meet USTRANSCOM/Navy wartime requirements.
Full authorized funding of the U.S. Merchant Marine Academy
and six state maritime academies to meet the operational,
maintenance and capital improvements requirements, including
expanding the Student Incentive Program to fully meet demand.
Providing dedicated funding for the authorized Maritime
Centers of Excellence, including graduate studies, to attract
new entrants into the maritime industry and to provide funding
for K-12 programs to help attract, educate and train the next
generation of mariners.
Increasing the size of the maritime workforce by funding new
education, recruitment, development and retention programs that
will attract all population segments and ages.
Ensuring a strong strategic sealift officer component in the
U.S. Navy Reserve. This ensures critical skills and experience
are retained to support Navy and sealift transportation and to
provide a backup pool of licensed mariners.
Implementation of a robust military-to-mariner program. This
facilitates the transition of former Army, Navy and Coast Guard
Sailors/Mariners to certificated/licensed merchant mariner
positions to help address projected shortfalls.
Updating the mariner availability study (drafted more than
seven years ago) to determine the adequacy of the current STCW-
qualified ocean-going workforce to crew surge sealift ships for
initial activation and protracted periods of operation.
Use of National Defense Features on other vessels. Navy
funding of such features on both U.S.-and foreign-built onboard
TSP and MSP vessels (e.g., TSP CONSOL systems) is needed to
enhance their military utility in support of contingency
operations.
Increased funding for marine highway corridors, connectors,
and state freight systems as part of the National Freight
Strategic Plan to improve infrastructure and developing AMH
vessels to expand the use of coastal waterways for freight and
passengers.
Funding MARAD's energy conservation programs with resources
to promote sustainability throughout the MTS, including
research and technology in areas such as ballast water,
alternate fuels, small nuclear reactors, and energy management.
Funding Title XI: At least $30 million is needed now,
followed by about $30 million in annual appropriations to keep
up with the potential demand, including replacement Jones Act
tankers and other vessels recently announced to be constructed
for foreign trades.
The SHIPS for America Act is a timely, strategic investment in
national security, economic resilience, and American workers. The Navy
League urges the Committee to advance the bill with the recommendations
above to ensure a sustained, modern commercial maritime industrial base
capable of meeting 21st-century security and economic demands.
The views expressed are those of the Navy League of the United
States and do not necessarily reflect the views of any individual
member or affiliate.
Mike Stevens,
Chief Executive Officer,
13th Master Chief Petty Officer of the Navy (Ret.),
Navy League of the United States.
______
Prepared Statement of Nathan Sandel, Director of Education and
Community Development, Nauticus
Chair Sullivan, Ranking Member Rochester, and Members of the
Committee,
Thank you for the opportunity to submit this statement for the
record. We are honored to contribute to this important conversation on
the future of America's maritime workforce and the role the SHIPS for
America Act can play in revitalizing it.
Introduction
My name is Nathan Sandel, and I serve as the Director of Education
and Community Development at Nauticus, a maritime discovery center and
educational institution located in Norfolk, Virginia. We exist to
benefit our community through education, impactful experiences and by
sharing access to maritime resources. We serve thousands of students
annually through hands-on STEM and maritime workforce development
programs.
We are on the front lines of maritime education, working with
students from diverse backgrounds, many of whom have never considered a
future in the maritime industry. I submit this statement to highlight a
critical gap in our national workforce strategy: the need to reach both
underserved and gifted students before high school, or risk losing them
to other industries or losing them entirely from the workforce.
Statement of Position
Our organization strongly supports the SHIPS for America Act as it
strengthens domestic shipbuilding, enhances our national security, and
supports American workers. This legislation is a critical investment in
our future. The maritime industrial base depends not only on ships and
infrastructure, but on the people who will build, operate, and lead
them.
Analysis
Each year, thousands of high-paying, STEM-rich jobs in
shipbuilding, seamanship, port operations, and naval architecture go
unfilled. Yet two groups of young people who could fill this gap are
being overlooked:
1. Underserved students from urban and rural communities, who rarely
see maritime careers as accessible-or even know they exist.
2. Gifted students who are funneled toward traditional elite paths,
with little exposure to maritime science, engineering, or
leadership opportunities.
Both groups represent untapped talent. Unless we reach them before
high school, we risk losing them forever.
Recommendations
1. Invest in Early Maritime Exposure (Grades K-8)
Fund maritime STEM programming in elementary and
middle schools.
Invest in maritime based afterschool programs.
2. Position Maritime as Elite STEM
Target gifted programs and magnet schools with
messaging that frames maritime as intellectually rigorous
and globally significant.
Highlight careers in naval architecture and
engineering.
Make maritime visible and aspirational, like aviation
and space have done.
Conclusion
America's maritime workforce future depends on talent we are
currently overlooking. By reaching underserved students who don't see
themselves in maritime, and gifted students who are not told it's for
them, we can build an equitable, resilient, and elite workforce
pipeline.
The time to act is now. We urge the Committee to pass the SHIPS for
America Act and ensure that workforce development, especially early,
inclusive outreach is a core component of its implementation.
Thank you for your leadership and for the opportunity to contribute
to the record.
Nathan Sandel,
Director of Education and Community Development,
Nauticus.
______
Prepared Statement of New American Industrial Alliance
Dear Chairman Sullivan, Ranking Member Blunt Rochester, and Members
of the Committee:
I write on behalf of the New American Industrial Alliance, an
association of more than seventy companies and institutional investors
focused on strengthening the U.S. industrial base. Our members
represent sectors ranging from aerospace and defense to nuclear energy,
maritime industry, critical minerals, machine tools, auto supply
chains, medical manufacturing, and beyond, along with investors active
in multiple asset classes.
We strongly support the SHIPS for America Act and the need to
revitalize the commercial maritime industrial base. In addition to this
proposed legislation's direct positive impact on America's maritime
industry, we encourage the Committee to also consider the importance of
a healthy commercial shipbuilding industry to a broad array of
manufacturing supply chains and innovation ecosystems. A strong
shipbuilding sector provides demand for and foundational support to
other critical industries, such as machine tools, robotics, advanced
manufacturing technologies, including AI for manufacturing,
fabrication, critical minerals processing, and more.
A 2021 U.S. Maritime Administration (MARAD) report found that the
U.S. private shipbuilding and repairing industry generated
approximately $30 billion of GDP and over 276,000 jobs through indirect
impacts, even though only three oceangoing commercial ships were
produced in the United States in that year. A stronger commercial
shipbuilding sector could, therefore, produce significant benefits
throughout the economy, and particularly in manufacturing sectors.
At the same time, however, shipbuilding is a capital-intensive,
cyclical business subject to intense competitive pressure from
government-subsidized foreign rivals. Every major shipbuilding nation
provides billions of dollars in subsidies to shipbuilders. A recent
USTR Section 301 Investigation report details hundreds of billions of
subsidies provided by China, in particular. China's commercial
shipbuilding capacity now exceeds U.S. capacity by a factor of more
than 200 to 1.
The decline of U.S. shipbuilding represents a major national
security risk. It also represents the loss of jobs, workforce
capabilities, process knowledge, forgone technological innovation, and
reduced opportunities across U.S. manufacturing and manufacturing
technology sectors.
For these reasons, we strongly urge the committee to pass the SHIPS
for America Act, a critical step to strengthen U.S. shipbuilding
capacity, enhance national security, and support the revival of
America's broader industrial base. Thank you for your consideration.
Sincerely,
Julius Krein,
President,
New American Industrial Alliance.
______
Prepared Statement of Marine Engineers' Beneficial Association, AFL-CIO
(M.E.B.A.)
Chairman Sullivan, Ranking Member Blunt Rochester, and Members of
the Subcommittee, thank you for the opportunity to submit this
statement for the record on behalf of the Marine Engineers' Beneficial
Association (M.E.B.A.). M.E.B.A. is the Nation's oldest maritime labor
union, proudly representing the licensed deck and engineering officers
who crew the U.S.-flag commercial fleet--men and women who serve as the
backbone of our Nation's merchant marine.
Today's hearing titled ``Sea Change: Reviving Commercial
Shipbuilding?'' arrives at a pivotal moment for America's maritime
future. For decades, the United States has witnessed the slow erosion
of its commercial shipbuilding base and the decline of its U.S.-flag
fleet, once the envy of the world. At the end of World War II, the
United States commanded over 5,500 oceangoing commercial vessels flying
the American flag, representing nearly sixty percent of the world's
merchant tonnage. Today, that number has fallen to less than two
hundred ships, representing less than just one percent of the world's
shipping capacity. The consequences of this decline are profound as
each lost ship means fewer skilled mariners, diminished shipyard
capacity, and weakened national readiness.
By contrast, China has over the years developed a shipbuilding
industry that overshadows the rest of the world. Backed by massive
governmental subsidies, state-owned enterprises, and a national
strategy to dominate global logistics, shipping, and shipbuilding,
China has created a maritime ecosystem that now builds, finances,
insures, and operates the majority of the world's vessels. This
dominance has not occurred by accident--it has been carefully
constructed to secure China's control over nearly every aspect of
global commerce. As a result, America's dependency on foreign-flagged
ocean carriers, particularly those operating under foreign ``flags of
convenience'' pose not only an economic risk, but a clear threat to our
national security.
The global pandemic made this reality impossible to ignore. When
COVID-19 disrupted international trade, more than one hundred ships
idled off American ports, exposing the fragility of supply chains
dominated by foreign carriers. The bottlenecks that followed rippled
through every sector of the U.S. economy, driving up costs for
consumers, small businesses, and farmers alike. It is now abundantly
clear that the United States cannot depend on foreign shipping
interests to move the goods that sustain our economy. Rebuilding
America's maritime industrial base--including our shipyards, merchant
fleet, and pool of mariners--demands a decisive and unified ``whole of
government'' approach. As such, Congress and the Administration must
develop and execute a robust national maritime strategy that aligns
U.S. industrial policy, defense readiness, trade competitiveness, and
workforce development with one clear objective: to restore American
maritime dominance.
That is why this hearing is so important. Reinvigorating U.S.
shipbuilding cannot succeed unless we simultaneously strengthen the
economic foundations that support it. Without policies that foster
access to commercially imported and exported cargoes made available for
U.S.-flag carriers, we may build as many ships as possible, but we
would still have no cargo for them to move.
Simply put, we must build a demand signal.
The bipartisan SHIPS for America Act introduced by Senators Mark
Kelly (D-AZ) and Todd Young (R-IN) represents a commendable first step
toward restoring American shipbuilding capacity, expanding shipyard and
mariner employment, and strengthening the U.S. merchant marine.
M.E.B.A. applauds the leadership behind this legislation and the
recognition it has received from both Congress and the Administration.
Subsequently, President Trump's recent Executive Order on ``Restoring
American Maritime Dominance'' and the U.S. Trade Representative's
Section 301 investigation into China's targeting of the maritime,
logistics, and shipbuilding sectors underscore a renewed commitment to
maritime policy at the highest levels of government. Together, these
initiatives signal a turning point in our national policy: an
acknowledgment that a strong American maritime industry are
foundational to our economic and military strength.
While these measures lay important groundwork, they do not yet
address the central obstacle preventing U.S.-flag vessels from
competing in global commerce: cost. The average total cost of operating
an American vessel in foreign commerce is approximately 2.7 times
higher than a foreign-flag equivalent. This is largely driven by
foreign exploitation of labor costs, circumvention of U.S. taxes,
skirting of safety and environmental standards, and the heavy subsidies
foreign competitors receive from their respective governments. If we
are to close this gap, Congress and the Administration must consider
policies that directly level the playing field for U.S.-flag carriers.
One of the most promising approaches is a ``Ship American'' tax
deduction, modeled on the analysis conducted by the American Maritime
Congress (AMC) earlier this year. That study, prepared by Price
Waterhouse Cooper (PwC), evaluated the economic and revenue effects of
allowing U.S. importers and exporters to claim a 200 percent deduction
for shipping expenses associated with the use of U.S.-flag vessels. The
results were striking. The proposal would reduce the after-tax cost of
shipping on an American vessel by roughly twenty-five percent,
effectively erasing much of the cost differential between U.S.-flag and
foreign-flag carriers. The study estimated that such a policy could
increase demand for U.S.-flag shipping by approximately twenty
percent--an equivalent to adding 18 to 20 new vessels to the U.S.-flag
fleet over ten years.
This kind of incentive-based policy would not only make U.S.-flag
shipping more competitive but would also strengthen American
manufacturing and logistics networks. Much like the ``Buy American''
and ``Build American'' provisions that sustain domestic production, a
``Ship American'' tax incentive would encourage major shippers (i.e.,
retailers, agricultural exporters, and industrial producers, etc.) to
voluntarily move more cargo on American ships. By leveraging the U.S.
tax code to reward companies that invest in the national interest,
Congress can generate real, market-based demand for American shipping,
creating the commercial foundation necessary to sustain U.S.-built
vessels, American shipyards, and American mariners. Constructing ships
without providing incentives for cargo is akin to building trains
without tracks, or creating cities that are inaccessible. Establishing
cargo incentives via legislation for U.S.-flag vessels will serve as a
definitive demand signal, indicating to the world that the American
maritime industry is open for business and poised for future growth.
Ultimately, the health of the American maritime industry cannot be
restored through a single executive order or piece of legislation. It
requires a comprehensive, long-term national maritime strategy that
ties together shipbuilding, workforce development, port infrastructure,
and commercial competitiveness for U.S. shipping lines. It requires
that we produce maritime policy not as a niche industrial concern, but
as a cornerstone of national strength. America's ability to project
power, deliver military and humanitarian aid, and control its domestic
supply chains is based upon its ability to move goods and sustain
global trade under its own flag.
Thank you once again for convening this important hearing and for
your continued, bipartisan support of the American maritime industry.
We urge the Committee to consider a legislative markup for the SHIPS
for America Act as the Trump Administration develops a Maritime Action
Plan (MAP) this year. But we must go even further. We must ensure that
U.S.-flag ships can compete for the world's cargoes so that American
shipyards can have the contracts to build, that will ultimately expand
future opportunities for our maritime workforce. Only by generating
sustained commercial demand and leveling the global playing field can
we restore America's rightful place as a maritime leader.
M.E.B.A. and its members stand ready to work with Congress, the
Administration, and our maritime industry partners to revitalize U.S.
shipbuilding, strengthen our maritime workforce, and ensure that the
United States is no longer dependent on foreign interests to move its
own goods and commerce. Thank you for the opportunity to share our
views ahead of the hearing.
______
Prepared Statement of Rear Admiral James Watson (USCG, ret.), on behalf
of the Maritime Accelerator for Resilience (MAR) and the authors of
Zero Point Four
Dear Chairman Sullivan, Ranking Member Blunt Rochester and members
of the Committee,
We thank the Committee for the opportunity to submit a statement.
On behalf of the Maritime Accelerator for Resilience (MAR) and the
authors of Zero Point Four, we offer these comments to encourage a
harmonized approach to maritime industrial policy--one that aligns
trade, national security, and shipbuilding revitalization goals. Our
organization strongly supports the SHIPS for America Act to provide a
coherent framework for a revised National Maritime Strategy.
The Need for a new Strategic Maritime Policy
The United States has taken important steps in recent months to
reassert maritime competitiveness and resilience. The bipartisan SHIPS
for America Bill, Executive Orders to address U.S. dependence on
Chinese Maritime Supply Chains, and bipartisan recognition of maritime
vulnerabilities all point toward the same imperative: rebuilding
industrial capability for the construction and maintenance of
commercial and military-relevant vessels.
Our national maritime security includes national security, economic
security, food and energy security, climate security and American
workforce security. Currently our Nation's maritime leaves us with
vulnerabilities in all these areas. This legislation begins to address
our weakened state of having less than 200 seagoing U.S. flagged
commercial ships compared to the 55,000+ global foreign owned, foreign
crewed, foreign government controlled ships (0.4 percent). Enacting the
SHIPS for America Act will motivate U.S. private investment and public
focus to capture enormous untapped opportunities and improve our
maritime competitiveness.
Near-term recommendations of Zero Point Four
The SHIPS Act and the Zero Point Four framework both call for a
revitalization of U.S. maritime manufacturing through targeted, long-
term incentives. For example:
Recommendation #12 of Zero Point Four encourages reforming
MSP to give preference to newer vessels and to ships built in
the U.S. or by allied nations.
Recommendation #22 highlights the power of regulatory
preferences to de-risk private capital and spur new shipyard
investment.
Recommendation #38 calls for reducing dependence on
adversarial build, finance, and flag arrangements in the U.S.
sealift system.
Modernization of the MSP Fleet: A Timely Opportunity
Currently, 48 of the 60 vessels in the MSP fleet are more than 15
years old and are likely to be replaced within the next 2-3 years. This
replacement cycle presents a unique opportunity to shift toward newer,
more capable ships built in the U.S. or allied shipyards. However, if
exemptions are not time bound or appropriately structured, program
participants may opt to replace aging tonnage with more affordable--but
strategically misaligned--Chinese-built vessels.
We recognize the concern that limiting eligibility to U.S.-built
(or allied-built) vessels may increase costs to the government in the
short term. However, the magnitude of these increases is manageable
when contextualized:
A Chinese-built vessel may cost approximately $60 million,
while a U.S.-built equivalent could be in the $180-200 million
range.
This represents a capital cost differential of $120-140
million per ship, but when amortized over a 20-year lifecycle,
it equates to an annualized cost of $6-7 million per ship.
For the 8 Chinese-built vessels currently in MSP, the
additional cost over 3 years is roughly $168 million, or $56
million/year.
However, these same vessels already receive $127 million in
subsidies over the same period under MSP, suggesting that the
marginal cost of shifting to U.S.-built ships is relatively
modest and can be further mitigated with phased procurement.
Moreover, incorporating U.S. allies such as South Korea and Japan
into the eligibility framework can serve as a practical bridge--
offering more competitive pricing than U.S.-built ships while still
reinforcing secure supply chains.
Strategic Commercial Fleet: 250 Vessels in International Commerce
We support Title 4 of the SHIPS for America Act that proposes
creating a Strategic Commercial Fleet.
There were about 80,000 foreign vessel port calls into U.S. ports
last year involved in $1.9 trillion of traded goods and commodities.
Assuming that involved about 3,000 distinct ships, then increasing the
U.S. flag fleet to 450 ships (200 plus 250 Strategic Commercial Fleet
ships) making regular U.S. port calls could be about 15 percent of the
port calls. Although that would not be enough capacity to support the
U.S. economy, it's reasonable to assume that no more than half of the
normal foreign flag fleet would abandon the U.S. trade in favor of a
strategic competitor, therefore the import/export trade might only be
reduced by 33 percent instead of 50 percent.
Beyond our own economy, the United States national security depends
on deterrence and free trade. The UN Convention on the Law of the Sea,
implemented in 1982, has provided the framework for the peaceful,
shared use of the high seas for over 40 years. In 1982, the U.S.
negotiators of UNCLOS would likely have assumed the U.S. would maintain
around 800 U.S. flagged and crewed commercial ships (the fleet number
at that time) to assist the USN and USCG to monitor compliance and
benefit from the convention. Rebuilding that fleet back to at least 450
ships via the Strategic Commercial Fleet provision of the SHIPS for
America Act would begin to reverse the deteriorated national security
expectations of UNCLOS that we are currently experiencing. Finally, we
point to the disparity between U.S. flag international commercial
aircraft and U.S. flag international commercial ships. Both go hand in
hand supporting the U.S. economy and strategic logistics. Yet, whereas
U.S. flag international commercial aircraft are 10 percent of all
international aircraft, U.S. flag seagoing commercial ships are 0.4
percent of international seagoing ships.
Recommendations
We encourage the Committee to pursue the revival of vibrant
shipbuilding industrial base and workforce. The pathway to success is
embedded in the SHIPS for America Act. We particularly recommend the
following as presented in detail in the book Zero Point Four:
Launch a public awareness campaign in partnership with key
industry, academic and public organizations (MARAD, DoD, and
DHS). Increase the general understanding about shipping,
highlight the security risks of a weak U.S. maritime sector,
and attract new career-minded workers to the industry.
Invest in a sustainable U.S. economic security plan to
increase the amount of U.S.-controlled, ocean-going tonnage,
engaged in international trade. This recommendation is
reflected in the various sections of the SHIPS for America Act.
Create a network of maritime innovation hubs to pool co-
invested capital from government and industry for competitive
maritime technology advancements. This recommendation is
reflected in Subtitle C of the SHIPS for America Act.
Establish the U.S. as the leader in small modular reactors
for international commercial ships. The U.S. is in a unique
position to pioneer the integration of nuclear propulsion into
the global commercial fleet. Other countries may supply the
hulls and superstructure, but the U.S. can completely control
the engine room.
These and other recommendations published in Zero Point Four would
provide the necessary clarity and runway for fleet operators,
shipyards, and investors to act and achieve the sorely needed
principles of maritime security for the United States.
Conclusion
The U.S. maritime industrial base will not revitalize itself
through one-time deals, tax incentives or subsidies dependent on one
appropriation. It requires coherent, aligned, and predictable policy
signals across the regulatory and trade landscape. By passing the SHIPS
for America Act, we can achieve national resilience goals in a way that
is both affordable and strategically sound.
We stand ready to support further consultations and thank the
Committee for their consideration to advance these goals.
Rear Admiral James Watson (USCG, ret.)
On behalf of the Maritime Accelerator for Resilience
and the authors of Zero Point Four
Attachment: Bios of MAR/Zero Point Four co-authors
AUTHORS
Rear Admiral James Watson (USCG, Ret.)
James Watson is currently an independent consultant providing
business development services to maritime clients. He previously held
the position of Senior Vice President of American Bureau of Shipping
Global Government Services, where he was responsible for the government
market sector across the four ABS divisions and technology. Before
becoming Senior VP of Global Government Services, Watson was President
and COO for the Americas Division where he was responsible for all
operations of the American Bureau of Shipping in the Western
Hemisphere. Prior to joining ABS, Watson served as Director of the
Bureau of Safety and Environmental Enforcement at the U.S. Department
of Interior. In this role he provided regulatory oversight for energy
exploration and production on the U.S. Outer Continental Shelf. Before
becoming BSEE Director, Watson served as the U.S. Coast Guard's
Director of Prevention Policy for Marine Safety, Security and
Stewardship, where his responsibilities included commercial vessel
safety and security, ports and cargo safety and security and maritime
investigations. He was also designated as the Federal On-Scene
Coordinator for the government-wide response to the Macondo incident in
the Gulf of Mexico. Watson earned a Bachelor's of Science in Marine
Engineering from USCGA in 1978. He received his Master of Science in
Naval Architecture and his Master of Science in Mechanical Engineering
from the University of Michigan in 1985. Watson earned an additional
Master of Science in Strategic Studies at the National Defense
University in 2001.
Carleen Lyden Walker
Carleen Lyden Walker is the Chief Evolution Officer of
SHIPPINGInsight, leveraging off her experience as a marketing and
communications professional in the commercial maritime industry with
over 40 years of experience. She specializes in identifying, developing
and implementing strategic programs that position SHIPPINGInsight as
the most effective forum for shipowners and solution providers to
advance optimization and innovation in the maritime sphere. In 2015,
Ms. Lyden Walker was appointed a Goodwill Maritime Ambassador by the
International Maritime Organization (IMO). She is a member of WISTA
(Women's International Shipping and Trading Association), the
Connecticut Maritime Association, WIMAC (Women in Maritime Association,
Caribbean) and is a Past-President of the Propeller Club Chapter of the
Port of NY/NJ. She was also elected to the Board of the New Era Academy
(Baltimore Harbor School). Ms. Lyden Walker is also CEO of Morgan
Marketing & Communications, Co-Founder/CEO of NAMEPA, and Founder of
both CARIBMEPA and the Consortium for International Maritime Heritage.
In 2010 she was awarded the Certificate of Merit by the United States
Coast Guard, and in 2014 a Public Service Commendation for her work on
World Maritime Day and AMVER, respectively. In 2023, the USCG presented
her with the Distinguished Service Medal.
Rich Mason
A 25+ year veteran of technology titans such as AT&T, Lucent
Technologies' Bell Labs, and Honeywell International, Rich Mason
possesses deep expertise in the fields of cyber security, physical
security, and enterprise resilience. His last corporate post was as
Honeywell's Global Vice President and Chief Security Officer (CSO).
Prior to that, he held the role of Chief Information Security Officer
(CISO). Honeywell is a Fortune 100 conglomerate with a market cap
exceeding $130B. Honeywell Global Security, a converged unit within
Honeywell that provided cyber, physical, product, and classified
security services, achieved a number 1 global ranking in the Industrial
and Manufacturing sector during his tenure (Security Magazine, Security
500 Report). Rich now leads Critical Infrastructure LLC, a boutique
Virginia-based consultancy, where he combines his unique experience, a
Honeywell Operating System (HOS) and Six Sigma mindset, and a
relentless focus on innovation, trust, and resilience as business
enablers. His visioneering approach enables startups, venture capital
firms, corporate boards, and think tanks to challenge assumptions,
positively disrupt markets and digitally transform the world. An
engaging communicator, demonstrated practitioner and creative thinker,
Rich is well-respected among his peers in the cyber, information, and
physical security domains. He is vocal about how the practical
application of theory should be present at all layers of an
organization, and passionately challenges the idea of 'tick box' (vs
actual) security. Mason is a is an active member of the George Mason
University's National Security Institute (NSI) Cyber and Technology
Center, a contributor within a U.S. maritime security accelerator
coalition, a former member of the Secret Service's New York Electronic
Crimes Task Force, a graduate of the FBI's Executive Academy, and a
retired member of the FBI's National Security Business Alliance Council
(NSBAC) and Domestic Security Alliance Council (DSAC). An Alumni with
honor from Michigan State University, Mason received his Criminal
Justice bachelor's degree with a specialization in Security Management.
Jonathan Kempe
Jonathan Kempe is an entrepreneur, founder, and technology
strategist with over 23 years of professional experience across a broad
array of disciplines. Jonathan has held a number of diverse roles over
his working life: From senior positions in large corporations, founding
and running several small businesses, holding trusted roles in
nationally accredited NFPs and NGOs, and providing technical services
to the Australian Defense Force sector. When running Sydney-based
Verifai, Jonathan developed deep experience in global supply-chains,
including the implementation of unique security solutions--involving
PhySec, CyberSec, IoT, biometrics, and a range of communication
standards--to solve practical problems related to theft and cargo
tampering, and to provide tracking services for product provenance.
Jonathan is well connected within the Australian and New Zealand
business communities, has lectured in universities, and spoken at
conferences across the world, and regularly contributes to industry
advocacy efforts through the provision of unique insights, research and
ideation. Jonathan now leads Source Consulting, an innovative strategic
consultancy, based in New Zealand. He is passionate about solving
global problems, loves to work alongside like-minded individuals, and
is dedicated to building impactful solutions that positively transform
the world.
Nishan Degnarain
Nishan Degnarain is a Harvard-educated Development Economist
working on addressing sustainability with fast-growing technologies. He
is currently co-founder and Managing Partner of The ExO Organization, a
leading Silicon Valley technology and sustainability advisory firm. He
has given keynote addresses to Governments, various United Nations
agencies, the IUCN, World Bank and IMF, and has worked with some of the
biggest technology companies on breakthrough innovations for the ocean.
In 2017, he launched the World Economic Forum's Center for the Fourth
Industrial Revolution in San Francisco to harness the power of
technology to address some of the world's most pressing environmental
problems. Since 2013, Nishan has chaired the World Economic Forum's
Global Agenda Council on the Ocean, a group of leading ocean experts
from around the world that meet at Davos each year. He sits on several
boards, and was previously on the Monetary Policy Committee of the
Central Bank of Mauritius and helped establish the National Ocean
Council for their newly created Ministry of Ocean Economy. Prior to
this, Nishan worked at McKinsey and Company, the World Bank, the UK
Prime Minister's Strategy Unit under Tony Blair, and as a broadcast
journalist for the BBC. Nishan holds an undergraduate degree from the
University of Cambridge and a postgraduate degree from Harvard
University's Kennedy School of Government in International Economic
Development. He is the author of Soul of the Sea in the Age of the
Algorithm (2017), on how exponential technologies can heal our oceans,
and has won several international awards, such as being recognized as a
Young Global Leader by the World Economic Forum and winning the
Economist's Ocean Economy Innovation Prize.
Captain Anuj Chopra
Captain Anuj Chopra is an international executive, enterprise risk
manager, and an ESG champion who has successfully forged client
relationships in the maritime industry for more than three decades. He
co-founded ESGPlus LLC, an international consulting firm focused on
bringing sustainability, resiliency, efficiency, and independent board
advisory to clients invested in a sustainable global maritime supply
chain. Before his time at ESGPlus, Captain Chopra spent nearly a decade
as a Vice President Americas of RightShip, negotiating high-level due
diligence and compliance agreements in developing business across
Americas. Prior to his time at RightShip, he served as the President of
Anglo-Eastern Houston, with direct oversight of vessels visiting U.S.
ports, risk evaluation, and government relations. Captain Chopra began
his seafaring career as a deck cadet, working his way up to Captain. He
has commanded large bulk carriers and tankers and holds a Commonwealth
Extra Masters Certificate of Competency, Shipping Management from the
Indian Institute of Management, Ahmedabad, India, and ACUE
Certification. Captain Chopra currently serves as a Fellow of The
Nautical Institute (Chairperson of the U.S. Gulf Branch), is on the
Board of Directors at the Houston International Seafarers Center,
Member of NOAA FACA HSRP, Advisory Board member of Houston Maritime
center, and is an Adjunct Professor for the Supply Chain & Logistics
Technology program at the University of Houston, where he has served as
a lecturer and teacher for more than 32 years.
ABOUT ZERO POINT FOUR
Dive into ``Zero Point Four,'' a compelling collaboration by six
maritime, ocean and security experts, led by U.S. Coast Guard veteran
Rear Admiral James Watson, as they illuminate the alarming decline of
the U.S. maritime industry. The United States, a maritime nation, is on
a precipice. Where once over half the world's ocean-bound vessels flew
the U.S. flag after WW2, today, U.S.-flagged ships amount to less than
0.4 percent. This staggering decline threatens America's National
Security, Economic Security, Energy and Food Security, Climate
Security, and Workforce Security.
In this groundbreaking book, the authors introduce the ZP4
Framework, evaluating the U.S. maritime industry's importance through
five lenses. From the scarcity of military support vessels to threats
against U.S. dollar-denominated trade, and from the shortage of U.S.
mariners and vessels for energy and food security, to the urgent need
for climate-resilient maritime operations, the book meticulously
dissects America's maritime vulnerabilities.
The authors don't just identify problems; they present a visionary
57-point Action Plan to revolutionize the U.S. maritime sector within a
decade. This plan, vetted by experts and industry leaders, offers bold
proposals for a new and holistic U.S. National Maritime and Blue
Economy Strategy.
As the world grapples with uncertainty--pandemics, conflicts, and
climate crises--America's reliance on a robust maritime sector has
never been more crucial. The authors passionately argue that the ZP4
Framework isn't just a call to action; it's a roadmap to a more secure,
preeminent, and viable United States.
Join the authors on this urgent mission to strengthen America's
maritime destiny. The seas beckon, and the security of a nation hangs
in the balance. With practical solutions within reach, ``Zero Point
Four'' is a rallying cry for business, workforce, public and military
leaders to safeguard America's maritime interests and secure its
future.
______
Lake Carriers' Association
Westlake, OH, October 21, 2025
Hon. Ted Cruz,
Chairman,
Committee on Commerce, Science, and Transportation,
Washington, DC.
Hon. Maria Cantwell,
Ranking Member,
Committee on Commerce, Science, and Transportation,
Washington, DC.
Dear Chairman Cruz and Ranking member Cantwell:
The Lake Carriers' Association (LCA) supports the enactment of
S.1541, the SHIPS for America Act of 2025.
Since 1880, LCA has represented the U.S.-flag Great Lakes fleet,
which today can move more than 90 million tons of cargos annually that
are the foundation of American industry, infrastructure, and energy:
iron ore, stone, coal, cement, and other dry bulk materials such as
grain, salt, and sand. Our largest Lakers are over 1,000 feet long and
can carry 70,000 tons of cargo.
Now more than ever, our national and economic security depends on a
reliable and resilient Great Lakes maritime transportation system. To
compete with the rise of China and its rapidly growing Navy, the United
States needs not only a larger and more capable Navy, but also a more
robust merchant fleet to move goods needed by the American people and
our Armed Forces. Building more ships requires a lot of steel, most of
which is manufactured in Great Lakes States using raw materials also
obtained from Great Lakes States. LCA's member companies are proud to
transport the raw materials needed to produce that steel.
