SCA Weekly Round-Up
July 16-20, 2012
The online version of the Weekly Round-Up can be found HERE
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SCA CALL TO ACTION: STOP SEQUESTRATION
Thank you to all the companies who have participated thus far in SCA’s letter writing campaign to urge Congress to solve sequestration now. Your letters are vital to this shipyard industrial base grassroots effort and we encourage you to participate and write to your respective Congressional Delegation requesting a near term solution to avoid sequestration.
The letters - one to both Senators and the other to your House Member (or Members) from the Congressional Districts where your company or facilities are located can be found HERE.
Please PDF copies of the letters on your company letterhead to Matt Paxton and Paula Reever, and SCA staff will hand deliver them to the appropriate offices on Capitol Hill.
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BUDGET UPDATE
House Passes FY13 Defense Spending Bill
On Thursday the House passed the FY13 defense appropriations bill. A total of 89 Republicans joined 158 Democrats on the key 247-167 amendment vote that froze core appropriations at 2012 levels - $1.1 billion below the funding level in the HAC-passed bill. Overall, the Defense spending bill, as amended, would provide $518.1 billion for the Pentagon’s base budget, the same as the fiscal 2012 level and $2 billion more than Obama’s request, which has prompted a veto threat from the Administration. The bill would also provide $87.7 billion for the war inAfghanistanand other overseas operations. The reduction of $1,072,581,000 does not apply to the Department’s personnel accounts, Defense Health Program or the OCO account. House members fended off a series of amendments to the defense appropriations bill that would have further reduced the size of the measure, including amendments that attempted to cut one DDG-51 destroyer and another that would reduce the Navy procurement account by $506 million. The bill includes $15.2 billion to purchase 11 Navy ships.
SEQUESTRATION UPDATE
House Passes Sequestration Transparency Bill
The House on Wednesday took up the Sequestration Transparency Act of 2012 (HR 5872) that would pressure the Obama administration to detail how federal agencies would implement sequestration at the beginning of next year. Nearly every lawmaker opposes the sequester, and the bill passed 414 - 2. Sequestration would result in nearly $500 billion in automatic cuts to defense over 10 years. The cuts, which were set in motion by last August’s bipartisan debt reduction measure, kick in onJan. 2, 2013.
AIA Updates Sequestration Report
The Aerospace Industries Association released an updated version of a report it released last October that projected more than a million lost jobs over the next fiscal year if the first round of the automatic cuts take effect. The revised report, “The Economic Impact of the Budget Control Act of 2011 on DOD and Non-DOD Agencies,” concludes the cuts would trigger the biggest one-year drop in the gross domestic product, about $215 billion, directly and indirectly. The revised report now projects that more than 2 million jobs would vanish and the national unemployment rate would increase by 1.5 percentage points over the next year. In addition to the impact on the defense industry, the report finds 48,059 jobs in healthcare, 98,953 in construction, 473,250 in manufacturing and 617,449 federal jobs are at risk. The study outlines the impacts in all 50 states withCalifornia,Virginia andTexas experiencing the largest potential jobs losses.
HASC Brings in Industry to Discuss Sequestration
On Wednesday the House Armed Services Committee (HASC) held a hearing on industry perspectives of sequestration. Industry witnesses included Robert J. Stevens, Chairman and CEO of Lockheed Martin, Sean O’Keefe, Chairman and CEO of EADS North America, David P. Hess, President of Pratt and Whitney and Della Williams, President of Williams-Pyro. Chairman McKeon convened the full-committee hearing to pressure the Administration to explain how it would implement sequestration. Before he dismissed the witnesses McKeon asked them to submit written explanations of what information they need to help arm HASC members for when Office of Management and Budget director Jeffrey Zients testifies before them on August 1st. Witnesses argued that when sequestration occurred in the past - on a much smaller scale than now looms - it caused costly inefficiencies, such as penalties for unilaterally altering the terms of contracts, and predicted the administrative disruption will likely cost almost as much as what the sequestration mechanism is designed to save.
