Hearings to examine reviving commercial shipbuilding.

1[Senate Hearing 119-300]2[From the U.S. Government Publishing Office]34                                                        S. Hrg. 119-30056                              SEA CHANGE:7                    REVIVING COMMERCIAL SHIPBUILDING89=======================================================================1011                                HEARING1213                               before the1415                SUBCOMMITTEE ON COAST GUARD, MARITIME,16                             AND FISHERIES1718                                 of the1920                         COMMITTEE ON COMMERCE,21                      SCIENCE, AND TRANSPORTATION22                          UNITED STATES SENATE2324                    ONE HUNDRED NINETEENTH CONGRESS2526                             FIRST SESSION2728                               __________2930                            OCTOBER 28, 20253132                               __________3334    Printed for the use of the Committee on Commerce, Science, and35                             Transportation3637                 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3839                Available online: http://www.govinfo.gov4041                               ______4243                 U.S. GOVERNMENT PUBLISHING OFFICE444562-921 PDF                WASHINGTON : 20264647       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION4849                    ONE HUNDRED NINETEENTH CONGRESS5051                             FIRST SESSION5253                       TED CRUZ, Texas, Chairman5455JOHN THUNE, South Dakota             MARIA CANTWELL, Washington,56ROGER WICKER, Mississippi                Ranking57DEB FISCHER, Nebraska                AMY KLOBUCHAR, Minnesota58JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii59DAN SULLIVAN, Alaska                 EDWARD MARKEY, Massachusetts60MARSHA BLACKBURN, Tennessee          GARY PETERS, Michigan61TODD YOUNG, Indiana                  TAMMY BALDWIN, Wisconsin62TED BUDD, North Carolina             TAMMY DUCKWORTH, Illinois63ERIC SCHMITT, Missouri               JACKY ROSEN, Nevada64JOHN CURTIS, Utah                    BEN RAY LUJAN, New Mexico65BERNIE MORENO, Ohio                  JOHN HICKENLOOPER, Colorado66TIM SHEEHY, Montana                  JOHN FETTERMAN, Pennsylvania67SHELLEY MOORE CAPITO, West Virginia  ANDY KIM, New Jersey68CYNTHIA LUMMIS, Wyoming              LISA BLUNT ROCHESTER, Delaware6970                 Brad Grantz, Republican Staff Director71           Nicole Christus, Republican Deputy Staff Director72                   Lila Harper Helms, Staff Director73                 Melissa Porter, Deputy Staff Director7475                                 ------7677          SUBCOMMITTEE ON COAST GUARD, MARITIME, AND FISHERIES7879DAN SULLIVAN, Alaska, Chairman       LISA BLUNT ROCHESTER, Delaware,80ROGER WICKER, Mississippi                Ranking81JOHN CURTIS, Utah                    BRIAN SCHATZ, Hawaii82BERNIE MORENO, Ohio                  GARY PETERS, Michigan83TIM SHEEHY, Montana                  TAMMY BALDWIN, Wisconsin8485                            C O N T E N T S8687                              ----------88                                                                   Page89Hearing held on October 28, 2025.................................     190Statement of Senator Sullivan....................................     191Statement of Senator Blunt Rochester.............................     392Statement of Senator Cantwell....................................     493Statement of Senator Cruz........................................    2894Statement of Senator Young.......................................    3295    Jesse Vecchione, Regional Business Development Leader,96      Americas, Weathernews, Inc., prepared statement............    3297    Dustin Walper, CEO, Valstad Shipworks, prepared statement....    3398    United Steel, Paper and Forestry, Rubber, Manufacturing,99      Energy, Allied Industrial and Service Workers International100      Union (USW) and the International Association of Machinists101      (IAM Union), prepared statement............................    34102    USA Maritime, prepared statement.............................    36103    Transportation Institute, prepared statement.................    38104    Letter dated October 28, 2025 to Hon. Dan Sullivan and Hon.105      Lisa Blunt Rochester from Brandon Farris, Vice President,106      Government Affairs, Steel Manufacturers Association........    40107    Letter dated October 28, 2025 from Jan Sramek, Founder & CEO;108      Craig Hooper, Director, Defense Industrial Base; Justin109      Esch, VP Business Development, California Forever..........    40110    Roberto Llames, President, SMART Development Institute (SDI),111      prepared statement.........................................    42112    Gary Aucoin, President, SCHOTTEL, Inc., prepared statement...    43113    Billy Thalheimer, Co-founder and Chief Executive Officer,114      REGENT Craft, Inc., prepared statement.....................    44115    Passenger Vessel Association (PVA), prepared statement.......    45116    Robert Sheen, President and COO, Ocean Shipholdings, Inc.,117      prepared statement.........................................    46118    Sam Salustro, Senior Vice President of Market and Policy119      Strategy, Oceantic Network. prepared statement.............    48120    Brad Ford, Executive Vice President, Plate and Structural121      Products, Nucor Corporation, prepared statement............    52122    Navy League of the United States, prepared statement.........    53123    Nathan Sandel, Director of Education and Community124      Development, Nauticus, prepared statement..................    56125    New American Industrial Alliance, prepared statement.........    57126    Marine Engineers' Beneficial Association, AFL-CIO (M.E.B.A.),127      prepared statement.........................................    58128    Rear Admiral James Watson (USCG, ret.), on behalf of the129      Maritime Accelerator for Resilience (MAR) and the authors130      of Zero Point Four, prepared statement.....................    59131    Letter dated October 21, 2025 to Hon. Ted Cruz and Hon. Maria132      Cantwell from James H. I. Weakley, President, Lake133      Carriers' Association......................................    64134    Ryan Lynch, President and CEO, Hanwha Shipping, prepared135      statement..................................................    65136    David Kim, CEO, Hanwha Philly Shipyard, prepared statement...    66137    Ted Stilgenbauer, President and Chief Operating Officer,138      Heartland Fabrication, prepared statement..................    67139    Patrick Kelly, Chief Executive Officer, Fraser Industries140      LLC, prepared statement....................................    69141    Dan Thorogood, President and CEO, Fairwater, prepared142      statement..................................................    69143    Elizabeth Kennedy, Director of Government Relations,144      Activate, prepared statement...............................    70145    Letter dated October 27, 2025 to Hon. Dan Sullivan from Mike146      Culbertson, President and CEO, Corpus Christi Regional147      Economic Development Corporation...........................    71148    Craig Koehne, Regional Manager, DNV Maritime Region Americas149      and Steven Sawhill, Director, U.S. Government and Public150      Affairs, DNV USA Inc., prepared statement..................    71151    David Levy (Austin, TX), Software Executive, Maritime152      Technology Sector, prepared statement......................    73153    Dave Matsuda, Founder, Small Shipyard Grant Coalition,154      prepared statement.........................................    74155    Sean Kline, President and CEO, Chamber of Shipping of America156      (CSA), prepared statement..................................    76157    Mikal B Enact a modified version of the SHIPS for America Act to158        establish a national maritime strategy that aligns demand,159        workforce, infrastructure, and supply chains, and that restores160        industrial resiliency across commercial and government161        shipbuilding and repair. This should be paired with stable,162        predictable Navy and Coast Guard shipbuilding and maintenance163        plans that reward design stability, disciplined change control,164        and productive government-industry partnership and innovative165        contracting structures.166167   Uphold and faithfully enforce the Jones Act to maintain the168        domestic market that sustains our commercial shipyards and169        mariner base. Ensure that agency interpretations and rulings170        reinforce, not erode, the law's core requirements.171172   Leverage and align trade actions with industrial strategy.173        USTR's Section 301 findings confirm that foreign non-market174        practices burden U.S. commerce and suppress healthy175        international competition. Align responsive actions with176        domestic investment in yards, equipment, and suppliers, and177        encourage allied coordination to reduce shared dependencies and178        bottlenecks.179180   Update how we measure output. Direct agencies to incorporate181        annual U.S. shipbuilding reports and other domestic datasets182        alongside OECD GT/CGT series in official assessments, so that183        appropriations, infrastructure planning, workforce pipelines,184        and supply-chain investments are calibrated to the full U.S.185        production landscape.186187   Stabilize acquisition practices that enable industry188        investment. Use multi-year procurement where appropriate, align189        funding profiles with realistic schedules, and adopt190        acquisition structures--advanced procurement, incremental191        funding, block buys--that provide credible, multi-year demand192        signals for both commercial and government programs.193194    These steps will expand opportunities across the full spectrum of195U.S. yards--from large complex-ship builders to mid-tier and small196shipyards--unlocking private investment in modernization, accelerating197productivity improvements, and strengthening the supplier base that198both commercial and defense customers depend on.199Conclusion200    American shipyards build some of the most advanced vessels in the201world. Our men and women deliver for our Navy, our Coast Guard, and our202domestic commercial markets every day. But we are contending with a203global commercial market skewed by decades of foreign non-market204intervention and by international statistics that omit much of what205America actually builds.206    The Jones Act remains the cornerstone of our maritime security; the207SHIPS for America Act is the strategic blueprint we need to restore208balance, rebuild commercial capability, and secure the maritime209industrial base for the long term.210    This is a moment for policy clarity and national purpose. If we211want credible sealift, resilient supply chains, competitive naval212shipbuilding, and a skilled maritime workforce ready when the Nation213calls, we must build ships in America and we must do so at scale.214    SCA and its members stand ready to work with this Subcommittee and215the Congress to enact the SHIPS for America Act, reinforce the Jones216Act, and ensure that America's shipyards have the stable demand and217strategic direction to deliver the ``sea change'' this hearing218contemplates--one that revives commercial shipbuilding and strengthens219our national security for decades to come.220    Thank you for the opportunity to testify. I look forward to your221questions.222223    Senator Sullivan. Great. Thank you, Mr. Paxton. Mr. Vogel.224225        STATEMENT OF JEFF VOGEL, VICE PRESIDENT--LEGAL,226                       TOTE SERVICES, LLC227228    Mr. Vogel. Good morning, Chairman Sullivan, Ranking Member229Blunt Rochester, Senator Cantwell, Senator Baldwin, Senator230Young. Thank you for the opportunity to testify on the urgent231need to revise America's commercial shipbuilding industry.232    The United States has always been a maritime nation, and233the shipbuilding industry is the backbone of our national and234economic security. It provides high-paying jobs and delivers on235commercial and government demand for vessels. However, we face236a stark reality. The U.S. produced just 0.04 percent of the237world's vessels last year, while China delivered over half of238the global fleet. This is not because Americans lack ingenuity239or shipbuilding skill. This disparity is the direct result of240foreign government market manipulations and decades of241insufficient support at home to address the threat of foreign242maritime dominance.243    Congressional support through marquee legislation such as244the Jones Act and Merchant Marine Act of 1936 has kept our245industry alive, supporting over 105,000 jobs and contributing246nearly $12 billion to our annual GDP. But to truly restore our247shipbuilding strength our Nation must take decisive action to248address heavily subsidized foreign competition and provide a249clear demand signal for U.S.-built ships.250    U.S. shipbuilding innovation is not our weakness. It is our251strength. TOTE Services is proud to have led the way. In252partnership with NASSCO Shipyard in California, TOTE delivered253the world's first liquified natural gas-powered container ship,254which established the international market standard. TOTE255Services also managed the construction of North America's first256LNG bunker barge, supporting the demand for U.S. LNG to fuel257vessels in domestic and international trade.258    We also pioneered the vessel construction manager259acquisition strategy for government shipbuilding. By applying260commercial principles and removing bureaucratic barriers, the261vessel construction manager acquisition strategy has delivered262government ships from commercial shipyards on time and under263budget, saving taxpayers billions, mitigating government risks,264and revitalizing struggling shipyards. In doing so, we have265produced the next generation of mariner training vessels, the266National Security Multi-Mission Vessels, which has resulted in267a stark increase in enrollment at our state maritime academies.268    To rebuild our government fleet and reinvigorate our269commercial shipyards Congress must expand the vessel270construction manager acquisition strategy across agencies, and271ensure that billions in appropriated shipbuilding funds from272the One Big Beautiful Bill Act are swiftly allocated, using an273experienced vessel construction manager.274    In addition, Congress and the Administration can encourage275private investment by modernizing regulations and supporting276build charter agreements. I have outlined these proposals in my277written testimony. If enacted, such changes would allow278American companies to use private capital for the rapid279commercial construction of non-combatant government ships that280ensure our national security.281    The SHIPS for America Act of 2025 and the forthcoming282Maritime Action Plan are critical to implementing improvements283to the shipbuilding industrial supply chain. Within this284context, I urge you to support tax incentives for shipyard285investment, including in U.S. territories, and ensure that286alternative marine fuels are not disadvantaged by outdated tax287rules. These steps will strengthen our industrial base and288restore American shipbuilding dominance.289    I appreciate this Subcommittee's efforts to restore our290critical U.S. shipbuilding industrial base. Thank you for your291leadership and commitment to this vital industry. Again, thank292you for the opportunity to testify today. I am happy to answer293any questions.294    [The prepared statement of Mr. Vogel follows:]295296      Prepared Statement of Jeff R. Vogel, Vice President--Legal,297                           TOTE Services, LLC298    Good morning, Chairman Sullivan, Ranking Member Blunt Rochester,299and distinguished members of the Subcommittee. Thank you for the300opportunity to testify today on the challenges and opportunities in301reviving the U.S. commercial shipbuilding industrial base. The United302States is a maritime nation. Since our country's inception, we have303relied upon our domestic maritime industry to support our national and304economic security. The commercial shipbuilding industry is the backbone305of our maritime strength, constructing innovative vessels to meet the306demands of our domestic trade and employing a skilled workforce to307support both commercial and government shipbuilding programs. However,308for decades this critical industry has been undervalued, allowing309foreign competitors to seize upon comparative economic advantages and310distort the market with significant government subsidies. The U.S.311commercial shipbuilding industry is not subsidized; it builds vessels312to meet market demands. This unfair competition has been left American313commercial yards in a challenging position, with only a handful of314shipyards delivering less than one percent (1 percent) of the world's315fleet. I am encouraged, however, by the recent bipartisan focus on316addressing this critical national and economic security vulnerability.317My testimony today will highlight some of the opportunities that this318Committee and the Administration have in restoring our international319shipbuilding dominance.320Current State of Commercial Shipbuilding321    There is no denying that the U.S. commercial shipbuilding industry322finds itself in a challenging position. According to statistics from323the United Nations Trade and Development (``UNCTAD''), the U.S.324produced 0.04 percent of the world's vessels delivered in 2024.