The U.S. has already taken some steps to increase the resiliency of
the Great Lakes industry supply chain, such as the U.S. Army Corps of
Engineers (Corps) project to build a new navigation lock at Sault Ste.
Marie, MI, and increased Corps maintenance of the Great Lakes
Navigation System. Other key support elements of Great Lakes shipping
are under stress and require increased attention from the Maritime
Administration and the U.S. Coast Guard (USCG).
U.S.-built, U.S.-flagged Lakers compete for trade between the
United States and Canada with Chinese-subsidized and built, Canadian-
flagged vessels. The USCG Great Lakes icebreaker fleet is too small and
too old to keep the Great Lakes Navigation System open during the
winter, which can put the steel industry's winter stockpile of iron ore
at risk. U.S.-flagged Lakers don't leave the Great Lakes, so they
depend on Great Lakes shipyards to repair and maintain them, however,
there are few U.S. Great Lakes shipyards and those yards struggle to
retain qualified workers and reinvest in infrastructure. U.S.-flagged
Laker crews are highly qualified and work hard in one of the coldest
operating environments in the U.S. merchant fleet, but like any
workforce, they age out and new crew members must be attracted to the
industry, trained and qualified.
The SHIPS for America Act would improve programs that can assist
with many of these challenges. The shipbuilding financial incentive
provisions in Title V of the bill and the workforce development
programs in Title VI of the bill are especially applicable to
supporting the U.S. Great Lakes maritime industry. For this reason, LCA
supports Senate Commerce Committee approval of the SHIPS for America
Act of 2025.
Sincerely,
James H. I. Weakley,
President,
Lake Carriers' Association.
______
Prepared Statement of Ryan Lynch, President and CEO, Hanwha Shipping
Chairman Sullivan, Ranking Member Blunt Rochester, and
distinguished members of the Subcommittee,
Thank you for the opportunity to submit this statement for the
record on behalf of Hanwha Shipping, a global maritime logistics
company committed to advancing the competitiveness, resilience, and
security of allied commercial shipping networks. We appreciate the
Subcommittee's leadership in convening this critical hearing on the
future of American shipbuilding and the broader maritime ecosystem that
supports it.
Introduction and Background
Hanwha Shipping operates across global trade routes, linking
energy, defense, and industrial supply chains that underpin the
prosperity and security of allied nations. We view the revitalization
of America's commercial maritime base as inseparable from its national
security posture. Ships are not just instruments of commerce; they are
the backbone of logistics, deterrence, and wartime surge capability.
The United States once led the world in shipbuilding and global
shipping presence. Today, dominance has shifted abroad, not because of
a lack of ingenuity or workforce quality, but because of an eroded
demand signal and fragmented policy environment. The passage of the
SHIPS for America Act would be a long-overdue turning point.
Statement of Position
Hanwha Shipping strongly supports the SHIPS for America Act and
broader policies aimed at restoring American maritime strength.
Rebuilding U.S. maritime dominance is not simply about revitalizing
shipyards; it requires restoring the sustained demand signal and
mariner workforce that give a nation true maritime power.
This is not a purely commercial challenge. The same mariners and
ships that power trade in peacetime form the logistics surge margin in
wartime. America's adversaries, particularly China, understand this
principle deeply. The People's Republic of China has perfected and
deployed a model of civil-military fusion in the maritime domain, using
commercial fleets and shipyards to project strategic power while
maintaining global market dominance. The United States must reclaim
that balance through smart, sustained investment.
Recommendations
Passing the SHIPS for America Act will help address multiple
interlocking vectors necessary for maritime revitalization:
1. Establishing a Strategic Commercial Fleet (SCF)
The SCF is essential to creating predictable, long-term demand for
U.S. shipyards and to bridging the cost delta between
international and American construction and operation. The more
vessels ordered under this framework, the more economies of
scale will drive down that delta and strengthen domestic
capacity.
2. Leveraging U.S. Energy Dominance
Energy cargo preference policies can turn America's position as
the world's leading energy exporter into a maritime advantage.
Ensuring U.S.-flag and U.S.-built ships transport our LNG and
other critical cargoes protects national and economic security.
The alternative, allowing adversaries to dominate LNG transport
capacity, creates a critical vulnerability to the U.S.'s
burgeoning LNG export market by allowing a scenario where China
could, in effect, ``turn off'' America's energy exports at
will. That outcome would fulfill one of Beijing's long-stated
strategic objectives and provide the PRC with leverage to wield
against the U.S. for decades to come.
3. Investing in Mariner Training
A modern commercial fleet is useless without skilled mariners to
crew it. Sustained investment in training pipelines, licensing,
and career mobility is essential. Without it, we risk losing
the human infrastructure required for any meaningful maritime
surge.
4. Creating a Maritime Trust Fund
Aviation and surface transportation have long benefited from
revolving trust funds that ensure steady infrastructure
investment. Maritime has not. Establishing a Maritime Trust
Fund would provide predictable, long-term financing for
shipyard modernization, port upgrades, and logistics
resilience--closing a critical policy gap.
Reviving American shipbuilding cannot be achieved by focusing
solely on the shipyard gates. It requires rebuilding the entire
ecosystem--ships, mariners, cargoes, and capital.
The SHIPS for America Act is a decisive step toward restoring the
maritime balance between the United States and its competitors.
As I have said within our company and to our partners across the
industry:
``No great naval power has ever existed without a great
commercial fleet behind it. The United States can and must
reclaim that foundation.''
Hanwha Shipping stands ready to work with this Subcommittee and
Congress to make that vision a reality. Thank you for your leadership
and for including this statement in the hearing record.
Ryan C. Lynch,
President and CEO,
Hanwha Shipping.
______
Prepared Statement of David Kim, CEO, Hanwha Philly Shipyard
Chairman Sullivan, Ranking Member Blunt Rochester, and
distinguished members of the Subcommittee, Thank you for the
opportunity to submit this statement for the record on behalf of Hanwha
Philly Shipyard.
We commend the Subcommittee's focus on the policies and investments
necessary to rebuild U.S. shipbuilding capacity and revitalize the
Nation's maritime industrial base.
Introduction and Background
Hanwha is one of the world's leading shipbuilders, with a long
track record of delivering technologically advanced vessels to global
markets. Through Hanwha Philly Shipyard, our goal is to bring that same
standard of excellence to the United States by transforming the
Philadelphia shipyard into a world-class facility--expanding capacity,
modernizing infrastructure, and integrating the best of Hanwha's global
shipbuilding expertise with the innovation and skill of the American
workforce.
This partnership between world-class Korean shipbuilding capability
and American industrial strength is designed to strengthen the U.S.
maritime workforce, industrial resilience, and national security.
However, this transformation depends on a sustained demand signal and
targeted government investment to restart the commercial industry that
has been allowed to atrophy.
While the defense industrial base has received consistent support
for decades, the commercial shipbuilding industry has not. Since the
1980s, support has waned, and the United States has seen its once-
dominant position in the global shipbuilding market collapse. What
remains is a domestic industry surviving on limited coastwise trade
that, while critical, cannot alone sustain the ambitions America should
have as a maritime power. The SHIPS for America Act can change that.
Statement of Position
Hanwha Philly Shipyard strongly supports the SHIPS for America Act
as the policy foundation necessary to restore the competitiveness and
capacity of U.S. commercial shipbuilding. The combination of
predictable demand, infrastructure investment, and workforce
revitalization can catalyze a true rebirth of the American shipbuilding
enterprise.
Recommendations
Stable Demand Signal:
A strong and predictable pipeline of ship orders is the single most
important factor in restoring competitiveness. The Strategic
Commercial Fleet program can provide this foundation. As order
volume increases, economies of scale and specialization drive
efficiency, reducing the cost delta between U.S. and foreign
ship construction. Consistent demand also justifies long-term
investments in facilities, tooling, and workforce expansion.
Infrastructure and Modernization:
The transformation of Hanwha Philly Shipyard depends on modern
docks, cranes, and fabrication facilities capable of handling
the next generation of commercial and dual-use vessels. A
Maritime Trust Fund, modeled after successful transportation
sector programs, would provide the sustained capital necessary
for shipyard modernization. These investments will ensure that
American yards can build efficiently at scale and compete
globally.
Workforce Development:
Revitalizing American shipbuilding requires a blue-collar
renaissance. These are family-sustaining, high-skill jobs that
can anchor communities for generations. Federal and state
governments should invest not only in training and
apprenticeship programs but also in shifting cultural
attitudes--encouraging young Americans to see trades and
manufacturing careers as paths of pride and prosperity.
Technology Transfer and Supply Chain Co-Production:
Hanwha is committed to partnering with U.S. industry to facilitate
the transfer of technologies and capabilities that currently
exist entirely outside the United States. This includes
advanced LNG carrier production, integrated digital design
systems, and next-generation propulsion technologies. These
partnerships must be structured around clear plans to bring
these capabilities onshore, strengthening the domestic supply
chain and creating high-value American jobs.
Conclusion
The SHIPS for America Act represents a generational opportunity to
rebuild American shipbuilding from the ground up. With stable demand,
modern infrastructure, skilled workers, and global technology
partnerships, the United States can once again become a nation that
builds the ships that power and protect its prosperity.
As we often say at Hanwha:
``Shipbuilding is not just about steel and cranes; it is about
national capacity. A strong shipyard builds more than ships--it
builds sovereignty.''
Hanwha Philly Shipyard stands ready to partner with Congress and
industry to make that future a reality.
David Kim,
Chief Executive Officer,
Hanwha Philly Shipyard.
______
Prepared Statement of Heartland Fabrication, LLC, on behalf of
Heartland Fabrication
Chair Sullivan, Ranking Member Rochester, and Members of the
Subcommittee:
Heartland Fabrication appreciates the opportunity to submit this
statement for the record for the subcommittee hearing ``Sea Change:
Reviving Commercial Shipbuilding'' to strongly voice our support of the
Shipbuilding and Harbor Infrastructure for Prosperity and Security
(SHIPS) for America Act. We commend Congress for advancing the most
comprehensive Federal effort in a generation to rebuild the U.S.
commercial shipbuilding base and maritime workforce. The Act's
combination of durable financing through a new Maritime Security Trust
Fund, robust tax incentives, strategic fleet commitments, and workforce
development programs provides the foundation necessary to restore
American shipbuilding capacity, competitiveness, and long-term national
resilience.
Heartland Fabrication LLC, located on the Monongahela River in
Brownsville, Pennsylvania, carries forward more than a century of
shipbuilding heritage at its site. The company employs over 400 skilled
workers in good-paying, family-sustaining careers and is evaluating
capacity expansion that would add more than 100 new jobs. Since 2005,
Heartland has modernized and expanded operations with advanced
fabrication, blasting, and coating capabilities using American-made
steel. We invest over $30 million annually in salaries and benefits,
supporting both our employees and the regional economy. Our state-of-
the-art training center, located onsite, allows us to train and pay
employees as they develop their craft, ensuring a steady pipeline of
skilled tradespeople ready to meet national shipbuilding needs.
Heartland builds inland river hopper and deck barges that are vital
to the movement of bulk agricultural commodities, energy products,
steel, and other goods. These vessels transport cargo efficiently,
safely, and with a fraction of the environmental impact and cost of
alternative modes of transport.
Our workforce includes skilled welders, fitters, painters, and
machine operators, who we consider among the best in the country and
the heart of America's inland maritime industry. As part of a
vertically integrated group of affiliated Heartland companies,
operations extend beyond vessel construction to leasing, management,
and maintenance of inland marine assets, providing end-to-end support
for the inland waterway fleet. This combination of domestic production,
workforce expertise, and integrated asset management enables rapid
response to operational needs while reinforcing supply chain
reliability, industrial capacity, and national security.
Heartland Fabrication exemplifies the critical role inland, or
``brown-water,'' shipyards play in the U.S. maritime industrial base.
By sustaining a skilled American workforce, producing vessels
domestically from American steel, and supporting the inland waterway
fleet that underpins commerce and strategic transport, Heartland
demonstrates why brown-water shipbuilding must be explicitly recognized
and supported under the SHIPS for America Act.
The SHIPS for America Act presents a historic opportunity to
revitalize the U.S. shipbuilding industrial base. If implemented with
stable revenues, timely rulemaking, and clear administrative guidance,
the Act could meaningfully shift the economics of U.S. ship
construction and repair over the next decade. However, one essential
component of the national shipbuilding industrial base risks being
unintentionally excluded--the inland or ``brown-water'' shipyards that
build and maintain the barges, towboats, and workboats operating on
America's rivers and intracoastal waterways.
Inland shipyards are the backbone of the domestic maritime economy.
More than 200 small and medium-sized shipyards across 38 states employ
tens of thousands of skilled workers--welders, fitters, machinists, and
marine electricians--who construct and maintain the vessels that move
over 500 million tons of bulk commodities each year, including grain,
petroleum, steel, chemicals, and aggregates. The inland waterway system
is essential to national supply chain resilience and economic security.
Without these yards and the vessels they sustain, blue-water ports and
export terminals could not function.
Several provisions of the SHIPS for America Act--such as the 25
percent Shipyard Investment Tax Credit, the Shipbuilding Financial
Incentives Program, and the Small Shipyard and modernization grant
programs--are drafted broadly enough to cover shipyards that construct
or repair inland vessels.
However, many of the Act's signature initiatives focus explicitly
on oceangoing vessels or international trade. Without further
clarification, these inland yards may be ineligible for the Act's
principal tax, financing, and modernization incentives.
To ensure that the SHIPS for America Act supports all components of
the U.S. shipbuilding industrial base, Congress should adopt technical
clarifications and modest structural adjustments to ensure inland
shipyards are fully eligible for its programs. Specifically:
1. Define ``shipyard'' in statute to include facilities engaged in
the construction, repair, or modernization of inland barges,
towboats, and other vessels used in domestic commerce to remove
any interpretive ambiguity that inland facilities are covered.
2. Establish a modest funding set-aside--for example, 10 to 15
percent of Trust Fund and shipyard grant resources--to ensure
inland and brown-water shipyards have equitable access to
assistance.
3. Clarify workforce eligibility so that training and apprenticeship
grants may support inland trades such as towboat engineering,
barge fit-up, and marine welding.
4. Incorporate inland vessel modernization and environmental
upgrades, including low-emission repowering and hull-life
extension projects, into eligible activities.
These provisions are straightforward, cost-neutral, and consistent
with the Act's stated objectives of strengthening America's
shipbuilding base, protecting supply chains, and creating family-wage
maritime jobs. The inland waterway system moves freight at one-tenth
the fuel cost per ton-mile of trucks, reducing congestion, emissions,
and logistics costs nationwide. Supporting inland shipyards advances
both economic and environmental goals while reinforcing U.S.
transportation resilience.
Inland shipyards are America's quiet maritime infrastructure--often
out of sight, but indispensable. They are an integral part of the
shipbuilding ecosystem that the SHIPS for America Act seeks to restore.
A clear statutory definition and modest funding allocation will ensure
that inland and brown-water facilities are not unintentionally excluded
during implementation and that the benefits of this historic
legislation extend across the full U.S. maritime industrial base.
As a working example of the inland shipbuilding industrial base,
Heartland Fabrication stands ready to expand production, train the next
generation of skilled maritime tradespeople, and continue supporting
the inland waterway fleet that is critical to U.S. commerce and supply
chain resilience. By ensuring that inland shipyards like Heartland are
explicitly included in the SHIPS for America Act, Congress will
reinforce the full maritime industrial ecosystem and help secure
American shipbuilding leadership for decades to come. Congress should
ensure that inland shipyards and the brown-water fleet are explicitly
included in the SHIPS for America Act's eligibility definitions and
funding mechanisms.
For these reasons, Heartland Fabrication urges Congress to ensure
that inland shipbuilders are fully included in any national
shipbuilding revitalization strategy or legislation. The inland
maritime sector is an indispensable component of the U.S. maritime
industrial base and merits equitable recognition and support alongside
coastal and blue-water shipyards.
Respectfully submitted,
Ted Stilgenbauer,
President and Chief Operating Officer,
Heartland Fabrication.
______
Prepared Statement of Fraser Industries LLC
On behalf of Fraser Shipyards, Lake Assault Boats and Northern
Engineering, wholly owned subsidiaries of Fraser Industries, I am
pleased to express our strong support for the SHIPS Act. Fraser
Industries is unique among North American shipyards. We have over 100
acres available for immediate expansion as well as an under-employed
maritime workforce ready to go to work. We can IMMEDIATELY begin
repairing in our two (2) underutilized graving docks the backlogged
U.S. Navy vessels awaiting repair, and IMMEDIATELY begin constructing
additional new vessels, additive to our existing four (4) United States
Navy contracts and numerous police and fire boats currently under
construction and delivered across the United States and globally.
Fraser Industries strongly supports the SHIPS for America Act
because it strengthens domestic shipbuilding, enhances national
security, and supports American workers. The SHIPS Act helps realize
the full commercial and military maritime potential at Fraser
Industries and other shipyards across the United States. We ask your
support by signing on as cosponsor of the Ships Act and to attend the
Sincerely,
Patrick Kelly,
Chief Executive Officer,
Fraser Industries LLC.
______
Prepared Statement of Dan Thorogood, President and CEO, Fairwater
Chair Cantwell, Ranking Member Cruz, and Members of the
Subcommittee:
Thank you for the opportunity to submit this statement for the
record in support of the SHIPS for America Act and the Subcommittee's
efforts to strengthen the U.S. commercial maritime industry.
Fairwater is a leading provider of petroleum and chemical
transportation solutions under the Jones Act and Tanker Security
Program. Our company operates along every U.S. coastline and plays a
critical role in the safe movement of energy that reliably fuels
American communities and industries 365 days a year. With deep
experience across the U.S. maritime sector, we understand the strategic
importance of a robust Jones Act industry, flourishing U.S.-flag fleet
internationally and a strong U.S. shipbuilding and repair base.
We are heartened that Congress is taking long-overdue steps to
revitalize the Nation's maritime policy through the SHIPS for America
Act. Fairwater supports this legislation, which will increase the
number of U.S.-flag tankers in international trade, expand job
opportunities for American mariners and strengthen national and energy
security. By rebuilding commercial shipbuilding capacity and promoting
U.S.-flag participation in international trade, this legislation will
help ensure that critical maritime expertise and infrastructure remain
under American control.
We urge the Committee and Congress to advance and enact the SHIPS
for America Act to restore U.S. maritime strength and reaffirm our
Nation's leadership on the world's oceans.
Thank you for your consideration and continued commitment to
America's maritime future.
Daniel J. Thorogood,
CEO.
______
Prepared Statement of Elizabeth Kennedy,
Director of Government Relations, Activate
Chair Cruz, Ranking Member Cantwell, Subcommittee Chair Sullivan,
Ranking Member Blunt Rochester, and Members of the Subcommittee:
Activate appreciates the opportunity to submit this statement for
the record in support of the SHIPS for America Act and the broader
bipartisan, bicameral effort to rebuild America's maritime industrial
base.
Founded in 2015, Activate is a 501(c)(3) nonprofit organization
that enables scientists and engineers to bring their critical research
to market through a two-year fellowship program. Activate has supported
nearly 300 fellows leading to nearly 250 startup companies across
industries of national importance including advanced manufacturing,
robotics, energy, and materials science in more than 25 states, which
have raised more than $5 billion total in follow-on funding and created
over 3,000 jobs. Our partners include the U.S. Department of Energy
(DOE), the National Science Foundation (NSF), the Defense Advanced
Research Projects Agency (DARPA), and the Department of Commerce
through the CHIPS R&D Office.
Today, the United States builds roughly 0.1 percent of the world's
commercial ships, down from about 5 percent in the 1970s. This dramatic
decline has eroded U.S. shipyard capacity, supply chain expertise, and
maritime workforce development posing serious risks to both national
and economic security. The SHIPS for America Act seeks to reverse this
trajectory by proposing approximately $20 billion in strategic
investments to modernize shipyards, rebuild maritime infrastructure,
and catalyze innovation across the sector. We are thankful for the
strong bipartisan support for this legislation and the shared vision of
restoring U.S. leadership in shipbuilding through cutting-edge science
and technology. We are particularly supportive of the $50M included for
a national maritime innovation accelerator supporting new innovation in
ship-building and systems.
Modern shipbuilding is no longer defined by steel and dry docks
alone. It is increasingly dependent on advanced materials, electronics,
and sensors: domains where U.S. innovators excel but where early-stage
support remains limited. Developing domestic technologies across these
fields is critical to protecting the Nation's warfighters, ensuring
supply chain independence, and maintaining a technological advantage
over global adversaries. An example from the Activate network is
Enertia Microsystems Inc., an Activate company developing the world's
most precise MEMS inertial sensors, offering over 1,000x greater
accuracy than conventional MEMS sensors. These sensors are vital for
next-generation navigation systems across ships, submarines, and
autonomous maritime platforms. Innovations like this illustrate how
investing in the early-stage R&D ecosystem strengthens the industrial
base that underpins U.S. maritime dominance.
The SHIPS for America Act thoughtfully provides direct resources
for maritime innovation programming, the incubation of new
technologies, and a diverse array of public private partnerships to
better harness the American industrial base. Once passed, Activate and
our peers look forward to connecting our innovation networks into this
new, critical infrastructure for shipping innovation.
America's maritime leadership has always been rooted in innovation.
The SHIPS for America Act represents a once-in-a-generation opportunity
to rebuild our shipbuilding capacity, restore industrial resilience,
and secure our technological edge at sea. Activate stands ready to
support Congress, the Administration, and the maritime community in
achieving this goal, ensuring that the ships of the future are
designed, built, and powered in the United States.
Thank you for the opportunity to submit this statement.
Elizabeth Kennedy,
Director of Government Relations,
Activate.
______
Corpus Christi Regional Economic Development Corporation
Corpus Christi, TX, October 27, 2025
Hon. Dan Sullivan,
Chairman, Subcommittee on Coast Guard, Maritime, and Fisheries,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.
Re: Statement for the Record--''Sea Change: Reviving Commercial
Shipbuilding'' Hearing before the Subcommittee on Coast
Guard, Maritime, and Fisheries October 28, 2025
Dear Chairman Sullivan and Members of the Subcommittee:
On behalf of the Corpus Christi Regional Economic Development
Corporation (CCREDC), I respectfully submit this statement for the
record in support of the Subcommittee's hearing titled ``Sea Change:
Reviving Commercial Shipbuilding. ``We commend the Subcommittee for its
leadership in examining policies to strengthen and modernize the United
States' commercial shipbuilding and maritime industrial base.
The Corpus Christi region is one of America's most strategically
significant coastal hubs, serving as the Nation's largest energy export
gateway and a center for heavy industry, maritime logistics, and
defense activity. Our port complex and industrial corridor are integral
to U.S. economic security and national resilience, with growing
capacity to support ship repair, fabrication, and advanced
manufacturing operations that complement the Nation's broader maritime
goals.
Revitalizing commercial shipbuilding presents an extraordinary
opportunity to align national defense priorities with regional economic
development. The Gulf Coast-and particularly South Texas-is uniquely
positioned to advance this effort due to its deepwater infrastructure,
industrial workforce, and access to key supply chains for steel,
energy, and fabrication. Targeted Federal investment in domestic
shipyard capacity, workforce development, and innovation incentives
would yield measurable returns in employment, industrial productivity,
and national security readiness.
In partnership with Del Mar College, Texas A&M University-Corpus
Christi, and the Port of Corpus Christi, CCREDC is working to expand
workforce pathways in maritime technology, ship systems engineering,
and industrial trades. These programs are directly responsive to the
needs of a revitalized shipbuilding ecosystem and can serve as models
for regional collaboration in support of Federal maritime goals.
We commend the Subcommittee-particularly Chairman Sullivan and
Senator Cruz-for advancing a national dialogue on the future of
American shipbuilding. The Corpus Christi Regional Economic Development
Corporation stands ready to collaborate with Federal and industry
partners to ensure that the Gulf Coast remains a cornerstone of
America's maritime resurgence.
Thank you for your consideration of this statement and for your
continued leadership on this critical issue.
Respectfully submitted,
Mike Culbertson,
President and CEO.
Corpus Christi Regional Economic Development Corporation.
______
Prepared Statement of DNV USA Inc.
Craig Koehne, Regional Manager, DNV Maritime Region Americas and Steven
Sawhill, Director, U.S. Government and Public Affairs
Chairman Sullivan, Ranking Member Blunt Rochester, and Members of
the Committee, thank you for holding this hearing and for the
opportunity to submit a statement on this most important and timely
topic--reviving commercial shipbuilding in the United States, renewing
the U.S. merchant fleet, and reinvigorating the maritime industry
across the country.
About DNV--DNV is an independent global assurance and risk
management company and the world's leading maritime classification
society.\1\ DNV was established in Norway in 1864 and has been
operating in the United States for more than 125 years, since 1898.
Today, DNV USA is headquartered in Houston, Texas, with 36 offices
across 22 states. DNV USA is an integral and contributing member of
U.S. society and the U.S. maritime sector, employs some 1700 Americans,
and pays millions in U.S. Federal and state corporate income taxes. A
recognized and approved classification society by the U.S. Coast Guard,
DNV has delegated statutory certification authorities for U.S.-flag
vessels under 46 CFR Parts 2 and 8, and is a trusted maritime technical
service provider to the U.S. Departments of Defense, Homeland Security,
and Commerce (Navy, Military Sealift Command, Army Corps of Engineers,
Coast Guard, NOAA).
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\1\ A maritime classification society is a non-governmental
organization that establishes and maintains technical standards for the
construction and operation of ships and offshore structures.
Classification societies certify that ships are designed, built, and
maintained according to specific standards, which helps ensure safety
and reliability at sea. This certification is often required for ship
registration and obtaining marine insurance, and it is mandatory under
current international regulations for ships trading in international
commerce.
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Position statement--DNV supports the bipartisan resolve of the
Congress and the Administration to revitalize the United States'
maritime industry with programs and policies that enable the growth of
U.S. shipyards and the maritime industrial base, expand the U.S.
maritime workforce, and rejuvenate the international fleet of vessels
of the United States. DNV agrees this requires a comprehensive strategy
that includes securing consistent, predictable, and durable Federal
funding, and commends the sponsors and cosponsors of the SHIPS for
America Act (H.R. 3151 and S.1541) and the Building Ships in America
Act (S.1536) for the proposals they have put forward to do so.
The Administration has also emphasized the need to look to the
United States' allies and partners and facilitate contributions from
companies domiciled in allied nations--such as DNV--to help strengthen
the shipbuilding capacity of the United States (EO 14269, Restoring
America's Maritime Dominance). DNV agrees and offers suggestions to
improve the bills' ability to ensure their active and beneficial
participation.
Shipyard and ship-building incentives--Among various incentives to
expand and establish shipyards and build ships in the United States,
the bills propose to create a new Credit for Construction of Shipyard
Facilities in Sec. 48G of the Internal Revenue Code (Ref: H.R. 3151
Sec. 706 and S. 1536 Sec. 7) and a new United States Vessel Investment
Credit in Sec. 48F of the Internal Revenue Code (Ref. H.R. 3151
Sec. 701 and S. 1536 Sec. 2).
These provisions take a similar approach to energy investment,
production, and advanced engineering project credits, which have been
successful in incentivizing investment and employment in their
associated sectors for many years. The 25 percent Shipyard Facility
Credit and the 33 percent Vessel Investment Credit are good examples of
incentivizing, non-discriminatory measures to promote American
shipbuilding; DNV supports them.
However, the bills also propose an additional bonus tax credit of 2
percent if a newly built American vessel is classified by the American
Bureau of Shipping--one of seven global maritime classification
societies currently recognized and approved by the U.S. Coast Guard and
to which it delegates statutory certification authorities for U.S.-flag
vessels.\2\
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\2\ Congress gave ABS a statutory monopoly for providing
classification services to U.S. Government vessels in 46 USC
Sec. 3316(a), but not for U.S. commercial vessels or offshore
facilities, for which they authorized the Coast Guard to delegate
statutory certification authorities to ABS and foreign classification
societies (Sec. Sec. 3316(b) and (d)).
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As currently proposed, the vessel classification credit is
discriminatory and will hinder foreign direct investment, competition,
and innovation--all to the detriment of the SHIPS for America Act's
intentions of revitalizing the U.S. maritime industry and all in
contravention of the policy objectives in the President's maritime
executive order.
This bonus credit will drive monopolization in the U.S. maritime
classification market. Monopolization will not only increase the cost
of shipbuilding in the United States, it will also deny the U.S.
maritime industry the wealth of international knowledge, expertise, and
innovation that all approved classification societies have to offer,
and all of which the industry needs to truly revitalize and
reconstitute itself as a force on the global stage.
Position--
DNV supports the general, non-discriminatory Sec. 48F Vessel
Investment Credit and Sec. 48G Shipyard Facility Credit in
S.1536, Sec. Sec. 2 and 7.
DNV opposes the discriminatory bonus credit for classifying
U.S. ships in S.1536, Sec. 2.
Recommendation--
Congress should strike the 2 percent vessel classification
credit from S.1536 Sec. 2 and reprogram it by increasing the
general Vessel Investment Credit from 33 percent to 35 percent.
Congress should ensure that any classification-related
incentives are available to all classification societies
recognized and approved by the U.S. Coast Guard.
Ship classification in the United States today
The U.S. Coast Guard delegates certain statutory authorities to
recognized ship classification societies, allowing them to conduct
vessel inspections, surveys, and certifications on behalf of the Coast
Guard under programs such as the Alternate Compliance Program (ACP).
These delegations are governed by Federal regulations (notably 46 CFR
Parts 2 and 8), and only societies that meet rigorous standards for
experience, technical capability, and international standing are
approved.
There are seven classification societies currently recognized by
the U.S. Coast Guard: the American Bureau of Shipping (ABS), Bureau
Veritas (BV), Det Norske Veritas (DNV), Indian Register of Shipping
(IRS), Lloyd's Register (LR), Nippon Kaiji Kyokai (NK), and Registro
Italiano Navale (RINA). They provide classification services to a
global market where they are globally competitive, with the four
largest societies--ABS, DNV, LR, and NK--having global market shares
from 15.2 to 17.2 percent with respect to commercial vessels in
international trade.\3\
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\3\ Class market share (by gross tonnage) of commercial vessels of
100 gross tons or more, with certificates for international trade;
includes non-ship structures such as mobile offshore drilling units,
and excludes vessels that are non-self-propelled, non-commercial, or
class unknown (S&P Global, August 2025).
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These delegations benefit the U.S. maritime industry by leveraging
the global expertise, technical standards, and resources of these
independent organizations. This arrangement streamlines regulatory
compliance, promotes international best practices, and enhances safety
and innovation in ship design and operation. By allowing multiple
qualified societies to participate, the Coast Guard ensures
competition, which helps control costs, fosters technological
advancement, and supports the competitiveness of U.S. shipyards and
vessel operators in the global market.
Conclusion--The Building Ships in America Act (S.1536) should be
revised to ensure all classification societies recognized and approved
by the U.S. Coast Guard can contribute to the revitalization of the
U.S. maritime industry on a competitive, non-discriminatory basis.
Bipartisan antitrust principles emphasize that competition protects
innovation, resilience, and consumer interests, and both current and
previous administrations have challenged monopolistic practices,
especially where market fairness and consumer choice is at stake.
Chairman Sullivan, Ranking Member Blunt Rochester, and Members of
the Committee, thank you again for holding this hearing and for the
opportunity to submit our statement. DNV has been part of the U.S.
maritime industry for more than a century; we look forward to working
together with you and your colleagues to ensure it can grow and thrive
into the next century.
______
Prepared Statement of David Levy (Austin, TX), Software Executive,
Maritime Technology Sector
Chair Cruz, Ranking Member Cantwell, and Members of the
Subcommittee:
Thank you for the opportunity to submit this statement in support
of the SHIPS for America Act. I write as a software executive in the
maritime technology sector with seven years of experience at one of the
world's most prominent vessel performance optimization companies,
working daily with shipowners and operators to improve efficiency and
reduce emissions.
I strongly support the SHIPS for America Act. This legislation
represents a critical investment in both economic security and national
security through the revitalization of America's commercial maritime
industrial base.
Economic and National Security Imperative
The decline of U.S. shipbuilding capacity is not merely an economic
concern--it is a national security vulnerability. A robust domestic
maritime industry ensures that America can build, maintain, and operate
the vessels critical to both commerce and defense. Countries that
dominate shipbuilding today--China, South Korea, and Japan--understand
what we have forgotten: maritime capability is foundational to economic
and military power.
