The Jones Act

Central to the U.S. commercial shipbuilding industry is the U.S. Merchant Marine Act of 1920, also known as the Jones Act, which ensures a robust and competitive domestic shipyard industrial base. Shipbuilders Council of America strongly supports the Jones Act, as well as policies and programs that promote domestic manufacturing; the inland tug and barge industry; offshore oil and gas development; offshore renewable energy development; the non-contiguous trades; and America’s commercial fishing fleets.

As a result of the Jones Act, the U.S. commercial shipbuilding industry and its related supplier base support America’s fleet of more than 40,000 commercial vessels.

The U.S. shipyard industry delivered more than 1,200 vessels in 2012, which represented more than $20 billion in domestic investments. In 2013, U.S. shipyards entered into contracts for hundreds of new vessels, including the construction of state of the art oil tankers and first in the world LNG powered containerships. U.S. shipyards are also leading the way in innovation with the construction of offshore oil and gas support and dynamic positioning vessels and the world’s first LNG-powered containership.

The Jones Act ensures a robust shipbuilding industrial base that helps ensure the U.S. maintains its expertise in shipbuilding and ship repair that can be utilized by the nation’s armed forces.

An Uneven International Playing Field

The U.S. commercial market has been squeezed by a variety of factors including the large amount of latent tonnage on the international market, a result of decades of subsidies by foreign countries like China, Japan and South Korea. Asian countries maintain roughly 90% of the world’s market share by subsidizing their shipyards (China), bailing out failing shipyards (Korea, China) and providing extensive shipbuilding financing capital. Most recently, South Korea announced a mid-term restructuring plan that will underwrite the construction of 200 commercial vessels over the next three years to the tune of more than $5 billion to prevent the closure of Korea’s shipyards.

Opponents to U.S. industry will continue to call for this work to be exported overseas, which would further erode the industrial base. The U.S. government needs to acknowledge that U.S. shipyards do not compete on an international level playing field.

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