Governors Concerned About Defense Impacts
During the annual National Governors Association (NGA) conference last week, governors from both parties seemed to agree that defense contractors should delay sending out layoff notices they are threatening to issue just days before the November 6 election. Some defense contractors have said that in compliance with federal law, they will be forced to issue layoff notices to workers 60 days before the cuts are enacted. The governors could move soon to call for a delay in when those layoff notices would go out – for economic, not political purposes, they say. It remains to be seen how the governors might go about urging such a delay, whether through congressional action or some kind of state-by-state action.
LEGISLATIVE AND POLICY UPDATE
Senate Sinks Law of the Sea Treaty
On Monday, senators Johnny Isakson (R-GA), Rob Portman (R-OH), and Kelly Ayotte (R-NH) included their names with 31 other Senate Republicans to block the controversial Law of the Sea Treaty. The law, championed by the White House and the Pentagon, would have created rules for the world oceans which would help establish de-facto laws in global hot spots such as the Asia-Pacific region. Opponents of the treaty claim ratification would effectively tie the hands of the U.S. Navy by requiring their missions to be approved by treaty members. Additionally, ratification would give the International Seabed Authority power to distribute portions of oil and gas royalties from offshore operations. Senate leadership still intends to hold an official vote on the treaty after the elections in November.
Cargo Preference Reduced in Transportation Bill
In a rush to resolve funding disputes in the Transportation Bill passed several weeks ago, House and Senate members on the conference committee agreed to ease cargo preference provisions that ensured American-flag ships carry most of the food aid sent abroad. The provision, intended to save the government money, could cost some 2,000 maritime jobs.
Conference members added the provision to help pay forGulfCoastrestoration with the Congressional Budget Office (CBO) scoring the savings at $108 million per year. However, initial cost analysis by the Maritime Administration scores the savings at only $15 million. The higher savings estimates may have mistook the cargo preference costs for broader ocean freight costs.
Additionally, the provision has proved doubly unpopular because of its threat to, the Jones Act, a longstanding bipartisan law meant to support the diminishing number of American-flag ships. Reps. Elijah Cummings (D, MD-7) and Rick Larsen (D, WA-2) have already started working on legislation to restore funds, which is likely to be added to the upcoming Coast Guard reauthorization bill.
Good News for Ports
This week, the White House issued a news release, found HERE stating that the Administration is expediting seven significant infrastructure projects to help modernize and expand five major ports. The move is part of the Administration's "We Can’t Wait" initiative. These are the first 7 of the initial 43 projects that are to be expedited according to an Executive Order issued in March. Additional expedited infrastructure projects will be announced in the coming weeks.
"One way to help American businesses grow and hire is to modernize our infrastructure," said President Obama. "That’s why in March I asked my Administration to identify important projects across the country where Federal review could be expedited. Today’s commitment to move these port projects forward faster will help drive job growth and strengthen the economy."
Below is a table that shows the projects to be expedited
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Port
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Projects to be Expedited
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Port of Jacksonville
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Feasibility study to deepen the navigation channel to
50 feet
Plans for a new Intermodal Container Facility
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Port of Miami
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Project to deepen the navigation channel to 50 feet
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Port of Savannah
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Project to deepen the navigation channel to 47 feet
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Port of New York and New Jersey
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Projects to deepen some federal channels to 50 feet
Project to raise theBayonneBridge to accommodate
larger vessels
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Port of Charleston
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Feasibility study to deepen the navigation channel to
50 feet
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Another Offshore Drilling Bill Advances in House
On Wednesday, the House Natural Resources Committee voted a third time this Congress to advance legislation significantly expanding offshore oil and gas development. The move is yet another rebuke of the Obama administration's five-year leasing plan which House Republicans say does little to increase jobs and energy security over the next several years.
The bill (H.R. 6082) offered by Chairman Doc Hastings (R, WA-4.) would expand future offshore leasing to the north and mid-Atlantic, the southern Pacific, and Alaska's Bristol Bay. It was amended to include a lease off the shores of South Carolinaby 2015. Click HERE to view areas that would be open for lease sales under the legislation passed this week. As with previous similar drilling legislation, the bill is not expected to be addressed by the Senate.
JONES ACT UPDATE
Trouble for Title XI?
This week, American Petroleum Tankers Parent LLC (APT) filed suit against the Administrator of the Maritime Administration (MarAd) in U.S. District Court for theDistrict of Columbia. APT, which is controlled by private equity investor The Blackstone Group, has had a pending Title XI loan guarantee application on file with MarAd since December 2010 relating to the construction of five Jones Act product/chemical tankers on order at GD NASSCO.