From my perspective in maritime technology, I witness daily how
vessel operators worldwide invest in modern, efficient ships while
America's commercial fleet ages and our shipyards struggle. The SHIPS
for America Act would reverse this trend, creating the conditions
necessary for American shipbuilders to compete and for American
operators to invest in U.S.-built vessels.
Creating Pathways for Young Americans
This legislation should be understood as a job creation act--one
that will produce tens of thousands of well-paying, skilled jobs.
Shipbuilding and maritime operations offer exactly the kind of careers
that young men and women need: work that is tangible, meaningful, and
builds real capability.
Young men in particular are struggling to find their place in the
21st-century economy. The maritime sector offers a solution: careers in
welding, engineering, operations, logistics, and technology that
provide purpose, dignity, and economic security. These are not jobs
that can be outsourced. They are American jobs that build American
strength.
Revitalizing U.S. shipbuilding means creating apprenticeships,
technical training programs, and career pathways for a generation that
needs opportunity. This is an investment in people as much as in ships.
Recommendation
I urge the Committee to pass the SHIPS for America Act without
delay. This legislation addresses a strategic weakness that grows more
acute with each passing year. Rebuilding America's maritime industrial
base is not optional--it is essential to our economic competitiveness,
our national security, and our ability to offer meaningful work to the
next generation.
Thank you for your consideration of this critical legislation and
for your leadership in strengthening American maritime capability.
Respectfully submitted,
David Levy, Austin, TX,
Software Executive,
Maritime Technology Sector.
______
Prepared Statement of Dave Matsuda, Founder,
Small Shipyard Grant Coalition
The Small Shipyard Grant Coalition, representing U.S. vessel
construction and repair facilities as well as U.S. shipyard equipment
manufacturers, strongly supports the SHIPS for America Act. This
visionary legislation strengthens America's maritime industrial base by
investing in our country's small shipyards, helping ensure the U.S.
remains competitive in shipbuilding and repair.
By proposing increased funding for the Small Shipyard Grant Program
to $1 billion over the next ten years, the SHIPS for America Act builds
on the success of a proven, efficient public-private partnership model.
The model uses Federal grants to incentivize investments in U.S.-
manufactured shipyard equipment as well as worker training programs.
Since 2008, the program has worked to modernize U.S. shipyards, support
good paying jobs and promote the success of America's workboat
operators, including operators of government and commercial boats.
The SHIPS Act recognizes the efficiency of the Small Shipyard Grant
Program addresses the one major challenge the program has faced: lack
of funding. We are grateful to Senators Kelly and Young, and
Congressmen Garamendi and Kelly, for their leadership in championing
this critical initiative.
Proven Success and High Demand
The Small Shipyard Grant Program is among the most efficient
Federal programs supporting industrial modernization. Since its
inception, developed by legislation proposed by the U.S. Senate
Committee on Commerce, Science and Transportation, MARAD has
successfully administered 17 rounds of grants, awarding more than 380
grants across 34 U.S. states and territories and in every maritime
region of the country. Agency staff have fine-tuned the program to
quickly get funding on projects, while making fair allocation decisions
and ensuring that funding directly supports shipyard productivity
improvements.
The program's success relies upon:
Discretionary, shipyard-driven projects: Every shipyard is
different, and the program allows each to propose projects that
reflect their own efficiency and modernization priorities.
Simplified application process: Only essential technical and
statutory information is requested, minimizing administrative
burden.
Rapid evaluation: The program's short, 60-day evaluation
period minimizes cost uncertainty and allows applicants to be
able to make timely capital decisions whether they receive a
grant award or not.
Proactive environmental review: Agency staff are available
to provide pre-application consultations to assist applicants
in identifying potential environmental risks before application
submission; this helps prevent delays and budget overruns.
Targeted project types: MARAD encourages projects with high
likelihood of rapid completion and measurable operational
benefits, including acquisition of proven U.S.-built equipment
and worker training programs, while discouraging high-risk,
long-duration projects.
Minimized reporting burden: Project updates are only
required during the grant period, and closeout reporting is
typically completed within one year.
The program's track record demonstrates tangible benefits: funded
projects are completed quickly, grant funds are spent efficiently, and
shipyards achieve measurable operational improvements that support both
commercial and national security needs.
Importance of Increased Funding
As documented in a recent study by the Government Accountability
Office (p. 28, GAO-25-107304), the Small Shipyard Grant Program is
consistently over-subscribed, with many meritorious projects unable to
receive funding under current levels, which have historically maxed out
at $20 million per year. The SHIPS for America Act, consistent with the
President's FY2026 budget proposal, would provide $100 million--five
times the recently appropriated maximum--and provide dedicated funding
through a multi-year trust fund. This reliable source of increased
funding is essential to growing America's maritime industrial base.
Operating a commercial shipyard requires costly investment in
waterfront infrastructure that inland industrial facilities do not have
to face. But, unlike larger shipyards, small shipyards often do not
have access to capital to continuously modernize the facility and
equipment. This hurts their competitiveness. Further, these small
shipyards face the challenge of competing in the same labor market with
larger shipyards and inland industrial facilities, putting pressure on
their competitiveness through higher labor costs, as well.
Small shipyards rely on targeted investments from the Small
Shipyard Grant Program to produce significant results, some of which
can be transformative. Accomplishing transformative changes at larger
shipyard facilities often involve complex projects requiring
significantly higher investments. The proposed increase in funding will
allow the program to fully leverage its proven efficiency and deliver
transformative impact in many parts of the U.S. maritime industrial
base that do not have access to other Federal programs.
Conclusion
The Small Shipyard Grant Program is a model of success for the
rapid modernization of a key part of the U.S. maritime industrial base.
The SHIPS for America Act proposal ensures that small shipyards can
continue to modernize efficiently, remain competitive globally, and
support national security interests through job creation, supply chain
resilience, and enhanced efficiency and capabilities. Increased funding
is not just desirable--it is urgently needed to meet the proven demand
for these critical investments.
Dave Matsuda,
Founder,
Small Shipyard Grant Coalition.
Disclaimer: the view expressed in this statement are those of Mr.
Dave Matsuda--founder of the Small Shipyard Grant Coalition and 17th
U.S. Maritime Administrator--and do not necessarily reflect those of
each individual Coalition member or participant. The Small Shipyard
Grant Coalition is an informal coalition sponsored by Matsuda &
Associates, LLC.
______
Prepared Statement of Sean Kline, President and CEO,
Chamber of Shipping of America (CSA)
Chairman Sullivan, Ranking Member Rochester, and Members of the
Committee:
Thank you for the opportunity to submit this statement of the
Chamber of Shipping of America's support for the SHIPS for America Act.
CSA represents 37 U.S. based companies that own, operate or charter
oceangoing tankers, container ships, car carriers, special purpose and
other merchant vessels engaged in both the domestic and international
trades, as well as other entities that maintain a commercial interest
in the operation of such oceangoing vessels. CSA's members own and
operate U.S. flag and non-U.S. flag vessels.
For over 100 years, CSA has represented shipowners in a variety of
areas including the U.S. legislative process, the U.S. regulatory
process and at the International Maritime Organization (via our
participation on the delegation of the United States and the
International Chamber of Shipping) and the International Labor
Organization.
CSA's goal and mission to our members is to represent the
shipowners interests in the development of effective and comprehensive
safety and environmental legislation, regulation and international
instruments. Our obligation to members is to advise them on current and
future requirements which will be applied to their vessels to ensure
full compliance with these legal requirements. We provide a voice of
the maritime industry operating in the U.S. to support sound public
policy through legislative and regulatory initiatives.
The Chamber of Shipping of America is proud to support the SHIPS
for America Act because it enhances national security, strengthens the
maritime transportation system, and supports American opportunity and
maritime jobs. The concepts included in this legislation will ensure
the reinvigoration of the U.S. flag fleet trading internationally and
our domestic shipbuilding industry which is critical for our national
security and economic wellbeing. This comprehensive approach, which
will establish national oversight and consistent funding for the U.S.
maritime industry, is essential to rebuilding the U.S. maritime
industry to a level which can support our national security and
economic needs, including ensuring supply chain security.
We advocate for the Committee to ensure sustained funding for the
U.S. commercial maritime industry which has been long overlooked, and
to support amendments that incentivize our maritime industry. We thank
the sponsors for their efforts and stand ready to provide additional
comments and urge the committee to promptly pass the SHIPS for America
Act.
CSA appreciates the opportunity to submit this statement and would
be pleased to answer any questions related to the SHIPS for America Act
or stimulated by our comments.
Sincerely,
Sean Kline,
President and CEO.
______
Prepared Statement of Mikal B Enhance industrial capacity and modernization: enabling
small shipyards to upgrade drydocks, cranes, and fabrication
technology to meet the evolving needs of both commercial and
government fleets.
Bolster workforce development: ensuring a pipeline of
skilled tradespeople--welders, fitters, machinists, and marine
electricians--who are essential to sustaining the U.S. maritime
sector.
Improve regional economic resilience: supporting good-paying
jobs and strengthening local economies that depend on maritime
industry vitality.
These investments are not abstract--they directly translate into
ship repair and maintenance capacity that supports the U.S. Navy, Coast
Guard, and the commercial maritime sector. They ensure that critical
vessels remain operational, safe, and mission ready.
Colonna's Shipyard urges Congress to enact the SHIPS for America
Act and fully fund Section 501 to continue empowering small shipyards
to contribute to our Nation's economic and national security.
Thank you for your leadership in advancing this important
legislation and for your ongoing commitment to American shipbuilding.
Respectfully submitted,
Jordan Webb,
President and General Manager,
Colonna's Shipyard, Inc.
______
Prepared Statement of Austin Gray, Co-Founder, Blue Water Autonomy
Chair Sullivan, Ranking Member Blunt Rochester, and Members of the
Subcommittee,
Thank you for the opportunity to submit this statement in support
of the SHIPS for America Act and the Committee's work to rebuild
America's commercial maritime strength.
My name is Austin Gray, and I am the Co-Founder of Blue Water
Autonomy, a shipbuilding and technology company developing highly
autonomous, mission-flexible ships to expand the capacity, resilience,
and lethality of our Nation's navy tonight and serve key commercial
maritime industries tomorrow. Our team includes engineers, veterans,
and shipbuilders who believe that America's maritime power is
inseparable from its industrial base. Technology, when paired with
policy foresight, can help both thrive again.
Why This Bill Matters
The SHIPS for America Act is more than an industrial policy; it is
a generational commitment to restore America's maritime
competitiveness. It recognizes what many of us working in the field
already know: that innovation, workforce, and industrial capacity must
rise together if we are to maintain leadership at sea.
Blue Water Autonomy strongly supports this bill's provisions that:
Incentivize innovation through R&D and technology programs,
which enable startups like ours to prototype and test advanced
ship systems here in the United States.
Offer tax credits for domestic ship construction and
modernization, which directly lower the barriers for small and
emerging builders to compete and partner with established
yards.
Invest in workforce development and apprenticeships,
ensuring that the next generation of American shipbuilders can
build both steel and software with equal mastery.
These measures do not just help our company; they help sustain the
ecosystem we depend on: naval architects, small suppliers, coastal
communities, and the shipyards that once defined our national strength.
A Vision for Renewal
We see this bill as part of a larger story--one where America
rediscovers how to build. Not just ships, but confidence that we can
once again make hard things here at home, faster and better than anyone
else.
At Blue Water Autonomy, we are building unmanned vessels that
reduce operational risk, lower lifecycle costs, and multiply naval
presence. But we cannot succeed in a vacuum. We need welders as much as
coders, shipfitters as much as AI engineers. The SHIPS for America Act
recognizes that by pairing twenty-first century technology investment
with twentieth century industrial muscle.
This legislation does not only benefit innovators like us; it
strengthens the whole foundation--from legacy yards to next-generation
startups--that keeps America's maritime capability alive.
Conclusion
We urge the Committee to move swiftly on this bill. The SHIPS for
America Act is not just sound policy; it is a signal of national
resolve. It tells every engineer, welder, and sailor that America still
builds, and that we intend to lead the seas not just with the best
ships, but with the best ideas.
Thank you for your leadership and for including the perspectives of
emerging companies like ours in this vital discussion.
Very respectfully,
Austin Gray,
Co-Founder, Chief Strategy Officer,
Blue Water Autonomy.
______
Prepared Statement of Bayonne Dry Dock & Repair Corp.
Chairman Sullivan, Ranking Member Blunt Rochester, and Members of
the Subcommittee:
Bayonne Dry Dock & Repair Corp. appreciates the opportunity to
submit this statement in strong support of the SHIPS for America Act
and the Subcommittee's focus on reviving the U.S. maritime industrial
base. Bayonne Dry Dock & Repair is a privately operated ship repair
facility in the Port of New York and New Jersey. We boast one of the
Nation's Largest Graving Docks (1092' LOA) and Highest-Capacity Mobile
Boat Hoists (``Travel-Lift'') at 1280 Metric Tons. For decades we have
supported Military Sealift Command (MSC), Maritime Administration
(MARAD), and United States Coast Guard (USCG) vessels, providing dry-
docking, complex repairs, and readiness support in a critical port
region. Our skilled workforce including welders, machinists,
electricians, and coatings professionals, anchors a capability that is
difficult and costly to reconstitute once lost.
We support the SHIPS for America Act's approach. A credible
national strategy must pair new-build incentives with stable, modern
repair and maintenance capacity, the practical backbone of fleet
availability and logistics readiness. Today, unpredictable Federal
repair awards can leave high-capacity dry docks and their workforce
idle despite a well-documented maintenance backlog. On the East Coast,
the number of large commercial dry docks capable of handling federally
utilized ships is limited; aging infrastructure can idle an entire node
of capacity for months. Access infrastructure matters as well:
strategic ports require reliable channels and in-yard systems to keep
vessels on schedule. Finally, workforce retention rises and falls with
demand stability
Recommendations to maximize the bill's impact and implementation
1. Treat repair and overhaul as co-equal with new builds. In
implementation plans and oversight (Title I), ensure MSC/MARAD
treat repair predictability as a readiness metric and align
with the bill's sealift objectives (Title III, Part H).
2. Stabilize Federal repair pipelines. Direct transparent schedules,
timely awards, and advanced notice of changes to allow
qualified yards to plan and staff efficiently (Title III--
sealift policy, prioritization, and reports).
3. Modernize critical yard infrastructure and enable critical
projects via:
Assistance for Small Shipyards enhancements (Title V,
Subtitle A),
Shipbuilding Financial Incentives/Title XI
modernization (Title V, Subtitles A & C), and
DoD/Industrial Base coordination, including a DPA plan
of action (Title V, Subtitle B).
4. Fund port access where authorized. Encourage USACE to initiate
feasibility/design (PED) for navigation improvements that
unlock repair throughput in strategic ports and prioritize such
work in Corps planning (Title V, Subtitle C--Marine
Infrastructure Readiness assessment; coordination with Energy &
Water appropriations).
5. Grow and retain the workforce. Expand targeted apprenticeships
and training grants, leveraging the bill's workforce pipeline
and incentives (Title VI, Subtitles A-D), with periodic
reporting on backlog reduction and private-yard utilization.
America cannot achieve maritime dominance if ships are unavailable
due to lack of timely repair. SHIPS for America is an important step,
paired with predictable repair pipelines, targeted modernization,
improved access, and sustained workforce investment, it can deliver the
reliable industrial base our national security and economy demand.
Bayonne Dry Dock & Repair stands ready to assist the Subcommittee and
to execute this mission on the East Coast.
Submitted by:
Ryan Patrick Woerner,
Executive Vice President and General Counsel,
Bayonne Dry Dock & Repair Corp. (Bayonne, NJ)
______
Prepared Statement of Association for Uncrewed Vehicle Systems
International (AUVSI)
Chairman Sullivan, Ranking Member Blunt Rochester, and Members of
the Subcommittee:
On behalf of the Association for Uncrewed Vehicle Systems
International (AUVSI) and our members, we would like to express our
gratitude for holding this important hearing on the critical need for
revitalizing the U.S. commercial shipbuilding industry to support the
safe and efficient integration of uncrewed maritime systems (UMS) into
the Nation's maritime transportation system (MTS). This hearing is
timely, and we applaud you for conducting this important oversight.
AUVSI is the world's largest industry association representing over
400 corporations and 8,000 professionals across more than 60 allied
countries in industry, government and academia. Our members span the
defense, civil, and commercial sectors. Today, we submit testimony to
the Subcommittee on Coast Guard, Maritime, and Fisheries representing
our UMS members, including uncrewed surface vehicles (USVs) and
uncrewed underwater vehicles (UUV) maritime operations.
Maritime security and efficiency demand vigilance, innovation, and
progress. We must address two key questions:
1. How do we modernize shipbuilding to meet current and future
challenges?
2. How can autonomy enhance safety, efficiency, and resilience in
the maritime ecosystem? The solutions require urgency and
purpose.
We are at a pivotal moment, with UMS unlocking benefits in safety,
technological leadership, economic activity, and workforce
opportunities. Supporting the advanced maritime and autonomy industry
must be a national priority to expand the economic and safety benefits
for the commercial shipping industry, as well as extending the
operational reach of our U.S. Navy and U.S. Coast Guard. We also must
consider geopolitical and global economic considerations. Today, the
United States has fewer than 80 oceangoing ships in international
commerce and limited shipbuilding capacity, while People's Republic of
China has both the largest commercial shipping and naval battle force,
and commands over 50 percent of global shipbuilding and over 70 percent
of new orders. This is a concerning metric for national security and
economic competitiveness that demands urgent attention and significant,
ongoing investment.
AUVSI and our members are prepared to help address this challenge.
The UMS industry delivers cost-effective solutions for commercial
shipping, environmental monitoring, offshore energy, fisheries,
infrastructure assessments, defense, and beyond. These systems
transform vessel design, propulsion, sensors, and navigation, unlocking
innovative capabilities for coastal and open-ocean operations while
enhancing productivity and safety. U.S. companies are investing in
high-rate production facilities, generating thousands of manufacturing
jobs across numerous congressional districts and states. However, while
the U.S. shipbuilding industry supports initial UMS adoption, scaling
these technologies demands revitalization. Key barriers--aging
infrastructure, outdated construction methods, and workforce
shortages--must be addressed to fully realize the potential of UMS and
strengthen U.S. maritime leadership.
The U.S. has an opportunity to lead in this space, recapitalizing
our domestic fleet and becoming a global exporter of UMS technology,
but to do so, sustained investment into domestic capacity is required.
Additionally, the U.S. must make meaningful progress on regulations for
digital navigation, commercial, and civil use of UMS.
To revitalize the maritime industry, Congress must:
1. Pass the SHIPS for America Act. AUVSI and our maritime members
staunchly support the passing of this legislation to expand the
U.S.-flag fleet, rebuild the industrial base, and provide
incentives like tax credits. AUVSI encourages garnering as many
bipartisan cosponsors possible to expeditiously move the SHIPS
for America Act through the legislative process.
2. Increase Federal investment in UMS. Fund research, development,
and deployment of UMS to enhance maritime domain awareness,
automation, and digitalization for both commercial and defense
applications.
3. Develop collaborative UMS traffic management. Create safe,
efficient traffic management systems for UMS in coastal and
open-ocean settings, avoiding restrictive regulations that
hinder innovation in uncrewed maritime technologies.
4. Expand workforce training programs. Invest in technology-driven
training to address skilled labor shortages, equipping workers
with expertise in UMS manufacturing, operation, and
maintenance.
5. Implement innovation-friendly regulations. Adopt flexible, risk-
based UMS regulations that ensure safety while fostering
innovation and testing of novel uncrewed maritime systems.
Avoid overregulation that stifles commercial growth, essential
for U.S. global leadership and national security.
6. Incentivize automation and digital tools. Encourage industry
adoption of cost-saving automation and digital technologies
that uphold safety standards.
7. Advance AI-driven navigation and data systems. Support investment
in AI-powered navigation, real-time data sharing, and crewed-
uncrewed coordination to enhance operational efficiency.
8. Strengthen workforce development. Fund specialized UMS training,
recruitment, and education programs to build a future-ready
maritime workforce.
A revitalized industry is key to UMS potential, ensuring safety,
efficiency, and economic vitality. AUVSI is ready to collaborate with
Congress, U.S. Federal agencies, and industry stakeholders to advance
the SHIPS for America Act and build a resilient, future-ready maritime
ecosystem.
Thank you for your leadership and consideration. We look forward to
working with the Subcommittee for realizing the transformative benefits
of UMS for all stakeholders.
______
Prepared Statememt of Roger Camp, President and CEO, American
Shipbuilding Suppliers Association
Dear Chairman Sullivan, Ranking Member Rochester and Members of the
Committee
Thank you for the opportunity to submit a statement on behalf of
the members of the American Shipbuilding Suppliers Association (ASSA).
ASSA is a member driven, national organization, advocating for the
American Shipbuilding Supplier Base to the U.S. Congress, Navy, Coast
Guard and shipbuilders to ensure the long-term stability of the U.S.
national maritime industry.
Our members are involved in this issue because we represent
thousands of American citizens who rely on the domestic shipbuilding
suppliers industry to provide for their families and protect the
national security of this Nation. Our members have expertise in the
field as manufacturers of the systems and components needed to build
Navy and Coast Guard ships and we have decades of experience to serve
as a resource to this committee.
ASSA applauds Congress' intent to include participants from the
maritime industrial base in the governing organizations which will
guide implementation of the National Maritime Strategy. The decades of
industry leadership on the waterfront and in the factories will provide
valuable insights for the government-led efforts.
Our organization strongly supports the SHIPS for America Act
because it strengthens domestic shipbuilding, enhances national
security and supports American workers. We believe strongly that every
effort should be made to ensure that this act does in fact include
language that protects the U.S. Shipbuilding suppliers.
In the United States, there are but a few shipyards focused on
building Navy and Coast Guard ships, and a far fewer number focused on
building ocean-going vessels for commercial use. At the shipbuilding
supplier level, we have many components that are provided by a
manufacturer who may be one of the few, if not the sole, remaining
means of production. Such is the case of Lister Chain, the last
manufacturer of anchor chain in the United States. Fairbanks Morse
Defense and Thrustmaster of Texas are other examples of the remaining
single source domestic manufacturers.
As noted in the SHIPS Act, American industry must work with our
industrial partners in NATO and Allied nations but also invest in our
American workforce and capabilities. The elements of Buy America
legislation incorporated in this Bill are important to reaching this
goal.
Importantly, the SHIPS for America Act provides resourcing for
small shipyards from the Maritime Security Trust Fund for over a
decade. As noted by the drafters, a sustained demand signal and
resourcing is necessary for many of the small and mid-size businesses,
which are the backbone of the industrial base, to operate successfully,
deliver their contribution to shipbuilding and repair, and provide pay
and benefits to their workforce.
The SHIPS for America Act goes beyond giving a sense of priority
and importance, and on into concrete ways the U.S. can grow our
shipbuilding, leading to an increased fleet of commercial vessels, from
high visibility programs like Strategic Sealift, the Cable Security
Fleet, and the Tanker Security Fleet, all the way down to how we make
an impact on the future mariners and workforce through resourcing the
Merchant Marine Academies and the U.S. Naval Sea Cadet Corps.
However, any legislation/policy that provides increased business to
the U.S. shipyards without providing some assurances for U.S.
shipbuilding suppliers will fall short of the national mission to
revive the entire U.S. shipbuilding industrial base. ASSA is requesting
consideration in the SHIPS Act that will help to sustain critical U.S.
shipbuilding suppliers.
Some of the problems we face are as follows:
The March 2023 Annual Industrial Capabilities Report to
Congress highlights a 70 percent decline of shipbuilding
suppliers over the last three decades (i.e., 17,000 suppliers
in the 1980s to approximately 5,000 in 2021), which has ``. . .
. created supply chain bottlenecks and reduced supplier
capacity and capability that have not been offset by new
sources of supply or a commercial industrial base that might be
converted to defense production'' This exposes a serious risk
for U.S. national security.
During the 1980s the U.S. had a strong commercial
shipbuilding industry, which additionally benefited the
construction of U.S. naval vessels. With the proposed buildup
of a 600 ship Navy the Reagan administration ended in 1981 the
Construction Differential Subsidy (CDS) program, which had been
in place since 1936. This in turn led to a significant decline
in the U.S. commercial shipbuilding industry.
Typically, U.S. shipbuilders will work with U.S. suppliers
in the design stage then often replace them with less expensive
competitors after design and performance requirements have been
identified. U.S. suppliers spend millions of dollars on
Government programs only to be changed out at the last step,
creating excess cost and a huge issue of distrust.
A recent survey conducted by the Amphibious Warship
Industrial Base Coalition (AWIBC) found that only 10 percent of
amphibious warship suppliers are operating at full capacity.
For the top 25 major components on amphibious warships, 81
percent are single or sole source providers.
Some examples of problem areas are as follows:
1. Early in the Polar Security Cutter (PSC) program, an engine
manufacturing company and ASSA members, worked for 3 years with
the shipyard on the propulsion system design. This supplier
spent millions of dollars on this sales campaign, performing
free design work for the shipyard (which is necessary to gain
the contract). At the last moment, the shipyard switched to a
cheaper foreign-made engine that fit the same envelope,
although with poorer fuel consumption and higher life-cycle
costs. The foreign manufacturer then announced the closure of
their German plant, making it necessary for the Coast Guard to
expedite buying three ship sets of engines (total of 18)--still
yet to be used. The foreign manufacturer reported that they
could not complete the required ABS Naval Vessel Rules (NVR)
qualification, so the Coast Guard then waived those testing
requirements that are critical to demonstrating performance,
which is of particular importance when operating in the harsh
and isolated polar regions. Those engines now sit in a
warehouse at great expense to the Government, and once
installed it is questionable whether they will be supported
over the life-cycle of the ships.
2. While the Polar Security Cutter (PSC) was under design at the
original shipyard, the program was significantly delayed in
large part due to the complete distrust between the shipyard
and the suppliers (see above example). The design agent for the
ship was unable to progress the design because suppliers would
not share their data (VFI or ``Vendor Furnished Information'')
without some assurance of a contract. The shipyard could not
receive funding to get suppliers under contract due to
insufficient design maturity, resulting in a circular no-win
situation and causing unresolvable delay. Three years after
contract award the shipyard only had less than 5 percent of
suppliers under contract.
Some recommended long-term solutions are as follows:
ASSA recommends policy and/or legislation that would strengthen the
entire U.S. shipbuilding supply chain. We recommend adoption of the
model used within the automotive industry, as follows:
Global auto manufacturers do not recompete components with
each new year model.
They instead develop long-term partnering agreements with
preferred suppliers with the expectation that suppliers will
improve delivery schedules, cut costs and drive innovation.
Auto manufacturers actively manage their supply chains,
using scorecards and long-term contracts.
In exchange the suppliers have predictability in multi-year
contracts, which then allows them to invest in R&D, workforce
development, infrastructure improvements and innovation.
This is a much more efficient method, as several foreign shipyards
have discovered and refined as a means of ensuring efficiency and
minimizing wasted time and money.
Several foreign shipbuilders have a similar model of partnership with
suppliers.
Foreign shipyards--especially in major shipbuilding nations like
China, South Korea, and Japan--operate through highly structured and
vertically integrated supply chains, as follows:
1. Tiered Supplier Systems--Shipyards in these nations often use a
tiered supplier system, similar to the automotive industry,
where Tier 1 suppliers provide major components and Tier 2 and
Tier 3 suppliers provide subcomponents, raw materials, or
services (e.g., steel plates, valves, pipes).
2. Long-Term Strategic Partnerships--these foreign shipyards often
establish long-term partnerships with key suppliers, especially
for complex or high-value components. This allows for
coordinated R&D efforts, improved quality control, reduced lead
times and price stability.
3. Modular Construction and Just-In-Time Delivery--Shipbuilding in
the example nations is highly modular. Suppliers deliver
prefabricated modules or kits to shipyards for final assembly.
This requires high-precision coordination, Just-in-Time (JIT)
logistics, and advanced project management systems. This system
has been adopted by at least one U.S. shipyard.
4. Digital Integration and Supply Chain Management--These non-US
shipyards increasingly share digital platforms to integrate
suppliers into their design and production systems.
5. Government and Industry Support--In countries like China,
suppliers often receive state support to align with national
shipbuilding goals (e.g., dual-use technology for military and
civilian vessels). This can include subsidies, mandated
sourcing, and centralized R&D initiatives.
6. Competitive Pressure and Cost Management--In nations with free
market economy-based commercial model, shipyards expect
suppliers to compete aggressively on price, quality, and
delivery speed. Many conduct regular benchmarking and audits.
One near-term consideration could be as follows:
In 1991, when Congress created the National Defense Sealift
Fund (NDSF) as a fix to the previous difficulties in funding
sealift and auxiliary mission ships, they recognized the need
to help preserve critical shipboard suppliers on government
programs that were more commercial in nature, and more
susceptible to foreign encroachment.
ASSA's proposed language is not a new requirement but rather
would ensure the restoration of a nearly 25-year policy
initially put into law through the FY 1991 NDAA and
subsequently amended through the establishment of the National
Defense Sealift Fund (e.g., Section 814 of the FY95 NDAA). This
policy helps to preserve critical U.S. manufacturing
capabilities.
Absent further direction from Congress, future Sealift and
Ready Reserve Force ships will not be subject to the statutory
requirement for U.S. manufacture of components that had
successfully been included within the NDSF statute and that has
been restated in every annual appropriations bill since the
NDSF establishment. Several Japanese and South Korean firms
have invested in U.S. Shipbuilding and suppliers with the
assumption that the laws will continue to promote U.S.
shipbuilding content.
ASSA's Legislative Ask for the SHIPS ACT
As an interim step towards a stronger U.S. shipbuilding
supply chain, ASSA is asking for a return to legislation that
has been successfully used for decades.
Proposed language: Within Section 501 of the Ships for
America Act, Sec. 53801, ``Shipbuilding financial incentives'',
add the following to (c)(2)(A):
``(iv) agree to prohibit any of the following components if
these components are not manufactured within the United States;
I. Air circuit breakers.
II. Welded shipboard anchor and mooring chain.
III. Powered and non-powered valves in Federal Supply Classes
4810 and 4820 used in piping.
IV. Machine tools in the Federal Supply Classes for metal-
working machinery numbered 3405, 3408, 3410 through 3419, 3426,
3433, 3438, 3441 through 3443, 3445, 3446, 3448, 3449, 3460,
and 3461.
V. Auxiliary equipment for shipboard services, including pumps.
VI. Propulsion equipment, including engines, propulsion motors,
thrusters, reduction gears, and propellers.
VII. Shipboard cranes.
VIII. Spreaders for shipboard cranes.
IX. Rotating electrical equipment, including electrical
alternators and motors.''
We urge the Committee to ensure sustained funding for shipbuilding
workforce development programs, and to support amendments that
incentivize the use of U.S. built vessels.
We urge the committee to promptly pass the SHIPS for America Act.
Thank you for your consideration.
Respectfully,
Roger Camp,
President and CEO,
American Shipbuilding Suppliers Association.
______
Prepared Statement of Association for Materials Protection and
Performance (AMPP)
Chair Sullivan, Ranking Member Blunt Rochester, and Members of the
Subcommittee:
Thank you for the opportunity to submit this statement on behalf of
the Association for Materials Protection and Performance (AMPP) in
support of the SHIPS for America Act of 2025. We commend the
Committee's leadership in considering this bipartisan legislation to
rebuild the U.S. shipbuilding and maritime industrial base as vital to
our Nation's economic and national security.
About AMPP
AMPP is the leading global authority on corrosion control,
coatings, and materials performance, representing more than 38,000
professionals in over 150 countries. Our members design, maintain, and
protect the infrastructure that underpins U.S. maritime operations.
AMPP's mission is to protect infrastructure, ensure asset
integrity, and extend the life of materials critical to public safety
and economic resilience. Our expertise is directly relevant to the
long-term success of the SHIPS for America Act.
Position
AMPP strongly supports expeditious consideration and passage of the
SHIPS for America Act of 2025. The legislation's focus on domestic
shipbuilding, port modernization, and workforce development will
strengthen America's maritime resilience, sustain skilled industrial
jobs, and reduce dependence on foreign shipyards.
Rationale
The problem--
The number of U.S.-flagged oceangoing vessels in international
trade has dropped from more than 1,000 in the 1950s to fewer
than 90 today, according to the U.S. Maritime Administration.