\1\ By325contrast, China delivered 54.57 percent of the world's fleet last year.326This grotesque market gap is the direct result of two forces: (1) the327Chinese government's state-directed industrial planning and integration328between329---------------------------------------------------------------------------330    \1\ UN Trade and Development, Ships built by country of building,331annual (rev. June 10, 2025), available at: https://332unctadstat.unctad.org/datacentre/dataviewer/US.ShipBuilding333---------------------------------------------------------------------------334    These challenges are not new. From the inception of our country,335through the Civil War, the U.S. was a dominant force in international336shipbuilding, with the cost of American-built vessels being 25 percent337to 50 percent cheaper than international competitors due to our vast338timber resources.\2\ However, with the advent of steel vessel339construction, this competitive advantage was lost and the U.S.340precipitously began to lose market share to international competitors341that enjoyed lower labor rates and government subsidies.342---------------------------------------------------------------------------343    \2\ William John Williams, Shipbuilding and the Wilson344Administration: The Development of Policy, 1914-1917, available at:345https://apps.dtic.mil/sti/tr/pdf/ADA218028.pdf.346---------------------------------------------------------------------------347    Notwithstanding these comparative economic challenges, our country348has always recognized the critical importance of sustaining a robust349commercial shipbuilding industry. This has led to focused legislative350efforts, such as the Merchant Marine Act of 1936, which recognizes that351``[i]t is necessary for the national defense and the development of the352domestic and foreign commerce of the United States that the United353States have a marine . . . composed of the best-equipped, safest, and354most suitable types of vessels constructed in the United States and355manned with a trained and efficient citizen personnel.'' \3\ In a356similar manner, the Jones Act has been the lifeblood of the U.S.357commercial shipbuilding industry, ensuring that we have maintained a358shipbuilding industrial base despite the efforts of foreign competitors359to pervert the economic framework.360---------------------------------------------------------------------------361    \3\ 46 U.S.C. Sec. 50101(a)(4) (emphasis added).362---------------------------------------------------------------------------363    As a result of these focused legislative efforts, we have sustained364a viable commercial shipbuilding industry, which directly provides over365105,000 high-paying jobs, $9.9 billion in labor income, and $12.2366billion in gross domestic product.\4\ Currently there are 154 private367shipyards in the United States, spread across 29 states and the U.S.368Virgin Islands, that are classified as active shipbuilders. In369addition, there are more than 300 shipyards engaged in ship repairs or370capable of building ships but not actively engaged in shipbuilding.\5\371From this foundation, a strong shipbuilding industrial base can be372reborn if the government provides the appropriate demand signal for373commercial and government vessels.374---------------------------------------------------------------------------375    \4\ Maritime Administration, The Economic Importance of the U.S.376Private Shipbuilding and Repairing Industry (March 30, 2021).377    \5\ Id.378---------------------------------------------------------------------------379    However, as highlighted by recent U.S. Trade Representative380(``USTR'') actions, the U.S. shipbuilding industry is facing an381unprecedented challenge in the form of China's focused efforts to382distort international shipbuilding markets. As established by the USTR,383``[c]onsistent with its policies to support and grow the Chinese384shipbuilding industry into the dominant shipbuilder in the world, the385Government of China has poured hundreds of billions of dollars into its386industry since 2000.'' \6\ Through a mix of direct investment,387favorable financing by government-owned banks, credit programs, tax388benefits, equity infusions, and steel and supply chain distortions, the389Chinese government has undertaken ``acts, policies, or practices that390are unreasonable and discriminatory and that burdens and restricts U.S.391commerce.'' \7\ The imposition of port fees on Chinese built and392flagged vessels seeks to address this imbalance. Receipts from port393fees imposed on Chinese built and flagged vessels into a specific394Maritime Security Trust Fund (as envisioned by Section 201 of the SHIPS395for America Act of 2025, S.1541) will support specific reinvestment396into U.S. shipbuilding and have a multiplier effect towards restoring397market balance.398---------------------------------------------------------------------------399    \6\ USW, Petition for Relief, China's Policies in the Maritime,400Logistics, and Shipbuilding Sector (March 12, 2024).401    \7\ USTR, Report on China's Targeting of the Maritime, Logistics,402and Shipbuilding Sectors for Dominance (Jan. 16, 2025).403---------------------------------------------------------------------------404Innovation and the Vessel Construction Manager Strategy405    A constant criticism levied at the U.S. commercial shipbuilding406industry is that it fails to innovate to keep pace with its heavily407subsidized foreign competition. This criticism is not accurate. In4082015, TOTE Maritime Puerto Rico proudly accepted delivery of the409world's first liquefied natural gas (``LNG'') powered containership,410the Isla Bella, from General Dynamic NASSCO. TOTE Services further411oversaw the design and construction of the first North American LNG412bunker barge, the Clean Jacksonville. Through these efforts, and413additional investment to repower our existing vessels, TOTE's entire414fleet in both the Alaska and Puerto Rico trade lanes are fueled by LNG.415As usual, where U.S. innovation leads the world follows, with LNG-416fueled container ships now making up over 56 percent of the entire417global orderbook.\8\418---------------------------------------------------------------------------419    \8\ Global Maritime Hub, LNG-fueled Container Ships make up over420half of the entire orderbook (May 16, 2025) (citing Alphaliner),421available at: https://globalmaritimehub.com/lng-fueled-container-ships-422make-up-over-half-of-the-entire-orderbook.html.423---------------------------------------------------------------------------424    In a similar manner, TOTE Services has led government shipbuilding425innovation in U.S. commercial shipyards. The National Defense426Authorization Act for Fiscal Year 2017 directed the Maritime427Administration (``MARAD'') to construct the next generation of mariner428training vessels (the National Security Multi-Mission Vessel429(``NSMV'')) ``using commercial design standards and commercial430construction practices that are consistent with the best interests of431the Federal Government.'' \9\ More importantly, Congress directed MARAD432to ``provide for an entity other than the Maritime Administration to433contract for the construction of the [NSMVs].'' \10\ This direction has434led to a spectacular success in modern American shipbuilding--435leveraging private enterprise and commercial best practices to436construct government vessels more efficiently and effectively than437traditional government-led approaches. TOTE Services, as the438Government's first Vessel Construction Manager (``VCM''), and in439coordination with TOTE Services' subcontractor Hanwha Philly Shipyard,440Inc., (``HPSI'') has overcome the faults of the legacy Government441shipbuilding model. By removing Government bureaucracy and overseeing442construction based on a commercial shipyard subcontract, TOTE Services443is preparing to deliver the third NSMV on a fixed-price and on-time444basis, far exceeding the results of any other Government shipbuilding445program, as illustrated by Table 1.446---------------------------------------------------------------------------447    \9\ Pub. L. No., 114-328, Sec. 3505(d), 130 Stat. 2776.448    \10\ Id. at Sec. 3505(f).449450[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]451452    The VCM was a catalyst for the revitalization of a struggling453shipyard. At the time of subcontract award in April 2020, HPSI had454approximately 80 employees, no order book, no government shipbuilding455experience, and was on the brink of closure. By applying commercial456principles, and placing non-construction responsibilities directly on457the VCM, HPSI has been able to concentrate on its strength--458shipbuilding. The result is that HPSI is once again a thriving459commercial shipyard, with additional commercial orders from multiple460customers on contract, a production workforce of over 2,000, and a461promise of billions of dollars in investment from its new ownership.462    Moreover, the VCM acquisition strategy has saved the U.S. taxpayer463billions of dollars, proving that U.S. shipyards can be cost-464competitive when bureaucratic barriers are removed and a proper demand465signal is in place. Indeed, ``during the design development period,466Naval Sea Systems Command experts said using Navy shipbuilding467requirements and Department of Defense contracting processes to build468the [NSMV] likely would result in an estimated final cost of $750469million to $1.2 billion per ship.'' \11\ By using the VCM process, the470actual delivered price per vessel is approximately, $314 million,471saving taxpayers nearly $4.5 billion from NAVSEA's highest estimate.472Moreover, TOTE Services has instilled discipline into the design and473construction process to limit costly and disruptive design changes on474the NSMV program. Post-contract changes by MARAD have increased the475total program cost by only 0.38 percent, as shown in Table 2, which is476unmatched in Government shipbuilding.477---------------------------------------------------------------------------478    \11\ Doug Burnett, A Better Way to Build Ships, U.S. Naval479Institute Proceedings, Vol 148/1/1,427 (Jan. 2022). See also S. Rept.480119-39 (July 15, 2025) (``The VCM acquisition strategy, as demonstrated481by the Maritime Administration's National Security Multi-Mission482Vessels (NSMV) program, has yielded significant cost savings and483operational efficiencies. The NSMV, built using commercial design and484contracting processes, has achieved a cost of approximately $300.0485million per ship, compared to an estimated $750.0 million to $900.0486million per ship, if the Navy were to use traditional Navy shipbuilding487requirements and Department of Defense contracting processes. By488utilizing off-the-shelf commercial technology and streamlined489contracting using a third-party entity, the VCM approach reduces490bureaucratic overhead, accelerates delivery schedules, and ensures491vessels meet mission requirements without the cost premiums associated492with military-specific standards.''493494[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]495496    To rebuild not only the commercial shipbuilding industry, but also497the aging Government non-combatant fleet, the VCM contract structure498must be applied across Government shipbuilding programs for the Navy,499Coast Guard, Missile Defense Agency (``MDA''), and others. TOTE500Services greatly appreciates the Senate's support of the VCM model (see501supra, note 11) and the provisions of the National Defense502Authorization Act for Fiscal Year 2026, S.2296, which would direct (a)503the Navy to contract with a VCM to construct the medium landing ship504(``LSM'') and light replenishment oiler (TAO-L), and (b) MARAD and MDA505to contract with a VCM to construct two replacement missile506instrumentation range safety vessels. By expanding the VCM model across507agencies, Congress can ensure that non-combatant vessels will be508delivered with budget and schedule stability, maximizing the output of509commercial shipyards.510The Need for a Steady Demand Signal511    Faulty economic analysis consistently plagues the assessment of the512U.S. shipbuilding industry. False equivalences are used to compare the513cost of building a single ship in the United States against the costs514of building a series of dozens of ships in Korea or China. As in every515industry, economies of scale result in significant price reductions516and, in turn, lead to reinvestment and innovation. For decades, this517demand signal has not existed in U.S. shipyards. The result is that518U.S. owners of vessels engaged in international trade rely on (often519heavily subsidized) foreign shipyards. The trend can change through the520establishment of a steady demand for U.S.-constructed vessels.521    I am encouraged by the actions of Congress under the One Big522Beautiful Bill Act, Pub. L. No. 119-21, which appropriated funding for523numerous shipbuilding programs, including $3.5 billion for Arctic524Security Cutters, $1.8 billion for LSMs, $816 million for light and525medium icebreaking cutters, and $530 million for MDA missile526instrumentation range safety vessels. Each of these platforms can be527constructed by U.S. commercial shipyards, using commercial designs and528best practices that mitigate risk for the Government as the customer.529Together with the proven VCM contracting structure, this funding will530be a strong foundation for reinvigorating the industrial base. I urge531the Administration to move swiftly in allocating these appropriated532funds and awarding a contract to an experienced VCM that can quickly533and effectively get U.S. commercial shipyards to work.534    I also invite this Subcommittee, along with the Senate Armed535Services Committee, to explore new ways to encourage private investment536in the U.S. shipbuilding industrial base. Companies like TOTE, and its537parent company Saltchuk, are ready to put private capital to work with538the appropriate support from Congress. For example, MARAD's Ready539Reserve Force (``RRF'') is in desperate need of recapitalization, with540an average age of over 45 years. This fleet is critical to our national541security, transporting (in combination with the U.S.-flag commercial542fleet) approximately 90 percent of combat unit equipment for the Army543and Marine Corps during deployments. As evidenced by a recent544Department of Defense Office of Inspector General report, efforts to545recapitalize the fleet via the purchase of used vessels have failed,546with only 5 of the 26 necessary ships being purchased, and efforts to547build ships under the legacy (i.e., non-VCM) Government shipbuilding548methods stalled due to high estimated costs.