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Shipbuilding in U.S. Declines-I] Shipyards National Asset—Sources of Business—Higher Cost in American Yards—Seriousness of Navy Yard Competition—Encourage Shipbuilding tional asset. Without them it would have been impossible to have built and kept in operation the vast fleet of ships for both the navy and the Emergency Fleet Corp. re- quired during the World war. The older shipyards were taxed to their capacity in building new vessels for the navy and Fleet corporation, and in addition many new yards sprang up like mushrooms and participated in ship construction. The private ship repair yards also performed an essen- tial national service by reconditioning and repairing vessels for the Emer- gency Fleet Corp. and _ performing work in the value of $73,000,000 for the navy. G ions ass are an important na- Sources of Shipyard Business The private yards depend for their new construction upon A—tThe navy and coast guard, B—tThe shipping board, C—tThe private shipowner. Five navy contracts totaling about $50,000,000 have recently been placed with private shipyards, but they are the only contracts of this character that have been placed during the past seven years. The shipping board has not made a contract for new _ ship construction during the past seven years; it has, however, contracted for the recondi- tioning of a few of its vessels and even on several of these the work has been performed by the navy yards at an expenditure of several million dollars. As previously stated, including con- tracts for the construction of passen- ger, combination and cargo vessels, tankers, yachts and seagoing dredges, contracts for the construction of only 86 merchant vessels have been placed with five shipyards during the past seven years, or an average, during each year, of less than two and one- half vessels for each yard. Merchant vessels may be separated into three important groups, as fol- lows, viz: A—Vessels for coastal and _ inter- coastal service. This is Part II and concludes an address by Mr. H. G. Smith before the National Indus- trial Conference Board Ine. on Jan. 19 at New York. Published by MARINE Review in two parts. Part I appeared in the March issue. By H. G. Smith Vice President, Bethlehem Shipbuilding Corp Ltd. B—Vessels for lake, sound, river, harbor and canal service. C—Vessels for the foreign trade. Vessels for the coastal and inter- coastal trade are protected by our coastwise laws, which require them to be built in the United States. Such vessels are seagoing and _ constitute the present nucleus of our merchant marine. Vessels for the lake trade, which are seldom operated on the high seas, are likewise protected by the same laws if engaged in trade between United States ports and are built in yards on Navy Yards to Compete Of the sixteen naval vessels au- thorized in the naval building program, eight are to be built in navy yards under an amend- ment made in the house of rep- resentatives March 16. In all fairness, this seems to be a par- ticularly stupid or purely political move on the part of congress. If the shipyards of the country are to continue in order to pro- vide facilities for naval construc- tion as needed they certainly should be encouraged by receiv- ing from the government such work as may be contemplated. the Great Lakes. The shipyards on the Great Lakes compete only to a limited degree with yards on the sea coasts. Vessels for sound, river, harbor and canal service, usually of small ton- nage, are built in the United States and are not sufficient in number to be an important factor in shipyard output. Higher Cost in American Yards Vessels for the foreign trade may be built either in the United States or in a foreign country. If built in the United States for an American owner, they must fly the American flag. If built abroad they may fly either the American or a foreign flag. Such vessels are seldom built in the United States because their cost of construction is much greater in a domestic shipyard than in any foreign shipyard. In fact there are no vessels for the foreign trade now building in the United States. MARINE REVIEW—April, 1928 The National Council of American shipbuilders has recently conducted an investigation of the relative cost of constructing similar vessels in Great Britain and in the United States. The investigation is the most thor- ough of its kind known to have been made and gives with reasonable accu- racy the following differences in the cost of construction: Cargo Vessel of 10,000 D. W. British : Cost s.caimernsuice 100 per cent American Cost sccdecnca: 159 per cent Tank Steamer—9850 Tons D. W. British < Gost. ssc 100 per cent AMETICAN COSE ....ccccccscecseeses 160 per cent Passenger and Cargo Steamer—11,000 Tons Displacement, Loaded Hritigh: Cost sce 100 per cent. AMmeritan ‘COst: 3. ic .ccstca. 154 per cent Interest on investment, insurance and depreciation represent about 27 per cent of the total cost of the opera- tion of a cargo vessel documented under the laws of the United States and the greater cost of a vessel built in the United States therefore imposes upon the operator of such a vessel a continuous handicap of 14 per cent to 16 per cent of the total cost of opera- tion in competition with a foreign built and operated vessel and this han- dicap exists during the entire life of the vessel. These facts demonstrate the impossibility of building vessels in the United States for the: foreign trade without some form of aid to overcome these differentials of cost of construction and operation. In one of the offices of the United States shipping board in Washington is a chart and tabular statement showing ships of the world in excess of 20,000 gross tons built and in the course of building. This chart dis- closes 43 vessels of 20,000 tons or more now in operation in the foreign trade, of which only two fly the Amer- ican flag, the LEVIATHAN and_ the GEORGE WASHINGTON, each built abroad and a war inheritance. Four- teen additional vessels each of more than 20,000 tons are now being built but not one is an American vessel; therefore of the total of 57 vessels of this larger class only two fly the American flag and both were built in foreign shipyards. (Continued on Page 90) 73.