Meanwhile, China and South Korea now build over 95 percent of
large commercial ships. Reinvigorating domestic shipyards is
essential to maintaining the capability to design, build, and
repair ships in times of crisis or conflict.
How AMPP Membership figures in--
Corrosion costs the U.S. maritime sector an estimated $20
billion annually\1\ Our membership extends vessel life,
improves performance, and significantly reduces long-term
maintenance costs. Through applied research, standards
development, and hands-on inspection training, our community
delivers proven methods that improve safety, sustainability,
and lifecycle reliability across fleets and facilities.
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\1\ U.S. Government Accountability Office, Department of Defense--
Additional Corrosion Prevention Measures Could Enhance Readiness, GAO-
19-39 (Washington, DC: GAO, 2018), https://www.gao.gov/products/gao-19-39.
How AMPP figures in--
The maritime industrial base faces acute workforce shortages in
the skilled trades, particularly among certified corrosion
professionals like coating applicators, inspectors, and
corrosion technicians. The SHIPS Act's workforce provisions
align with AMPP's training and certification programs, which
prepare hundreds of thousands of skilled workers annually in
materials protection and asset integrity.
Big Picture--
Revitalizing domestic shipyards supports good-paying American
jobs, strengthens supply chains, and re-affirms the United
States as the international maritime leader.
Recommendations
1. Sustain Workforce Investments: AMPP supports Federal efforts to
modernize, expand, and maintain funding for technical training
and certification programs vital to the maritime industrial
base. Additionally, AMPP encourages the adoption of modern
workforce strategies that prioritize innovative operating
models, skill-based hiring, skill acceleration, and technology-
enabled workforce augmentation. AMPP also stresses the value of
innovative recruitment approaches that increase workforce
participation, close severe workforce gaps, and create
alternate entry points into corrosion-related trades through
apprenticeships, industry partnerships, community initiatives,
and veteran transition programs.
2. Align Standards and Certification Requirements: AMPP advocates
for greater alignment among Federal shipbuilding programs,
naval maintenance facilities, and commercial shipyards to
ensure consistent training, certification, and quality
standards. Harmonizing these requirements will bolster the
industrial base, minimize redundancy, and enhance quality
assurance and safety across the U.S. fleet.
3. Maritime Materials Performance: AMPP believes the Center for
Maritime Innovation, found in Sections 521 & 522, should
prioritize materials performance, including life cycle cost
calculations which fully account for corrosion protection. Such
an initiative would foster collaborative research and
development of advanced, sustainable marine materials,
coatings, and corrosion prevention methods while standardizing
testing and data sharing between industry (including AMPP),
academia, and government.
Conclusion
The SHIPS for America Act of 2025 presents a timely opportunity to
restore U.S. shipbuilding capacity, reinforce national security, and
create sustainable, high-skilled employment. AMPP, and our diverse,
talented membership stand ready to contribute technical expertise and
workforce training to advance these goals.
We respectfully urge the Committee to advance and pass the SHIPS
for America Act of 2025. Thank you for your attention and commitment to
strengthening America's maritime future.
Alan Thomas,
CEO,
Association for Materials Protection and Performance (AMPP).
______
Prepared Statement of American Maritime Partnership
The American Maritime Partnership (AMP) is the largest maritime
industry legislative coalition ever, representing all elements of the
U.S. domestic maritime industry including shipping companies, mariners,
shipyards, pro-defense organizations, and others. AMP's sole focus is
the Jones Act, the fundamental law of the U.S. domestic maritime
industry.
AMP appreciates the Subcommittee's decision to hold a hearing
addressing the important issue of how to accelerate U.S. commercial
shipbuilding while strengthening America's broader maritime industrial
base. During Chairman Sullivan's questioning of the panel, he asked
about what went wrong with commercial shipbuilding in the United
States. Thank you for the opportunity to share our thoughts on this
important subject.
The Jones Act is the essential foundation of America's maritime
industry that ensures U.S. control of our supply chain, maritime domain
awareness, and a critical mass of mariners and shipbuilding capability.
U.S. shipyards have pioneered innovations like Articulated Tug Barges
(ATBs), LNG-fueled containerships, and other cutting-edge technologies.
As a result, the United States has over 45,000 U.S.-owned, U.S.-built,
and U.S.-crewed vessels that enable us to meet our needs for domestic
maritime transportation on America's waterways, oceans, and coasts
safely, securely, and efficiently.\1\
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\1\ Bureau of Transportation Statistics, U.S. Flag Vessels by Type
and Age, available at: U.S. Flag Vessels by Type and Age | Bureau of
Transportation Statistics.
---------------------------------------------------------------------------
This framework supports an annual economic impact of more than $150
billion and approximately 650,000 U.S. jobs. This is a testament to the
strength and vitality of American maritime commerce.
While we agree with the panel that there are challenges facing U.S.
commercial shipbuilding, the Jones Act is not the cause of these
challenges. In fact, exactly the opposite is true: the United States
maintains a thriving presence in the commercial shipbuilding market
because of the Jones Act. Countries around the world that have removed
or weakened their own cabotage requirements, such as the United
Kingdom, have seen their merchant fleets significantly decrease and
shipyards become uncompetitive.\2\ The Jones Act, by contrast, has
preserved and strengthened America's domestic maritime capability.
Looking to the rest of the world, 105 countries accounting for 85
percent of the world's coastline have cabotage laws similar to the
Jones Act, a number that has increased over the last seven years,
showing other countries understand the importance of maintaining a
national fleet.\3\
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\2\ See The Guardian, How Britain sank its shipping industry by
waiving the rules (August 2016).
\3\ Seafarers Rights International, Cabotage Laws of the World
(September 2025), available at: https://seafarersrights.org/seafarers-
subjects/cabotage/.
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When critics discuss the diminishment of the U.S.-flag fleet, they
are often referring to large, oceangoing ships active in international
trade. Shipbuilders Council of America President Matthew Paxton
identified this misconception in his written testimony to the esteemed
members of this committee.\4\ These vessels are not required to be
built in the United States. In the U.S. domestic fleet, where the Jones
Act governs, America enjoys a strong and growing fleet of tens of
thousands of vessels.
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\4\ See Testimony of Matthew O. Paxton, President Shipbuilders
Council Of America, available at: https://www.commerce.senate.gov/
services/files/ECC43D59-8557-45A1-9B33-04C145048528
---------------------------------------------------------------------------
Where we do have a gap is in U.S.-built vessels trading
internationally, where U.S. shipyards must compete with heavily
subsidized foreign shipyards both from our friends and our foes. This
is the real challenge facing American shipbuilding competitiveness in
the global market.
Furthermore, the Jones Act serves as a critical stabilizer for
shipyards that also work on government ships. Take the Hanwha Philly
Shipyard, for example. While the government's order of five National
Security Multi-Mission Vessels (NSMVs) from that shipyard in 2020
certainly played a leading role in its revitalization, the Philly
Shipyard could not survive on government orders alone. Two large Jones
Act-qualified companies filled the gaps, ordering four vessels for
construction over a period of six years. This public-private synergy
demonstrates how the Jones Act strengthens our entire shipbuilding
ecosystem.\5\
---------------------------------------------------------------------------
\5\ See also Coalition for a Prosperous America, How to Solve
America's Shipbuilding Crisis (September 2025), available at https://
prosperousamerica.org/wp-content/uploads/2025/10/CPA-Economic-Report-
How-to-Solve-Americas-Shipbuilding-Crisis.pdf (stating ``Without the
Jones Act--and without Navy contracts--the U.S. would likely have no
shipbuilding industry left today.'')
---------------------------------------------------------------------------
As Steve Carmel, the nominee for the position of Maritime
Administrator, stated this week in front of the full Committee, the
Jones Act (along with the Maritime Security Program and cargo
preference laws) is critical to sustaining our fleet. While these
programs are not on their own going to solve the U.S.-flag
international trade issues, they are ``critical to making sure we don't
go backwards.''
We welcome the leadership of the Trump Administration, the
bipartisan sponsors of the SHIPS for America Act, and the bipartisan
leadership of this Committee in helping us build on the foundation of
the Jones Act and make American Maritime Great Again in the
international trades. Commercial shipbuilding in this country benefits
extensively from the Jones Act, and with the right policies to address
international competition, we can expand American maritime excellence
to global markets while maintaining the strong domestic foundation the
Jones Act provides.
______
Prepared Statement of American Maritime Congress
Chairman Sullivan, Ranking Member Blunt Rochester, and Members of
the Subcommittee: American Maritime Congress (AMC) sincerely
appreciates the opportunity to submit this statement for the record. In
its nearly fifty years of advocating for the United States Merchant
Marine, AMC has never seen a time more promising for revitalizing
America's maritime dominance than the present.
AMC's membership is made up of twelve U.S.-flag internationally
trading carriers, all of which are crewed by American mariners and
owned by American companies, as well as the oldest maritime union in
the nation, the Marine Engineers' Beneficial Association. For decades,
AMC has proudly served in an educational capacity for virtually every
major piece of maritime-related legislation considered by the Federal
Government.
America's maritime sector has long been fundamental to our national
and economic security. From the Merchant Marine that carried our forces
to victory in World War II to the vessels that sustain our global
supply chains today, our maritime strength has always reflected our
national strength. Yet over the past several decades, that foundation
has weakened. Today, fewer than 200 U.S.-flag ships operate in
international trade, accounting for less than one percent of global
shipping capacity. Each vessel lost means fewer jobs for American
mariners, reduced economic activity in our ports, and a diminished
capacity to advance and protect U.S. interests abroad.
Meanwhile, foreign competitors such as the People's Republic of
China have undertaken deliberate and coordinated action over decades to
unfairly dominate global shipping and shipbuilding. Through a
combination of targeted industrial policy, long-term state investment,
and close coordination between government, military and industry, China
has built a maritime system intended to permeate and control every
facet of the world's commerce. This has left the United States
increasingly dependent on foreign carriers and crews to move its own
goods and sustain its economic security and preserve its supply chain.
America must not rely on others to deliver the goods and materials that
keep our economy and military strong. We must restore the capacity to
move our own commerce under the U.S. flag.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Strengthening the Entire Maritime Industry
Rebuilding U.S. maritime capability requires a comprehensive
approach that supports not only shipbuilding, but also mariner
training, port infrastructure, ship repair, logistics, and perhaps most
importantly: policies that foster cargo for U.S. ships. Ships,
shipyards, mariners, and cargo are mutually dependent; strengthening
one element without the others will not restore America's maritime
resilience.
The American Maritime Congress strongly supports the bipartisan
SHIPS for America Act, introduced by Senators Todd Young (R-IN) and
Mark Kelly (D-AZ). This legislation represents an important and timely
step toward renewing the U.S.-flag fleet and ensuring that American
seafarers, shipyards, and carriers return to their status as global
leaders in the maritime industry. The SHIPS for America Act recognizes
that rebuilding this industry requires sustained commitment and
partnership between government and the private sector. By fostering
long-term operational capacity and investment, the bill lays the
groundwork for a true national maritime renaissance. Of particular
importance within the SHIPS Act, is Subtitle B focused on bringing more
cargo to the U.S.-flag fleet, including Section 422: the promotion of a
specific organization or entity that will develop incentives for U.S.
shippers to foster increased use of U.S. ships for their cargo.
Congress must also consider low-cost tax proposals to incentivize
private U.S. exporters and importers to choose U.S.-flag vessels for
their commercial cargo. An initiative as simple as expanding the
current tax deduction that U.S. shippers employ for shipping cargo on
foreign carriers to an increased level if U.S. ships are used would
drastically increase the demand for U.S. ships. An August, 2025 PwC
analysis of such an enhanced deduction found that nearly eliminates the
cost differential between the use of foreign-flag vessels and U.S.-flag
vessels, and would increase the demand for U.S.-flag vessels by
approximately 20 percent.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Impact of increasing current shipper tax deduction by 200 percent on
overall cost of shipping, U.S. vs. foreign-flag carriers, PwC 08-25
A targeted ``Ship American'' deduction would align economic
incentives with national interests, encourage the use of U.S.-flag
carriers in global trade, and create a stronger commercial foundation
for our shipyards, operators, and mariners. The following example
illustrates the basic operation of the proposal.
Every major trading nation treats maritime capability as a
cornerstone of its economic and national security strategy. The United
States cannot afford to be the only maritime power without a fully
capable fleet to call its own. The SHIPS for America Act, together with
renewed bipartisan support from Congress and the Trump Administration,
provides a rare opportunity to rebuild America's maritime capability.
This effort must include investment in shipyards, active collaboration
between government and industry to grow commercial shipping, and a
long-term maritime strategy that aligns America's trade, defense, and
workforce goals.
Reviving American shipbuilding and increasing the size of the U.S.
flag commercial fleet is not only an industrial challenge but a
strategic necessity. The ability to move goods, materials, and military
cargo under the U.S. flag is fundamental to both our economic
independence and national defense.
The American Maritime Congress applauds the Subcommittee's
leadership in convening this hearing and urges swift, bipartisan action
to advance policies that strengthen the entire maritime industry. Thank
you for the opportunity to share the views of the American Maritime
Congress and for your continued commitment to advancing America's
maritime interests. Restoring America's maritime dominance will require
determination, investment, and vision. It begins with a clear
commitment: America must once again build, crew, and ship American.
______
Prepared Statement of Kevin M. Dempsey, President and CEO,
American Iron and Steel Institute
Chairman Sullivan, Ranking Member Blunt Rochester and Members of
the Subcommittee:
On behalf of the American Iron and Steel Institute (AISI), below
please find comments for the subcommittee hearing entitled ``Sea
Change: Reviving Commercial Shipbuilding.'' AISI appreciates the
subcommittee holding today's hearing and for its focus on the
commercial shipbuilding and maritime sector, which plays an essential
role in our defense industrial base, and as such, our national and
economic security.
AISI serves as the voice of the American steel industry in the
public policy arena and advances the case for steel in the marketplace
as the preferred material of choice. AISI's membership is comprised of
integrated and electric arc furnace (EAF) steelmakers, steel pipe and
tube manufacturers and steel processors and fabricators, reflecting the
production and distribution of both carbon and stainless steels. These
steels are critical to America's national and economic security,
including roads and bridges, buildings, the electrical grid, defense
applications, cars and trucks and all clean energy technologies. AISI
also represents associate member companies who are suppliers to or
customers of the steel industry.
Reviving U.S. shipbuilding capabilities has the potential to create
tens of thousands of jobs at U.S. shipyards and within the entire
shipbuilding supply chain at manufacturing operations that produce key
inputs across the Country. The American steel industry is one of the
primary suppliers of critical raw materials to America's shipbuilding
industry. Steel, especially steel plate, is a critical and
irreplaceable material used for construction of commercial and military
ships. The U.S. has significant steel plate production, including
specialty plate for shipbuilding applications, which is currently
substantially underutilized. In fact, the U.S. International Trade
Commission, in a recent trade remedy proceeding, found that capacity
utilization in the cut-to-length (CTL) plate sector was an average of
67.8 percent over the period examined.\1\ Since that case, domestic CTL
plate capacity has only increased, with additional new capacity coming
online. U.S. steel producers are fully prepared to meet the steel needs
of shipbuilders as they increase their build rates.
---------------------------------------------------------------------------
\1\ Carbon and Alloy Steel Cut-to-Length Plate from Austria,
Belgium, Brazil, China, France, Germany, Italy, Japan, South Africa,
South Korea, Taiwan, and Turkey, Inv. Nos. 701-TA-560-561 and 731-TA-
1317-1328, USITC Pub. 5399 (Jan. 2023) at C-9 (Table C-1).
---------------------------------------------------------------------------
In order to maximize the benefits of revitalizing our shipbuilding,
industry including for suppliers to the sector, Congress and the
Administration must institute policies that incentivize utilization of
domestic supply chains, not just final assembly.
AISI strongly supports policy efforts to revitalize domestic
shipbuilding. In particular, we have endorsed S. 1541, the Shipbuilding
and Harbor Infrastructure for Prosperity and Security (SHIPS) for
America Act of 2025 introduced by Senators Mark Kelly and Todd Young.
This bipartisan legislation would enable a comprehensive approach to
revitalize the United States shipbuilding and commercial maritime
industries. We appreciate the leadership of Senators Kelly and Young on
this key legislation, as well as the Senate cosponsors of the bill. The
work of Representatives John Garamendi and Trent Kelly to advance the
SHIPS for America Act in the U.S. House of Representatives is also
critical. AISI endorses this key domestic shipbuilding legislation and
looks forward to working with the broad coalition of supporters to
enable its passage in both houses of Congress.
AISI and our member companies look forward to continuing to work
with Congress to create and implement policies that will increase the
demand for domestic steel products that are essential for a revitalized
American-made shipbuilding industry.
______
Prepared Statement of Scott N. Paul, President,
Alliance for American Manufacturing (AAM)
Chair Sullivan, Ranking Member Blunt Rochester, and Members of the
Subcommittee:
The Alliance for American Manufacturing (AAM) appreciates the
opportunity to submit this statement for the hearing record in strong
support of the SHIPS for America Act (S. 1541/H.R. 3151). We commend
the subcommittee for convening this timely hearing to address the
urgent need to strengthen America's commercial shipbuilding capacity, a
cornerstone of our economic and national security that has been eroded
by both neglect and the predatory policies of the People's Republic of
China.
AAM is a non-profit, non-partisan partnership formed in 2007 by
some of America's leading manufacturers and the United Steelworkers.
Our mission is to strengthen American manufacturing and create new
private-sector jobs through smart public policies. We believe that an
innovative and growing manufacturing base is vital to America's
economic and national security, as well as to providing good jobs for
future generations. AAM achieves its mission through research, public
education, advocacy, strategic communications, and coalition building
around the issues that matter most to America's manufacturers and
workers.
AAM strongly supports the bipartisan, bicameral SHIPS for America
Act, introduced by Senators Kelly (D-AZ) and Young (R-IN) and
Representatives Kelly (R-MS) and Garamendi (D-CA). This landmark
legislation provides the strategic framework and resources necessary to
rebuild U.S. commercial shipbuilding, expand the U.S.-flag fleet, and
revitalize the maritime industrial base and workforce. The SHIPS for
America Act complements the ongoing Section 301 trade action targeting
China's unfair practices in shipbuilding and maritime logistics.
Together, these measures represent a coordinated national strategy to
restore America's maritime power and to ensure that our commercial and
defense needs are met by America's workers, shipyards, and supply
chains.
A strong domestic shipbuilding and maritime sector is indispensable
to U.S. national security, economic resilience, and industrial
independence.
National Defense: More than 90 percent of U.S. military
equipment and supplies moves by sea, underscoring the
indispensable role of domestic shipbuilding in sustaining
strategic sealift capacity. Strategic sealift capacity depends
on having shipyards, suppliers, and mariners capable of
producing, maintaining, and operating vessels under the U.S.
flag. Without a viable commercial shipbuilding base, we cannot
sustain naval readiness or scale logistics in a major conflict.
Economic and Supply Chain Security: Over 80 percent of
global trade moves via ocean shipping. The United States must
break its dependence on foreign shipbuilding, particularly that
of China. Moreover, our capacity to independently produce
ships, ship-to-shore cranes, port equipment, data systems, and
other maritime infrastructure necessary to move critical
cargoes stands at a critical juncture.
Jobs and Industrial Strength: U.S. shipbuilding supports
over 400,000 jobs across steel, advanced manufacturing,
logistics, and maritime operations. These are high-skill, high-
wage positions that sustain entire regional economies. A single
commercial ship can require 13,000 tons of steel, 60,000
gallons of paint, and 130 miles of cable--all products that can
and should be made by America's workers.
America's commercial shipbuilding industry has suffered a dramatic
collapse. According to the USTR's January 2025 report on China's
Targeting of the Maritime, Logistics, and Shipbuilding Sectors for
Dominance, the U.S. now builds fewer than five commercial vessels
annually, while China produces over 1,700 per year--marking a major
reversal from the mid-1970s when the U.S. led the world with over 70
ships on orderbooks annually. The U.S.-flag international fleet has
dwindled to fewer than 80 merchant vessels, while China operates over
5,500. More than 70,000 shipbuilding jobs and 20,500 suppliers have
disappeared from our industrial base.
Meanwhile, China's global shipbuilding expansion is part of a
deliberate, state-directed campaign to control critical supply chains.
It produces 95 percent of shipping containers and 80 percent of ship-
to-shore cranes. Its LOGINK platform operates in over 20 major ports
worldwide, gathering sensitive logistics information that can be
weaponized against the United States and its allies. Many Chinese
shipyards serve both civilian and military production, directly
bolstering the People's Liberation Army Navy (PLAN), now the world's
largest by ship count with more than 370 ships and submarines in
service compared to the U.S. Navy's approximately 292 ships.
The good news is that the Federal government has begun taking
decisive steps to remedy these alarming trends. In March 2024, a
coalition of labor unions--including USW, IAM, IBEW, and IBB--filed a
Section 301 petition documenting China's maritime industrial targeting.
USTR concluded in January 2025 that China's actions are unreasonable
and discriminatory, burdening U.S. commerce and threatening our
national security. The Trump administration has seamlessly continued
taking the steps necessary to revive U.S. shipbuilding. In April 2025,
President Trump signed the Executive Order on Restoring America's
Maritime Dominance, calling for a Maritime Action Plan (MAP) that will
soon be released. And, most recently, USTR began implementing
responsive actions called for under the Section 301 action, including
port fees on Chinese-built ships, restrictions on LOGINK, and
benchmarks for U.S. energy exports on U.S.-flagged vessels.
For its part, a bipartisan group of members in both the House and
Senate have introduced the SHIPS for America Act, which provides the
long-term investment framework and Federal leadership necessary to
sustain these efforts. The legislation establishes a national goal to
build 250 U.S.-flagged commercial vessels over ten years, incentivizing
construction and operation of U.S.-built ships. Critically, the bill
would codify the establishment of a Maritime Security Trust Fund
financed through user fees and Section 301 collections to sustain
investments in shipyard modernization, infrastructure, and workforce
development. While it is imperative that we strengthen U.S. shipyards
and the health of our supply chains, we must not overlook mariner
recruitment, retention, and training programs to rebuild a skilled
maritime workforce.
For decades, the U.S. has watched its shipbuilding industry decline
due to foreign state intervention and policy neglect. The SHIPS for
America Act offers a historic opportunity to rebuild this vital sector,
restore the U.S.-flag fleet, and secure our maritime future. AAM urges
swift passage of the SHIPS for America Act and robust implementation of
complementary Section 301 and executive actions.
Thank you for holding this hearing and for the opportunity to share
our views.
______
Prepared Statement of Blue Sky Maritime Coalition (BSMC)
The Blue Sky Maritime Coalition (BSMC) is pleased to provide this
submission to the Senate Committee on Commerce, Science, and
Technology's Subcommittee on Coast Guard, Maritime, and Fisheries for
consideration in the hearing entitled ``Sea Change: Reviving Commercial
Shipbuilding.'' The Blue Sky Maritime Coalition (BSMC) appreciates the
opportunity to submit this statement for the record regarding the
critical topic of reviving commercial shipbuilding in the United
States.
INTRODUCTION TO BSMC
The Blue Sky Maritime Coalition (BSMC) appreciates the opportunity
to submit this statement for the record regarding the critical topic of
reviving commercial shipbuilding in the United States. BSMC is a non-
profit, strategic alliance launched in June 2021 to accelerate the
transition of waterborne transportation in the United States and Canada
toward net-zero greenhouse gas emissions. With over 100 member
organizations, BSMC brings together industry, community, government,
academia, and other stakeholders across the maritime value chain to
pursue projects that remove barriers, encourage innovation, and promote
policies supporting zero emissions.
STATEMENT
The maritime sector is responsible for delivering more than 80
percent of traded goods globally, yet it often receives less attention
compared to other transportation modes. BSMC does not take a specific
position on the SHIPS Act but wishes to highlight the importance of
research and development, particularly Section 521, which expands the
United States Center for Maritime Innovation program. This Center
exemplifies the value of public-private partnerships in accelerating
the commercial development of fuels and integrated supply chains,
supporting a sustainable and competitive maritime industry.
BSMC also emphasizes the importance of workforce development for
the future of the maritime industry. Sections 611, 613, and 617 of the
SHIPS Act present significant opportunities to provide funding,
training, and infrastructure to support the next generation of mariners
and ensure the continued growth of sustainable pathways for the
industry.
The Coalition was established to unite all parties involved in the
North American waterborne value chain and collaboratively develop a
roadmap to net-zero greenhouse gas emissions by 2050. This includes
identifying and removing barriers to decarbonization through
demonstration projects and other initiatives.
We urge careful consideration of the total system impacts of
legislation such as the SHIPS Act to ensure that the energy and focus
on maritime issues establish a framework supporting a sustainable
future for the entire maritime value chain.
Respectfully submitted,
David H. Cummins,
President & CEO,
Blue Sky Maritime Coalition.
______
Prepared Statement of Rye Barcott, Co-founder and CEO,
With Honor Action
Chairman Sullivan, Ranking Member Blunt-Rochester, and Members of
the Subcommittee,
With Honor Action is pleased to submit this statement for the
record, and appreciates the subcommittee for recognizing this
consequential issue of maritime security and for holding today's
hearing. We are a bipartisan, nonprofit organization that strives to
strengthen democracy and fight polarization in Congress through
principled veteran leadership. This includes endorsing legislative
solutions to our Nation's most pressing threats, connecting Members
across the aisle to forge bipartisan bonds, and building coalitions of
like-minded organizations to demonstrate overwhelming support for
commonsense policies. With Honor works with the 37 members of the For
Country Caucus in the House of Representatives, all of whom are
military veterans, and have taken our pledge of integrity, civility,
and courage. We also work closely with our 11 Senate allies, which
includes the leaders of the SHIPS for America Act, Senators Todd Young
(R-IN) and Mark Kelly (D-AZ), both military veterans. These
Congressional leaders leverage their military experience and leadership
to build support for and pass legislation in the national security,
national service, and veterans spaces. The issue of maritime security
and our maritime industrial base is just one area where we have worked
on a bipartisan basis to drive support for much-needed legislation.
With Honor Action strongly supports the SHIPS for America Act
because it strengthens domestic shipbuilding, enhances our national
security, and revitalizes our industrial base. This legislation has
strong bipartisan and bicameral support with over 110 House cosponsors
and 9 Senate cosponsors. Senators Young and Kelly, both military
veterans, and both from states without a history of shipbuilding, have
championed the SHIPS Act not for political gain, but because it is the
right thing to do for our country.
In the United States, commercial shipbuilding has receded to an all
time low. In the last 10 years, China has built 6,765 commercial ships,
Japan has built 3,130 commercial ships, South Korea has built 2,405
commercial ships while the U.S. has only produced 37 commercial
ships.\1\ Gaps between the United States' and China's shipbuilding
capacities surpass a simple overreliance on Chinese manufacturing-it is
society-wide. According to the Congressional Research Service, in 2022,
there were 1,794 ships under construction at Chinese shipyards,
compared to only five in the U.S.\2\ In terms of ``gross tons,'' or the
measure of a ship's volume, China, Korea, and Japan build over 90
percent of the world's tonnage, compared to the United States' 0.2
percent.\3\
---------------------------------------------------------------------------
\1\ ``USW Continues to Lead Drive to Rebuild Shipbuilding
Industry--United Steelworkers.'' United Steelworkers, 13 Aug. 2025,
usw.org/news/usw-continues-to-lead-drive-to-rebuild-shipbuilding-
industry.
\2\ Frittelli, John. ``U.S. Commercial Shipbuilding in a Global
Context.'' Congressional Research Service, 15 Nov. 2023,
www.congress.gov/crs-product/IF12534.
\3\ Ibid.
---------------------------------------------------------------------------
The United States' minuscule market share of global shipbuilding
predates China's ascension to the majority of the market. The last time
America was a leader in peacetime global shipbuilding was during the
early 1800s, when ships were still made of wood. Ship manufacturing
exploded during the World War era, but these cargo ships were soon sold
to private merchants and replaced with more efficient foreign-
manufactured ships.
There is finally an issue of worldwide overcapacity. Despite being
enormous companies (the three largest shipbuilding firms in China,
Korea, and Japan, nine in total, account for 75 percent of global
shipbuilding capacity), firms in Korea and Japan often operate at a
loss, requiring government bailouts or relying heavily on subsidies.\4\
They alternatively may be a part of a large conglomerate (e.g., Samsung
and Hyundai) where profit margins in more profitable areas of the
company help weather losses in shipbuilding. In China, 36 of the 100
largest shipyards are owned by the national government, 10 by local
governments, and 54 are privately owned.\5\ The government-owned yards
accounted for 64 percent of ship tonnage built in China in 2021.\6\ The
United States' commercial maritime industry simply cannot compete on
such an unfair playing field.
---------------------------------------------------------------------------
\4\ Ibid.
\5\ Ibid.
\6\ Ibid.
---------------------------------------------------------------------------
Our policy makers and industry leaders need to work together to
develop innovative solutions to bring back commercial shipbuilding to
the United States. With Honor Action applauds the efforts of Senators
Young and Kelly as well as Congressmen Kelly and Garamendi.
With Honor Action urges the Committee to ensure sustained funding
for the shipbuilding workforce development programs, and to support
amendments that incentivize the use of U.S.-built vessels. We thank the
Committee for holding today's hearing and for their consideration of
this vital legislation. By supporting this legislation, we are
demonstrating that we view maritime capacity not as a relic of the
past, but as a strategic asset for the future. With Honor Action is a
strong supporter of the SHIPS for America Act and we urge Congress to
pass this important national security legislation as soon as possible.
______
Prepared Statement of Michael Roberts, Senior Fellow, Hudson institute
and Director, American Maritime Security Initiative
Chairman Sullivan, Ranking Member Rochester and Members of the
Subcommittee--
My name is Michael Roberts and I am a Senior Fellow at the Hudson
institute and director of its American Maritime Security initiative.
American Maritime Security Initiative | Hudson Institute. I write to
emphasize three primary points:
Because America all but abandoned its maritime industrial
base, our country is at extreme risk in preparing for and
deterring major conflict with China. Our commercial
shipbuilding industry is far too small, which impacts our on-
going naval shipbuilding capabilities and our ability to scale
up in a conflict. America has almost no control over the
maritime supply chains that feed our economy, while China has
more control over those supply chains than any other country.
And our fleet of American ships is too small even to supply our
own troops if deployed in a major overseas conflict.
We do not have very much time or resources to fix this
problem. Even under the best of circumstances it will take
years to restore America's maritime self-sufficiency let alone
achieve maritime dominance. Some amount of smart government
investment will be needed. Yet as important as this is,
government resources and other priorities limit the amount that
can be invested to address this priority. Such investment must
be deployed wisely to achieve realistic and important
objectives.
The SHIPS For America Act is excellent legislation and
should be enacted this year. It is comprehensive legislation
that reflects a cogent strategy designed to grow and modernize
the American maritime industry, using government and private
sector investment. It will halt the decline in America's
shipbuilding industrial base and provide a platform for
technology-led growth. It will close the gap in America's
sealift capacity and help secure our maritime supply chains.
Because of the strategic approach it follows, the costs to
taxpayers would be a small fraction of what might be expected--
and those costs would be fully covered by the penalties imposed
on Chinese ships calling at American ports.
We cannot afford to spend years groping for consensus or fine-
tuning legislation. This may be the last opportunity to begin to
rebuild America's maritime strength. I urge you to pass the SHIPS Act
this year.
Background
Before joining the Hudson Institute at the beginning of 2022, I
spent a full career involved in the American commercial maritime
industry. From 1984 to 1991, I was an attorney in private law practice
focused on maritime, aviation and other transportation matters. I
joined the Washington office of Crowley Maritime Corp. in 1991 as
counsel to its liner shipping division and was promoted to VP
Government Relations in 1994. I left Crowley in 2000 and returned to
private practice but continued to represent the company on legislative
and other matters. I returned to Crowley in 2008 as Senior VP and
General Counsel and remained in that role until leaving the company at
the end of 2021. I was also President and Chairman of the American
Maritime Partnership (AMP), the largest coalition of American maritime
interests, for a two-year term in 2020-2021.
From 1994 forward I was actively involved in the formulation and
drafting of American maritime policy and legislation. This included the
Maritime Security Act of 1996 (creating the Maritime Security Program
(MSP) and the Voluntary Intermodal Sealift Agreement implementing the
MSP), as well as the container shipping deregulation bill in 1998,
Coast Guard Authorization Acts and other matters.