\12\ The report encourages549the Government to ``revise the strategy based on known limiting550factors, and develop viable milestones based on those factors to ensure551the Navy is capable of meeting readiness requirements in the event of a552contingency.'' \13\553---------------------------------------------------------------------------554    \12\ Department of Defense Office of Inspector General, Evaluation555of U.S. Navy Efforts to Recapitalize Surge Sealift Vessels (Report No.556DODIG-2025-116) (June 20, 2025).557    \13\ Id.558---------------------------------------------------------------------------559    To that end, I encourage this Committee to expand MARAD's authority560to enter into build-charter and contractor owned-contractor operated561(``COCO'') agreements (e.g., by exempting the agency from the faulty562capital lease scoring criteria under OMB Circular A-11, Appendix B).563Revising the capital lease scoring criteria can accelerate the564recapitalization of the RRF fleet, with an initial series construction565of at least ten (10) roll-on/roll-off vessels. Under such a model,566private companies such TOTE/Saltchuk can use private capital to567construct the vessels under the commercial agreements in commercial568shipyards, with security of long-term charter or operating agreements569with the Government. These actions would drive down taxpayer costs,570quickly deliver critical national security assets into operation,571mitigate Government financial risk, and reinvigorate the U.S.572commercial shipbuilding industry.573SHIPS for America Act and Maritime Action Plan574    Building on this Committee's demonstrated commitment to restoring575American maritime leadership, several complementary initiatives now576stand poised to accelerate the revitalization of U.S. shipbuilding. The577SHIPS for America Act, S.1541, together with the forthcoming release of578the Maritime Action Plan (``MAP'') in accordance with Executive Order57914629: Restoring America's Maritime Dominance, reflect the forward-580thinking leadership that will revive U.S. shipbuilding and usher in a581new era of industrial innovation, strengthening our national defense,582driving economic growth, and reinforcing homeland security through a583modern maritime industrial base. TOTE Services supports the proposed 25584percent tax credit for U.S. shipyard and component manufacturing585investment and encourages this Committee to ensure that the provision586includes investments in U.S. territories such as Puerto Rico and the587U.S. Virgin Islands. These incentives could help accelerate much-needed588reinvestment into our commercial shipyards, further aided by the589envisioned Maritime Security Trust Fund, to enable receipts from the590USTR's port fees to be used for shipyard investments. To further ensure591that investments are made in support of innovative technologies, I592further urge Congress to pass the Maritime Fuel Tax Parity Act (S.549/593H.R. 2925, also Section 709 of the SHIPS Act), which modernizes the tax594code to by putting alternative petroleum-based fuels on the same595footing as traditional fossil fuels as part of an all-of-the-above596energy strategy to fuel domestic vessels.597    Finally, as discussed above, the VCM acquisition strategy and598build-charter/COCO model directly address many of the SHIPS Act and599Executive Order stated goals, including reducing foreign shipbuilding600dependency and improving procurement efficiency. By using commercial601solutions, many of the inefficiencies that have plagued the U.S.602shipbuilding industry can be quickly resolved, restoring American603shipbuilding dominance.604    Again, thank you for opportunity to testify today. I appreciate605this Subcommittee's focused efforts on restoring our critical U.S.606shipbuilding industry and I am happy answer any questions of the607Subcommittee members.608609    Senator Sullivan. Thank you, Mr. Vogel. Dr. Mercogliano.610611STATEMENT OF SALVATORE MERCOGLIANO, Ph.D., PROFESSOR, CAMPBELL612                           UNIVERSITY613614    Mr. Mercogliano. Good morning, Chairman Sullivan, Ranking615Member Cantwell, Ranking Member Blunt Rochester, and members of616the Committee. Thank you for the opportunity to testify on a617subject that has defined my professional and academic career.618    I am a Professor at Campbell University in Buies Creek,619North Carolina. I am a graduate of the New York Maritime620Academy, a former deck officer in the U.S. merchant marine,621working both afloat and ashore for the U.S. Navy's Military622Sealift Command. After swallowing the anchor, I earned an M.A.623in Maritime History and Nautical Archaeology from East Carolina624University and a Ph.D. from the University of Alabama, where my625dissertation examined the role of American shipping in national626defense. I also serve as an Adjunct Professor at the U.S.627Merchant Marine Academy, teaching a graduate-level course in628Maritime Industry Policy, and in 2021, I launched the YouTube629channel, What's Going on With Shipping?630    As an active participant and observer of the U.S. maritime631industry, I have witnessed its long decline. The SHIPS Act is632the most significant maritime reform effort since the Merchant633Marine Act of 1970. Along with measures such as the U.S. Trade634Representative's Section 301 port fees and President Trump's635executive order on shipbuilding, this legislation represents a636critical step toward transforming the United States from a637purely naval power into a true maritime power with a638revitalized commercial sector.639    Twice in the 20th century, America launched major640shipbuilding efforts. The first, led by Edward Hurley during641and after World War I, produced a large fleet and inspired the642Merchant Marine Act of 1920, better known as the Jones Act,643which laid the foundation for the first National Maritime644Strategy.645    The second effort came with the Merchant Marine Act of6461936, which introduced operating and construction differential647subsidies for vessels in international trade and funded the648building of 500 ships over 10 years. This effort created the649industrial base necessary for the Two-Ocean Navy Act and650enabled the United States to transport the ``Arsenal of651Democracy'' from the home front to the battlefront.652    The SHIPS Act and related measures represent a long-overdue653``Merchant Marine Act of 2025.'' While ambitious--especially654the goal of building 250 ships in 10 years--it is essential if655we hope to rebuild our maritime capacity. However, achieving656these goals requires rebuilding the supporting infrastructure.657    A key step is facilitating the reflagging of vessels, as658seen with the container ship CMA CGM Phoenix and the LNG tanker659American Progress, and promoting the benefits of American660registry. This should include a careful re-examination of the661Jones Act, not to repeal it, but to modernize its application.662    Reflagging ships will require several complementary663actions. First, the Maritime Security Program and Tanker664Security Program should be expanded to offset higher U.S.665operating costs. Second, consistent cargo flows must be secured666through cargo preference laws, government contracts, or667incentives for private shippers. For example, offering tax668rebates to companies that ship goods on U.S.-flagged vessels or669reducing tariffs on goods transported aboard American ships670would help level the playing field. These policies would also671benefit island and noncontiguous states and territories that672rely heavily on Jones Act shipping.673    Third, the benefits of U.S.-registry vice open registries,674such as Panama, Liberia, and Marshall Islands, should be more675pronounced with protection afforded by the U.S. Navy against676threats like the Houthis and the providing of war risk677insurance to mitigate the costs to operate in contested678regions.679    While large, blue-water vessels take years to construct, a680near-term opportunity lies in modernizing the domestic fleet of681tugboats, towboats, and ferries. Much of this fleet is outdated682and aging, posing both economic and security risks to the683Nation. Insufficient tug capacity, for instance, contributed to684the Dali incident in Baltimore. A national program to replace685and modernize these vessels could provide an immediate boost to686domestic shipyards and workforce development while enhancing687port safety and resilience.688    Equally important is investment in advanced maritime689technologies that could once again place the U.S. at the690forefront of innovation. The Shipping Act of 1916 spurred691adoption of oil-fired boilers, freeing U.S. ships from692dependence on coaling stations and challenging British693dominance. During World War II, prefabrication techniques694revolutionized shipbuilding and made mass production possible.695Today, the United States has an opportunity to lead again, this696time through technologies, perhaps such as small modular697nuclear reactors for maritime propulsion.698    Finally, I strongly urge passage of the SHIPS Act to699establish a Maritime Security Advisor to lead this effort, and700a Maritime Trust Fund for financing. Expanding the Investment701Tax Credit, Title XI loan guarantees, and Shipbuilding Finance702Incentives would redirect American capital from foreign703shipbuilding toward domestic production. In addition, the704proposed Centers for Maritime Innovation could support705research, workforce training, and policy enhancement.706    Finally, reviving the U.S. maritime industry is not merely707an economic or industrial challenge. It is a matter of national708security and global competitiveness. The SHIPS Act provides the709vision and framework needed to rebuild our shipbuilding base,710reestablish a robust merchant marine, and ensure that the711United States remains a maritime nation capable of sustaining712its global role.713    Thank you for the opportunity to discuss this issue. I look714forward to your questions.715    [The prepared statement of Mr. Mercogliano follows:]716717   Prepared Statement of Professor Salvatore R. Mercogliano, Ph.D.,718                          Campbell University719720                     What's Going on With Shipping?721722    Chairman Sullivan, Ranking Member Blunt Rochester, and Members of723the Committee, thank you for the opportunity to testify on Reviving724Commercial Shipbuilding--a subject that has defined my professional and725academic career.726    I am a Professor and Chair of the Department of History, Criminal727Justice, and Political Science at Campbell University in Buies Creek,728North Carolina. I am also a former deck officer in the U.S. Merchant729Marine, working both afloat and ashore for the U.S. Navy's Military730Sealift Command. After swallowing the anchor, I earned an M.A. in731Maritime History and Nautical Archaeology from East Carolina University732and a Ph.D. from the University of Alabama, where my dissertation733examined the role of American shipping in national defense. I also734serve as an adjunct professor at the U.S. Merchant Marine Academy,735teaching a graduate-level Maritime Industry Policy, and in 2021, I736launched the YouTube channel What's Going on With Shipping?737    As an active participant and observer of the U.S. maritime738industry, I have witnessed its long decline. The SHIPs Act, introduced739by Senators Kelly and Young, is the most significant maritime reform740effort since the Merchant Marine Act of 1970. Along with measures such741as the U.S. Trade Representative's Section 301 port fees and President742Trump's Executive Order on Shipbuilding, this legislation represents a743critical step toward transforming the United States from a purely naval744power into a true maritime power with a revitalized commercial sector.745    Twice in the twentieth century, America launched major shipbuilding746efforts. The first, led by Edward Hurley during and after World War I,747produced a large fleet and inspired the Merchant Marine Act of 1920--748better known as the Jones Act, which laid the foundation for the first749national maritime policy. The second effort came with the Merchant750Marine Act of 1936, which introduced operating and construction751differential subsidies for vessels in international trade and funded752the building of 500 ships over ten years. This effort created the753industrial base necessary for the Two-Ocean Navy Act and enabled the754United States to transport the ``Arsenal of Democracy'' from the home755front to the battlefront.756    The SHIPs Act and related measures represent a long-overdue757``Merchant Marine Act of 2025.'' While ambitious--especially the goal758of building 250 ships in ten years--it is essential if we hope to759rebuild our maritime capacity. However, achieving these goals requires760rebuilding the supporting infrastructure.761    A key step is facilitating the reflagging of vessels, as seen with762the CMA CGM Phoenix and the LNG tanker American Progress, and promoting763the benefits of American registry. This should include a careful re-764examination of the Jones Act--not to repeal it, but to modernize its765application. Reflagging ships will require several complementary766actions. First, the Maritime Security Program (MSP) and Tanker Security767Program (TSP) must be expanded to offset higher U.S. operating costs.768Second, consistent cargo flows must be secured through cargo preference769laws, government contracts, or incentives for private shippers. For770example, offering tax rebates to companies that ship goods on U.S.-771flagged vessels or reducing tariffs on goods transported aboard772American ships would help level the playing field. These policies would773also benefit island and non-contiguous states and territories that rely774heavily on Jones Act shipping. Third, the benefits of U.S.-registry775vice open registries--such as Panama, Liberia and Marshall Islands--776should be more pronounced with protection afforded by the U.S. Navy777against threats like the Houthis and the providing of war risk778insurance to mitigate the costs to operate in contested regions.779    While large, blue-water vessels take years to construct, a near-780term opportunity lies in modernizing the domestic fleet of tugboats,781towboats, and ferries. Much of this fleet is outdated and aging, posing782both economic and security risks. Insufficient tug capacity, for783instance, contributed to the MV Dali incident in Baltimore. A national784program to replace and modernize these vessels could provide an785immediate boost to domestic shipyards and workforce development while786enhancing port safety and resilience.787    Equally important is investment in advanced maritime technologies788that could once again place the U.S. at the forefront of innovation.789The Shipping Act of 1916 spurred adoption of oil-fired boilers, freeing790U.S. ships from dependence on coaling stations and challenging British791dominance. During World War II, prefabrication techniques792revolutionized shipbuilding and made mass production possible. Today,793the United States has an opportunity to lead again--this time through794technologies such as small modular nuclear reactors for maritime795propulsion.796    Finally, I strongly urge passage of the SHIPs Act to establish a797Maritime Security Advisor to lead this effort and a Maritime Trust Fund798for financing. Expanding the Investment Tax Credit, Title XI loan799guarantees, and Shipbuilding Finance Incentives would redirect American800capital from foreign shipbuilding toward domestic production. In801addition, the proposed Centers for Maritime Innovation could support802research, workforce training, and policy development.803    Reviving the U.S. maritime industry is not merely an economic or804industrial challenge--it is a matter of national security and global805competitiveness. The SHIPs Act provides the vision and framework needed806to rebuild our shipbuilding base, reestablish a robust merchant fleet,807and ensure that the United States remains a maritime nation capable of808sustaining its global role. Thank you for the opportunity to discuss809this vital issue. I look forward to your questions.810811    Senator Sullivan. Thank you. Final witness, Ms. Snow.812813  STATEMENT OF TUULI SNOW, TALENT ACQUISITION AND ENGAGEMENT814                 MANAGER, SNOW & COMPANY, INC.815816    Ms. Snow. Thank you. My name is Tuuli Snow. My family owns817and operates one of the last independent boatbuilding companies818in Seattle, Washington. In a city that used to be the home of819dozens of shipbuilders, this is quite a feat. We build work820boats, pilot boats, fishing vessels, and tugboats, in addition821to a contract we hold to build 53 workboats for the U.S. Navy.822    Last year we built the first hybrid vessel in the U.S.823Department of Energy's fleet, and we are currently building a824set of first-of-their-kind electric tugs for a company in Long825Beach, California. Small shipyards like ours are essential to826supporting the maritime economy.827    Five years ago, Snow & Company had 30 employees, and this828year we have just over 100. This is not par for the course in829terms of hiring. Shipyards across the U.S. are struggling to830attract and maintain talent for a few reasons, most of which831include ignoring vast labor markets.832    A lot of our growth has been due to a deeply innovative833change that I have made in focusing on hiring from non-834traditional avenues. We hire veterans, immigrants, refugees,835individuals coming out of prison or starting work release, and836seek people from communities that have traditionally been837overlooked or excluded from the maritime industry.838    I often say, ``I play for the maritime long haul, not just839for our company,'' investing my time and energy into building a840better industry, not just a better business. Historically, in841nature, and across the globe, we have seen that a more diverse842ecosystem is often a more fruitful one. More sustainable, more843creative, and more effective.844    A great barrier to entering the maritime community is845exposure. People are unaware of what is out there. Many believe846that you have to go to sea in order to get a maritime job,847because they don't know any other aspects of this industry.848They don't realize you could be a project manager, or a naval849architect, an electrical engineer, or even a