According to Reuters, APT's suit alleges that it is being discriminated against because it is owned by a private equity firm and its application is not being judged on its merits. To read the Reuters report CLICK HERE.
STUDIES AND REPORTS
AIA Updates Sequestration Report
See under “Sequestration Update” above.
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Announcements
CONGRESSIONAL SHIPBUILDING CAUCUS BREAKFAST
WEDNESDAY, JULY 25, 2012
8:00 – 9:00 AM, RAYBURN HOUSE OFFICE BUILDING B339-340
The SCA and Navy League will be co-sponsoring the next Congressional Shipbuilding Caucus Breakfast on Wednesday, July 25. The featured speakers are Major General Arnold Punaro (ret) and Mr. Steve Bell of the Bipartisan Policy Center (BPC). They will be discussing the larger effects of sequestration including the BPC's report Indefensible: The Sequester's Mechanics and Adverse Effects on National and Economic Security.
All SCA members are welcome to attend, free of charge - please send your RSVP to cbennett@navyleague.org.
You can find the Dear Colleague letter sent by Co-Chairs Rob Wittman (R, VA-2) and Joe Courtney (D, CT-2) HERE
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SCA FALL GENERAL MEMBERSHIP MEETING
The SCA Fall General Membership Meeting will be held in Portland, ME on October 15-17.
Hotel reservations can be made at the Marriott: Portland at Sable Oaks by calling
1-800-752-8810. Registration for the meeting will be available online in September.
If you have any questions or concerns regarding the meeting, please email Paula Reever.
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SHIPYARD AND SUPPLIER PHOTOS NEEDED FOR NEW SCA WEBSITE
SCA would like to feature pictures of member shipyards and supplier facilities on our new website. Photos of workers and ships, and materials during all phases of construction, repair and maintenance are requested. Additionally we’d like to feature aerial and panoramic photos of yards and facilities.
Please send all photos to preever@balljanik.com. To send copies of photos on a CD, please mail to our address:
Shipbuilders Council ofAmerica
ATTN: Paula Reever
655Fifteenth Street, NW
Suite225
Washington,DC20001
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2012 VSRA 17th Annual Safety & Health Seminar
On Wednesday, September 26, 2012, Virginia Ship Repair Association, Inc. (VSRA) will host its 2012 17th Annual Safety & Health Seminar at the Ted Constant Convocation Center, Old Dominion University in Norfolk, VA., from 8:00 a.m. to 3:30 p.m. For more information, please see their press release HERE.
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UPDATE FROM THE U.S. COMMERCIAL SERVICE
Upcoming Canadian Shipbuilding Program Opportunity, September 5-7, Halifax, Nova Scotia
Canadahas recently committed $35 billion under the National Shipbuilding Procurement Strategy (NSPS) to build large combat and non-combat vessels for the Royal Canadian Navy and the Canadian Coast Guard over the next 30 years. The U.S. Embassy inCanadais organizing aU.S.delegation to visitHalifaxto assistU.S.companies to position themselves for the growing shipbuilding opportunities inCanada.
Full details are HERE and follow up questions can be sent to CS Canada’s Luz Betancur at luz.betancur@trade.gov
Adjustments in U.S. Export Control
Regulations that control U.S.exports are shifting certain marine and ship technologies from the U.S. Department of State ITAR to U.S. Department of Commerce Bureau of Industry Security. The U.S. Trade Department is coordinating with regulatory colleagues to provide a client outreach webinar in October/November. You can see the proposed rule HERE.
U.S. Department of Commerce Trade Lead
Cameroonis seeking a Passenger Ferry Vessel, age 10-15 years and with 300-350 person vessel capacity. You can read the specifications HERE. Please note that these opportunities are fully vetted through the U.S. Embassy and the Department of Commerce.
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FALL SAFETY AND HEALTH MEETING, OCTOBER 4-5, LOUISVILLE, KY
SCA’s Fall Safety and Health Meeting will be held in Louisville, KYOctober 4-5. To register for the meeting, please fill out the form found HERE. Hotel information can be found on the registration form. Please send registration forms to Ian Bennitt.
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