Discussion
Throughout my work in the industry, I have been keenly aware of the
challenges faced by America's commercial maritime industry. The
international shipping industry is a textbook example of free trade
economics. Ships serving American import-export trades can be built
anywhere in the world, owned and operated by businesses anywhere and
crewed by citizens of any country. This means that because American
shipping and shipbuilding companies are based on American soil and
operate in American waters according to American standards, they face
much higher costs to build and operate ships as compared to competitors
in the rest of the world. They can and do compete vigorously with each
other within US domestic markets where all must comply with US rules.
But the massive cost disadvantages American maritime companies face in
international markets led most of them eventually to make rational
business decisions to abandon those markets.
Congress last reset the policies for supporting America's shipping
and shipbuilding industry during the post-Cold War euphoria of the
1990s. The world was at peace. America was the world's only superpower,
and the general belief was that it would remain so indefinitely. The
world embarked on one of the most ambitious free trade experiments in
history with the creation of the World Trade Organization in the mid-
90's and the eventual accession of China into the WTO in 2001. Despite
the key role played by America's maritime dominance in winning World
War II, most Americans simply had no understanding of the maritime
industry. Very few people in the 1990's believed that maintaining a
substantial American shipping and shipbuilding capability would ever
again be important to our national security.
Beginning in the mid-2010's I became increasingly aware of the
threat to American interests posed by China's growth and geopolitical
ambitions, and by its increasing dominance of the commercial maritime
industry. Where America had all but abandoned its maritime industry,
China was moving in precisely the opposite direction, deploying a
whole-of-government strategy in support of its maritime industry. As
President of AMP, I had the opportunity to host podcast interviews with
senior experts on China and maritime matters, including Adm. James
Stavridis, National Security Advisor Robert O'Brien, Author Michael
Pillsbury, Rep. Mike Gallagher and others. The basic message in each of
these interviews was the same. America was no longer the world's only
superpower, as China presents a formidable competitor with explicit
designs to displace America as the global leader. And industrial
strength--particularly shipping and shipbuilding capabilities--is a key
element of China's strategy.
Because these facts contradict the most basic assumptions
underlying US maritime policies since World War II, and most certainly
since the 1990's, I believed that a review of those policies was in
order. I joined the Hudson Institute at the beginning of 2022 and began
to dig into the key questions: How do the maritime industries of the US
and China compare? What risks to American national and economic
security are created by China's growing dominance of the maritime
industry? How and to what extent can America rely on support from
allies--particularly Korea and Japan--to cover for America's relatively
weak maritime industrial base? And what realistic policies could
America adopt to turn around its own shipping and shipbuilding
industries to compete more effectively with China?
The Hudson Institute published the results of this analysis in
three monographs: Rewriting the Future of America's Maritime Industry
to Compete with China | Hudson Institute; Staying Afloat: Why America
Needs the Jones Act to Compete with China and What to Do Next | Hudson
Institute; and Shoring Up the Foundation: Affordable Approaches to
Improve US and Allied Shipbuilding and Ship Repair | Hudson Institute
(with Bryan Clark). Other recent writings include America's maritime
wake-up call: Competing with China at sea (Washington Examiner) and
``Why Budget Hawks Should Support the SHIPS Act'' (LinkedIn post
October 21, 2025).
The massive gap between America's and China's maritime industries
is by now well known, although it is worse even than many suggest.
China's maritime dominance means it can threaten America's maritime
supply chains and grow its navy three times faster than America can.
America's commercial fleet is far too small, lacking even the ability
to resupply American troops deployed overseas in a conflict involving
China. America can and should work with allies to secure the vessels
needed to close current gaps in maritime deterrence and to modernize
America's commercial shipbuilding industry. But working with allies is
only a partial answer, as America must become self-sufficient in
building and operating the vessels it will need in the event of serious
conflict.
In developing possible solutions, the starting place was to
consider the existing programs. In particular, the MSP is conceptually
sound and proved to be very effective in supporting the Pentagon
through the Persian Gulf wars. Under MSP the government pays the cost
to ``Americanize'' the operation of a small number of commercial ships
operating in international trades. The owners, operators and American
citizen crews of those ships agree to collaborate with the Pentagon in
planning and providing maritime logistics services in the event of
conflict. Use of MSP vessels saved US taxpayers tens of billions of
dollars in prosecuting the Persian Gulf wars as compared to what it
would have cost to have the military itself provide those services.
The MSP is inadequate, however, to meet the maritime challenges we
face with China. The number of US flag ships in the program is far too
small. Conservative estimates, including by former Maritime
Administrator and Commander of the Military Sealift Command Mark Buzby,
set the requirement at about 250 ships, almost three times the number
of US flag ships currently in international trade. This reflects the
far greater challenges in providing maritime logistics in a Western
Pacific scenario, with massive fuel transport requirements, much
greater distances and contested air and sea environments as compared to
the Persian Gulf conflicts.
It is not as simple as just expanding the MSP, however, because the
economic model underpinning MSP does not scale. Revenues needed to
incentivize participation in MSP include three components--ordinary
commercial freight charges; freight charges to carry government
preference cargo; and stipends in amounts set by statute. The size of
the US flag fleet thus depends in part on the volume of government
preference cargo. Many in government and industry indicate that there
is not enough government preference cargo today to sustain the existing
MSP fleet (including tankers under the Tanker Security Program), let
alone a fleet three times larger.
A third concern with MSP in context of the China threat is that it
does nothing to support the US shipbuilding industry. This reflects a
grudging willingness in the context of the 1990's to provide only
operating support for US flag ships and not support to build those
ships in the United States. Responding to China's maritime dominance
requires not only a larger US flag fleet, but also a much larger
American shipbuilding industrial base. The fleet of US flag ships
supporting our sealift needs provides an obvious source of demand to
help restore our shipbuilding industry.
Finally, MSP was arguably flawed from its inception in that
participants receive what are essentially permanent slots in the
program rather than long term contracts that are periodically
recompeted. This has precluded many qualified American companies from
participating in the program.
The recommendation made in my first report (Ch. 5 of ``Rewriting. .
.'') was thus based on adapting MSP, which was very effective in
providing the needed support to deal with a regional threat in Iraq, to
the new paradigm dealing with a peer competitor in China. It would
expand the US flag fleet to 250 ships. It would phase in a requirement
that those ships be built in US shipyards, with specifications that may
include any number of advanced technologies. And it would require that
participation in the new program be based on competitive bidding by
teams that could include US and foreign shipping companies,
shipbuilders, technology companies and others. Rather than have
stipends set by statute, those bidders would indicate the amounts of
support they would need to build their ships in America and operate
them in international trades under the US flag. Proposals that offer
the best value to the government would be awarded seven-year contracts,
with participation recompeted at the end of each seven-year term. The
SHIPS For America Act has adopted and modified this proposal and
included it as the Strategic Commercial Fleet Program (SCF), Section
401 of the bill.
The primary objective of the SHIPS Act must be to grow the American
maritime industry, and the SCF is arguably the most significant aspect
of the bill in providing a path for growth. A fleet of 250 US flag
ships will close sealift gap and provide the Pentagon with more
capacity that it could use to resist Chinese gray zone tactics.
American shipbuilders will be presented with consistent demand for
eventually twenty ships each year under the program. This is twice as
many ships as were delivered by US shipyards in the single highest year
in recent history. It is enough demand to drive government and private
sector investment to grow and modernize the industry, and to build up
the workforce and supply chains needed for long-term success.
The goal to restore America's maritime strength cannot
realistically be to match China hull-for-hull, which would cost
hundreds of billions of dollars with doubtful outcomes. Rather, the
goal should be to grow and reposition America's maritime industry to
increase its presence in international trades and provide a platform
for modernization rather than continued decline. The SCF would do
exactly that. The estimated costs for the SCF would not be tens or
hundreds of billions of dollars, but $11 billion over ten years, or an
average of $1.1 billion annually. That amount would be fully covered by
the funds generated by the USTR Section 301 penalties on Chinese ships.
The proposed SHIPS Act includes many other provisions that are
intended to grow the industry and update the entire American maritime
ecosystem. Together they reflect a depth of thought that takes
seriously the challenges we face in restoring America's maritime
industry and the steps needed to meet those challenges. I urge you to
move forward with this legislation.
Thank you very much for your attention.
Sincerely,
Michael G. Roberts.
______
Prepared Statement of Patriot Maritime
Chairman Sullivan, Ranking Member Blunt-Rochester, and Members of
the Subcommittee:
Patriot Maritime appreciates the opportunity to submit this
statement for the record. As one of the Nation's leading U.S.-flag
shipping and logistics operators supporting the Department of Defense,
Military Sealift Command (MSC), and the Maritime Administration
(MARAD), and as U.S. owned small-business, Patriot strongly supports
the bipartisan SHIPS for America Act (S.1541) and commends the
Subcommittee for its leadership in restoring America's maritime
strength.
Patriot Maritime: Trusted to Deliver. Ready to Respond.
Patriot Maritime is a shipping and vessel management company
managing a diverse fleet of over twenty U.S.-flagged vessels sustaining
readiness and logistics around the world as well as commercial trade.
Our ships include ten Ready Reserve Force vessels for MARAD, eight
Watson-class and two Bob Hope-class Large, Medium-Speed Roll-on/Roll-
off ships for MSC, the training ship for California State University
Maritime Academy, one MR tanker for Federated Maritime, and the Haina
Patriot, a shallow-draft chemical/oil products tanker owned by Patriot.
Over more than 25 years, Patriot has successfully executed more than
100 on-time vessel activations supporting both exercises and real-world
operations such as Operation Enduring Freedom and Operation Iraqi
Freedom.
America's Strategic Maritime Deficit
For decades, the United States has allowed its commercial maritime
base--shipbuilding, repair, and the U.S.-flag fleet--to erode. Today,
fewer than 200 U.S.-flag ships operate in international trade, while
China's state-controlled fleets dominate global shipping and ship
construction. The United States is increasingly dependent on foreign-
flag carriers and shipyards to move its own commerce and defense
materials--a vulnerability that undermines both economic security and
military readiness.
Reviving U.S. Commercial Shipbuilding Requires Cargo Preference
Rebuilding U.S. shipbuilding and the maritime workforce depends on
a single essential factor: cargo. When there is steady cargo moving
under the U.S. flag, investment follows--shipyards expand, mariners
train, and private operators commit capital. The SHIPS Act's cargo
preference provisions are therefore indispensable. They ensure that
U.S.-government cargoes and taxpayer-funded exports are carried on
U.S.-flag vessels, strengthening the very foundation of our maritime
industrial base.
Cargo preference, properly administered, creates the demand signal
that drives private ship orders, provides the employment base for
trained U.S. mariners, and sustains the Nation's commercial sealift
capability. The more cargo reserved for U.S. ships, the greater the
incentive for private investment in U.S. yards and crews--and the
stronger our Nation becomes.
Building on Proven Programs
Patriot strongly supports the Maritime Security Program (MSP) and
Tanker Security Program (TSP), public-private partnerships that provide
critical readiness capacity for U.S. Transportation Command. These
programs have proven that commercial operators can deliver reliability
and efficiency in both peacetime and contingency operations. Congress
must continue to fully fund these programs and expand them as new ship
construction and emerging cargo opportunities come online.
Likewise, full enforcement of cargo preference laws, combined with
the creation of modest but meaningful tax incentives--such as a ``Ship
American'' deduction for companies that use U.S.-flag carriers--would
substantially reduce the cost differential between U.S.-and foreign-
flag service. Such steps align economic incentives with national
interests and would produce immediate benefits for U.S. mariners,
shipyards, and operators.
The SHIPS Act: A Generational Opportunity
The SHIPS for America Act recognizes that shipbuilding revival
cannot occur in isolation. Its comprehensive approach--pairing
workforce development, industrial expansion, and cargo preference--is
the most significant maritime policy initiative in a generation.
Subtitle B's focus on ensuring sustained cargo for U.S.-flag vessels is
especially vital. Without it, newly built ships will have no work; with
it, we can sustain an expanding fleet, employ more American mariners,
and reestablish the United States as a true maritime power.
Conclusion
Patriot Maritime commends the Subcommittee and bill sponsors for
their leadership in addressing the decline of the U.S.-flag fleet.
Reviving America's maritime capability is not just an industrial goal--
it is a national security imperative. The SHIPS for America Act offers
a path to restore the balance between government partnership and
private investment that built and operated the greatest merchant marine
in history.
Patriot urges Congress to enact this legislation swiftly and to
reaffirm the principle that American cargo should sail on American
ships, crewed by American mariners, built in American shipyards. This
is how we rebuild the fleet, strengthen our economy, and secure our
Nation's future.
Thank you for the opportunity to share the views of Patriot
Maritime.
______
Prepared Statement of Matthew Garner, President, TAI Engineers, LLC
Chair Sullivan, Ranking Member Rochester, and Members of the
Committee,
Thank you for the opportunity to submit a statement for the record
regarding the SHIPS for America Act. We believe this is an important
piece of legislation deserving the full attention of Congress.
TAI Engineers, LLC (TAI) is one of the few U.S. companies
exclusively dedicated to full-ship design, engineering, and
integration--providing essential services to the U.S. maritime
industrial base. TAI's vision is to provide ``Solutions that Enhance
Value.'' Our business focus encompasses all aspects of ship design
integration, program and ship construction management from concept
through detailed design, incorporating operational innovation,
optimization, risk mitigation, and best-value tradeoffs through
production, testing, delivery, and the operational life cycle. Our goal
is to develop and sustain true Naval Architecture and Integrated
Logistics expertise in the United States.
Our team of 150 maritime professionals--predominantly engineers,
specialized designers, and drafters--has served as the design agent for
thousands of vessels since 1993. We began in commercial ship design,
supporting small U.S. shipyards. Working primarily on commercial
vessels, we built the knowledge, skills, and abilities that enabled us
to successfully transition to government work as commercial
shipbuilding declined. Every ship design contract supports dozens of
high-skill engineering jobs and hundreds of follow-on production jobs
at U.S. shipyards and suppliers.
Over the past decade, TAI has delivered design contracts for the
U.S. Navy's LAW/LSM, NGLS/T-AOL, and MSV(H) programs as a prime
contractor, as well as numerous designs for shipyard partners. We have
successfully executed Vessel Construction Manager prime contracts for
six design-and-construction programs for the U.S. Army, the U.S. Army
Corps of Engineers, and the National Park Service.
Our organization strongly supports the SHIPS for America Act and
the urgent need to revitalize the commercial maritime industrial base.
It should be recognized that the maritime industrial base includes not
only shipyards and suppliers, but also the naval architects and marine
engineers who design and engineer ships in the United States. Our
experience assisting shipyards in the commercial maritime industry
strengthens our technical capabilities and positioned us to
successfully support government programs. We are a clear example of how
a healthy commercial shipbuilding and engineering sector directly
benefits the government. Commercial shipbuilding strengthens
engineering talent, which strengthens government programs.
Robust naval architecture efforts lead to more mature designs that
support efficient production, minimizing construction costs and delays.
The U.S. commercial maritime industry will benefit greatly from a
strong naval architecture community capable of delivering mature
designs. Mature designs have been shown to reduce risk and cost in
shipbuilding programs, as documented by GAO-24-105503. We support
revitalizing commercial shipbuilding because it sends a strong demand
signal for more naval architects and marine engineers--a signal
necessary to attract new talent into the field.
We recognize the importance of maintaining a vibrant national
shipbuilding infrastructure, as our Nation's shipyards are critical
national security assets. We also believe that U.S. ship design and
maritime engineering capabilities have not been adequately prioritized
in recent years. This workforce is essential to solving emerging
maritime challenges, strengthening U.S. commercial maritime capacity,
supporting national emergencies, and providing high-quality STEM
careers for both high school and college graduates. The United States
has a long history of leadership in ship design, and continued
advancement of this skillset is critical to our maritime future--
particularly in large-volume ship design.
As part of the SHIPS for America Act's workforce development
pillar, we recommend several additional actions to strengthen U.S.
naval architecture and marine engineering capabilities:
1. Invest in Education and Scholarships. Reduce barriers to entry
through expanded scholarship programs--ideally a naval
architecture-specific equivalent to the DoD SMART program--with
guaranteed internships and post-graduation employment. Fully
fund tuition and living expenses for B.S., M.S., and Ph.D.
students in naval architecture and marine engineering.
2. Modernize Digital Engineering Infrastructure. Adopt and support
advanced digital tools, including modeling, simulation, and
digital twin technologies, to enhance productivity and
collaboration. The government can accelerate adoption by
funding shared digital engineering infrastructure and software
licenses for qualified partners; sponsoring training and
certification in tools such as MBSE, CAD/CAE, and PLM; and
requiring open digital standards in new acquisition programs to
ensure interoperability.
3. Raise the Profession's Visibility. Launch a national awareness
campaign featuring real ship design projects and young
engineers' stories. Sponsor guest speakers, ship visits, and
media content that highlight the critical role of naval
architects.
4. Strengthen University Programs. Provide grants to ABET-accredited
NA&ME schools to hire faculty, upgrade facilities, expand
distance learning, and develop industry certifications.
Establish two to three Centers of Excellence in Naval
Architecture.
5. Build a High School Pipeline. Fund STEM outreach programs in
shipbuilding regions. Create summer design camps at partner
universities and sponsor national high school design
competitions judged by government and industry naval architects
and marine engineers.
6. Incentivize Career Entry and Retention. Offer sign-on bonuses or
student loan repayment for naval architects and marine
engineers. Fund rotational fellowships across Navy labs,
government and commercial shipyards, and design firms. Support
continuing education, Professional Engineer exam preparation,
and advanced degrees.
7. Leverage Public-Private Partnerships. Expand collaborative
internships and co-op programs tied to the commercial maritime
industrial base. Form industry consortia--modeled after the
National Shipbuilding Research Program--to co-develop workforce
initiatives. Use OTAs and other flexible funding tools to
launch pilot programs quickly.
8. Support Ship Design Companies. Ensure that firms like TAI remain
fully engaged on meaningful projects, allowing them to maintain
and grow the Nation's design expertise.
We strongly believe that a robust commercial maritime industry
enables a strong government maritime industry by expanding the overall
market and providing greater opportunities across the sector. We urge
the Committee to promptly pass the SHIPS for America Act. America's
maritime strength relies not only on shipyards, but also on the
specialized professionals who conceive, design, and integrate the ships
we build. We urge the Committee to ensure that the SHIPS for America
Act explicitly includes investments in U.S. ship design, engineering,
and digital infrastructure--without which revitalizing shipbuilding
will not be sustainable. Without targeted investment in workforce,
tools, and partnerships, the U.S. risks losing a capability that takes
decades to develop and only years to erode. By acting now, Congress can
ensure that America retains the capacity to design the ships that will
safeguard its future.
We appreciate the opportunity to comment on such an important topic
for the United States. We thank the committee for your consideration.
______
Prepared Statement of Carleen Lyden Walker, CEO, SeaTrain Technology
Dear Members of the Committee:
Thank you for addressing the critical position of our maritime
security. For too long, our Nation has made the decision to ignore the
role that our maritime industry plays in our daily lives, and has
outsourced that responsibility to other nations, some of whom are no
longer working in our best interests.
At the end of World War II, the U.S. Flag flew on 50 percent of the
world's ships--today that number has been reduced to 0.4 percent. This
loss has opened up vulnerabilities for our Nation that include national
security, energy and food security, economic security, and workforce
development.
The SHIPS for America Act will put us on the path to recovery as we
recommit our Nation to this vital industry. I would urge this
committee, though, to not just agree to throw money at the problem, but
to take an intentional view as to how we get the maximum benefit from
our resources.
SHIPS
The Act's goal of 250 ships by 2035 will not be realized if we
persist in building the same ships. We cannot compete with China in
this realm. Why not overpower them by launching a new design: SeaTrain
Technology's remotely operated submersible cargo vessels suitable for
commercial, energy and defense applications (https://seatraintech.com/
). We could effectively have 250 SeaTrain gliders operational within 3
years and solve for the shipyard and mariner challenges.
SHIPYARDS
Our shipyards need to be overhauled and modernized to be effective,
if not competitive, with Asian yards. Let us invest in technologies
that will support this industrial advancement and springboard our
shipyards into the 21st century.
SeaTrain Technology takes a page out of both Henry Ford's book on
assembly line manufacturing and Asian yards' practices by creating a
``series building'' platform that maximizes efficiency and
productivity.
MARINERS
We are all aware there is a mariner shortage today and in the
foreseeable future. Further, more and more of our current mariners are
seeking a work/life balance that doesn't exist in today's deep sea
shipping world. SeaTrain Technology offers experienced mariners
shoreside positions monitoring and guiding SeaTrain's gliders from
variable control centers, thus mitigating time at sea and away from
families.
In conclusion, SeaTrain Technology strongly supports the SHIPS for
America Act, and hopes that it will provide us with the opportunity to
demonstrate how we can rapidly answer the needs of our country for
maritime dominance in the most efficient and effective way possible.
Thank you for your consideration,
Carleen Lyden Walker,
CEO,
SeaTrain Technology.
______
Prepared Statement of Carleen Lyden Walker, Chief Evolution Officer
(CEO), SHIPPINGInsight
Dear Members of the Committee:
Thank you for addressing the paucity of maritime assets the United
States currently deploys. While the U.S. once boasted 50 percent of the
world's maritime tonnage, that number is now 0.4 percent.
The Spanish philosopher, George Santayana once wrote: Those who
cannot remember the past are condemned to repeat it. To wit,
China: Maritime power until 1421.
Portugal: Maritime power in the 15th and 16th centuries.
Spain: Maritime power until mid-17th century.
Netherlands: Maritime power until mid-18th century.
Great Britain: Maritime power until mid-20th century.
United States: Maritime power at the end of World War II.
(50 percent of the world's tonnage)
China: has returned as the maritime power in the 21st
century
With all due respect to our European allies, their role as global
powers is over. Do we want to see the United States suffer the same
fate?
I am writing to urge you to support the SHIPS for America Act. Our
nation is a world leader in so many arenas; it is imperative that we
reclaim our position as a maritime power.
Key reasons why we need to restore our maritime pre-eminence:
90 percent of the world's goods and energy are transported
on ships-``The Engine of Global Trade''
Backbone of a nation's economy and security
Most environmental and efficient mode of transporting bulk
goods
Of vital importance to supporting military efforts
I urge you to restore our maritime might.
Thank you for your consideration.
Carleen Lyden Walker,
Chief Evolution Officer,
SHIPPINGInsight.
______
Prepared Statement of the American Maritime Officers, International
Organization of Masters, Mates & Pilots, Marine Engineers' Beneficial
Association, Marine Firemen's Union, Maritime Trades Department, AFL-
CIO, Sailors' Union of the Pacific, Seafarers International Union,
Transportation Trades Department, AFL-CIO
Chairman Sullivan, Ranking Member Blunt Rochester and Members of
the Subcommittee:
This statement is submitted by the American Maritime Officers, the
International Organization of Masters, Mates & Pilots, the Marine
Engineers' Beneficial Association, the Marine Firemen's Union, the
Maritime Trades Department, AFL-CIO, the Sailors' Union of the Pacific,
the Seafarers International Union, and the Transportation Trades
Department, AFL-CIO. Collectively, our unions represent the ships'
masters, licensed deck officers, licensed engineers, and unlicensed
merchant mariners working aboard all types of U.S.-flag commercial
vessels, including all those enrolled in the Maritime Security Program
and the Tanker Security Program.
The development, implementation and funding of programs and
policies that promote, support and grow the U.S.-flag fleet, enhance
its economic viability, and increase its ability to compete for and
secure a larger share of America's commercial commerce are extremely
important to the jobs of the men and women our organizations represent.
The jobs that American merchant mariners perform, and the ships that
they crew, are a vital component of America's economic and military
security. They provide the commercial sealift readiness capability
needed by the Department of Defense and, as history has demonstrated,
are always ready, willing and able to put themselves in harms' way to
support American troops deployed throughout the world. Consequently, we
are grateful that this hearing is being held and we appreciate the
opportunity to submit our statement.
At the outset, we wish to reiterate our strong support for the
bipartisan and bicameral SHIPS for America Act. We thank the sponsors
of this legislation for their leadership in introducing this
legislation and we thank all those who have cosponsored this
legislation for their commitment to revitalize America's commercial
maritime capability. We assure you that America's seafaring labor
organizations look forward to working with you and your colleagues to
enact the provisions in the SHIPS for America Act relating to maritime
manpower as well as the other far reaching and innovative proposals to
achieve a stronger maritime industry.
We also wish to acknowledge the support for our industry expressed
by President Trump, Vice President Vance, Secretary of Transportation
Duffy, and others in the Administration. Their statements demonstrate a
clear recognition at the highest level of our government that the
United States needs and must have a stronger and larger U.S.-flag
maritime industry. Our organizations agree wholeheartedly.
In addition, as reflected in the SHIPS for America legislation and
the actions taken by the Administration, the international shipping
arena is not a level playing field where all vessels operate under the
same set of rules and comply with the same operational, manning and tax
requirements. Rather, U.S.-flag vessels are forced to compete against
foreign state owned and controlled vessels and other flag of
convenience vessel operations, as well as those vessels receiving
significant tax related and other economic incentives that help them
secure larger amounts of the world's foreign trade.
The same holds true for the American shipbuilding industry and our
labor colleagues who work in America's shipyards or in related service
and supply industries. We support the steps being taken by the
Administration to respond to unfair shipbuilding practices by China and
urge the Administration to ensure that such steps reflect the
importance of both domestic shipbuilding and U.S.-flag vessel
operations to the economic and military security of our Nation.
It is for these reasons why we strongly urge Congress to consider
as expeditiously as possible the SHIPS for America legislation. Without
the critically important initiatives contained in this legislation,
vessels may be forced to leave the U.S.-flag. This will not only reduce
the commercial sealift capability available to the Department of
Defense but result in an outsourcing of critically important American
maritime jobs causing a dangerous reduction in the number of American
mariners available to crew the surge and sustainment vessels needed to
support American troops overseas.
In fact, when we lose U.S.-flag vessels and the shipboard billets
they provide, trained and experienced American mariners lose their
jobs, their income, their health and other benefits, and their ability
to provide for their families. When this happens, they have no choice
but to leave our industry and find employment someplace else. For our
government, and particularly the Department of Defense, this means that
a sufficient number of American mariners will no longer be there--will
no longer be working in our industry--the next time the need to support
American troops and America's interests abroad arises.
It is also extremely important to emphasize that it takes many
years for an individual to gain the sea-time necessary to obtain Coast
Guard-issued licenses and endorsements. Simply put, it will take a long
time for our country and our industry to recover from the further
downsizing of our fleet and the outsourcing of American maritime jobs.
Rather, Congress, the Administration and our industry need to work
together to achieve the goals and objectives contained in the
Declaration of Policy in the Merchant Marine Act, 1936: namely, that
``It is necessary for the national defense and development of its
foreign and domestic commerce that the United States shall have a
merchant marine (a) sufficient to carry a substantial portion of the
water-borne export and import foreign commerce of the United States. .
.''
Today, U.S.-flag commercial vessels today carry less than 2 percent
of America's commercial foreign commerce, clearly not a ``substantial
portion''. However, the simple fact is that the key element in the
revitalization of the U.S.-flag shipping industry and its ability to
protect the international shipping supply chain is to increase the
share of commercial cargo carried by U.S.-flag vessels in international
commerce. Without cargo, ships don't sail and if ships don't have the
cargo they need to operate, then the American merchant mariners who
crew these vessels will not have work and may in fact be forced to
leave the industry, reducing the critically important maritime manpower
pool.
To this end, we support the increase in U.S.-flag cargo preference
shipping requirements to 100 percent as contained in the SHIPS for
America legislation. We believe very strongly that U.S.-flag vessels
and their U.S. citizen crews should be responsible for the carriage of
all U.S. taxpayer financed government cargoes.
At the same time, it is important for Congress and the
Administration to understand that simply increasing the share of
government cargo to be carried by U.S.-flag vessels will not result in
the increase in the number of U.S.-flag commercial vessels envisioned
by the SHIPS for America legislation. It is essential that provisions
be included that result in the carriage of a greater portion of
America's foreign trade on American ships.
Congress should, for example, consider the establishment of a tax
credit provided to the shippers or owners of the cargo as an incentive
to utilize American ships in response to the economic advantages
enjoyed by foreign flag and foreign crewed ships. In addition, we would
encourage Congress to consider which tax-related incentives currently
available to foreign flag vessels should be made applicable to U.S.-
flag vessels and their American crews. Many nations, for example,
exclude the income earned by their mariners from their income tax, a
provision that reduces operating costs to the vessel owner. In fact,
this foreign source income exclusion is currently available to other
American workers employed outside the United States pursuant to section
911 of the Internal Revenue Code but not to American mariners working
aboard U.S.-flag vessels operating in the foreign trades.
We also believe that section 421 in the SHIPS for America Act that
allows duties on imported cargo to be adjusted if carried on U.S.-flag
vessels should be utilized and that such incentives should be a part of
bilateral and multilateral trade negotiations.
In short, if we do nothing and our industry is expected to respond
on its own without the support of the United States government to
constantly changing conditions in the international shipping arena, the
stability necessary for the U.S.-flag shipping companies to attract the
investments they need and the opportunity for maritime labor to recruit
and retain the mariners our country needs will not be there. Most
importantly, the failure to act means that the Department of Defense
will no longer have the certainty that the privately-owned U.S.-flag
commercial industry will be there to provide the commercial sealift
capability it needs; will no longer be able to undertake the long-term
planning necessary for an effective sealift strategy; and will be
forced to dedicate a significant portion of its limited resources to
the commercial sealift functions presently provided by the U.S.-flag
merchant marine at a fraction of what it would cost the government to
do it all itself.
In conclusion, we stand ready to do whatever we can to help put in
place the programs and policies that result in the operation of a
greater number of commercial vessels under the United States-flag, that
create new job opportunities for American mariners, and that increase
the share of America's foreign trade carried by U.S.-flag vessels.
______
Prepared Statement of Captain James Tobin, President and CEO,
U.S. Merchant Marine Academy Alumni Association and Foundation
On behalf of more than 13,000 living graduates of the United States
Merchant Marine Academy, I thank Senators Todd Young and Mark Kelly for
their bipartisan leadership in advancing the SHIPS for America Act and
for keeping America's maritime strength squarely on the national
agenda.
As the maritime threat from China becomes clearer by the day,
America must focus on regaining and sustaining dominance of the seas.
In any future major-power conflict, our Nation's ability to project and
sustain power across the Pacific will depend on the reliability of
military sealift--and on the men and women trained to operate it.
More than 80 percent of the U.S. Navy's Strategic Sealift Officers
are service-obligated graduates of the U.S. Merchant Marine Academy
(USMMA), whose mission is to educate and train the licensed officers
who command our commercial fleets in peacetime and, in wartime,
transport the armaments, fuel, and supplies required for victory.
The SHIPS for America Act rightly emphasizes rebuilding the
industrial base--shipyards, vessels, and the skilled workforce that
sustains them. But a true maritime resurgence also requires rebuilding
the human base--specifically, the licensed, militarily obligated
Merchant Marine Officers trained at USMMA who will crew those ships in
times of war.
To ensure a ready cadre of sealift-qualified officers, Congress
established the U.S. Merchant Marine Academy at Kings Point, New York,
more than eight decades ago. Today, its 1940s-era campus must be
modernized to meet 21st-century security demands. Recognizing this
urgent need, the SHIPS for America Act provides for the modernization
of the USMMA's infrastructure--a critical link in the chain of
America's maritime readiness.
This bipartisan support in the Senate aligns with efforts at the
Department of Transportation (DOT), which is advancing a comprehensive
Campus Modernization Plan consistent with the requirements specified in
the SHIPS for America Act
This is government at its best: Congress, the Administration, and
DOT all pulling in the same direction to strengthen both the maritime
industrial base and the human base--the licensed, militarily obligated
Merchant Marine Officers who will carry the load when it matters most.
If the United States is serious about maritime resurgence, it must
invest not only in ships and shipyards, but also in the service
obligated midshipmen training at USMMA who will command them into
contested waters.
Respectfully submitted,
Captain James F. Tobin.
President and CEO,
Merchant Marine Academy Alumni Association and Foundation.
Senator Young. Dr. Mercogliano, thanks so much for being
here. You know, it has been said by a number of our witnesses
today that American shipbuilding has ebbed and flowed, and you
have each spun I think very related and complementary
narratives about why right now we have a shipbuilding infirmity
in this country. And I agree with, I think, Mr. Paxton's
assessment that it was market forces that led us to chase
value, you know, the same quality or even better quality at
lower cost. And we delivered that to the taxpayers, but we lost
sight of the fact that it is important for us policymakers to
be baking into the price of certain critical goods, strategic
goods, a national security or economic security premium.