nurse. This isn't850a career path that was introduced to them in kindergarten,851middle school, or high school. People don't see the same852opportunities and career pathways as other industries. I enter853communities, neighborhoods, and towns in Washington to share854the great opportunities in this industry and hopefully855encourage more people to join it.856    There has been a huge boom in young people returning to857trade school and traditional apprenticeships in the last 2 to 5858years. There is less public shame than in the recent past,859where technical colleges have been viewed as less valuable than860other 4-year universities. People complete these technical861programs or apprenticeships with an active and applicable skill862set, ready to enter the workforce, and bearing significantly863less debt. In apprenticeship programs, young people are paid864while learning these valuable, and necessary, skills. This is a865change we greatly need but has made a gap in skills visible.866    We have hundreds of maritime experts that are ready to867retire and a new workforce excited to learn, but this makes our868expertise an hourglass shape, heavy on entry level and heavy on869expert, but less concentrated in mid-level tradespeople.870Investment in our youth is absolutely vital, and this hourglass871shows, so is investment in working adults. Opportunities to872learn new trades and skills, opportunities to be mentored and873trained, opportunities that should be granted to those we874traditionally ignore.875    There is a common misconception that you must speak English876to have an impactful job in the United States, which I have877repeatedly proved to be inaccurate. Two years ago, I had a878Ukrainian refugee reach out to me via e-mail stating he could879not speak English, but he could weld, and he wanted to apply at880our company. I invited him in for an interview and weld test,881which the hiring manager was initially very sure would not work882out due to his lack of English. About 30 minutes later, after883his weld test was complete, the hiring manager came back to me884and said, ``If I do one thing right this year, it will be885hiring this man, because he is incredible.'' After passing his886E-Verify check, we started him immediately. That individual now887leads a team of Ukrainian and Russian refugee fabricators and888welders. He is one of our highest paid production employees,889proving to us that you do not need to speak English to work890hard with exceptional results. In a time when we have immediate891access to technology that can translate quickly and892effectively, taking a chance on skilled non-English speakers893seems like an obvious opportunity to me.894    Building a good team is one thing and keeping it is895another. To keep our employees happy, healthy, and present, and896to attract young talent, we provide 100 percent employer-paid897health insurance, with 80 percent for any dependents the898employee has. Most businesses can't or just won't do this, but899we see it as a necessity to build a strong team. We feel the900cost is made up for and reflected in the high quality products901we produce.902    Shipping and shipbuilding are absolutely essential to the903livelihood and strength of our country and economy. My request904today, from all of you, is for an investment in the maritime905industry. An investment in industrial lands to protect906businesses like ours. Allocation of funds to small shipyard907grants. Investment in youth and education to grow this sector908for decades to come. Investment in the health and welfare of909our employees. Investment in adults looking to learn new skills910that will inflate our diminishing workforce. And an investment911in marginalized communities that will breathe new life,912creativity, and innovation into this industry.913    Thank you. I look forward to your questions.914    [The prepared statement of Ms. Snow follows:]915916   Prepared Statement of Tuuli Snow, Talent Acquisition & Engagement917                     Manager, Snow & Company, Inc.918    Hello, my name is Tuuli Snow. My family owns and operates one of919the last independent boatbuilding companies in Seattle, Washington. In920a city that used to be the home of dozens of shipbuilders, this is921quite a feat. We build work boats; pilot boats, fishing vessels, and922tugboats, in addition to a contract we hold to build 53 workboats for923the U.S. Navy. Last year we built the first hybrid vessel in the U.S.924Department of Energy's fleet, and we are currently building a set of925first of their kind electric tugs for a company in Long Beach,926California. Small shipyards like ours are essential to supporting the927maritime economy.928    5 years ago, Snow & Company had 30 employees and this year we have929just over 100. This is not par for the course in terms of hiring.930Shipyards across the U.S. are struggling to attract and maintain talent931for a few reasons, most of which include ignoring vast labor markets. A932lot of our growth has been due to a deeply innovative change I have933made in focusing on hiring from non-traditional avenues. We hire934veterans, immigrants, refugees, individuals coming out of prison, or935starting work release, and seek people from communities that have936traditionally been overlooked or excluded from the maritime industry.937    I often say, ``I play for the maritime long haul, not just our938company'' investing my time and energy into building a better industry,939not just a better business. Historically, in nature, and across the940globe, we have seen that a more diverse ecosystem is often a more941fruitful one. More sustainable, more creative, and more effective. A942great barrier to entering the maritime community is exposure. People943are unaware of what is out there. Many believe that you have to go to944sea in order to get a maritime job, because they don't know any other945aspects of this industry. They don't realize you could be a project946manager, or a naval architect, an electrical engineer, or even a nurse.947This isn't a career path that was introduced to them in kindergarten,948middle school, or high school. People don't see the same opportunities949and career pathways as other industries. I enter communities,950neighborhoods, and towns in Washington to share the great opportunities951in this industry and hopefully encourage more people to enter it.952    There has been a huge boom in young people returning to trade953school and traditional apprenticeships in the last 2-5 years. There is954less public shame today than in the recent past, where technical955colleges have been viewed as less valuable than other 4 year956universities. People complete these technical programs or957apprenticeships with an active and applicable skill set, ready to enter958the workforce and bearing significantly less debt. In apprenticeship959programs, young people are paid while learning these valuable, and960necessary, skills. This is a change we greatly need but has made a gap961in skills visible. We have hundreds of maritime experts that are ready962to retire and a new workforce excited to learn, but this makes our963expertise an hourglass shape, heavy on entry level and heavy on expert,964but less concentrated in mid-level trades people. Investment in our965youth is absolutely vital, and this hourglass shows, so is investment966in working adults. Opportunities to learn new trades and skills,967opportunities to be mentored and trained, opportunities that should be968granted to those we traditionally ignore.969    There is a common misconception that you must speak English to have970an impactful job in the United States, which I have repeatedly proved971to be inaccurate. Two years ago, I had a Ukrainian refugee reach out to972me via e-mail stating he could not speak English, but he could weld,973and he wanted to apply at our company. I invited him in for an974interview and weld test, which the hiring manager was initially very975sure would not work out due to his lack of English. About 30 minutes976later, after his weld test was complete, the hiring manager came back977to me and said ``if I do one thing right this year, it will be hiring978this man. He is incredible.'' After passing his E-Verify check, we979started him immediately. That individual now leads a team of Ukrainian980and Russian refugee fabricators and welders. He is one of our highest981paid production employees, proving to us, you don't need to speak982English to work hard with exceptional results. In a time when we have983immediate access to technology that can translate quickly and984effectively, taking a chance on skilled non-English speakers seems like985an obvious opportunity to me.986    Building a good team is one thing and keeping it is another. To987keep our employees happy, healthy, and present, and to attract young988talent, we provide 100 percent employer paid health insurance, with 80989percent for any dependents the employee has. Most businesses can't or990won't do this, but we see it as a necessity to build a strong team. We991feel this cost is made up for and reflected in the high quality992products we produce.993    Shipping and shipbuilding are absolutely essential to the994livelihood and strength of our country and economy. My request today,995from all of you, is for an investment in the maritime industry. An996investment in industrial lands to protect businesses like ours.997Allocation of funds to small shipyard grants. Investment in youth and998education to grow this sector for decades to come. Investment in the999health and welfare of our employees. Investment in adults looking to1000learn new skills that will inflate our diminishing workforce. And an1001investment in marginalized communities that will breathe new life,1002creativity, and innovation into this industry.1003    Thank you.10041005    Senator Sullivan. Great. Thank you very much, Ms. Snow.1006    Let me begin with the questioning with just a various1007obvious question. What went wrong? What went wrong? I mean,1008there are so many areas where in my view we kind of, critical1009minerals is the latest and greatest we are seeing. My state has1010incredible critical minerals, but our own Federal Government,1011no offense, a lot of times on the other side of the aisle, they1012just shut down the ability to produce any critical minerals,1013and we outsource all of it to China.1014    So we have got a big problem. China is dominating this1015sector like they do critical minerals, like they do. We fell1016asleep at the switch, and we produce less than one percent of1017commercial shipping. What went wrong and how do we fix it? Very1018tight. I know this is a dissertation, professor, but if you can1019keep this very tight. Some people blame the Jones Act. What1020went wrong? We have got a giant problem. Our main adversary is1021kicking our tail on this issue. What went wrong and how do we1022fix it? Mr. Paxton. Keep it succinct.1023    Mr. Paxton. Yes, sir. We moved away from some industrial1024policies that we had in the 1970s. We moved away from that. We1025moved toward government shipbuilding, which was the right thing1026to do at the time, during the Cold War, 600-fleet Navy. We had1027the peace dividend in the 1990s. We decided that global free1028trade was a given, that we did not have to worry about freedom1029of the seas, which we know is not the case anymore. And so we1030went to flags of convenience, and we got a cheap product out of1031China, and we took it.1032    Senator Sullivan. Mr. Vogel.1033    Mr. Vogel. Chairman, I would absolutely echo what Mr.1034Paxton said. We made the decision to move away from investing1035and creating that demand signal for this industry. It is1036impossible for a U.S. shipyard to compete on sort of a one- or1037two-vessel basis versus----1038    Senator Sullivan. Is that because the Chinese subsidize1039everything? I mean, look, the Finns produce icebreakers very1040efficiently. You saw the President, the President of Finland,1041came up with an agreement. I mean, is it just the subsidies of1042foreign nations, or is it something that we are doing wrong1043back here?1044    Mr. Vogel. So I think it is a two part. I think it is both1045the subsidies. We are operating at a level that is similar to1046or above where Finland is in terms of overall output. But1047certainly there are challenges. The regulatory requirements1048that we have placed on government shipbuilding have taken1049commercial shipyards out of the market.1050    Senator Sullivan. So our own Federal Government's red tape,1051which crushes everything in this country, is a big part of the1052problem?1053    Mr. Vogel. Yes, Chairman. And for us using something like1054the vessel construction manager model has helped us to remove a1055lot of that red tape, allow commercial shipyards to get back1056in. We saw the success at Philly Shipyard, taking that yard1057from 83 employees now to over 2,000 production employees, just1058by removing a lot of that bureaucratic oversight and allowing1059the yards to----1060    Senator Sullivan. That has major investments from a foreign1061shipbuilder right now. Correct?1062    Mr. Vogel. That has resulted in those investments.1063    Senator Sullivan. Are you OK with that?1064    Mr. Vogel. So, yes, I would love to see that be----1065    Senator Sullivan. We can learn from the Japanese and1066Koreans, in my view.1067    Mr. Vogel. We absolutely can, and the Koreans have created1068an industry that faces a lot of the same challenges in terms of1069cost of labor. But we have better natural resources, as you1070have said, sir. So we should be taking those lessons,1071incorporating them, and I think there is a lot to be learned1072from our allies.1073    Senator Sullivan. And Professor, what went wrong? You are a1074Jones Act supporter. I have read all your materials. What went1075wrong, though? Why are we in this giant disadvantage, hugely1076dangerous disadvantage relative to our main adversary, who1077cheats and subsidizes. We all know that. But what went wrong?1078    Mr. Mercogliano. Well, in 1934, 1935, we built two1079commercial ships each of those years. Within a 10-year span we1080were able to build 1,000 ships in 1943.1081    Senator Sullivan. Right.1082    Mr. Mercogliano. At the end of World War II, we controlled108363 percent of the world's merchant fleet, and we made a1084conscious decision then to begin a process of rebuilding not1085just our allies' merchant fleets but their shipyards, and even1086our enemies, Japan and Germany at the time. And we decided to1087focus on the naval and military application. It was our1088decision that really led to the growth of global trade from----1089    Senator Sullivan. By the way, one point I just want to1090make. When people say, ``Hey, in America we can't build1091ships,'' yes, really? Go look at a nuclear submarine. Pretty1092darn impressive. No one can build ships like we can, aircraft1093carriers, as well. So we can build ships.1094    Mr. Mercogliano. Yes, sir.1095    Senator Sullivan. But on the commercial side we can't. We1096are not. Or we are getting out-competed. Correct?1097    Mr. Mercogliano. We made the decision in the 1980s to kind1098of shift our shipyards over to building a 600-ship Navy, which1099at the end of the Cold War went from a 600-ship Navy to a 300-1100ship Navy. And so we had already sent that capability overseas1101to Korea, to Japan, to Europe. And now what we see is China1102taking that lead. Five percent of shipbuilding was in China in11031999. Today it is over 60 percent. And this is an issue that we1104realized, after the fact, that it is not just building Navy and1105military ships, but we need those commercial ships in the1106shipyards to provide that residual base for shipyard workers,1107for capacity. You cannot do what Freedom's Forge talks about1108without that inherent capability, that commercial----1109    Senator Sullivan. Sorry. Sorry to interrupt, but I want to1110get one more question in for Mr. Vogel. I am a big supporter of1111the energy sector. It is a great strategic advantage for1112America. It certainly helps my state. It helps the whole1113country when we are the dominant energy producer on the planet.1114We export LNG all over the world. We are going to continue to1115do that. Should there be some kind of tie, maybe within 101116years, to say to some of our LNG producers, ``Hey, if you are1117going to ship LNG all over the world should that be on1118American-built ships?'' It cannot happen overnight. The oil and1119gas industry does not like that idea, because they do not think1120we can build them, quickly, efficiently, costly. What do you1121think? You have kind of done some of that already.1122    Mr. Vogel. Yes, Chairman. I absolutely support that1123concept, and as we have seen from the USTR action it is1124certainly a critical part of balancing with both sort of the1125carrot and the stick. We have the capability. We have the1126ingenuity to build the world's best LNG fleet