So it is time we updated our economics. If we learned
anything over the course of a global pandemic, with
semiconductors and other valuable products, it is that we need
to do our work up here on the Hill.
So this hearing is really important, sir. Our industrial
capacity, as you have intimated, has cratered since the 1970s,
with respect to some of these key strategic products. So we are
in a bind.
We are a maritime nation. Alfred Thayer Mahan, a name you
are familiar with, talked not just about naval power but more
broadly about sea power. And could you unpack that a little
bit, explain what that means to be a nation of sea power, and
explain how the SHIPS Act and the President's Maritime Action
Plan can get us back on the right course as a sea power nation?
Mr. Mercogliano. I would be happy to, Senator Young, and I
want to thank you and Senator Kelly for your leadership on the
SHIPS Act. It has been absolutely essential for us.
A friend of mine, Nicholas Lambert, wrote a fantastic book,
``Neptune Factor'', which talks about Alfred Thayer Mahan, in
looking at this as economics. And that is what he understood.
He understood sea power to be not just the application of
military force but economic force. It is trade. It is commerce.
The whole reason to have a Navy is to ensure that the economics
and trade is moving and flowing for a nation.
We shifted our focus. We have gone kind of back and forth
between being a continental and a maritime nation and now we
are obviously a maritime nation, based on our imports and
exports. And we have seen, since 2021, with Ever Given getting
stuck in the Suez, we have seen it with incidents along the
coast of the United States, Dali in Baltimore. We have seen how
vulnerable our supply chain can be to disruptions, both being
caused naturally and by other forces, outside forces, the
Houthi, for example, in the Red Sea.
So I think the importance here is that we have kind of
gotten away from that lesson, but since 2021, it has been
brought home numerous times through the supply chain crisis.
Senator Young. Right. So thank you, sir. And just to put a
fine point on it, I am quoting Mr. Paxton a lot today, but he
did say earlier, and I wrote it down, ``Maritime dependency
makes us a client state.'' So Doctor, what would happen if
tomorrow China said, ``We are no longer going to allow our
vessels, our merchant vessels, to stop in U.S. ports,'' and how
might the SHIPS for America Act offer a solution to that
challenge?
Mr. Mercogliano. Well, as you know, less than 2 percent of
our imports/exports are on U.S. ships, and a nation like China,
which has a Chinese overseas shipping company, a major shipping
firm, can cause disruptions to us. I mean, just by simply
ordering their ships to slow down and come in two days late
would cause disruptions to us.
By having a SHIPS for the United States we provide us with
that reservoir, that backlog, so that we are not dependent on
it. It was the thing that created, actually, the Jones Act in
1920, when we found out that 11 percent of our international
trade was only carried on American ships. It is much lower
today.
Senator Young. Right. And that legislation, perhaps it can
be improved in various ways. We want to keep this coalition
together around the SHIPS for America Act. But it was designed
to change the cost structure, right, a very similar motivation
that we are seeking today with the SHIPS for America Act.
Mr. Paxton, as my time comes to a close here, there are
some who doubt that America's shipbuilding industry is capable
of responding to the enormity of this threat of supply chain
interruption and all the rest. What do you say to that?
Mr. Paxton. I categorically disagree. We have shipyards
that are building large, oceangoing vessels right now, as we
speak, up at Philly, at NASSCO, many other shipyards. We have
the capability and capacity, sir. What we do not have is the
demand signal your legislation will produce. That would open up
more capacity in existing infrastructure and probably end up
opening more shipyards.
Senator Young. Thank you. Thank you all.
Senator Sullivan. Senator Schatz.
STATEMENT OF HON. BRIAN SCHATZ,
U.S. SENATOR FROM HAWAII
Senator Schatz. Thank you, Chairman and Ranking Member.
Thank you to all the members and all the testifiers for your
commitment to this issue.
Mr. Vogel, in interacting with Senator Kelly's shop, my
understanding is that this Act is at least partly designed to
sort of look at some of the success stories in individual
shipyards and scale them up. Just for the record, can you tell
us what is going right in the Philly shipyard and how we can
sort of replicate that across the country?
Mr. Vogel. Yes. Thank you, Senator. So much has gone well
with the National Security Multi-Mission Vessel Program, by
removing those regulatory constraints that are in typical
government shipbuilding. We awarded that contract to the Philly
Shipyard in April 2020, right at the start of the COVID-19
impact. At that time, they had about 80 employees in the
shipyard. Despite those challenges, we have been able to
successfully deliver three of the five vessels on time, on
budget. We have seen growth at 0.38 percent of the original
budget. That is compared to often 20, 30, 40, a multitude more,
percent in terms of growth.
Senator Schatz. Why? I get it. So what did you do?
Mr. Vogel. So having the vessel construction manager fully
integrated, we have been able to identify issues before they
have really arisen. We have removed that sort of gotcha
mentality of traditional government shipbuilding, where you
have inspectors in the yard who are trying to bring back sort
of the demonstration of their value. Instead, we are working
hand-in-hand with the shipyard, identifying issues, identifying
things like supply chain, how can we identify the right
American supply chain and help them to buildup that capacity.
Senator Schatz. And are there specific Federal regulatory
barriers, or is it mostly like a sort of staffing structure,
where the old school was you would come in and you would sort
of post audit or prove to the shipyard that they were doing
something wrong? Is that what you are talking about, or is
there separately a set of regulations that need to be gotten
rid of?
Mr. Vogel. Yes, it is both, Senator. So the Federal
Acquisition Regulation places numerous burdens. We have been
able to reduce that by using a commercial model, minimizing the
slowdowns. One of the keys for us, too, was to be able to sort
of break that privity between the government and the shipyard,
snap that chalk line so that when the design was done we were
able to move out. Historically, government shipbuilding has
been plagued by change orders, constant changes to the design.
By eliminating all of that we have been able to instruct Philly
to move out on a design that was agreed on, back in 2019 and
2020, and execute upon that to get ships in the water.
Senator Schatz. Should I understand this sort of like value
engineering? Is that kind of what we are talking about?
Mr. Vogel. Absolutely, Senator.
Senator Schatz. OK. I got it. OK.
Mr. Paxton, talk to me broadly about the workforce. I mean,
if we send the demand signal, that is great, but as we have
seen markets are not perfect, and there are pipeline issues and
retention issues. So how do we address that sort of
concurrently with the other stuff that we are working to do?
Mr. Paxton. Yes. Thank you, Senator. I think our workforce
is sometimes a reflection of kind of the boom-and-bust cycles
we go through in shipbuilding, both commercial and government.
When the work is there and we have that long series
construction, our workforce knows they have a career in that
shipyard, not a job. So having the work, being able to plan,
being able to hire up your workforce, that happens because you
have that long run of work.
I know it sounds simple, sir, but in these shipyards that
are privately held and publicly traded, they are making
investments based on the best information they have, and they
cannot keep a workforce employed if they see a strategic pause
or a reduction in the work.
Senator Schatz. OK. Got it. So you need to send a big
demand signal to kind of establish a foundation for all this.
Mr. Paxton. Yes, sir.
Senator Schatz. What else?
Mr. Paxton. I think we have been doing a good job with
trying to go down to the middle schools, to the elementary
schools, to explain that this is a career that you can pursue,
and it is changing. We are talking about AI. We are talking
about robotics. We are talking about new technologies coming
into our shipyards. So the education, Senator, of making sure
that this is an understood profession as opposed to you have
got to go get that standard 4-year degree.
Senator Schatz. Thank you very much.
Senator Sullivan. Thank you. Just a real quick point on
that. A lot of the budget reconciliation bill, the One Big
Beautiful Bill, does a lot for this, to jumpstart Navy,
commercial. But on the workforce side, one of the really
understated provisions here that has not gotten a lot of
attention, the Pell Grants funding, which is a lot of Federal
money, now is able to go to certificate programs, for
registered apprenticeships, and 529 program that go to these
registered apprenticeship programs for training. Just what you
were talking about, Mr. Paxton. I just wanted people to know
that is a really good part of the program. Senator Curtis.
STATEMENT OF HON. JOHN CURTIS,
U.S. SENATOR FROM UTAH
Senator Curtis. Thank you, Chairman. I would like to begin
by giving a shoutout to my colleagues, Senator Kelly and
Senator Young, for their work on this, for their leadership,
and I look to them as important leaders on this, so thanks for
their work.
Dr. Mercogliano, if there was a theme for this hearing it
would be where did we go wrong. That seems to summarize all of
my colleagues' questions. But it was also my question. I will
not bore down too much into that, but I would like to
specifically look at China the last 20 years. Yes, we know of
subsidies. We know the way the Chinese government works. Are
there other things that we should be learning from the Chinese,
innovations, and what else should we learn from this? And then
kind of a follow up to that question is, what could go wrong
with China dominating? You talked a little bit about that, but
I would like you to bore down on that a little bit more, the
problem with China being so dominant?
Mr. Mercogliano. Thank you, Senator Curtis. China's
dominance has been absolutely fascinating to watch. Again, I
will not quote CSIS again, but what has been interesting is how
China has gone from small, little shipyards to consolidating
their shipyards into much larger entities. They took very
disparate shipyard capability and have built it up into these
huge conglomerates. Consolidation is the issue we see in
shipping in almost all areas. And it is that vertical
integration I think is really the most disturbing that you see
in them.
Obviously, China has the ability to, you know, low labor, a
lot of money that is freely available to them, not a lot of
overhead. We talk about the subsidies, the direct and indirect
subsidies. From 2010 to 2018, they received about $132 billion
in subsidies. Our Title XI grants during that same period was
$77 million. So, I mean, it is just proportionally different.
But they control other aspects. I mean, they are building
almost every container in the world and leasing them out. They
are building the trailers that they carry on. We see Chinese
mariners becoming much more dominant. The Chinese merchant
ships are built with military capability in them. One of the
things that we need to understand, the more military capable
you build a commercial ship, the less commercially viable it
tends to be. But the Chinese can do that because they do not
have to worry about the net profit in the end. So a Chinese
overseas shipping company can have commercial ships, roll-on,
roll-off ships, that can carry military capability.
In many ways, to go back to what Senator Young was talking
about, China has swallowed Alfred Thayer Mahan and really
understand it in a way that other countries have not. So they
have embraced that.
The other issue, too, is that China, Japan, and Korea are
in a three-way war out there in shipbuilding. If you look over
the past three years, China's share of shipbuilding has
increased by 16 percent. That is the exact amount that Japan
and Korea have lost. It is one of the reasons why you are
seeing Japan and Korea so interested in investing in the U.S.
And one of my concerns about the SHIPS for America Act is we do
not become a SHIPS for Korea Act. We need to make sure that we
focus it here in the United States. So it is a very coherent
program put out by the Chinese.
Senator Curtis. Thank you. It is very insightful and
enlightening. I saw a lot of heads shaking up and down as you
were speaking.
Let me go to the U.K. for a minute, because U.K. is a close
ally. A lot of policies would be similar. While we have
declined, they have not. What could we learn from the U.K.?
Mr. Mercogliano. Well, the U.K. has gone through their
peaks and troughs too, I would mention. They have had issues
with their shipbuilding. I would argue that if you look at a
lot of European shipyards, if I can expand out just a little
bit----
Senator Curtis. Sure.
Mr. Mercogliano.--you know, one of the things that we saw
with specialization in shipyards, so if you go to the Dutch,
for example, they are building small craft. They are doing
dredges, very specialized. Germany, you know, realized that
they cannot do quite the shipbuilding they do, but they produce
propellers and diesel engines, much more specialized. The
Italians, Fincantieri building cruise ships. Finland building
icebreakers. So the realization that specialization came in.
I do get concerned if we try to get into a shipbuilding
competition against China they are going to out-compete us all
the time. If you look at where China is building today, they
are number one in all categories of ships, except for cruise
ships and liquified natural gas carriers, but they are growing
in that. I think we need to really focus and target in certain
areas where we need to fill our strategic commercial fleet.
Senator Curtis. Thank you. Thanks to all the witnesses. I
yield my time.
Senator Sullivan. Thank you. I don't know if you mentioned,
Dr. Mercogliano, that we helped finance that too, you know,
unfortunately. Our Wall Street guys are always helping China,
which is another challenge of ours. Senator Baldwin.
STATEMENT OF HON. TAMMY BALDWIN,
U.S. SENATOR FROM WISCONSIN
Senator Baldwin. Thank you, Mr. Chairman. Thank you to all
of our witnesses today.
Representing a state in the Great Lakes I want to focus a
little bit to start with Great Lakes shipbuilding. For nearly
two centuries, Wisconsin workers have built world-class vessels
and ships for moving goods to market and also to power our
Navy. Wisconsin workers in our shipbuilding companies can
compete with anyone in the world, but they need a level playing
field to do it. We talked a bit about China. As I have been
saying for years, China has gotten away with cheating the
system and undermining our workers, and it is long overdue that
we stand up to them.
Prioritizing efforts to revitalize our domestic
shipbuilding and repair sector is a matter of both economic and
national security. I was proud to stand with workers to push
President Biden and now President Trump to do right by these
workers. Earlier this year, the Administration announced
penalties on China for the unfair trade practices in
shipbuilding.
I also strongly support passage of the SHIPS for America
Act, our bipartisan and comprehensive legislation to revitalize
the United States shipbuilding and commercial maritime
industry, and I urge all of my colleagues to review and support
this legislation.
Mr. Paxton, so far this year China has made 717 large
commercial vessels and the United States has made just 1.
Wisconsin stands ready to play a key role in revitalizing the
country's shipbuilding capacity. How does the shipbuilding
industry see the need to better utilize the Great Lakes
workforce to meet the needs of the commercial maritime and Navy
shipbuilding demands?
Mr. Paxton. Thank you, Senator, for the question. I know we
focus on large, oceangoing vessels, and we should, because they
are important. I would point out last year we delivered 964
ships of all shapes and sizes, some of them built on the Great
Lakes. This year we delivered 750 of those ships. So we should
not just throw away the fact that those are smaller ships and
specialized vessels. They are being built all over the United
States, inland waterways, and the Great Lakes. So we do have
ship capability that is really important. We have got to speak
to that.
I do think, going forward, if we are doing something like
the SHIPS Act, you are going to see something that they are
calling now distributed shipbuilding, where you see modules and
structural assemblies being built in non-traditional areas, in
not your normal coastline shipyard areas. So that is a good
thing, trying to get that entire industrial base in on it.
Where we can parse out pieces and modules, that is a good way
to utilize our industrial base.
Senator Baldwin. Great. I wanted to add to previous
questions about the Small Shipyard Grant Program. This is
something that I have championed for years, the funding for
that Small Shipyard Grant Program. Small shipyards are often
the lifeblood of coastal communities, and the grant program
provides resources for smaller shipyards to upgrade equipment
and support worker training programs. Companies in Wisconsin,
including Marinette Marine Corporation, Fraser Shipyards,
Fincantieri, and Marine Travel Lift have all benefited
tremendously from this program.
Mr. Paxton, can you speak to the importance of small
shipyards in America's maritime industrial base and why
continued and increased investment in the Small Shipyard Grant
Program is critical?
Mr. Paxton. Yes, it was a program that was authorized right
in this Committee, and it has a long history, and its history
is one of, it has always been over-subscribed, meaning when
there is $100 million in there, there is $1 billion in demand.
So what we know about the Small Shipyard Assistance Grant
Program is that it is absolutely utilized the right way and it
is always over-subscribed. SCA fully supports it. We like the
SHIPS Act putting $100 million authorization in there for
sustained investment in the program.
Senator Baldwin. Thank you. Ms. Snow, thank you for your
remarks. I appreciate you mentioning the value of
apprenticeships and technical colleges. It is critical that we
support the growth of a maritime workforce concurrent with
efforts to support the shipbuilding and repair industry. If
there are no workers available to build ships, these efforts
are pretty meaningless.
There are successful programs underway in my home state of
Wisconsin. Northeast Wisconsin Technical College provides
specialized training through a longstanding partnership with
Fincantieri Marinette Marine to provide career paths through
good-paying union jobs and a pathway to the middle class. The
college has expanded this partnership to Fincantieri Bay
Shipbuilding at their Sturgeon Bay campus.
How can industry work better with technical colleges and
entities like labor unions to grow the maritime workforce?
Ms. Snow. Thank you for the question. I think that their
creating a pipeline from technical schools directly to
businesses is actually a vital solution to a lot of these
workforce problems. I would go as far to say as introducing
them earlier, though. I have created a pipeline with our
Seattle Public Schools Skills Center, which is a high school
program, where their final that they take in high school in
their welding program is our weld test that you take to
interview. So if they have passed this class in high school,
they are automatically set up for success at our business. So I
would encourage other companies to take the personnel leap to
go and make those pipelines.
Senator Baldwin. Thank you.
Senator Sullivan. Senator Moreno.
STATEMENT OF HON. BERNIE MORENO,
U.S. SENATOR FROM OHIO
Senator Moreno. Thank you, Mr. Chairman, for holding this
hearing. I will start with you, Mr. Paxton. You have been, from
the background materials here, doing and advocating for
shipbuilding in America for 18 years. What is different today
that gives you hope versus the last 18 years, where we have
continued to see inaction by Congress and actually competing in
shipbuilding?
Mr. Paxton. Thank you, Senator, for the question. One of
the things we have always advocated for was just a simple
thing, having a National Maritime Strategy. We have these
things for defense. We have them for other transportation
modes. We do not have it for the maritime industry.
I would say over the last 18 years, a little bit earlier
than that, that is when we saw China enter the WTO, and we
thought capitalism would take down communism. It did not
happen, and China did their 5-year plans and grew.
Senator Moreno. Just let me interrupt you real quick. So
that was 25 years ago. You would agree, I think all of us
should agree, that that vote 25 years ago was a catastrophic
disaster.
Mr. Paxton. They have played the long game.
Senator Moreno. We played the dumb game.
Mr. Paxton. Well, I will not speak to that, sir. But I will
say that that had a bad impact on all global shipbuilding,
because it has all declined since that moment happened.
Senator Moreno. Right. But you would agree, and Dr.
Mercogliano, you would agree, energy policy does also matter,
right. To build ships here at scale in America, you need
affordable, abundant, reliable energy. Would you both agree on
that?
Mr. Mercogliano. Yes, sir. I think we need not just energy
but an entire strategy dealing with an industry in all aspects
of it, to really promote shipping.
Senator Moreno. So a shipbuilding facility run by solar
panels is decently unrealistic today?
Mr. Mercogliano. I do not think you are going to be able to
generate enough power for it.
Senator Moreno. But 94 percent of all new power generation,
under the Biden administration, was wind and solar. So energy
policy matters. Regulatory policy matters, right? That is a big
hindrance to our industry, to private industry, when you have
regulatory policy that strangles the private sector. Would you
agree?
Mr. Mercogliano. It is very difficult in the maritime
sector right now. You see that issue with just manning ships
and the regulations that U.S. merchant mariners fall under in
regard to licensing, and even the number of crew on board ships
makes us very uncompetitive in that way.
Senator Moreno. How about tax policy, meaning when you have
inconsistent tax policy, when you have corporate tax rates that
are very high, you have a disincentivizing of investment, that
also makes a difference. Correct?
Mr. Mercogliano. I agree, Senator. One of the comments I
had earlier was Americans are the fourth-largest investors in
shipping, just not in American shipping. They are putting their
money offshore.
Senator Moreno. And then workforce policies matter. I think
all of you have talked about that, the importance of trade
schools, investing in that, expansion of Pell. All of that
happened in the One Big Beautiful Bill. Every single thing that
I just mentioned was fixed in the One Big Beautiful Bill. Do
you think, and I will ask just a quick yes or no, was the One
Big Beautiful Bill helpful in getting more shipbuilding in
America? Yes or no.
Mr. Paxton. Generational, yes.
Senator Moreno. So a huge yes.
Mr. Vogel. Absolutely, Senator, and we look forward to the
funding that has been provided and appropriated to be placed on
contract quickly.
Mr. Mercogliano. Yes, sir. We have never seen this level of
interest and effort being put into shipping in over 50 years.
Senator Moreno. Ms. Snow.
Ms. Snow. I do not have an answer for this right now, but I
can submit a written answer. I am here to talk about workforce
development.
Senator Moreno. OK. The good news is we can thank the Vice
President of the United States for casting the tiebreaking vote
on that bill, I guess.
How about tariffs? Doctor, how do tariffs play into this
equation? Should we allow China to continue to go unchecked, or
do tariffs matter?
Mr. Mercogliano. I mentioned, sir, that I think one of the
efforts we can do to promote cargo on U.S. ships is to give a
benefit to hauling cargo onto U.S. ships and maybe waive
tariffs on that. We need to do something to incentivize putting
cargo onto U.S. ships. Building ships will do no good if we
cannot generate funds for them, even in the Maritime Security
Program, Tax Security Program. That money does not provide
enough for our ships to be competitive and operate out there.
And I would think we need a tariff strategy to assist in that.
Senator Moreno. Perfect. And then last question for you,
Mr. Paxton. Senator Baldwin mentioned the Great Lakes. I will
point out that the first entry from the ocean to the Great
Lakes runs through Ohio. How important is it to keep the St.
Lawrence Seaway open 12 months a year?
Mr. Paxton. I think it is critical. I would just also echo,
Senator, we need to do more shipbuilding in more places, and we
can do that if we had that demand signal. You see it happening,
honesty, with the SIB, the submarine industrial base, where
they are putting modules and structures in other places,
nontraditional places. We should be building in those places,
as well.
Senator Moreno. Yes, let me just be clear. Unlike the East
Coast and West Coast, Ohio is open for business. If there is
somebody watching that is in the shipbuilding industry, come to
Ohio. We will make it quick, we will make it easy, and we will
not absolutely torture you or put you through the wringer.
Thank you, Mr. Chairman.
Senator Sullivan. Thank you, Senator Moreno. Great
questions, by the way. I think the generational answer that Mr.
Paxton mentioned on the One Big Beautiful Bill, it is a really
important point.
By the way, there is shipbuilding now going on in Alaska.
There is a good company in Cleveland----
Senator Moreno. Don't forget your family is from Ohio.
Senator Sullivan.--called American Tank and Fabricating
Company that is doing good shipbuilding in Cleveland. So it is
happening all over the country.
I want to go to this issue of financing. One thing that
drives me crazy is how much our American financers still are
addicted to financing China's rise, including in their
military. Fortunately, we have a provision in this year's NDAA
that requires transparency. If you are an American investment
bank or private equity company and you are investing in Chinese
shipbuilding or weapons or manufacturing or software
development or chip manufacturing, we need to know about it.
So Dr. Mercogliano, you say, hey, we have this small fleet
now, but we are big investors. Has American capital been the
key to the Chinese shipbuilding rise?
Mr. Mercogliano. I think we definitely assisted in that in
both the use of finances and even some industrialization. And
we have seen that just recently where Italian company,
Fincantieri, helped them construct their first passenger liner,
which is going to be a competition for the Europeans.
I think there is always the urge that China seems like the
emerging behemoth, and so people want to join in on that.
Senator Sullivan. Yes. We have got to get our Wall Street
guys off the addiction of funding the rise of our adversary.
They have been doing it for 40 years. Quite frankly, it is un-
American, and we are starting to push back on that.
Mr. Vogel, I have a request for you. You made a really good
point on this vessel construction manager model, but also the
gotcha approach of our own Federal Government with red tape and
the mentality of catching you as opposed to supporting you. Can
you give us, for the record, a very detailed list of
unnecessary regulations from our own Federal Government that
are inhibiting shipbuilding domestically, both on the DoD side
and the commercial side? Can we get that from you, for the
record, a homework assignment?
Mr. Vogel. Happy to provide that, Mr. Chairman.
Senator Sullivan. You have made a really good point on
that, and I think we need to make the case.
I had a great opportunity to sit down with the former
Secretary of the Navy, John Lehman, under President Reagan, who
is the father of the 600-ship Navy, which was quite an
accomplishment. And I asked him, ``What was the secret sauce?
How did you do that?'' He was a 38-year-old Secretary of the
Navy when he started, pretty remarkable guy. The one key thing
he said was, ``No change orders.'' They put the pencils down.
They told the industry, ``We are going to do 40 of these
destroyers, and then if we find something better, for Block 2,
or Block B, or Block Bravo, we will do a change order.'' But is
that something we need also?
Mr. Vogel. Yes, Mr. Chairman. That is really the key, and
that has been the key to the success of the National Security
Multi-Mission Vessel is limit the change orders. Once the
government has a design, let's move out and build it a
commercial standard.
Senator Sullivan. Good. Senator Cantwell mentioned this
idea of AI and software development. We actually, once again,
in the budget reconciliation bill--there is so much good stuff
in this, by the way, Pell Grants for apprenticeships--there is
$450 million for software and AI deployment in U.S. shipyards,
in that bill. What impact do you believe software and AI could
have in increasing the transparency of building schedules and
supercharging the existing constrained workforce? Dr.
Mercogliano, do you have a view on that, or any other
witnesses?
Mr. Mercogliano. I would probably defer over to Mr. Paxton
on that, sir.
Senator Sullivan. Mr. Paxton. You have been given this one
from your fellow panelist.
Mr. Paxton. Absolutely. Look, we are trying to look at all
technology advancements. In fact, that is one of the things we
have been doing, Mr. Chairman, with our allies, strategic
collaboration on the best practices in advanced technology. So
I do think AI is going to play an important part.
Senator Sullivan. So let me just conclude with kind of an
important question. You know, when you have this kind of
momentum, bipartisan support, the President leading the One Big
Beautiful Bill, putting billions--and I mean billions, just the
Coast Guard's $25 billion investment, $29 billion for
shipbuilding, these other provisions that are important--what
are some of the near-term initiatives that the Congress should
prioritize, such as small shipyard grants, these regulatory
reforms, workforce training programs, to start to try to get
momentum. We have dug a giant hole. We have all asked the same
question--how the heck did this happen? But there is momentum,
there is bipartisan support, there is a lot of money, right,
being put into this sector, both in the DoD military side,
Coast Guard side, but commercial side. What do you think, just
very quickly, kind of the quick hits that we can do in the next
1 to 3 years to show progress? It is going to take a long time
to dig out of this hole.
Mr. Paxton. Acquisition reform.
Senator Sullivan. So what Mr. Vogel has been talking about?
Mr. Paxton. That, but also some of the things you have been
working on with the FoRGED Act and the SPEED Act, things where
we can really get at our acquisition.
Senator Sullivan. OK. I am going to task you, too, Mr.
Paxton. How about a list of those, as well? Is that all right--
--
Mr. Paxton. Yes, sir.
Senator Sullivan.--for the record here? OK, Mr. Vogel, you
are going to say regulations.
Mr. Vogel. Absolutely, Mr. Chairman, regulations. And I
would also say the Congress needs to focus on those platforms
that need to be replaced immediately and can be built in
commercial shipyards. Things like our Missile Defense Agency
sensor vessels that are over 60 years old. They are a critical
part of the Golden Dome protection of this country. Things like
the roll-on, roll-off vessels for our ready reserve force,
critical to national defense, can be built with simple
commercial designs, cost effective construction through a
commercial model.
Senator Sullivan. Dr. Mercogliano.
Mr. Mercogliano. I would say leadership, sir. Both in World
War I and World War II we had that leadership, Edward Hurley
and then Emory S. Land. Who is going to direct this? Where is
that National Maritime Security Advisor going to be? Because
there are a lot of moving parts here, and my fear is we get
past it and we are not cutting steel any time in the near
future.
Senator Sullivan. OK. Ms. Snow.
Ms. Snow. I would say education exposure as well as the
protection of industrial lands.
Senator Sullivan. OK, great. Senator Young, I am going to
give you the final.
Senator Young. Well, thank you, Senator Sullivan. There is
certainly excitement around the SHIPS for America Act and the
Maritime Action Plan that we have a flyover, it seems, going on
right now.
This has been a great Subcommittee hearing, so I thank all
our witnesses. Just a couple of things I wanted to follow up on
before we depart. One, Mr. Vogel, a number of questions have
been lobbed at you about the regulatory burden of the Federal
Government as it relates to shipbuilding, and your consistent
response has been this vessel construction manager program and
how effective it has been. As I understand it, this is
effectively a project manager that sits between the private
sector shipbuilders and Federal Government, and once the
Federal Government signs off on a contract for specs, there are
not changes. There are not change orders. You give private
sector flexibility and best-in-class project management tools
to that manager, and they go to work and drive costs down.
Is that accurate? Is that a fair description?
Mr. Vogel. Yes, Senator. That is a perfect summary.
Senator Young. OK. And this would overcome, as we think
about regulatory burden, the regulatory burden associated with
procurement and change orders. That is, by far, the biggest
regulatory burden with shipbuilding. Is that accurate?
Mr. Vogel. That is correct, Senator. Those pieces are what
have really hampered our legacy government shipbuilding.
Senator Young. OK. And if there is any witness who
disagrees in regards to another source of regulatory burden to
be greater, if you would raise your hand right now. But I think
that is probably a shared belief. OK, great.
When we think of regulatory burden up here on Capitol Hill,
many of us would say especially Republicans tend to associate
that with OSHA, or the EPA, or these sorts of regulatory
burdens. But instead we are talking about a procurement process
and multiple changes. And I just think it is real important to
bear that in mind.
So I would say publicly here, if Senator Sullivan's
subcommittee gets your list of regulatory burdens that we
should address, and any of them are not addressed, it is
certainly my desire, and I know Senator Kelly, the other lead
on this legislation, to accommodate those concerns as it
relates to regulatory burdens. No pride of authorship here.
And then the last point that I would like to sort of elicit
from some of you is the amazing workforce opportunities that
might be realized, up and down the value chain but also
geographically in this country. Because as someone who has
spent a little time studying this issue, there is a tight labor
market near many of our existing shipyards. So in some circles
there are doubts. There is certainly uncertainty about our
ability to unlock further labor to come and work at those
shipyards. So not only do we want to see the modernization, and
perhaps expansion, in some of those shipyards, we want to
unlock fallow capacity or brand-new capacity, potentially in
the coastal state of Indiana, the shores of the heartland.
But could anyone speak to these opportunities? And to put a
little flourish on it, this again is not unlike semiconductors.
I would describe that as, you know, we are facing novel
challenges as a country, and this broader problem set of
economic security is one we policymakers are struggling to deal
with. And the way I like to describe it is, if we play our
cards right we have an opportunity to become a better version
of ourselves, a more resilient version of ourselves, to avoid
conflict through deterrence, but also to ask rank-and-file
Americans to play a meaningful role in this generational,
multigenerational project.
So with that, I will ask any of you to speak to this topic?
Mr. Paxton. Senator, I will just say if we do this right,
the SHIPS Act, and other things that would come with a National
Maritime Strategy, as I mentioned distributed shipbuilding
means you can build these things, pieces, parts of them,
anywhere. And we should be focusing on Middle America and some
of the places where traditionally we have not built ships.
Because I think if we get it right, that is what is going to
happen.
The last thing I will say, Jeffboat, which was an amazing
little shipyard, that shipyard used more steel than some of our
large Navy shipbuilders combined over the course of a year,
because they would pump out a barge and a half every day. And
when that yard closed, it hurt our steel industry and it hurt
the overall industrial base.
So we have got to make sure we stay focused on the fact
that Jeffboat was an important contributor to the shipyard
industrial base, and when it went away it caused a lot of pain.
Senator Young. I am so glad you mentioned Jeffboat. With
the Chairman's indulgence I am going to give the other
witnesses an opportunity to respond. But a little flourish
about my state. Right down the river, the Ohio River, from
Jeffboat you have Evansville, Indiana. This was, at the end of
World War II, the leading inland shipbuilder in the country.
They produced four LSTs per day. Up north we have got major
steel production. We have got auto component manufacturers who
could pivot to some marine production. We have Cummins Engine
and even a Caterpillar presence. Large marine engines are
already in production. So lots of opportunity for what was once
considered flyover America. Mr. Vogel.
Mr. Vogel. I would absolutely agree, Senator. When we think
about the work that is actually being done at the shipyard, in
many ways it is just assembly of sort of components, and there
is no requirement for those components to be coming from the
same location as the shipyard.