here in the1127United States. I fully support creating that cargo base, and1128with that demand signal we will be able to build those ships in1129the United States.1130    Senator Sullivan. OK. Senator Blunt Rochester.1131    Senator Blunt Rochester. Thank you, Mr. Chairman, and1132again, thank you to our witnesses. In Delaware, I was fortunate1133to serve as Secretary of Labor. And so for me the whole issue1134of jobs and people being able to live their purpose and get a1135great skill is vital. So I was pleased to hear that we are1136shifting, and people's perceptions of what great jobs are is1137really a focus right now. I love the focus on the trades,1138manufacturing.1139    And as former Secretary of Labor, I want to emphasize how1140critical our maritime and shipbuilding workforce is for our1141industrial base. Without the skilled men and women in these1142trades, we cannot build the ships, maintain the fleets, or1143sustain our competitiveness on the global stage.1144    It is interesting, as I was sitting here, my sister, who is1145kind of like the family historian, sent me a document from our1146great-grandfather, who actually worked at the Philly Navy Yard.1147And the document, actually, Matthew Miller, World War I1148registration, and he was at Merchant and Miners, Pier 24, on1149Delaware Avenue.1150    So again, I really appreciate the focus on the future of1151this country and our security, and I want to ask you, Ms. Snow,1152not that most of us here are older, but you seem to come from a1153younger generation. If you could talk about younger generation1154industry leaders who are looking at recruitment and engagement1155in a different way than in 1902, when my grandfather got the1156opportunity. Are current training and apprenticeship programs1157keeping pace with what the workforce needs are?1158    Ms. Snow. I do not think so. Thank you for the question. I1159think that there could be a lot more investment in trade1160programs and trainings and also apprenticeships. A lot of1161businesses cannot afford to hire people just to teach and not1162be on their workforce as well. So investment in the ability for1163a company to have their own internal apprenticeship program1164would really expedite the process of getting trade skills into1165our work.1166    Senator Blunt Rochester. If any of the other members want1167to answer the question about apprenticeships or workforce, I1168would be happy to hear.1169    Mr. Paxton. Yes, Senator. I would say it is a badge of1170honor that a lot of our shipyards, at their own expense,1171implement apprenticeship programs, with no guarantee at the end1172of it that they will employ that person, highly competitive1173market for shipyard employees. And so that apprenticeship1174program could see that person going elsewhere. Highly1175trainable. Highly hirable.1176    And we do this on a regional basis. We work with our1177community colleges. We work with our trade schools. And I think1178it was said earlier there is a focus now on, it is not1179necessary to get that 4-year degree. Go to trade schools.1180    Senator Blunt Rochester. Thank you. Dr. Mercogliano, you1181have written extensively about how the U.S. maritime sector1182depends on foreign supply chains for key components and1183materials. What vulnerabilities stand out to you most in our1184current U.S. shipbuilding supply chain, and what steps could1185the Federal Government take to build more secure domestic1186source base? I am fortunate to work with Senators Cantwell and1187Blackburn on strengthening our supply chains, so I would love1188to hear from you on that.1189    Mr. Mercogliano. Well, I would defer to Matt, who might be1190able to talk about that in a little bit more detail. I can say1191that my conversations with shipbuilders and looking at the1192supply chain is we have seen continual disruptions across the1193supply chain recently. And particularly, obviously, in steel1194and, more importantly, specific manufactured parts and1195specialized parts in shipping is the key that we see1196vulnerabilities happening.1197    Right now, if you look, for example, at anything from pumps1198to machinery, our group supply chain in the United States is1199very vulnerable. They are down to sometimes one small1200manufacturer that is building parts for both commercial and1201naval vessels. And we have seen that down to the third level,1202below the shipyards, below their suppliers. So that creates a1203lot of vulnerability, which means if we cannot produce it in-1204house, in the United States, we have got to source it from1205overseas. And the disruptions we are seeing in the global1206supply chain and competition for those resources by other1207shipbuilders out there--Japan, Korea, and particularly China--1208makes it very vulnerable for us. And it is one of the reasons1209why you will hear my associates here talk about creating those1210infrastructures here in the United States and not be depending1211on those foreign sources.1212    Senator Blunt Rochester. I know I have 8 seconds left, but1213again, thank you so much for taking the time. And I will follow1214up with many of you questions for the record. Thank you. I1215yield back.1216    Senator Sullivan. Thank you. We now have our Chairman, and1217I would like to let him say a few words and ask some questions.1218It is great to have the Chairman of the Committee, Senator1219Cruz, here. Mr. Chairman, the floor is yours.12201221                  STATEMENT OF HON. TED CRUZ,1222                    U.S. SENATOR FROM TEXAS12231224    Chairman Cruz. Thank you, Mr. Chairman. I appreciate it.1225Welcome to each of the witnesses. I appreciate this hearing on1226this very important topic.1227    Dr. Mercogliano, let me start with you. The SHIPS Act aims1228to guarantee annual commercial ship production of 15 to 251229ships per year through subsidies disbursed by Maritime Security1230Trust Fund, which would in turn be capitalized by various1231revenue streams, including new tonnage taxes on international1232shippers bringing goods into the United States and fines on1233importers for failing to meet certain ship preferencing1234requirements. China, South Korea, Japan, meanwhile, each1235annually deliver hundreds of ships per year.1236    In the face of the advantage of economies of scale that1237they have and the resulting lower costs they produce, prospects1238for U.S. shipyards, which face a strained labor pool, high1239input costs, and serious technological challenges compared to1240East Asian competitors, the possibility of becoming1241internationally competitive is, at a minimum, challenging.1242    Should we assume that large and recurring subsidies, and by1243extension, annually increasing tonnage taxes and fines on1244importers to fund them, will need to be an enduring feature of1245U.S. policy to produce the kind of ship production envisioned1246by the SHIPS Act?1247    Mr. Mercogliano. Historically, that is the way it has been1248done. If you look at the shipbuilding process in World War I1249and World War II it was done either through a large1250appropriation that was put into a corpus, a body of money to1251draw from, or it was through a subsidy process.1252    I will note that the U.S. is the fourth-largest investor in1253commercial shipping worldwide, even though we have the 23rd-1254largest merchant marine in the world. The question is how do we1255get U.S. money to invest in American shipping by investing in1256foreign shipping? And I think if we can tackle that hurdle then1257we would not be as dependent on government funding for1258shipbuilding, because we can get that investment into U.S.1259ships.1260    Chairman Cruz. So how would you answer the questions that1261you just posed? How do we get U.S. money to invest in1262shipbuilding here at home?1263    Mr. Mercogliano. I think we need to change and look at how1264Korea, Japan, and many other countries give either tax1265deferments or opportunities for long-term loans so that you can1266invest. You know, investing in a ship, you are not going to see1267a ship for 4 to 5 years. What can we do to offset that,1268especially for a shipping company, to minimize their downside,1269their loss capability should cargo not appear. I mean, we could1270do processes whereby ships could be turned back into the1271government if there is no business for them, put into the1272reserve fleet. Basically provide them a minimal loss coverage1273so that there is more willingness to invest in that. The key1274thing is getting incentives from Wall Street and venture1275capitalists to get into this, so that we are not relying wholly1276on the U.S. Government for funding.1277    Chairman Cruz. So why did we lose shipbuilding to begin1278with? What are the challenges? What are the impediments that we1279face to domestic shipbuilding?1280    Mr. Mercogliano. I think we did not lose shipbuilding. We1281shifted our shipbuilding. We decided to focus on naval and1282military and allow the commercial to go overseas, because we1283viewed that that naval capability was a much larger capability1284to have. And we assumed that there was going to be a residual1285left over from that. However, what we saw happen, especially in1286the 1980s and into the 1990s, with the end of the Cold War it1287went from a 600-ship Navy to a 300-ship Navy, and all of a1288sudden our capacity decreased. And we really did not foresee a1289really coordinated effort by the Chinese to take over and1290control shipping in a way that we really have never seen1291before. Some people make the comparison to the British, but1292China has done a pure vertical integration of all aspects of1293shipping in a way unlike any other country has done.1294    Chairman Cruz. And let me open this up to the rest of the1295panel. What steps do you think are most important to1296reinvigorate the commercial shipbuilding industry here in the1297United States? Mr. Paxton, we will start with you, and I will1298give everyone a chance to answer.1299    Mr. Paxton. Thank you, Mr. Chairman. I think it comes down1300to, sir, that sustained, long-term demand signal, that we are1301serious about owning our own global logistics. Being dependent1302on three shipping companies around the world for our trade1303makes us a client state. That is a vulnerability. We are at a1304national security--and we saw this during COVID, because this1305Committee had to work on the Ocean Reform Act because China was1306not taking our exports. We should own our global logistics to a1307certain extent, and I think this concept of a strategic1308commercial fleet under the SHIPS Act makes sense.1309    I would say, sir, there is a lot of capital sitting on the1310sidelines. If there was a demand signal there, I see private1311industry coming to the shipbuilding industry. You see it in the1312autonomous space with Saronic and Blue Autonomy. These things1313are happening, and they are happening in your state, as well,1314sir.1315    Chairman Cruz. They are, indeed. Mr. Vogel.1316    Mr. Vogel. Mr. Chairman, I would absolutely say creating1317that demand signal for private investment, removing the1318regulatory constraints that we have on commercial shipyards can1319work together to rebalance the international shipbuilding1320market.1321    Chairman Cruz. When you say regulatory constraints, what,1322in particular, are impediments that if removed would unleash1323shipbuilding?1324    Mr. Vogel. Mr. Chairman, I think they are twofold. As Dr.1325Mercogliano said, we moved into government shipbuilding. But1326there are a huge number of government ships that can be built1327on a commercial model basis, using things like vessel1328construction manager, getting us out of sort of the legacy1329shipbuilding, using all the constraints of Federal acquisition,1330instead relying on commercial practices and commercial1331suppliers in order to build up our capacity. And we need to1332focus on the full supply chain. We need to focus on engine1333manufacturers that we have, including in your state, support1334them so that they can reduce their costs and ultimately reduce1335the cost of ships.1336    Companies like TOTE and our parent company, Saltchuk, are1337ready to put private capital to use, as well. There are1338platforms out there, like the roll-on, roll-off vessels, that1339need to be recapitalized in our ready reserve force, like the1340cable laying ships that we need for the Navy, that could be1341paid for with private capital if we had the right charter1342agreements in place and that right assurance of that long-term1343investment from the government to operate those vessels.1344    Chairman Cruz. Ms. Snow, briefly.1345    Ms. Snow. Allocations of funds to small shipyard grants and1346to training programs and apprenticeship programs across the1347U.S.1348    Chairman Cruz. Thank you.1349    Senator Sullivan. Thank you, Mr. Chairman. Senator1350Cantwell.1351    Senator Cantwell. Thank you, Mr. Chairman. Following up on1352that point, Ms. Snow, you listed a whole line of things that1353you guys have done, various ships. How does the Shipyard Grant1354boost your capacity?1355    Ms. Snow. That is a great question. We are the recipient of1356a MARAD Small Shipyard Grant, and that allowed us to buy a1357deburring machine, a laser cutter, and a press break, which we1358would have to outsource otherwise. So we now have made 15 to 201359more jobs within our business. We have also expanded the number1360of things that we can do and build. So we can be open for 16 to136120 hours a day instead of 8 hours a day, because we have an1362entirely new element to our business.1363    Senator Cantwell. So boosting those MARAD Small Shipyard1364Grants is huge capacity building?1365    Ms. Snow. Yes.1366    Senator Cantwell. How many jobs would you say that helped?1367    Ms. Snow. For just this one specifically we hired 15 to 201368more people, and then it has changed the track of other1369people's career paths, where they get to learn more and new1370diverse things. It also would allow us to, if we received1371another, would allow us to create our own in-house1372apprenticeship program, where we could allocate those funds1373specifically just for a teacher and educator.1374    Senator Cantwell. Thank you. Mr. Paxton, do we have the1375capacity to build icebreakers?1376    Mr. Paxton. I do think we have that capacity. And you do1377not have to take my opinion on that. An RFI went out asking the1378question. MARAD asked, ``Would you bid on the icebreaker1379contract?'' and seven shipyards came back and said they did. In1380fact, two entities, unsolicited, put proposals in that could1381deliver an icebreaker within the 4-year period of this1382Administration.1383    Senator Cantwell. So we do not have to outsource to another1384country?1385    Mr. Paxton. I do not think we do.1386    Senator Cantwell. Thank you for that. Everybody has1387mentioned the finance program. Should we make a finance Title1388XI or something like it apply to fishing vessels since they are1389not eligible under Title XI? Mr. Vogel or Mr. Paxton.1390    Mr. Vogel. Absolutely, Senator. The fishing industry is a1391critical customer for our commercial shipyards. Title XI can1392help to really invigorate and accelerate the investments that1393are made by commercial fishing companies in building new1394capacity. A lot of our fleet is quite aged at this point and1395needs to be recapitalized. Things like Title XI, providing the1396loan guarantee, can really help to accelerate that1397recapitalization.1398    Senator Cantwell. So you would just put fishing in there?1399    Mr. Vogel. I would absolutely support expanding the Title1400XI authorization to include fishing, Senator.1401    Senator Cantwell. Great. Great. That is good to hear. And1402then, you know, back to this price signal thing, you talked1403about incentives, various tax incentives. Does somebody have a1404viewpoint there of what needs to happen?1405    Mr. Vogel. Yes, Senator. I think there are two great1406aspects of the SHIPS for America Act, and it has a separate1407focus, really, on tax incentives. One, a 25 percent tax credit1408for investment in shipyards can accelerate much of the1409reinvestment that we need in commercial shipyards. And then the1410fuel parity tax aspects, to ensure that companies that are1411making investments in the newest technology are not unfairly1412disadvantaged in competing in our domestic trades.1413    Senator Cantwell. Thank you. Well, that has been our1414traditional tool, at the Federal level, so I am glad to see1415that people want a demand signal. That was our goal with CHIPS1416and Science, as well, to say that there is a demand signal to1417innovate in the United States of America because of those1418incentives.1419    Here we have a larger challenge to get that infrastructure1420right and move forward. And Dr. Mercogliano, you mentioned that1421shipping is national defense. Do you think that we need to do1422more to integrate--I am not sure I heard many people say1423anything about AI or blockchain technology--but isn't there a1424way for the United States to move even faster? I see, Ms. Snow,1425you shaking your head--to move faster on new innovation1426technology to help with shipping logistics?1427    Mr. Mercogliano. I think so. Technology is the one1428advantage that the United States has consistently brought to1429bear that allows us to propel ourselves past competition. And1430if we can incorporate that, I always argue that the greatest1431innovation in shipping came from somebody outside the shipping1432industry, Malcolm McLean, who came up with containerization. So1433AI, you know, anything we can do to assist that I think is key1434for us maximizing. The question is how do we integrate it into1435the shipping aspect right now. Because again, a lot of AI and a1436lot of those developers do not know anything about it, and we1437are not doing a great job in bringing that technology into it.1438    Senator Cantwell. That is what I see in my state, and I do1439not know, Ms. Snow, if you have a comment. My time is running1440out. But I have seen the blockchain people come to the sector1441with ideas, but then you have to get somebody in the sector. I1442do think maybe a program that helps propel that along would be1443something that people would take advantage of as opposed to1444just kind of standing still when they hear about it. Right? We1445need these two things to be married together.1446    Thank you very much, Mr. Chairman.1447    Senator Sullivan. Senator Young.14481449                 STATEMENT OF HON. TODD YOUNG,1450                   U.S. SENATOR FROM INDIANA14511452    Senator Young. Thank you, Chairman. Thank you for1453prioritizing this important topic. Mr. Chairman, I ask for1454unanimous consent to enter into the record 51 statements from145564 organizations, spanning industry, labor, and the broader1456maritime community, expressing support for the SHIPS for1457America Act. These statements reflect the broad bipartisan and1458nationwide support for rebuilding U.S. shipbuilding capacity,1459expanding our U.S.