We were recently visiting a shipyard down in the Gulf, and
we were looking at the development of cable spools, you know,
miles and miles of cable required for each of these ships, and
those spools were being developed there onsite. And I was
thinking about states like Indiana, and that those cable spools
could have been developed up there, creating great, high-paying
jobs in Indiana, transporting those down to the yard. That
allows the yard to use that space, that waterfront space that
is so limited, to really focus on generating new shipbuilding
opportunities.
Senator Young. Thank you, sir. Doctor.
Mr. Mercogliano. As a graduate of a state maritime academy
I basically went to a 4-year trade school. And so I learned
very quickly not just that I had a college degree but how to go
out into the industry. And I think one of the things we need to
focus and we need to task MARAD, the Maritime Administration,
to do in their mission to promote the merchant marine is to
educate our college instructors, our universities out there of
the opportunities out there in shipyards. We just talked about
the use of AI and a whole batch of new technologies that we can
be drawing more population into.
I think it is important what Mr. Paxton said. We have got
to get down to the lower level to get our younger generation
involved, but also the potential for careers out there in this
field is not being at all touching those graduates of
universities, where they can make good money very quickly, deal
with student debt.
Senator Young. Well, as a fellow trade school graduate,
thank you. Ms. Snow.
Ms. Snow. I would double down on exactly the same thing. I
think investment in education, especially in education of
adults, and there are a lot of adults that want to change their
track and maybe just do not know the source to go to. I also
think an investment in time and energy into even younger than
colleges. I think that maritime should be introduced as a valid
career path in kindergarten, just like a doctor or a lawyer.
Senator Young. Great stuff. Chairman.
Senator Sullivan. Thank you. Thank you, Senator Young.
Thank you for your passion here. I could not agree more on this
whole idea, what I have been referring to as our Nation as a
shipyard. And we had legislation last Congress, the ENSIGN Act,
that my team wrote, that was very focused on that, primarily on
Navy shipbuilding. But it is a great point. We have got the JAG
Shipbuilding company up in Alaska doing this, as well. But you
are right. All over the country.
And I think we have got a really good jumpstart, as Mr.
Paxton said, a generational advantage with the One Big
Beautiful Bill, the budget reconciliation bill. It does focus a
lot on training. So it is an exciting time.
The key from my perspective of those whole hearing, the
Federal Government has got to help, not like stop. You know, we
have got big challenges, and the Federal Government, for
decades, especially in Alaska, came up and said, ``How can we
crush you? How can we stop you? How can we prevent you from
doing anything that is going to help your constituents or
America?'' We have got to change that mentality. So Mr. Paxton,
Mr. Vogel, I am looking forward to getting your list of things
where the Feds can help us, not continue to hurt us.
But again, I want to thank everybody. This was a really,
really good, informative hearing, good start on an issue that
is very bipartisan, we need to address. Let's get on it, right?
We have the leadership from the President and his team,
Senators like Senator Young and his legislation, which is very
bipartisan. Money--we have got some pretty good money right now
in the One Big Beautiful Bill.
So with that I want to thank the witnesses. Senators may
continue to submit questions for the record for the next week
on this hearing, and upon receipt we ask the witnesses
respectfully to submit their written answers to the Committee
by the close of business on November 18. Give you a little bit
of time to do your homework.
And again, I want to thank everybody for an excellent
hearing today. This hearing is now adjourned.
[Whereupon, at 11:48 a.m., the hearing was adjourned.]
A P P E N D I X
Response to Written Question Submitted by Hon. Dan Sullivan to
Matt Paxton
Question 1. Opponents of the Jones Act often argue that it raises
consumer prices in noncontiguous U.S. regions such as Alaska, Hawaii,
and Puerto Rico because those areas rely heavily on ocean transport and
have no practical alternatives. From your perspective, to what extent
do you believe the Jones Act materially increases shipping or consumer
costs in these regions--and if those costs are real, do you see them as
an unavoidable trade-off for the national-security and industrial-base
benefits you describe, or are there specific policy tools that could
mitigate them without weakening the Act's core protections?
Answer. The Jones Act is the foundation of America's maritime
security and industrial base. It sustains U.S.-built, U.S.-flagged,
U.S.-owned, and U.S.-crewed fleets that carry our domestic commerce,
underpin sealift readiness, and support a nationwide network of
shipyards and suppliers--at no direct Federal cost. Opponents often
attribute higher costs in noncontiguous trades to the Act, but the
drivers are multifactorial: long sea distances, small and variable
volumes, backhaul imbalance, port and landside constraints, and the
unique vessel characteristics required for those routes. The premise
that costs are solely a function of the U.S.-build requirement
overlooks these structural factors and the significant national-
security insurance that the Act provides.
Even so, Congress has tools to improve affordability without
eroding the law's core. First, stable, series-based ordering of Jones
Act vessels--supported by credit enhancements, accelerated
depreciation, or targeted tax incentives--can lower build prices
through learning-curve effects and bulk material buys. Additionally,
aligning Federal cargo preference, MSP/TSP participation, and domestic
repair requirements to reward U.S. shipyard utilization will strengthen
the industrial base that serves these routes. Finally, financing tools
that lower capital costs--loan guarantees, maritime bonds, or risk-
sharing mechanisms for series construction--can bring down the hurdle
rates carriers face when renewing fleets, especially for specialized
ships in thin trades.
These measures preserve the core protections--U.S.-build, U.S.-
flag, U.S.-ownership, U.S.-crew--while pragmatically addressing cost
drivers. Importantly, weakening the Jones Act would undermine the very
shipyard and mariner capabilities that the Nation must have in crisis,
increasing strategic dependence on foreign state-backed fleets. The
better course is to sharpen policy to capture economies of scale,
accelerate fleet renewal on common designs, and reduce logistics
frictions--delivering affordability through competitiveness, not by
eroding national security.
______
Response to Written Questions Submitted by Hon. Brian Schatz to
Matt Paxton
Workforce
Question 1. We've seen proposals, such as the SHIPS Act, which
recognize that we need a sustainable talent pipeline to support U.S.
maritime interests. Where are areas of opportunity to not only grow,
but also retain a strong maritime workforce?
Answer. The Jones Act is the foundation of America's maritime
security and industrial base. It sustains U.S.-built, U.S.-flagged,
U.S.-owned, and U.S.-crewed fleets that carry our domestic commerce,
underpin sealift readiness, and support a nationwide network of
shipyards and suppliers--at no direct Federal cost.
The opportunities that are most impactful to the workforce are
those that convert ``episodic'' demand into reliable multi-year
pipelines for jobs, training, and capital investment. Congress can help
support predictable demand for commercial and government work, which is
the indispensable precondition for recruitment and retention. Where
programs provide visible backlogs, shipbuilders hire apprentices,
expand training cohorts, and invest in productivity-enhancing equipment
with confidence. Second, modernizing and scaling registered
apprenticeship and pre-apprenticeship pathways--tied to industry-
validated skills frameworks--will expand throughput in critical trades
such as welders, fitters, pipefitters, electricians, and marine
machinists. Third, aligning Federal workforce tools with industry needs
matters. Targeted support for community and technical college
partnerships, competency-based training, portable industry credentials,
and supportive services such as childcare, transportation, and
relocation assistance will increase completion and retention. Fourth,
investments that reduce non-productive time and improve quality--
standardized designs, disciplined change control, and stable funding
profiles--translate into better schedule performance and more
attractive, higher-earning jobs that keep workers in the industry.
Finally, recognizing and measuring the full spectrum of U.S. shipyard
output--not only large ocean-going tonnage--improves Federal resource
allocation for training and helps sustain core skills across the
inland, workboat, and repair segments that are the spine of the
industrial base.
Strategic Commercial Fleet Program
Question 2. The Strategic Commercial Fleet program phases in a U.S.
build requirement. How would a phased in requirement support demand
signals for U.S. shipyards?
Question 3. The Strategic Commercial Fleet program has a process to
allow one shipyard and carrier to bring multiple vessels into the
fleet, and is structured to recapitalize every 21 years. What certainty
would that provide for U.S. shipyards?
Question 4. What economies of scale could be created if we provide
incentives to have carriers order multiple vessels at once?
Answers:
i) A phased U.S.-build requirement creates an investable demand
curve. By sequencing initial tranches and ramping domestic
content and U.S.-construction over time, carriers and yards
receive a forward signal strong enough to underwrite hiring,
apprenticeships, and yard modernization, while giving suppliers
time to expand capacity. Well-specified phase-in schedules,
combined with design discipline and procurement structures that
enable series production, drive learning-curve efficiencies,
reduce unit costs, and de-risk capital commitment. Importantly,
a build requirement anchored to multi-year fleet
recapitalization prevents the ``boom-bust'' cycles that erode
workforce and supplier viability.
ii) Allowing a single yard-carrier team to bring multiple vessels
into the SCF under a predictable 21-year recapitalization
horizon provides precisely the certainty America's shipyards
and suppliers need to invest at scale. A known refresh cadence,
combined with portfolio ordering, allows for block buys,
advanced procurement, and incremental funding that align
material purchase, production planning, and workforce growth.
It also incentivizes common hull forms, modularization, and
configuration control across a class, increasing throughput and
quality. For suppliers, assured series volumes justify
investments in capacity, tooling, and domestic substitution of
components that have migrated offshore, directly strengthening
U.S. industrial resilience.
iii) Ordering multiple vessels at once, or in a block buy, unlocks
the classic learning-curve effects--repeatable work packages,
bulk material buys, and standardized quality processes. For
complex assemblies, series production reduces marginal costs
significantly and shortens cycle times, while enabling
investments in automation and advanced machining including
welding, cutting, and outfitting technologies. Incentive
structures that reward on-time delivery, design stability, and
performance improvements can be shared along the supply chain.
The result is a virtuous cycle: lower per-unit costs, better
schedule adherence, and stronger balance sheets that support
reinvestment in people and facilities
______
Response to Written Questions Submitted by Hon. Tammy Duckworth to
Matt Paxton
Question Topic: Surge Production Capacity for Auxiliary Ships
Question 1. What is your assessment of the capacity of U.S.
shipyards to build new auxiliary vessels for the U.S. military at the
scale and speed necessary to sustain a maritime conflict?
Answer. The United States retains substantial latent capacity
across more than one hundred private shipyards spanning the coasts,
Gulf, Great Lakes, and inland waterways. While only a handful currently
build large naval combatants, many mid-tier and smaller yards are
actively fabricating drydocks, submarine modules, berthing barges,
tugs, auxiliary oilers, and other government and commercial craft,
often as subcontractors to the large yards. This distributed network,
if provided with standardized auxiliary designs, disciplined
requirements, and multi-year block orders, can be mobilized to produce
auxiliary hulls, barges, and mission support platforms at scale. The
principal constraints are not physical space alone; they are
predictable work, long-lead materials and government-furnished
equipment, timely approvals, and workforce throughput. With stable
funding, early material authorization, and portfolio contracting
aligned to production reality, U.S. yards can increase throughput
markedly for auxiliaries, particularly where designs emphasize common
hulls and modular outfitting.
I would note that recent independent oversight has highlighted
shortfalls in the Navy's execution of auxiliary and sealift
recapitalization that directly suppress demand signals to U.S. yards.
The Department of Defense Inspector General reported that from 2018 to
2025 the Navy, working with USTRANSCOM and MARAD, extended the service
life of only 6 of 31 planned Ready Reserve Force vessels, acquired only
7 of an estimated 26 used vessels, and did not initiate any new
construction after ending the Common Hull Auxiliary Multi-Mission
Platform effort because of cost concerns--leaving no auxiliary/sealift
new-build program underway.\1\ The IG further noted the absence of an
annually reviewed, milestone-driven recapitalization plan and kept its
recommendation open when the Navy disagreed. These gaps translate into
uneven backlogs, design churn, and delayed government-furnished
equipment--precisely the conditions that limit throughput and workforce
retention in U.S. shipyards. By addressing these failings and locking
in predictable, series production of auxiliaries, Congress can unlock
the latent capacity described above and put it to work for national
readiness.
---------------------------------------------------------------------------
\1\ Evaluation of U.S. Navy Efforts to Recapitalize Surge Sealift
Vessels (Report No. DODIG-2025-116) > Department of Defense > DoD OIG
Reports
Question 2. What would be the most impactful authority or policy
Congress could pass to increase our shipyards' capabilities and
capacity to accelerate production of these kinds of vessels that enable
lift of our forces?
Answer. The single most impactful step is to pair disciplined,
government-owned baseline designs with multi-ship, multi-year
procurement that enables block buys and advanced procurement for
materials. Congress should authorize portfolio-based awards for
auxiliary classes with firm configuration control and a defined change
discipline. This should be coupled with accelerated approvals and
streamlined oversight that align decision rights with accountability
for cost and schedule. Acquisition tools such as incremental funding,
block buys, and advance appropriations for long-lead components would
de-bottleneck material availability and allow suppliers to scale.
Finally, ensuring that domestic repair and lifecycle support are
captured in the contracting strategy will sustain workload between new
construction peaks, stabilizing the workforce.
Question Topic: Workforce Skills for Building Auxiliary Ships
Question 1. Based on your conversations with shipyards, repair
facilities and suppliers, what skills gaps do you assess are the most
critical to fill to ensure that we can build auxiliary vessels for our
U.S. military in the event of the need to surge production capacity at
scale?
Question 2. What steps are being taken to fill these skills gaps
and what can Congress do to help?
Answer. Across the country, shipyards are expanding apprenticeship
cohorts, creating pre-apprenticeship bridges with high schools and
community colleges, and investing in simulators, training cells, and
instructor capacity. Many are reorganizing production to improve flow
and reduce non-productive time, which increases effective workforce
capacity. Congress can amplify these efforts by funding industry-linked
registered apprenticeships; enabling equipment and instructor grants
for high-need trades; supporting mobility stipends where regional
talent must relocate; and tying workforce grants to multi-year program
backlogs that give trainees confidence in long-term employment.
Additionally, aligning immigration pathways for experienced maritime
trades where domestic supply is insufficient can provide a targeted
bridge without displacing U.S. workers.
The U.S. shipyard industry is fully capable of building auxiliary
vessels without significantly increasing the skill sets of the existing
shipyard industry workforce.
Question Topic: Workforce Exchanges
Question 1. Investing in the U.S. workforce is one of my top
priorities, but in the interim, there may be opportunities to leverage
the knowledge of our international partners to overcome the gap in
domestic shipbuilding capacity.
What is your view of workforce exchanges or training exchanges with
international shipbuilding companies--either in the United States or
abroad--to help expand skill-building for U.S. shipbuilders and
shipyard workers?
Answers. Well-structured, time-bound workforce exchanges can
accelerate skill-building, particularly in lean ship production,
outfitting sequence optimization, and design-for-production. Any
exchanges should occur under strict safeguards that protect U.S.
intellectual property, exclude adversarial state-backed entities, and
prioritize trusted allies. Equally important is reciprocity: techniques
brought home must be translated into curriculum and embedded in U.S.
yard production systems. The goal is not dependence on foreign
capacity, but the rapid diffusion of modern methods that increase U.S.
throughput and quality while we expand domestic training pipelines.
It is also critical that beyond workforce exchanges, is that the
U.S. shipyard workforce needs to have work to utilize the skills
learned in these potential exchanges. Consistent and stable demand from
our government and commercial customers is the most significant factor
in developing our workforce capability and capacity.
Question Topic: Workforce Growth
Question 1. If you could change just one thing at the Federal level
to make it easier for shipyards to recruit and retain skilled workers--
whether that's a new incentive, a funding stream or a policy change--
what would it be?
Answer. Stable and consistent demand for the workforce that exists.
______
Response to Written Questions Submitted by Hon. Dan Sullivan to
Jeff Vogel
Question 1. Opponents of the Jones Act often argue that it raises
consumer prices in noncontiguous U.S. regions such as Alaska, Hawaii,
and Puerto Rico because those areas rely heavily on ocean transport and
have no practical alternatives. From your perspective, to what extent
do you believe the Jones Act materially increases shipping or consumer
costs in these regions--and if those costs are real, do you see them as
an unavoidable trade-off for the national-security and industrial-base
benefits you describe, or are there specific policy tools that could
mitigate them without weakening the Act's core protections?
Answer. The Jones Act's core protections--U.S. build, ownership,
crewing, and control of domestic maritime transport--are essential to
national security and the maritime industrial base. These protections
ensure that the United States retains merchant mariners, shipbuilding
and repair capability, and a domestic fleet available in contingencies,
while supporting over 100,000 high-paying jobs and billions in GDP
across the private shipbuilding and repairing sector. While shipping is
one input into delivered cost for noncontiguous regions, the retail
price impacts are frequently overstated and can reflect multiple
confounding variables beyond freight--such as energy costs, local
taxes, real estate, and distribution dynamics. Moreover, in lanes such
as Alaska and Puerto Rico, U.S.-flag carriers have invested heavily in
modern, fuel-efficient vessels, LNG propulsion, and integrated
logistics that drive reliability and resiliency--benefits that become
salient when global shocks disrupt foreign-flag networks.
Any incremental cost concerns can be mitigated through targeted
policy tools without weakening the Jones Act. Congress should consider
corrections to the outdated tax code through the bipartisan Maritime
Fuel Parity Tax Act (S.549/H.R. 2925) to ensure that operators can
modernize the domestic fleet with cleaner, more efficient propulsion
and hull forms, improving fuel economy and reliability. In addition,
Congress must continue to invest in port infrastructure and landside
intermodal connectors in noncontiguous regions to reduce dwell, improve
turn times, and lower effective logistics cost. These measures preserve
the Jones Act's strategic value while acting directly on cost drivers
and service reliability, which is a better policy path than eroding
core protections that underpin our security and industrial capacity.
Question 2. In-Hearing Question from Senator Sullivan: Government
shipbuilding programs have been plagued by inefficiency. In your view,
what regulatory and bureaucratic hurdles need to be removed from
government shipbuilding programs to increase efficiency, reduce costs,
and increase speed of delivery?
Answer. Three categories of hurdles consistently impair efficiency:
requirements overreach, fragmented accountability, and change-
instability. Requirements overreach occurs when non-combatant ships are
burdened with military-unique specifications that add cost and delay
without commensurate mission value. The remedy is to adopt commercial
design standards and commercial construction practices for eligible
platforms, as Congress directed for National Security Multi-Mission
Vessels, and to enforce early requirements discipline that resists
customization not tied to clear, risk-justified outcomes. Fragmented
accountability arises when multiple government entities share
technical, commercial, and integration authority, elongating decision
cycles and diluting responsibility. The Vessel Construction Manager
(VCM) model addresses this by consolidating non-construction
responsibilities under a single, accountable manager with authority
over schedule, supplier integration, and change control, while the
shipyard concentrates on production. Finally, change-instability--
frequent, late-arising design or scope changes--erodes cost and
schedule performance. Fixed-price VCM contracts, which break the
contractual privity between the Government and shipyard, with rigorous
configuration control and measured gates for change requests reduce
churn and keep production stable.
Over the past few decades, Congress has imposed several new
regulations and directives that apply to numerous shipbuilding
programs, across the Navy and Coast Guard. These regulations are often
borne out of failed programs and/or repeated mistakes that come at the
expense of the taxpayer. While well-intentioned, the cumulative effect
of these directives results in an acquisition approach that takes years
to execute, discourages competition, stifles innovation, increases
cost, limits commercial flexibility, and jeopardizes mission readiness
when ships are not delivered on time.
To allow our shipbuilding industry to thrive and compete on a
global scale, Congress should immediately remove the barriers outlined
below to support the rapid construction of non-combatant vessels. The
term ``non-combatant'' refers to any vessel that can be built to
commercial standards and can apply the American Bureau of Shipping
(ABS) rules and regulations. This includes, but is not limited to, the
following programs:
T-Ships: Including Fleet Replenishment Oilers, Dry Cargo
Ships, Expeditionary Fast Transport Vessels, Hospital Ships,
Crane Ships, Cable Laying Ships, Towing and Salvage Ships,
Command and Control Ships, Missile Range Instrumentation Ships,
and Oceanographic Research Ships
Landing Ships: Including Landing Ship Medium (LSM) and
Landing Craft Utility (LCU) Vessels
U.S. Coast Guard Vessels: Including icebreakers and other
cutters.
Domestic Content Requirements:
For non-combatant programs, prime contracts should impose a
preference for domestic content, but the thresholds imposed by Congress
should be eliminated.
Under DFARS Subpart 225.70:
225.7004-2: Restrictions on acquisition of foreign-made
components for naval vessels (e.g., gyrocompasses, propulsion
control systems, welded shipboard anchor chain) unless
manufacturer is part of the U.S. national technology &
industrial base.
Provisions in the FY 2024/2025 version of the National Defense
Authorization Act (NDAA) proposed a change to the ``Buy American''
content thresholds for Navy shipbuilding. The changes begin in January
2026 and require components to be ``manufactured substantially'' in the
U.S. at a threshold of 65 percent cost for components, scaling up to
100 percent by January 1, 2033.
This requirement could shift significant risk into non-combatant
shipbuilding programs. Rather than leveraging proven, commercial-off-
the-shelf (COTS) equipment that could be procured from allied nations,
the increased thresholds will force prime contractors to procure
prototype machinery and equipment from domestic suppliers, which often
adds significant cost, schedule, and performance risk to the program.
U.S. suppliers are generally not well equipped to manufacture and test
this certain equipment. For example, on the National Security Multi-
Mission Vessel (NSMV) program, TOTE Services procured the 4,500 kW
electric propulsion motors from a reputable manufacturer in France, as
similar electric motors had been recently produced by this company, and
there were no domestic equivalents available.
Recommended Solution: Allow contractors and the acquisition
authorities to negotiate thresholds for domestic content on a program-
by-program basis. Depending on the type of vessel, some programs are
better suited for increased domestic content requirements. There should
be an achievable minimum threshold, with additional targets that would
trigger incentives for the prime contractor. This would allow the prime
to make commercial trade-off decisions and assume a reasonable amount
of risk.
Congressional Phase Gates:
Congress requires agency reporting or certification of certain
milestones (design maturity, functional design completion, workforce
mandates, etc.) before subsequent contract awards or construction can
begin. Again, these directives were initiated following several
combatant shipbuilding programs that were mismanaged and exceeded cost
and schedule goals. While aimed at reducing risk to the Government and
the taxpayer, non-combatant shipbuilding programs should be excluded
from these requirements, which will delay procurement and construction
by negatively impacting the efficient execution of commercial
shipbuilding processes.
For example, under a commercial Vessel Construction Manager (VCM)
model, the VCM is the prime contractor and assumes nearly all cost,
schedule, and performance risk on the program. The VCM would not allow
the shipyard to procure long lead time materials (LLTM) or begin
construction unless/until the design is sufficiently mature to mitigate
risk, while keeping the program on-schedule. The VCM should not be
subject to Government-imposed phase gates.
In the Senate Report for NDAA FY 2025 (S. Rept. 118-188) the
committee recommended a ``Limitation on the construction of the Landing
Ship Medium (sec. 123)''. The language would prohibit awarding a
contract for construction until basic and functional design are
certified complete. Not only does this impose additional reporting
requirements and oversight burdens that are unnecessary for this class
of ship, but it will also delay the total build duration. This text
limits the prime contractor's ability to leverage concurrent
engineering approaches and overlapping design/construction activities
that are commonly employed by commercial shipbuilders, often with
little risk to the Government.
Recommended Solution: Congress should clarify that phase gates and
certifications are not required for non-combatant programs,
particularly those managed by an experienced VCM, to avoid delay and
disruption on these commercial programs.
Timely Appropriations and Full Funding:
Demand signal is a key factor that will support the growth of our
domestic shipbuilding industry and establishment of a skilled and
qualified workforce. Congress can support this demand signal by
providing full funding (vice incremental funding) and timely
appropriations for non-combatant shipbuilding programs.
Of course, we understand Congress must make difficult decisions and
balance multiple priorities when determining where to allocate money
and which programs to fund. However, procuring one ship at a time and/
or incrementally funding a program limits the prime contractor's
ability to leverage economies of scale and efficiently construct a
fleet of ships.
On the NSMV program, which is a 5-ship program, MARAD had
sufficient funding for two (2) ships at the time of VCM contract award
to TOTE Services. When negotiating the construction contract with
Philly Shipyard, TOTE Services established ``series'' and ``non-
series'' pricing for hulls 3-5 with specified cutoff dates for the
timing of the Delivery Orders for follow-on ships. Because the Congress
provided timely funding for hulls 3-5 prior to the cutoff date, TOTE
Services could offer MARAD the ``series'' price for these ships, saving
the taxpayer $55 million.
Recommended Solution: For non-combatant shipbuilding programs,
Congress should provide sufficient appropriations to fully fund at
least the first two (2) ships in the series and maintain these funding
lines each year until the program of record is complete.
Contracting Rules, DFAR Flow Downs, and Oversight Burdens:
Contracting rules and regulatory flow downs, whether imposed by the
Congress or the individual agencies, stifle progress and have negative
cost and schedule consequences for our non-combatant shipbuilding
programs. For example, the current price for a T-AO (Oiler) at General
Dynamics NASSCO is $800 million per ship, while a similarly sized
commercial tanker could be built at the same shipyard for roughly $350
million per ship. This cost difference is not attributable to increased
capabilities or performance of the Oiler, but rather the regulations,
contract requirements, and oversight requirements imposed on the
shipbuilder.
The volume and complexity of procurement regulations (FAR/
DFARS) increase overhead costs, negatively impact contracting
timelines, and discourage non-traditional government
shipbuilders from entering the space.
Earned Value Management (EVM) reporting is unnecessary for
non-combatant vessels that are built to commercial standards. A
milestone-based approach with an appropriate Integrated Master
Schedule (IMS) is sufficient and aligns with commercial best
practices.
Excessive oversight by the Supervisors of Shipbuilding
(SUPSHIP) is common throughout Navy and USCG construction
programs. The oversight teams can range from 80--120 government
personnel, some of which have little-to-no shipbuilding
experience. A commercial VCM would manage the same program with
less than 20 people. Excessive oversight requires the builder
to employ equally sized and capable staff to manage and respond
to government personnel, needlessly increasing overhead costs.
Recommended Solution: Employing a VCM acquisition strategy allows
the shipyard subcontract to be established on commercial paper, with
FAR/DFARS flowdowns limited to those mandated for commercial items
subcontracts as provided by FAR 52.212-5(e) and those that an
experienced VCM deems necessary to get the vessels in the water as
quickly as possible, while mitigating the Government's risk. In
addition, Congress should ensure that agencies fully adopt the VCM
model, instead of looking to use half measures. Removing government
inspection regimes and allowing an experienced VCM to efficiently
oversee inspections, with permissible Government attendance at testing,
is critical to ensuring success. Accordingly, when directing the use of
a VCM, Congress should look to codify what has made the NSMV program a
success, rather than leaving interpretation up to the agencies and
allowing traditional government shipbuilding practices to erode the VCM
benefits.
Tax Policy:
The U.S. shipbuilding industry is challenged by rising costs and
prolonged delivery timelines driven by regulatory complexity,
fragmented oversight, and the absence of modern economic incentives.
While structural reforms can streamline processes, the lack of targeted
tax policy compounds inefficiencies by discouraging investment in
innovative, cost-effective technologies, such as the utilization of
liquified natural gas (LNG) as a maritime fuel. Current law creates a
price disadvantage for alternative fuels compared to diesel, and
uncertainty around long-term incentives undermines confidence in
capital-intensive retrofits and new builds. Without corrective action,
these barriers will continue to stifle innovation, limit commercial
flexibility, and jeopardize America's ability to maintain a
competitive, resilient maritime fleet.
Recommended Solution: To complement structural reforms, Congress
should leverage tax policy as a strategic tool to lower costs and
incentivize domestic shipbuilding. Modernizing the tax code will remove
economic barriers that currently discourage investment in more
efficient propulsion systems and advanced fuel technologies. Two
targeted measures stand out as critical steps to create a level playing
field, reduce lifecycle costs, and enable rapid adoption of next-
generation vessels:
1. Maritime Fuel Tax Parity Act (H.R. 2925/S.549)--Current law
exempts diesel from Federal excise taxes but penalizes LNG and
other alternative fuels, creating a cost disadvantage for
cleaner technologies. Aligning tax treatment through parity
removes this distortion, reducing lifecycle operating costs and
encouraging broader use of LNG and other advanced fuels. This
not only improves environmental performance but also supports
an all-of-the-above energy strategy that strengthens domestic
supply chains and accelerates delivery timelines by making
alternative-fueled vessels economically viable.
2. Alternative Fuel Tax Credit (AFTC)--Reinstatement of the AFTC
[Section 6426(d) of the Internal Revenue Code], which expired
on December 31, 2024, would incentivize investment in
alternative fuel infrastructure and dual-fuel technologies for
new builds and retrofits. By lowering fuel costs and supporting
modernization, this credit helps shipyards and operators offset
upfront capital expenses, enabling faster adoption of cleaner
propulsion systems without compromising schedule or
affordability. The AFTC functions as an end-user incentive to
encourage the adoption of alternative fuels throughout the
transportation sector, including maritime use cases. The credit
supports alternative fuel dispensing infrastructure and lowers
overall costs for fleets, encouraging continued investment in
modernization of the industry. Necessary retrofits and new
ship-builds demand substantial time and upfront investment,
making continued long-term tax incentive certainty essential to
support the innovations that will drive the next generation of
maritime vessels. The AFTC played a critical role in enabling
continued investment in cleaner fuel technologies and
infrastructure by helping offset the substantial upfront costs
of building new alternative-fueled ships or converting existing
diesel-powered vessels to dual-fuel engines, beginning with the
world's first LNG-fueled container vessel put into service in
2015. Ongoing support for the use of alternative fuels for
maritime would allow companies to make critical investments in
next generation ships and accelerate offtake markets for LNG
and other alternative fuels.
Together, these measures complement regulatory streamlining by
lowering total ownership costs, improving predictability for
shipbuilders, and creating the economic conditions necessary for fleet
renewal.
______
Response to Written Questions Submitted by Hon. Brian Schatz to
Jeff Vogel
Workforce
Question 1. The National Security Multi-Mission Vessel (NSMV)
program at the Hanwha Philly Shipyard has led to workforce growth. Can
you describe how the NSMV contract helped generate that workforce
growth, and what lessons we can apply from that experience to future
commercial ship programs, such as those envisioned under the SHIPS for
America Act?
Answer. The NSMV program catalyzed a rapid and durable workforce
expansion at Hanwha Philly Shipyard (HPSI) by combining several
reinforcing elements: a clear multi-hull demand signal, a commercial-
style contracting approach, and disciplined scope control under the
Vessel Construction Manager (VCM) model. At subcontract award in April
2020, HPSI had approximately 80 employees, limited prospects, and no
recent government new-construction experience. Under TOTE Services' VCM
structure, the shipyard concentrated on core production while the VCM
assumed non-construction responsibilities, such as vessel outfitting
and procurement, and applied commercial best practices. This alignment
enabled recruitment, training, and retention at scale, growing HPSI's
production workforce to more than 2,000 employees and securing
additional third-party orders--outcomes that restored the yard's health
and validated the power of predictable workstreams paired with
streamlined execution. The VCM construct also supported workforce
stability by limiting post-contract change growth to approximately 0.38
percent, protecting production cadence and planning while avoiding
avoidable disruptions that otherwise drive attrition and cost
escalation.
The successful VCM approach can be replicated throughout the
government, with programs that lend themselves to commercial designs
for rapid construction at U.S. commercial shipyards. Such platforms
include the Navy's Landing Ship Medium, hospital ships, command and
control ships, light replenishment oilers and cable-lay vessels, the
Coast Guard's National Security Cutters (domestic icebreakers), the
Maritime Administration's Ready Reserve Force roll-on/roll-off fleet,
and the Missile Defense Agency's missile instrumentation range safety
vessels. Each of these programs requires multi-vessel series production
to address the Government's aging (or non-existent) fleets to increase
our national security. Execution of these multi-vessel programs through
a VCM model will allow our shipyards to concentrate on the development
of shipbuilding skills and workforce growth, instead of misapplying
their time on bureaucratic oversight and government-driven change
orders as occurs under the traditional government shipbuilding model.
In this manner, the shipyards can focus on craft development and
specialization and growing shipyard worker recruitment and education
through apprenticeship programs. Supportive policy tools in the SHIPS
for America Act--such as targeted tax incentives for shipyard capital
improvements and a Maritime Security Trust Fund--will amplify and
sustain these workforce investments through market cycles.
______
Response to Written Questions Submitted by Hon. Tammy Duckworth to
Jeff Vogel
Question Topic: Workforce Exchanges
Question 1. Investing in the U.S. workforce is one of my top
priorities, but in the interim, there may be opportunities to leverage
the knowledge of our international partners to overcome the gap in
domestic shipbuilding capacity.