-flagged, oceangoing commercial fleet, and1460ensuring the American workers remain at the heart of our1461maritime strength.1462    Senator Sullivan. Without objection.1463    Senator Young. Thank you, sir.1464    [The information referred to follows:]14651466 Prepared Statement of Jesse Vecchione, Regional Business Development1467                  Leader, Americas, Weathernews, Inc.1468Dear Chair, Ranking Member, Members of the Committee:14691470    Thank you for the opportunity to submit this statement in support1471of the SHIPS for America Act.1472Who We Are1473    Weathernews Inc. is the world's largest commercial weather services1474company supporting the maritime industry''. Since we are publicly1475listed on the Tokyo Stock Exchange Market. supporting the maritime1476industry. Headquartered in Japan, with 930 maritime customers across 321477offices in 21 countries, we provide weather intelligence for1478approximately 84,000 voyages annually.1479    Weathernews has maintained operations in the United States since1480the 1990s, now headquartered on the University of Oklahoma Research1481Campus in Norman, OK. Our U.S. team of more than +70 professionals1482works closely with NOAA, the National Weather Service, and the National1483Hurricane Center. We support dozens of American commercial shipping1484companies, energy firms, and port authorities.1485Why We Have Standing1486    Our experience serving the global maritime industry gives us direct1487insight into what makes nations competitive in maritime operations. We1488see firsthand how American operators compete against international1489counterparts, what tools and services they need, and where U.S.1490maritime infrastructure--both public and private--must strengthen to1491ensure American leadership.1492Our Position1493    Weathernews strongly supports the SHIPS for America Act. This1494legislation is essential for revitalizing domestic shipbuilding,1495enhancing national security, and supporting the skilled maritime1496workforce upon which American competitiveness depends.1497The Foundation for Maritime Excellence1498    As a Japanese company with deep connections with the American1499maritime industry, Weathernews has firsthand insight into how Japan has1500built maritime dominance. President Trump's visit this week underscores1501the strategic importance of our relationship with Japan. Japan's1502maritime successes rest on a proven model: robust government1503infrastructure combined with thriving private sector innovation.1504Japanese shipyards, supported by strong public meteorological services1505and maritime policy, have built competitive advantages that benefit the1506entire economy. America can achieve the same through the right1507combination of policy and partnership.1508    Weathernews does not compete with NOAA, NWS, and NHC--we complement1509them. Government agencies provide foundational observational data,1510forecast models, and public good services. Private companies add1511specialized capabilities, 24/7 operational support, and targeted1512innovation. Strong government infrastructure creates the foundation1513upon which private innovation thrives, and private sector competition1514drives excellence in service delivery. The SHIPS for America Act1515strengthens this entire ecosystem by revitalizing domestic commercial1516maritime, creating the foundation for both public services and private1517innovation to deliver maximum value to American operators.1518Our Recommendations1519    We strongly suggest the Committee to:15201521   Pass the SHIPS for America Act expeditiously to signal1522        America's sustained commitment to maritime revitalization15231524   Ensure sustained funding for maritime workforce development1525        programs--skilled mariners, naval architects, and shore1526        personnel are the foundation of operational excellence15271528   Maintain and strengthen support for NOAA, NWS, and NHC as1529        the public infrastructure that enables the private sector to1530        innovate and serve maritime stakeholders effectively15311532   Encourage public-private partnerships that leverage1533        government capabilities and private sector specialization to1534        maximize safety, efficiency, and American competitiveness1535Conclusion1536    The SHIPS for America Act positions American maritime to reclaim1537global leadership through the combination of advanced technology,1538strong public infrastructure, and a skilled workforce. These elements1539reinforce one another. Without domestic shipbuilding capacity, we lose1540operational expertise. Without workforce investment, we lose the human1541judgment that makes technology powerful. Without robust public1542services, private innovation cannot flourish.1543    Weathernews is committed to supporting American maritime1544revitalization as an industry partner that values both strong1545government services and private sector innovation working together in1546service of American interests.1547    We urge the Committee to promptly pass the SHIPS for America Act.1548            Respectfully submitted,1549                                           Jesse Vecchione,1550                     Regional Business Development Leader, Americas1551                                                      Weathernews, Inc.1552                                 ______15531554      Prepared Statement of Dustin Walper, CEO, Valstad Shipworks1555Chair Sullivan, Ranking Member Blunt, and Members of the Committee:15561557    Thank you for the opportunity to submit a statement.1558    My name is Dustin Walper, and I'm the CEO and founder of Valstad1559Shipworks. We are a venture-backed startup focused on the application1560of AI, robotics, and advanced manufacturing to the problem of American1561shipbuilding.1562    Our goal is to build a dual-use ``Gigafactory for Ships'', applying1563technologies from the automotive and aerospace industries to rethink1564the way America builds ships for both commercial and military use.1565Our position1566    Our organization strongly supports the SHIPS for America Act1567because it recognizes the existential threat to U.S. maritime interests1568posed by China.1569    We believe that strengthening the maritime industrial base is one1570the most important challenges we face in an era of renewed great power1571competition, impacting not only U.S. shipbuilding and workers but also1572our ability to conduct commerce and project power in waters near and1573far.1574Analysis1575    I will be blunt: China poses the most serious maritime threat we1576have ever faced as a nation.1577    The evidence for this is overwhelming:15781579   Measured by deadweight tonnage (DWT), China's share of1580        global shipbuilding in 2024 was estimated at 53.3 percent\1\.1581        It also holds 67.3 percent\2\ of the orderbook for new orders,1582        suggesting increasing global dominance at the expense of allies1583        like Japan and South Korea.1584---------------------------------------------------------------------------1585    \1\ https://www.csis.org/analysis/china-dominates-shipbuilding-1586industry1587    \2\ https://www.marineinsight.com/shipping-news/chinas-1588shipbuilding-sector-sees-significant-growth-with-rise-in-vessel-1589deliveries-and-new-orders/15901591   China's shipbuilding capacity is estimated to be 2321592        times\3\ that of the United States, with a merchant fleet of1593        7,838 vessels vs. 185 US-flagged vessels\4\. The Chinese1594        merchant fleet can be repurposed to provide sealift capacity in1595        the event of a conflict over Taiwan.1596---------------------------------------------------------------------------1597    \3\ https://www.twz.com/alarming-navy-intel-slide-warns-of-chinas-1598200-times-greater-shipbuilding-capacity1599    \4\ https://cimsec.org/break-chinas-grip-on-shipping-with-the-1600multilateral-maritime-alliance/16011602   China has been rapidly expanding both shipbuilding capacity1603        and capability, with new shipyards like Xinneng Shipbuilding\5\1604        demonstrating integration of industrial robots, computer1605        vision, AI planning, and autonomous mobile robots like those1606        used in Amazon warehouses. Xinneng's website claims they can1607        produce 400+ inland vessels per year at their new 1,757 acre1608        facility.1609---------------------------------------------------------------------------1610    \5\ https://xinneng-shipbuilding.com/16111612    On these and other measures, China is far ahead on ships.1613    If we do not act now--and act decisively--we believe we could see a1614reorienting of alliances in the Asia-Pacific region away from ``Pax1615Americana'' towards a sinister new ``Pax Sinica''.1616Recommendations1617    We applaud the administration's efforts to attract allied nations1618like South Korea and Japan to invest in the U.S. maritime industrial1619base.1620    We also believe that American innovators like Tesla and SpaceX1621prove that domestic companies--including startups like ours--are1622capable of truly astounding feats of reindustrialization.1623    Our recommendations are as follows:16241625   Expand funding to explicitly include new shipyard1626        development. The U.S. has not built any major new shipyards in1627        decades, and in our view this must change--yards designed1628        specifically to make use of modern manufacturing automation are1629        the fastest, best way to significantly increase shipbuilding1630        capacity.16311632   Invest heavily in automation & new technology. Ships made in1633        U.S. yards are significantly less labor-efficient than1634        comparable ships built in South Korea. To increase our total1635        output without placing unrealistic demands on the labor supply,1636        we must embrace automation and reduce labor hours required per1637        compensated gross ton (CGT).16381639   Provide dedicated funding and/or supports for new domestic1640        entrants. We should incentivize private capital to invest in1641        the future ``SpaceX'' or ``Tesla'' of American shipbuilding.1642        Solutions that only focus on existing shipyards or foreign1643        shipbuilders risk neglecting the world-beating power of our1644        entrepreneurial ecosystem.16451646   Accelerate the development of autonomy guidelines for US-1647        flagged ships. The future of America's maritime industry need1648        not look like the past. A clear mandate for commercial vessel1649        autonomy would drive rapid adoption of innovative technologies1650        and create new export opportunities for U.S. companies.1651Conclusion1652    We urge the committee to pass the SHIPS for America Act without1653delay. China is continuing to advance rapidly, and that capabilities1654gap will only widen if we do not act immediately.1655    American dynamism is one of the most powerful forces for good the1656world has ever seen. We have every confidence that, with the right1657incentives and supports, the American people can rise to the occasion1658and address the threat from China head-on.1659                                 ______16601661    Prepared Statement of United Steel, Paper and Forestry, Rubber,1662      Manufacturing, Energy, Allied Industrial and Service Workers1663    International Union (USW) and the International Association of1664                         Machinists (IAM Union)1665    Chairman Sullivan, Ranking Member Blunt Rochester, and Members of1666the Subcommittee, thank you for holding this important hearing today.1667    We want to take this opportunity to express our strong support for1668the bipartisan, bicameral SHIPS for America Act (S. 1541/H.R. 3151),1669legislation that would help revitalize the U.S. shipbuilding and1670maritime industry. We would also like to thank Senator Young and1671Senator Kelly, and Representative Kelly and Representative Garamendi,1672for crafting and introducing it.1673    For years, our members have been ringing the alarm while the1674American shipbuilding sector eroded in the face of China's use of1675unfair trade practices and five-year plans designed to dominate the1676global maritime sector. As U.S. shipyards have shuttered, tens of1677thousands of jobs have been lost, and highly trained dedicated workers1678have been pushed out of a supply chain that is critical to the future1679economic and national security of the Nation. The SHIPS for America Act1680reflects a sorely needed dedication to rebuilding American shipbuilding1681and the trained workforce required to meet the challenges of the1682future.1683    Collectively, organized labor supporting this effort represents1684tens of thousands of hard-working union members in the shipbuilding and1685maritime sector. Our unions represent workers making commercial vessels1686and working in naval shipyards, as well as in the production of steel,1687engines, boilers, propulsion systems, glass, cables, pipes, fittings,1688pumps, and other machinery, supplies, materials and components used on1689commercial and military vessels. Our members work in the ports and on1690our ships.1691    From Maine to Virginia to Mississippi to California and Hawaii, our1692unions and their membership supply, build, maintain, repair and man our1693Nation's vessels, and work at the ports and logistics facilities.1694    We know that the Chinese Communist Party (CCP) has directed over a1695hundred billion dollars in state support to Chinese shipbuilding1696companies, mandated preferences for ships built in China, discriminated1697against non-Chinese ships, and created a global web of ports and1698terminals owned by, or affiliated with, Chinese firms. Meanwhile, U.S.1699shipyards have been devastated. Tens of thousands of jobs have been1700lost as shipyards have closed and highly trained expert workers have1701been forced out of the U.S. defense industrial base.1702    In the face of the CCP plans to dominate global shipbuilding,1703logistics and maritime sectors, several unions jointly filed a petition1704with the U.S. Trade Representative (USTR) under Section 301 of the1705Trade Act of 1974, seeking an investigation into the CCP's strategic1706conduct\1\. We are proud that we created the spark that has fueled1707attention to, and action on, these critical issues.1708---------------------------------------------------------------------------1709    \1\ https://ustr.gov/sites/default/files/1710Section%20301%20Petition%20-%20Maritime%20Logis1711tics%20and%20Shipbuilding%20Sector.pdf1712---------------------------------------------------------------------------1713    In April 2024, USTR initiated an investigation and subsequently1714issued its report concluding that China engages in non-market-economy1715practices to dominate the maritime, logistics, and shipbuilding sectors1716and that China's behavior is unreasonable and actionable given the1717destructive effects and challenges it poses to U.S. interests\2\. We1718support USTR's findings, which align with the allegations in the1719petition, finding that the CCP's actions not only restrict U.S.1720commerce but have had massive negative impacts for American workers and1721the shipbuilding sector, logistics and maritime sectors.1722---------------------------------------------------------------------------1723    \2\ https://ustr.gov/sites/default/files/enforcement/1724301Investigations/USTRReportChinaTar1725getingMaritime.pdf1726---------------------------------------------------------------------------1727    We commend the USTR and the Administration for acting on behalf of1728American workers in the U.S. shipbuilding sector. USTR has subsequently1729proposed a set of strong relief measures aimed at leveling the playing1730field against the CCP's unfair trade practices and creating a path to1731the restoration of our Nation's maritime capacity. These measures will1732begin to rebalance the global market for the American shipbuilding1733sector and its existing thousands of workers across the economy. They1734will also lay a foundation for revitalizing our capacity in the1735critical sectors covered by these measures.1736    We also support the Administration's Executive Order announced on1737April 9, 2025 on Restoring America's Maritime Dominance\3\. The order1738and the Maritime Action Plan and support for a Maritime Security Trust1739Fund contained within are designed to address our growing dependence on1740China to meet basic shipping and logistics needs.1741---------------------------------------------------------------------------1742    \3\ https://www.whitehouse.gov/presidential-actions/2025/04/1743restoring-americas-maritime-dominance/1744---------------------------------------------------------------------------1745    The SHIPS for America Act will create the statutory framework1746needed to rebuild and maintain American shipbuilding and maritime1747manufacturing long into the future, when combined with the USTR 3011748remedies and the actions laid out in the President's executive order.1749    All three vectors--Section 301, the Administration actions and the1750SHIPS for America Act are vital to restoring our maritime strength.1751    By investing in workforce development while incentivizing the1752construction of commercial vessels in U.S. shipyards, supported by an1753upgraded robust maritime infrastructure, the SHIPS for America Act, and1754the Maritime Security Trust Fund which it creates, will help revitalize1755the U.S. shipbuilding industry, provide stability to a sector plagued1756by boom-and-bust cycles and create thousands of jobs while enhancing1757our Nation's economic and national security. It also recognizes the1758critical need to expand our mariner workforce to ensure the U.S. has1759skilled workers on our ships and are not dependent on other nations to1760meet commercial and military needs. Indeed, more than eighty percent of1761U.S. military cargo transits on commercial vessels and these U.S.1762flagged ships are critical to meeting our Nation's needs.1763    We support the SHIPS for America Act and will continue to encourage1764its swift consideration and passage. This legislation is vital to the1765future of the industry and the workers we represent. We believe that1766with the right policies in place, U.S. shipbuilding and maritime1767capabilities can thrive, and the American people can benefit from a1768newly restored position of American maritime leadership.1769    We look forward to continuing to partner with you and your1770colleagues to promote the interests of U.S. workers and industry in1771shipbuilding, industrial supply chains, and the maritime sector. We1772urge you to consider and advance this critical legislation quickly. We1773stand ready to work with Congress and the Administration as the process1774unfolds.1775                                 ______17761777                   Prepared Statement of USA Maritime1778    This statement is submitted on behalf of USA Maritime, the1779coalition representing the U.S.-Flag international sailing fleet, made1780up of ship operators, trade associations and labor organizations1781owning, operating, crewing and advocating on behalf of the United1782States Merchant Marine in international commerce.1783    Our members own, operate, crew or represent most of the U.S.-Flag1784vessels currently operating in foreign commerce, including all ships in1785the Maritime Security and Tanker Security Programs.1786    This hearing could not come at a more significant time in America's1787maritime history. After decades of allowing the foreign competition to1788overtake our maritime industry, especially the shipyard industrial1789base, the attention of the American people and our government seems to1790have finally been drawn back to its roots.1791    There is no more American industry than the maritime industry. From1792the founding of the Republic, America has been a nation of the sea,1793surrounded by water and dependent on trade for our wealth and well-1794being. Despite that history, the last two hundred years of maritime1795policy has struggled to find a consistent means of ensuring that1796America's merchant marine remains afloat.1797    As we look around the world today, the need for a robust U.S.-Flag1798international fleet capable of carrying a significant portion of our1799waterborne commerce and to serve our national interests is paramount.1800America faces numerous challenges abroad and at home that demand our1801ability to move cargo over our oceans and inland waterways. And time1802and history have proven that we cannot rely on foreign carriers to meet1803our needs. Whether it's the supply chain issue we saw over the last few1804years, or when foreign carriers have balked at moving cargo into1805dangerous waters, we have ample evidence to confirm we cannot put our1806faith in the idea that foreign carriers with foreign crews and ships1807will always be there when we need sealift.1808    Now, more than ever, America needs to develop and implement1809programs and plans, as well as provide the critical funding necessary1810to fuel the renewal of our international sailing fleet.1811    This hearing is about reviving commercial shipbuilding. Our1812shipbuilding industry is a vital national asset that we absolutely must1813revive if we are to remain a first-class power in the world in the1814future. Yet we must never forget that the building of a ship is the1815first step in the process--it is not the end goal, it is the beginning.1816    Once that ship is built, it needs a crew to sail it, and it needs1817cargo to move. Without a crew and without cargo, a ship is useless--an1818unmoving, unprofitable, mass of steel that serves no purpose. If we are1819to revitalize our shipbuilding industry, we must look at our entire1820maritime industry, because each part works together to form a coherent1821whole. Building ships that go nowhere and do nothing is pointless and a1822waste of resources.1823    Thus, as we work to revitalize shipbuilding, we must work to ensure1824that once those ships are built, they will have something to do.1825    USA Maritime remains a committed supporter of the bipartisan and1826bicameral SHIPS for America Act. We look forward to working with1827Congress as this legislation works its way through the legislative1828process, and we hope to work with the sponsors and co-sponsors to make1829it even better.1830    We have been pleased with the level of support and the level of1831commitment demonstrated by the Trump Administration when it comes to1832maritime. Their statements and quick action, including an Executive1833Order on maritime, have put maritime at the forefront of our policy1834debates. The President, Vice President and the rest of the1835Administration have our sincere thanks.1836    The Administration has been focused on working to level the playing1837field between America and our competition overseas. We support the1838steps being taken by the Administration to combat unfair shipbuilding1839practices by China. As the Trade Representative continues to work on1840these issues, we urge the Administration that whatever steps they take1841do not damage our existing maritime capabilities as we pursue the goal1842of increasing our fleet and our percentages of global trade.1843    We must ensure that any steps we take to rectify China's unfair1844policies do not have the unintended consequences of damaging existing1845U.S.-Flag carriers and capabilities. We also urge that the government1846take advantage of all the tools currently at its disposal to promote1847and support our maritime industry. The traditional tools government has1848used--cargo preference, foreign food aid, the Maritime Security and1849Tanker Security programs--must be funded fully and administered1850properly.1851    Furthermore, the Federal government must follow its commercial1852first policy where the active fleet of vessels are used to carry1853government cargoes before U.S. government vessels are used. Using1854government vessels to carry government cargoes is short-sighted and1855weakens the privately owned fleet that is essential to national1856defense.1857    To be clear, various programs that currently exist represent the1858bare minimum needed to keep our ships and mariners afloat and sailing.1859Without full funding for MSP and TSP, we risk the ships and jobs that1860we currently have in the industry. Without a Food for Peace program1861that is actively moving cargo, ships that are currently within the1862U.S.-Flag fleet will either go into long-term layup, putting their1863crews out of work, or worse--those companies will be forced to leave1864the U.S.-Flag, and those ships will likely never return. We urge the1865administration to use the funding provided to the Food for Peace1866program to ensure sufficient cargo is available to keep our existing1867fleet sailing.1868    The Food for Peace issue highlights the most critical need for our1869maritime industry: cargo. A ship without cargo is like a car without a1870motor--not moving.1871    If you want to promote shipbuilding in the United States, you must1872focus like a laser on the question of commercial cargo and how to get1873it back on American ships. Do that, and most of the issues we face1874become surmountable. Demand for ships driven by an abundance of1875commercial cargo that wants to move on American ships will do as much,1876if not more, for revitalizing American shipbuilding as any government1877program could.1878    And it solves other problems, too. The more cargo our ships have to1879move, the more ships we have and can sustain, and the more ships we1880have and sustain means more jobs and an easier way of recruiting men1881and women to go to sea.1882    No one wants to join a dying industry, wondering if the time and1883money they spend on training and education will ever end up paying off.1884But a thriving industry, one that has a future, is an industry that can1885recruit and retain the best people. While we have made significant1886strides in fixing our current mariner shortage, we cannot assume that1887the problem will be solved. The best way to ensure we have enough1888mariners to meet all our needs and to crew an even larger fleet is for1889there to be sufficient cargo to generate the ships and the jobs needed1890to keep those ships sailing.1891    At sea jobs are difficult and demanding, but they are also some of1892the most rewarding, and our mariners get the best training and strong1893support at home. These are solid, middle-class jobs that pull people1894out of poverty, give them a chance at a good life, with a meaningful1895career that makes a difference in their lives, their families lives,1896and the lives of their fellow Americans.1897    The government has the power to help increase the amount of cargo1898available for U.S.-Flag vessels to carry. The foremost step would be1899the establishment of a tax incentive provided to shippers who move1900their products on U.S.-Flag ships. In whatever form that comes, whether1901as an enhanced deduction or as a tax credit, by providing an incentive1902to ship American, Congress can help ensure sufficient cargo exists to1903keep the new ships and crew envisioned in the President's Executive1904order and the SHIPS for America Act moving.1905    The use of bilateral and multilateral trade agreements to secure1906access to cargo for American ships is recommended. All too often, our1907trade agreements have ignored maritime transportation. Including1908maritime in our trade agreements can reserve a portion of the trade1909between the two contracting states for American vessels--something we1910used to do but have not done in far too long.1911    Finally, as the government has pivoted from free trade to fair1912trade, we hope that any tariff policy adopted by the Federal government1913includes provisions that provide a benefit to shippers who opt to use1914American ships with American crews.1915    As we noted earlier, the best way to revive American shipbuilding1916is to ensure there are customers to order those ships, men and women to1917crew them, and cargo for them to move. Absent all of those things,1918America's shipbuilding industry will remain in its present condition.1919    Doing nothing is, unfortunately, the easiest thing to do, and1920something America has become particularly good at. But we cannot afford1921to continue doing the same things we've always done and hope for a1922different outcome.1923    To be clear--if we do nothing, America's ability to maintain its1924merchant marine will continue to slowly erode until we become fully and1925completely dependent on foreign interests to move our cargo and supply1926our warfighters. This is an untenable situation, and one we cannot1927allow to happen. Passage of the SHIPS Act, the continued full funding1928of our maritime programs, the proper administration and usage of our1929Food Aid programs and, most importantly, government action to increase1930the cargo base will help keep the merchant marine afloat.1931    As always, the members of USA Maritime look forward to working with1932Congress and the Administration as we all strive to protect American1933national and economic security through trade on the sea.1934                                 ______19351936           Prepared Statement of the Transportation Institute1937    Chair Sullivan, Ranking Member Rochester, and Members of the1938Committee,19391940    Thank you for holding a hearing on the state of commercial1941shipping, a critically important issue for our nation, and for the1942opportunity to comment in support of this effort to strengthen American1943commercial shipbuilding. The bipartisan, bicameral SHIPS for America1944Act takes our Nation in the right direction of strengthening our1945commercial capacity.1946    Transportation Institute has, for nearly sixty years, worked for a1947strong American maritime capability. Transportation Institute closely1948monitors the workings and decisions of the U.S. Congress and the wide1949range of administrative agencies of the Federal and state governments1950as they affect waterborne transportation. The Institute staff conducts1951research and study projects on all maritime-related issues.1952    Transportation Institute issues a number of publications and other1953materials designed to inform the public, the Congress, and the1954government of important merchant marine matters.1955    Transportation Institute was established in 1967 as a Washington-1956based, non-profit organization dedicated to maritime research,1957education, and promotion. The Institute companies participate in all1958phases of the Nation's deep-sea, foreign and domestic shipping trades,1959and barge and tugboat operations on the Great Lakes and on the 25,000-1960mile network of America's inland waterways. All our member companies1961are of U.S. registry--crewed by American citizens operating under the1962world's highest safety standards and proudly flying the American flag.1963    Transportation Institute supports the bipartisan effort of this1964Congress and the Administration to restore the U.S.-flag merchant1965marine and also our overall maritime industrial base through public1966forums like this hearing and the SHIPS for America Act. The maritime1967industry plays a unique role in the American ecosystem, affecting1968national security, supply chain resilience, workforce, and trade.1969America is a maritime nation, and both our national security and1970economic prosperity are tied to our waterways and ability to engage in1971trade freely across the global commons. American industry thrived1972because it could move its goods worldwide and won wars on the strength1973of its ability to deliver the goods to project power abroad. American1974merchant fleets have been critical our Nation since its founding.1975    To strengthen commercial shipbuilding for international trade,1976first must come increased cargo on U.S.