What is your view of workforce exchanges or training exchanges with
international shipbuilding companies--either in the United States or
abroad--to help expand skill-building for U.S. shipbuilders and
shipyard workers?
Answer. Structured workforce and training exchanges can be an
effective accelerant to domestic capacity when they are narrowly
tailored, time-bound, and focused on transferable production practices
that complement U.S. safety, quality, and security requirements.
Exchanges centered on production system design, outfitting sequence
optimization, modular construction techniques, welding automation,
digital work-package integration, and supply-chain synchronization can
shorten the learning curve for U.S. yards while protecting proprietary
data and national security. An exchange framework should include clear
scopes of work, robust technology and data safeguards, alignment with
U.S. certification standards, and joint curricula with domestic labor
and training institutions to ensure skills are institutionalized
stateside.
Critically, exchanges are most impactful when married to a stable
domestic demand signal and modernized contracting models. The Vessel
Construction Manager approach magnifies the utility of skills transfers
by embedding commercial discipline into program execution, which allows
imported best practices to take root in production rather than being
diluted by change churn or bureaucratic delay. Pairing exchanges with
VCM-led series production provides the repetition and schedule
stability required to translate training into durable workforce
capability. This ensures the benefits of exchanges accrue to American
workers and the U.S. industrial base, while safeguarding strategic
technology and supply chains.
Question Topic: Vessel Construction Manager
Question 1. In your opening statement, you wrote ``the VCM
acquisition strategy has saved the U.S. taxpayer billions of dollars,
proving that U.S. shipyards can be cost-competitive when bureaucratic
barriers are removed and a proper demand signal is in place.'' What
specific bureaucratic barriers did TOTE Services remove by serving as
VCM?
Answer. The VCM construct removes or mitigates several recurring
bureaucratic failure points associated with legacy government
shipbuilding approaches. First, it decouples commercial production from
protracted government-specific requirements development by using
commercial design standards and practices, thereby avoiding costly
tailoring that does not add mission value for non-combatant vessels.
Second, it streamlines decision authority and reduces cycle times on
technical, schedule, and commercial matters--placing configuration
control and change discipline under the VCM to limit scope creep.
Third, it consolidates non-construction responsibilities--such as
procurement coordination, supplier qualification, logistics, and
program integration--under a single accountable VCM, so that shipyards
can focus on building ships rather than navigating multiple contracting
and bureaucratic lanes. Fourth, the VCM structure supports firm-fixed-
price contracting aligned with commercial norms, curbing the incentive
for open-ended modifications and facilitating predictable cost and
schedule performance.
These process improvements have demonstrated quantifiable benefits.
The NSMV program has achieved delivered pricing on the order of roughly
$314 million per vessel, in stark contrast to prior projections using
legacy requirements and contracting methods that ranged from
approximately $750 million to $1.2 billion per ship. Just as
importantly, post-award change growth has been limited to well under
one percent, mitigating the constant change order process that has
hampered traditional government shipbuilding programs. By
institutionalizing commercially proven disciplines while maintaining
appropriate government oversight of the VCM prime contractor, the VCM
model translates directly into savings, schedule adherence, and
industrial-base health.
Question 2. In your opinion, what concrete steps should we take to
scale the VCM model to address other gaps in our ability to build ships
for the military?
Answer. Congress and the Administration can scale the VCM model
across non-combatant and auxiliary platforms through several practical
measures. First, direct agencies with substantial non-combatant
portfolios--the Navy, Coast Guard, Maritime Administration (MARAD), and
Missile Defense Agency (MDA)--to utilize VCM contracting for eligible
platforms. Such platforms include the Navy's Landing Ship Medium,
hospital ships, command and control ships, light replenishment oilers
and cable-lay vessels, the Coast Guard's National Security Cutters
(domestic icebreakers), the Maritime Administration's Ready Reserve
Force roll-on/roll-off fleet, and the Missile Defense Agency's missile
instrumentation range safety vessels. Second, codify a VCM playbook
that codifies commercial design baselines, change-control thresholds,
schedule governance, performance reporting, and integrated supply-chain
practices to enable rapid stand-up across multiple yards.
Critically, there are no half measures. A ``VCM light'' or similar
concept that allows Government agencies to retain control and
inspection oversight will lead to the same failures as traditional
government shipbuilding. Third, align appropriations with multi-hull
series buys where practical, providing the demand stability that
enables workforce expansion, vendor qualification, and capital
investment in facilities and automation. Fourth, apply complementary
fiscal tools--tax credits for shipyard modernization and creation of
fuel parity incentives, targeted funding via a Maritime Security Trust
Fund, and streamlined capital-lease scoring for privately-funded build-
charter models--to support private investment and reduce government
risk. Finally, ensure interagency coordination and early requirements
discipline to resist non-value-adding customization and keep non-
combatant vessels on commercial standards wherever feasible. These
actions will replicate NSMV outcomes--on-time, fixed-price delivery
with minimal post-award changes--across priority recapitalization
programs while strengthening the domestic industrial base.
Question Topic: Workforce Growth
Question 1. If you could change just one thing at the Federal level
to make it easier for shipyards to recruit and retain skilled workers--
whether that's a new incentive, a funding stream, or a policy change--
what would it be?
Answer. Establish a sustained, multi-year, multi-hull demand signal
for non-combatant vessels executed through VCM-led, commercially
grounded programs. While training incentives and grant funding are
valuable, no policy lever is more decisive for recruiting and retention
than predictable, repeatable work that supports apprenticeship
pipelines, craft specialization, and learning-curve efficiencies.
Multi-vessel series buys--anchored by commercial standards and rigorous
change control--enable shipyards to hire and train with confidence,
justify capital investment in automation and facilities, and maintain
high retention by offering stable, family-wage careers. This demand
clarity is the foundation upon which all other workforce initiatives
become durably effective.
______
Response to Written Questions Submitted by Hon. John Fetterman to
Jeff Vogel
Tote & VCM Model
Question 1. Mr. Vogel, you discussed in your testimony how Tote has
pioneered innovative and cost-effective ways of building vessels
faster. Could competitive bid programs like the Strategic Commercial
Fleet help reward models like the VCM model you've used at Philly
Shipyard?
Answer. When deploying the Strategic Commercial Fleet (SCF)
envisioned by the SHIPS for America Act, it will be critical for the
Government to evaluate competition based on total life-cycle cost
beginning at the construction phase, and to consider schedule
reliability and shipbuilding industrial-base outcomes. Evaluating bids
that demonstrate construction and vessel delivery performance, change
order discipline, and cost control would inherently elevate and reward
offers that integrate VCM structures and series production. In effect,
this type of SCF procurement framework would favor the methods that
have already yielded substantial cost avoidance and schedule adherence
under the established VCM model. Incorporating evaluation factors to
consider an applicant's history of delivering commercial and government
vessels while minimizing post-contract-award change growth and schedule
deviation would further reinforce the alignment between the SCF program
goals and VCM-led execution.
Workforce
Question 1. Mr. Vogel, through the National Security Multi-Mission
Vessel (NSMV) program at Philly Shipyard, now Hanwha Philly Shipyard,
the shipyard has been brought back to life--growing its workforce and
putting hundreds of skilled tradesmen and women back on the job. Can
you describe how the NSMV contract helped generate that workforce
growth, and what lessons we can apply from that experience to future
commercial ship programs, such as those envisioned under the SHIPS for
America Act?
Answer. The NSMV contract generated workforce growth by sequencing
production around a standardized, multi-hull design and embedding
commercial execution discipline under a Vessel Construction Manager
(VCM). This model created the planning certainty needed for targeted
hiring and training in structural fabrication, piping, electrical, and
outfitting trades; it also supported apprenticeship scalability and
craft progression within stable, repetitive work packages. The VCM's
role in supplier integration and schedule control minimized bottlenecks
and change-induced rework, which often drive morale issues and
attrition. In addition, having a flexible commercial shipyard
subcontract--as opposed to a rigid government prime contract--allowed
TOTE Services to establish financial discipline in the subcontract,
such as restricting dividends to parent companies and instead requiring
the shipyard to reinvest profits into workforce growth efforts. As a
result, HPSI expanded from roughly 80 employees at subcontract award to
more than 2,000 skilled workers, while securing additional third-party
commercial work that further stabilized employment.
The core lesson for future commercial ship programs is that
workforce development follows dependable demand and disciplined
execution. The SHIPS for America Act can embed these lessons by
structuring multi-hull awards, directing agencies to use VCM-led
commercial standards for non-combatant vessels, and supporting shipyard
modernization with targeted incentives. When combined, those measures
enable sustained hiring, structured training pathways with labor and
educational partners, and continuous improvement practices that lock in
cost and schedule gains over successive hulls.
Question 2. Mr. Vogel, you mentioned how the NSMV program helped
rebuild the workforce at Philly Shipyard. Could you expand on how Tote
and the shipyard partnered with labor unions, local training programs,
or technical schools to recruit and train those workers? And how might
similar partnerships be encouraged or scaled to ensure we have a ready
workforce for future commercial shipbuilding projects?
Answer. Effective workforce rebuilding at HPSI relied on close
collaboration with labor partners, community colleges, and regional
training organizations to create clear on-ramps into shipbuilding
careers. The VCM structure provided stable, forecastable work packages
and multi-year demand, which allowed unions and schools to tailor
curricula, expand cohorts, and align certifications with production
needs. Practical components included pre-hire bootcamps focused on
foundational safety and basic craft skills; apprenticeships
synchronized with hull milestones and outfitting sequences; upskilling
modules in digital work instructions, precision measurement, and weld
procedures; and concurrent supervisor development to sustain quality
and throughput. The predictability afforded by the VCM and series
production was essential to scaling these pipelines and retaining
graduates.
To expand these partnerships nationally, Federal programs should
prioritize multi-hull awards that enable long-term training
commitments; encourage standardized curricula aligned to commercial
standards; and incentivize regional partnerships among shipyards,
labor, secondary schools, and technical colleges. These partnerships
translate into a ready, resilient, and mobile maritime workforce that
can surge across programs while anchoring high-quality employment in
shipbuilding communities.
______
Response to Written Question Submitted by Hon. Dan Sullivan to
Dr. Salvatore Mercogliano
Question 1. Opponents of the Jones Act often argue that it raises
consumer prices in noncontiguous U.S. regions such as Alaska, Hawaii,
and Puerto Rico because those areas rely heavily on ocean transport and
have no practical alternatives. From your perspective, to what extent
do you believe the Jones Act materially increases shipping or consumer
costs in these regions--and if those costs are real, do you see them as
an unavoidable trade-off for the national-security and industrial-base
benefits you describe, or are there specific policy tools that could
mitigate them without weakening the Act's core protections?
Answer. When the Jones Act was passed in 1920, the cabotage
provision--Article 27--was a single component of a larger national
maritime strategy that included the regulation of international
shipping rates, protection for American mariners, support to
shipbuilding, dispensing the World War One built fleet, and ensuring
American presence on key shipping routes. Historically, the United
States has always faced higher wages for its mariners and shipyard
workers.
Cabotage does not just impact Americans in the noncontiguous United
States. To move cargo by sea from American ports along the East, Gulf
and West coasts require ships that meet the build, ownership, registry,
and crewing requirement, as demonstrated on the Great Lakes. In the
contiguous 48 states, the creation of the Federal Interstate Highway
and Pipeline systems alleviated the majority of the cargo and need for
coastal shipping that once existed; and with the deregulation of the
trucking industry, the cost to move goods by road became the cheapest,
fastest, and easiest method to deliver goods. In 2023, the United
States moved 12,975,000,000 tons of cargo by trucks.\1\ That is greater
than the total global amount of goods moved by sea--12,292,000,000 tons
in 2023.\2\
---------------------------------------------------------------------------
\1\ U.S. Department of Transportation, Bureau of Transportation
Statistics, Transportation Statistics Annual Report 2024, 3-5.
\2\ United Nations Conference on Trade and Development, 2024 Review
of Maritime Transport, 3.
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The higher costs to move goods by sea experienced in Alaska, Puerto
Rico and Hawaii is a burden that should be addressed; however, I don't
believe repeal of the Jones Act is the proper measure. The Jones Act,
in its entirety in 1920, was intended to ensure that the United States
had a requisite merchant marine, shipbuilding and maritime
infrastructure to address its domestic and national security needs.
This was tested in the Second World War and with the amendments from
the Merchant Marine Act of 1936, the U.S. was able to construct and
operate the largest merchant marine in the world, capable of delivering
the Arsenal of Democracy from the home front to the war front.
It was in the post-World War Two-era that the United States adopted
policies that fostered international competition, ensured that our
allies and previous enemies could rebuild their fleets, and create new
entities to lower the transportation costs for goods around the world.
As we did for the world, we should aim to do the same for our citizens
today.
As the United States dismantled the provisions of the Merchant
Marine Act of 1920, the cabotage requirement maintained a residual of a
domestic shipbuilding base. It was never intended to support and
sustain an industry that can compete against the likes of China who
provides direct and indirect subsidies to their shipbuilding
corporations.
Provisions should be adopted that allow Americans, who ship cargo
on U.S. ships, particularly those in the cabotage trade, to be eligible
for tax abatements or deferments to offset the higher transportation
costs. The Congress should look at measures to fully support and fund
programs through the Maritime Administration to finance the
construction of new coastal trading ships and identify such vessels and
national security assets and participate in an active reserve force in
time of war or national emergency.
The Maritime Administration in the Department of Transportation,
along with the Departments of Commerce and others, should examine and
identify key trading routes both within and along the United States and
overseas and prioritize the support for new vessel construction and
replacement.
______
Response to Written Questions Submitted by Hon. Tammy Duckworth to
Dr. Salvatore Mercogliano
Question Topic: Workforce Exchanges
Question 1. Investing in the U.S. workforce is one of my top
priorities, but in the interim, there may be opportunities to leverage
the knowledge of our international partners to overcome the gap in
domestic shipbuilding capacity.
What is your view of workforce exchanges or training exchanges with
international shipbuilding companies--either in the United States or
abroad--to help expand skill-building for U.S. shipbuilders and
shipyard workers?
Answer. The connection with American shipyards to foreign companies
is extensive. NASSCO in San Diego has worked with Korean shipyards in
the past on the construction of tankers in the mid-2010s. Fincanterri
in Wisconsin has a connection to its parent company in Italy and Austal
in Alabama is a subsidiary of an Australian firm.
Workforce exchanges and training will be essential to re-
establishing an American presence in deep draft, blue water ship
construction. But it will not just be skills that need to be adopted
but management techniques and philosophies.
American shipyards have been dealing with a single customer for a
while, specifically the U.S. government. Construction of government
vessels, in particular, ships for the U.S. Navy have an enormous burden
placed upon the yards due to oversight, restrictions and regulations
placed on them from the Naval Sea Systems Command (NAVSEA). The
construction of commercial ships will not have this, as experienced in
the Hanwha yard in Philadelphia building the National Security Multi-
Mission Vessels through a Vessel Construction Manager (VCM) contract.
In some ways, restarting commercial shipbuilding in the United
States, will allow the United States to adopt new practices and
policies, while training new personnel to meet the needs in the new
shipyards. In several American shipyards, they have worked with local
community colleges to train new workers. It may be possible to expand
this idea to a `study abroad' style of operation where Americans can go
to foreign yards and learn the requisite skills and bring them back.
Question Topic: China Shipbuilding
Question 1. What are your views on the national security risks of
the Chinese dominating the shipbuilding market and the commercial
shipping market?
Answer. In the 1980s, the United States made the policy decision to
end the construction and operational differential subsidies for the
American international trading fleet. This led to the offshoring of
American ship construction to Europe, Japan, and Korea. At the time,
this was not viewed as a concern as they were Allies, and the United
States shifted its private shipyards to support the construction and
support of a 600-ship Navy.
The end of the Cold War, meant a reduction to a 300-ship Navy, but
with no threat on the world's oceans, and commercial ships providing
low cost transportation due to construction overseas, open registries
that provided lower operating costs for ships and crews, and new
technologies--such as containerization and super tankers, all developed
by Americans--there was little concern for American imports and exports
sailing in foreign bottoms.
At the turn of the century, with the United States focused on wars
in the Middle East, China began its rise in shipbuilding. From
constructing five percent of the world's ships in 1999, they have risen
to 51 percent in 2024. While many criticized the build quality of
Chinese ships, today they are the industry standard.
While some have compared Chinese domination of shipping to that of
the British Empire in the eighteenth and nineteenth centuries, their
current policies are much more elaborate. Today, besides China
dominating shipbuilding, with their percentages growing, they also
build most of the world's containers and control their leasing. They
sell and lease most of the container trailers, along with the ship-to-
shore cranes in terminals. Chinese mariners are the second largest
segment sailing the world today. China has an interest in ports around
the world, and they have the third largest fleet in terms of registry
(including the ship of Hong Kong). They are also a major owner and
investor in ships; with the Chinese Overseas Shipping Company being the
largest shipping line in the world.
China's control in so many aspects of global shipping give them the
means to influence trade and economy through a variety of mediums. In
many ways this is returning China back to its central position in trade
it held in the past.
Question 2. How would the average American be harmed by allowing
China to dominate the shipbuilding and commercial shipping markets?
Answer. Average Americans have little visibility or concern how the
goods they purchased are transported to the United States. Their
concern is affordability and availability. As the United States relies
more on Chinese operated and owned ships, this could allow China to
constrict the flow of goods and material to the United States.
The Chinese Overseas Shipping Company (COSCO) is one of the largest
container lines in the world and they make regular port calls in the
United States. Should China decide to slow down or restrict the sailing
of these ships, this could cause disruptions in American ports and
impact the global supply chain.
By investing in more American ships, currently U.S.-flag ships only
transport approximately two percent of its imports and exports, it
provides some cushion, and reserve should there be a disruption in the
flow of goods.
Question 3. How could China use their control of the maritime
industry to harm the U.S. economy, especially if we're in a scenario
where China invades Taiwan and wants to pressure the U.S. to stay on
the sidelines?
Answer. China's dominance in the maritime industry provides them
with leverage that can be used to exert influence that could hinder and
disrupt the United States' ability to support Taiwan. As noted in the
previous question, since Chinese owned and built ships transport a
large portion of American imports, any delays or disruptions could have
an impact on American port operations, the supply chain, and
manufacturing as material and goods arrive late.
Perhaps the most disturbing aspect is how China has taken the
lessons of nineteenth-century American naval philosopher Alfred Thayer
Mahan to heart and have combined together naval power with commercial
shipping to be a true maritime power.
One example would be in their influence in Panama Canal. While
China does not own or operate the canal, they do have terminals at each
end. Plus, they have invested heavily in the country, and their ships
are a major user of the canal. Should China decide to exercise leverage
against Panama, in a Taiwan scenario they could persuade Panama to
prohibit the passage of American ships. This would have a direct impact
on the U.S. ability to transport forces across the Pacific as the
Atlantic Fleet and two-thirds of all the surge sealift ships in the
Ready Reserve Force are located on the wrong side of the canal. This
would necessitate longer sea voyages and delay deployments.
China's investment in countries and projects around the world could
also limit American access to fuel and supplies for its fleet,
particularly with the closing of the Red Hill facility in Hawaii. Add
to this, China's extensive network of ports, shipping, fishing fleet
and maritime militia, provide a real time surveillance and visibility
of global shipping. Chinese-built ship-to-shore cranes, with hidden
Internet connectivity, could be instructed to damage themselves thereby
reducing the number of available loading/unloading capabilities in U.S.
ports.
Chinese ships also provide the feeder service (local movement of
goods) for many countries around the world, and the removal or
disruption of these ships could have large economic impact on these
nations. This could allow China to economically coerce nations toward
their side.
______
Response to Written Questions Submitted by Hon. John Fetterman to
Dr. Salvatore Mercogliano
Industrialization & Executive Orders
Question 1. Dr. Mercogliano, in President Trump's executive order,
Restoring America's Maritime Dominance, there is a clear mandate for
new regulatory and tax relief programs to support the industry [Section
12]. Are there proposals circulating within the industry that would
advance these goals?
Answer. One of the major efforts of the SHIPs Act should be to
encourage the investment in American shipping. According to the United
Nation's Review of Maritime Transport, Americans are the fourth largest
investors in shipping (by value). Americans are willing to invest in
ships, but their focus is overseas due to the favorable tax situations
and returns.
The SHIPs Act does contain a Shippers' Tax Incentive which can be
expanded to encourage further investment in the U.S. flag. With the
one-year postponement of U.S. Trade Representative port fees for
Chinese-owned and flagged ship, there will be less money for the Ship
Trust Fund. The American Maritime Congress has looked at this in a
study, and this would shift investment toward the domestic fleet.
There have also been suggestions to waive tariffs or port fees for
cargo shipped on U.S.-flagged ships, thereby incentivizing their use.
Similarly, tax rebates, deferments or incentives can be provided to
Americans to ship on U.S.-flag ships, which would not only benefit
international shipping, but also the closed, cabotage trade.
Question 2. Dr. Mercogliano, you stated in your testimony that
there are near-term opportunities to modernize our domestic fleet of
tugboats, towboats, and ferries. Can you provide more specific
proposals that Congress should consider in helping achieve this goal?
Answer. Any deep-draft ship construction initiated will take years
before we see the results afloat. The U.S. does possess many small and
medium shipbuilding capacity, but it can be expanded faster than the
larger shipyards. Currently, many of our Nation's ferries, in
particular the Washington State system, and our tugboats in our
harbors,, our towboats along the Mississippi and other inland waters,
and the Great Lakes are extremely old, outdated and need replacement.
The recent NTSB hearing on the allision between MV Dali and the
Francis Scott Key Bridge noted that the ship sailed out of the harbor
without a tug escort. Such an escort, which is required in many ports
around the world, particularly those with narrow channels or of such
high value that the concern is the closure of the waterway, was not
provided due to regulations, but also cost and availability of modern
tugboats.
The Maritime Administration should be detailed to provide a study
that identifies ports that are in danger of similar accidents as
occurred with Dali. Such high risk ports, particularly those which are
the busiest in the U.S., such as Los Angeles, Long Beach, Houston,
Savannah, and New York/New Jersey may be designated to require escorts
for portions of ship voyages. The Maritime Administration can then
develop a Vessel Construction Manager system, like the National
Security Multi-Mission Vessel, to be construction of a standardized
design tugboat for use in U.S. harbors and lease them to commercial
firms to operate to meet the new demands. They could also be fitted
with firefighting capability to strengthen the responses in ports.
On the Great Lakes, MV Mark W Barker was the first new U.S.-flagged
freighter built in forty years. The Maritime Administration, along with
the Commerce Department, should look at a vessel replacement program
for the aged fleet operating on the Great Lakes and ways that American
shipping can be expanded. An expansion of Title XI loans and the use of
low-interest long term government financing could help encourage the
further replacement of ships on America's fourth coast.
Question 3. Dr. Mercogliano, as Congress considers proposals to
revitalize commercial shipping, what role(s) can you envision our Great
Lakes shipyards, like the shipyard in Erie, PA, playing in advancement
of this national goal?
Answer. On the Great Lakes, MV Mark W Barker was the first new
U.S.-flagged freighter built in forty years. The Maritime
Administration, along with the Commerce Department, should look at a
vessel replacement program for the aged fleet operating on the Great
Lakes and ways that American shipping can be expanded. An expansion of
Title XI loans and the use of low-interest long term government
financing could help encourage the further replacement of ships on
America's fourth coast.
China
Question 1. Dr. Mercogliano, we've seen how China has used its
massive commercial fleet not just for trade, but as a strategic asset--
blurring the line between civilian and military operations. Their so-
called `shadow fleet' plays a key role in gray-zone activity,
supporting their ambitions in the South China Sea and potentially
around Taiwan. Meanwhile, the United States has only a fraction of that
capacity under the U.S. flag. The SHIPS for America Act would begin to
close that gap by rebuilding our commercial shipbuilding base and
expanding our U.S.-flag fleet. From your perspective, how important is
it that we take this step now--both to ensure economic security and to
be prepared for the kinds of hybrid or gray-zone maritime challenges
that China is already using its commercial fleet to pursue?
Answer. The emergence of the `shadow fleet' is a disturbing trend
in global shipping. Sanctions against Iran and Venezuela gave birth to
a fleet of ships that are designed to evade sanctions. They do this, by
registering in countries with little oversight--true flags of
conveniences. They may or not have classification societies inspecting
them or insurance. This has been expanded by the Russians in their
attempts to evade G7/EU price caps and specific sanctions against
companies and ships.
China has utilized its commercial fleet as a naval auxiliary, along
with their massive fishing and maritime militia to scout the world's
oceans and provide real-time intelligence. These ships could also pose
threats to ships and ports if they deploy underwater, surface or aerial
uncrewed vehicles, akin to what we see being used between Russia and
Ukraine in the Black Sea.
U.S. flag ships represent not just a commercial interest on the
high seas, but sovereign American territory that can also assist in the
support of our national economy, but also the military in time
emergency or national defense. The greater the scope of our shipping,
the more difficult it will be interdict. However, as has been shown by
the Houthis in the Red Sea, just the threat and the increase cost of
insurance is enough to force shipping to divert and raise the cost to
move goods. What makes the U.S.-flag unique is the added protection
afforded by the U.S. Navy, but that relationship needs to be
strengthened, exercised and practiced to counter any hybrid or gray-
zone challenges.
______
Response to Written Questions Submitted by Hon. Lisa Blunt Rochester to
Dr. Salvatore Mercogliano
Question Title: U.S.-Flagged Ships
Question 1. Dr. Mercogliano, during the hearing you stated that the
U.S. must incentivize private shippers to use U.S.-flag vessels to move
their cargo. What type of incentives could Congress implement to
encourage shippers to choose the U.S.-flag?
Answer. The current situation for U.S.-flag shipping is they either
operate in the closed cabotage trade, or they participate in
international trade and receive a stipend through the Maritime or
Tanker Security Programs. Yet, the stipends are not enough to ensure
that the ships are profitable and they require cargo, which is provided
through either government cargo preference or some of the operators
have agreements with larger foreign shipping lines.
The incentives that I would propose, would build on those currently
in the SHIPs Act that provide a 25 percent investment tax credit,
transform Title XI Federal Ship Financing into a revolving fund and
establishing a Shipbuilding Financial Incentives Program. The American
Maritime Congress has proposed expanding the Shipper's Tax Incentive
which would encourage the shift in American shipping investment (of
which the U.S. is fourth in the world in terms of value) from foreign
hulls to U.S.
I contend that waiving tariffs and port fees on cargo shipped on
U.S.-flagged ships could also encourage a shift of cargo into American
bottoms. We should look to provide tax rebates, relief, or incentives
to American businesses to use U.S.-flagged shipping as they would not
only encourage international shipping but also provide relief for the
domestic cabotage trade of goods.
We also do more to encourage the rapid reflagging of ships into the
U.S. registry, as we have seen with the CMA CGM Phoenix and American
Energy. We should examine expansion of the Maritime and Tanker Security
Program, requiring a percentage of American exports in key commodities
to be on American ships through cargo preference, work with the State
Department to incorporate reciprocal trade agreements concerning the
use of American ships, and discuss measures to waive certain
restrictions to bring ships into aspects of the American trade while
new vessels are being constructed.
The key today is increasing the number of American ships, as this
will increase the job market for mariners and the need for ship repair
facilities and workers. We should support the construction of tug and
ferry replacement program to jump start small and medium ship
construction and start building our shipyard workforce. Then we begin
the programs that will lead to deep draft ship construction and reverse
the downward trend and prevent China from being the dominant player in
shipping.
______
Response to Written Question Submitted by Hon. Dan Sullivan to
Tuuli Snow
Question. Opponents of the Jones Act often argue that it raises
consumer prices in noncontiguous U.S. regions such as Alaska, Hawaii,
and Puerto Rico because those areas rely heavily on ocean transport and
have no practical alternatives. From your perspective, to what extent
do you believe the Jones Act materially increases shipping or consumer
costs in these regions--and if those costs are real, do you see them as
an unavoidable trade-off for the national-security and industrial-base
benefits you describe, or are there specific policy tools that could
mitigate them without weakening the Act's core protections?
Answer. The Jones Act does not relate to the cost of delivery or
ocean transportation. Geography, market size, population, remoteness,
and the inflation of everyday products raise the cost of delivery to
places such as Alaska, Hawaii, and Puerto Rico. The Jones Act ensures
reliable, dedicated service to the markets it serves as well as
boosting our industrial bases and benefiting our national security. A
good example of this was visible during the Covid Pandemic. We saw the
cost of internationally delivered goods fluctuate immensely, but those
fluctuations were not reflected in domestic delivery.
The cost of shipping is often a percentage of the cost of cargo. If
the costs are rising it is due to the cost of products rising. Ocean
freight does not drive up consumer costs. We would not recommend change
to The Jones Act.
______
Response to Written Questions Submitted by Hon. Tammy Duckworth to
Tuuli Snow
Question Topic: Workforce Exchanges
Question 1. Investing in the U.S. workforce is one of my top
priorities, but in the interim, there may be opportunities to leverage
the knowledge of our international partners to overcome the gap in
domestic shipbuilding capacity.
What is your view of workforce exchanges or training exchanges with
international shipbuilding companies--either in the United States or
abroad--to help expand skill-building for U.S. shipbuilders and
shipyard workers?
Answer. I believe we lose a very valuable labor market by not
allowing more people into the United States, every day. Lowering
barriers for people to immigrate and become citizens would greatly
boost our workforce. There is terrific value in learning from other
cultures and countries in all respects, including manufacturing. As I
spoke about at the Senate hearing on the 28th, there is a huge gap in
skilled trades people at the mid-career level. Investing in youth is
vital, but it does not solve this labor problem in the present, only
the future. Allowing more skilled trades people to come work in
shipbuilding from other parts of the world is a great solution to this
issue.
Question Topic: Workforce Growth
Question 1. If you could change just one thing at the Federal level
to make it easier for shipyards to recruit and retain skilled workers--
whether that's a new incentive, a funding stream, or a policy change--
what would it be?
Answer. Single payer healthcare. A single payer healthcare system
would put all employers on a level playing field. Physical health is
absolutely essential to maintain a robust workforce, especially in
manufacturing, and we see it as a mandatory benefit. It is repeatedly,
statistically, proven that employee satisfaction is the key driver in
employee retention and a robust benefits package is the highest
requested elements of a new position. Per the Society for Human
Resource Management 68 percent of job seekers prioritized healthcare
benefits over anything else in 2024. It is absolutely a key factor in
my ability to recruit at the capacity I can.
Just this year, our health care rates rose 39 percent putting us
from around $600,000 to over $1,000,000 dollars annually. If this rise
continues, as a small business, this could push us to ruin.
______
Response to Written Question Submitted by Hon. John Fetterman to
Tuuli Snow
Workforce
Question 1. Ms. Snow, during the hearing you spoke about the need
to bring new people into the workforce and the parallel challenge in
making sure the workers we already have can keep up with new
technologies and evolving industry needs. From your perspective as a
talent acquisition manager, how important is upskilling--continuous
training and professional development--for retaining workers and
keeping our shipyards competitive? And what more could be done to
support that effort?
Answer. Incredibly important. Many people are driven by
opportunities for growth and if those opportunities do not present
themselves, employees will go somewhere else to learn them. I would
always prefer to offer an employee the chance to learn something new if
possible. This not only benefits them, but our business as well. The
more multifaceted an employee, the better. We will also see a spike in
need of continuous development as we welcome a large, new workforce
over the next few years. This could be supported by grants for learning
and training or government funded trades trainings.
______
Response to Written Question Submitted by Hon. Brian Schatz to
Tuuli Snow
Workforce
Question 1. If you could change just one policy at the Federal
level to improve recruitment and retainment of skilled workers, what
would it be?
Answer. Lowering taxes for small businesses like ours would even
out the costs we incur in other places, like healthcare, and the rise
in cost of material. Lowering costs across the board for small
businesses and making more grants available is vital. Sales and use tax
on materials and equipment that may already be affected by fluctuating
tariffs can make business arduous. The MARAD grant we acquired this
year has already allowed us to expand our business, opening 5-10 new
positions with the potential for more. There is also the opportunity
for a swing shift, which would double our available production hours.
Allocations of funds to small shipyards make it possible to send
employees to trainings and acquire equipment we may not otherwise be
able to afford. Grants like these create jobs for new candidates and
upskill current employees, adding value to their personal skill set as
well as our business.
[all]