-flag vessels. The 40,0001977vessels operating in the domestic trade, and the incredible innovations1978made by American shipbuilders, shows that with fair conditions to1979compete for cargo, American shipping companies can thrive. Businesses1980will invest in American-built commercial vessels when they know that is1981the right long-term decision; vessels are expensive, lasting assets. To1982build ships for international market, fair access to compete for cargo1983must be assured through legislation and other government actions.1984    A number of factors, including inertia, unfair foreign competition,1985and the loss of government support has led to the steady and1986unrestrained decline of the size of the international-trading U.S.-flag1987fleet, which has depressed workforce participation, made American1988businesses vulnerable to supply-chain disruption, and affects military1989readiness.1990    American businesses had a preview of a world without assured access1991to shipping during the supply chain crisis following the pandemic.1992American exports were left rotting on piers, as contracted, foreign1993flag carriers abandoned their commitments to chase more profitable1994shipments, as rates increased as much as 1,000 percent along some1995routes. Meanwhile, U.S.-flag shippers, according to a study by EY,1996committed to their routes.\1\1997---------------------------------------------------------------------------1998    \1\ https://dredgewire.com/new-ey-study-jones-act-shipping-more-1999affordable-and-reliable-delivery-for-puerto-rico/2000---------------------------------------------------------------------------2001    The military understands the importance of a strong U.S.-flag2002merchant marine. In every American conflict, the United States merchant2003marine, and American mariners, have delivered the goods, sailing into2004danger to support their fellow countrymen so ensure they had what they2005needed to win the fight. U.S. Transportation Command (USTRANSCOM),2006which manages the military's logistics, pays close attention to the2007state of the commercial U.S.-flag international trading fleet, as they2008are dependent on public-private partnerships, like the Maritime2009Security Program and the Voluntary Intermodal Sealift Agreement, to2010deliver the goods These vessels are upgraded and maintained by the2011vessel owners, American companies thoroughly vetted by appropriate2012background checks.2013    Not only do the actual vessels matter, but these companies also2014provide access to their entire intermodal networks, which proved2015critical to supplying material to troops in Afghanistan, when2016USTRANSCOM had to find a way to deliver critical defense material to2017our brothers and sisters in Afghanistan.\2\ Most significant to2018Transportation Command and Military Sealift Command are the mariners.2019The people who crew both these commercial vessels and government-owned2020sealift vessels must be American mariners. Their bravery, devotion to2021duty, and patriotism means that they are always willing to sail into2022harms way to deliver what we need, unlike some allies we have depended2023upon in the past.\3\ American mariners are proud to be called the2024``fourth arm of defense'', as President Franklin Roosevelt called them.2025Not only that, but the material these mariners move, and where it moves2026to, are often national security secrets. Not just anyone can crew these2027vessels for obvious reasons--it must be American mariners, all devoted2028to our country. However, for these mariners to be available to work2029when the military needs them--trained, ready, and with the appropriate2030licenses--they must have regular, peacetime work as well, on board2031commercial vessels.2032---------------------------------------------------------------------------2033    \2\ https://lexingtoninstitute.org/northern-distribution-network-2034revolutionizes-afghanistan-wars-logistics/2035    \3\ According to Global Reach, there are 13 documented cases of2036foreign-flag vessels refusing to sail into the Persian Gulf War.2037Herberger, Vice Adm. A.J., Gualden, Kenneth C., and Marshall, Cdr.2038Rolf. Global Reach: Revolutionizing the Use of Commercial Vessels and2039Intermodal Systems for Military Sealift, 1990-2012. (2015). Naval2040Institute Press. p. 109.2041---------------------------------------------------------------------------2042    Of course, nobody wants these vessels to be fully dependent on2043government cargoes for peacetime work, so these companies must be2044commercially viable in an international market. The international2045shipping market is a challenging place to compete, as high American2046regulatory standards and state-supported shipping companies like COSCO2047distort the market. Therefore the role the government must play is2048twofold: to create conditions in which shippers are incentivized to use2049U.S.-flag vessels and to reduce regulatory burdens on U.S.-flag2050vessels. The SHIPS Act does exactly that, all while ensuring that we2051make the right investments into the workforce now so that enough people2052are training and ready to work when the United States truly restores2053its American maritime dominance.2054    There are many opportunities for this Nation to rebuild our2055maritime power, in addition to passing the SHIPS Act and implementing2056the President's Executive Order. Congress can include U.S.-flag2057requirements on trade deals. Tariffs could include exemptions for goods2058moved on U.S.-flag vessels. Shippers who choose to use U.S.-flag should2059be financially incentivized to and widely celebrated for Shipping2060American, just as Buy American is a source of pride for many. These2061long term actions would create the appropriate conditions for shippers2062to commit to booking their cargo on U.S.-flag vessels, and give vessel2063owners the right signal to invest in American shipyards.2064    Congress's continued support for the Jones Act and to fully funding2065the Maritime Security Program, Tanker Security Program, and Cable2066Security Program, create a strong foundation from which to rebuild2067America's maritime strength and ultimately strengthen commercial2068shipbuilding for international trade.2069                                 ______20702071                            Steel Manufacturers Association2072                                                   October 28, 202520732074Hon. Dan Sullivan,2075Chairman,2076Subcommittee on Coast Guard, Maritime, and Fisheries,2077United States Senate,2078Washington, DC.20792080Hon. Lisa Blunt Rochester,2081Ranking Member,2082Subcommittee on Coast Guard, Maritime, and Fisheries,2083United States Senate,2084Washington, DC.20852086RE: Hearing on Sea Change: Reviving Commercial Shipbuilding20872088Dear Chairman Sullivan and Ranking Member Blunt Rochester:20892090    The Steel Manufacturers Association (SMA) appreciates the2091opportunity to submit a statement for the record for the hearing2092entitled, ``Sea Change: Reviving Commercial Shipbuilding.''2093    SMA represents electric arc furnace steelmakers, which account for2094more than 70 percent of domestic steel capacity. Our members have a2095nationwide geographic footprint and range in size from America's2096largest publicly traded steel producers down to single facility,2097privately-owned family businesses. They make essential products for2098America's infrastructure, national security, and energy and2099manufacturing sectors, including materials used in shipbuilding.2100    Once a leader in shipbuilding, the U.S. maritime industrial base2101has atrophied--our country now produces only 0.1 percent of global2102ships\1\. Meanwhile, China produces more than half of global commercial2103ship tonnage, benefitting from state-sponsored technology and2104infrastructure as typified by the state-owned China State Shipbuilding2105Corporation\2\; and its global network of ports continues to grow.\3\2106This severe imbalance threatens the supply chains on which Americans2107depend, as well as our national security. A strong domestic2108shipbuilding capability is essential to securing the U.S. maritime2109industrial base and strengthening the merchant marine fleet.2110---------------------------------------------------------------------------2111    \1\ https://www.csis.org/analysis/are-us-policies-eroding-chinas-2112dominance-shipbuilding2113    \2\ https://features.csis.org/hiddenreach/china-shipyard-tiers/2114    \3\ https://www.bloomberg.com/graphics/2025-china-ports/2115?cmpid=BBD102125_TRADE&utm_medium=e-2116mail&utm_source=newsletter&utm_term=251021&utm_campaign=trade2117---------------------------------------------------------------------------2118    Steel manufacturers strongly support the SHIPS for America Act and2119related efforts to revitalize U.S. shipbuilding. The American steel2120industry has more than enough capacity to produce and supply any growth2121in demand for key shipbuilding inputs like steel plate. SMA's members2122include longstanding suppliers of steel plate for both military and2123commercial shipbuilding applications. These capabilities have only2124expanded in recent years, as steel companies in America have invested2125billions of dollars in new and expanded facilities, some of which have2126been designed specifically to increase supply for shipbuilding2127applications. The SHIPS for America Act will strengthen and enhance the2128entire shipbuilding supply chain, which is critical to our national2129security, while restoring critical manufacturing and supporting2130American workers. We stand ready to supply American-made steel that2131will help re-establish U.S. maritime dominance.2132    SMA thanks the Subcommittee for holding this important hearing and2133urges support for the SHIPS for America Act to reestablish the U.S. as2134a global leader in shipbuilding. Thank you for your consideration.2135            Sincerely,2136                                            Brandon Farris,2137                                Vice President, Government Affairs,2138                                       Steel Manufacturers Association.2139                                 ______21402141                                         California Forever2142                                                   October 28, 20252143    Chairman Sullivan, Ranking Member Blunt, and Members of the2144Committee,21452146    Thank you for the opportunity to submit a statement for the record.2147    Over the past decade, California Forever has invested more than a2148billion dollars in acquiring over 100 square miles of property in2149Solano County, California. As part of this acquisition, we have secured2150exclusive control of 6.5 miles of strategically-located waterfront with2151direct deep-water access to the Pacific Ocean. Through public-private2152partnerships with the U.S. Government and maritime industrial base2153stakeholders, we hope to build one of the world's largest and most2154modern maritime industrial complexes, working at a scale that America's2155international rivals will struggle to match.2156    California Forever strongly supports the SHIPS for America Act.2157Coupled with the White House's April 9, 2025, Executive Order,2158``Restoring America's Maritime Dominance,'' the Act can strengthen2159domestic shipbuilding, bolster national security, and support American2160workers. In aggregate, these measures will help secure the economic2161future of our nation, help tens of thousands of unemployed workers in2162the region find good jobs, and activate waterfront land that has long2163been reserved for industrial development.2164    The SHIPS for America Act enables the big waterfront investments2165America needs. Our nation's commercial shipbuilding capability has2166languished while global rivals have expanded. Consider the example of2167Changxing Island in China: a national shipbuilding center that last2168year launched more vessels than the United States has produced in the2169past 75 years. The proposed Solano Shipyard would be more than double2170the size of that facility in land footprint (7,500 acres at full build-2171out for Solano Shipyard, versus Changxing's 3,200 acres). If our2172Nation decides to undertake a next-generation ``Manhattan Project'' for2173shipbuilding, no location is better suited for this effort than the2174Solano Shipyard.2175    Big waterfront investments require political leaders willing to2176support new approaches to tough problems. California Forever is proud2177to note that our greenfield shipyard is located in Solano County, near2178California's 8th Congressional District, the home district for SHIPS2179for America Act Sponsor, John Garamendi.2180    We hope that the Senate, in its hearing today, will emphasize that2181the SHIPS for America Act, by building demand for new vessels,2182providing funds for workforce development, and opportunities for2183regulatory relief, supports both new and old shipyards alike.2184    New, greenfield shipyards like ours are unconstrained by prior2185development, past pollution, technological obsolescence, and2186residential encroachment. Modern, purpose-built facilities allow2187maritime innovators and shipbuilders to fully exploit current2188technologies, building new ships with far greater efficiency than aged,2189often contaminated turn-of-the-century shipyards can permit.2190    While America's rivals have built on West Coast-based industrialist2191Henry Kaiser's World War II shipbuilding lessons, combining large2192greenfield, mass-production-oriented shipyards with an integrated2193regional supply chain and local workforce, the United States has failed2194to follow suit.2195    Until now.2196    With a nearly 7,500-acre shipyard reservation on the Sacramento2197River, backed by a new city and an advanced manufacturing core,2198California Forever offers America a new place to chart a new century in2199the global maritime, combining affordable, modern housing and a trained2200local workforce with the latest vessel manufacturing-oriented AI2201systems and robotics technology.2202    The only thing missing is sustained demand for new U.S.-built2203ships, and the SHIPS for America Act provides that--it gives2204shipbuilders and U.S. government sponsors confidence that American2205orders for new cargo ships will offset the cost of large investments2206they must make in the U.S. waterfront.2207    With help from the SHIPS For America Act, California Forever can2208start building a shipyard complex quickly--potentially as early as22092026. The tax credit for the construction of shipyard facilities2210(Section 48.G) is a critical enabler for development, and we2211respectfully urge that the legislation explicitly support the2212construction of both new and existing shipyards.2213    During World War II, shipbuilding projects in Solano County spanned2214the river basin. Critical Dry Dock components were built in both Solano2215County and San Joaquin County. Ship modules for escort vessels were2216built and then shipped in for assembly on the Solano County waterfront.2217    Modern shipbuilding is typically a regionally distributed effort2218that integrates shipyards, module fabrication facilities, supply chain2219vendors, workforce training hubs, and maritime logistics nodes. To this2220end, SEC. 1400Z-3. TREATMENT OF MARITIME PROSPERITY ZONES AS2221OPPORTUNITY ZONES should explicitly state that the Maritime2222Administrator can designate a set of regionally interlinked census2223zones as a single Maritime Prosperity Zone. This would facilitate2224regional planning and development of the integrated waterfront2225infrastructure America needs, rather than a mosaic of isolated and2226unviable ``special projects''.2227    For example, in Northern California, a single Maritime Prosperity2228Zone could encompass new and existing shipbuilding sites in Solano2229County and throughout the adjoining counties of Contra Costa,2230Sacramento, and San Joaquin, enabling development of America's first2231integrated regional shipbuilding complex.2232    We respectfully request that the Senate:22332234   Pass the SHIPS for America Act without delay, to provide the2235        demand signal and regulatory support needed to start building2236        the U.S. merchant fleet of tomorrow.22372238   Ensure that the tax-credit provision (Section 48.G)2239        explicitly supports both the new build-out of greenfield2240        shipyards and the modernization of existing yards.22412242   Amend Section 1400Z-3 to authorize MARAD to prioritize the2243        designation of regionally interconnected Maritime Prosperity2244        Zones.22452246   Recognize that greenfield shipyards such as ours offer the2247        most efficient platform for deploying advanced manufacturing2248        technologies and achieving scale productivity--and that this2249        investment must be matched by policy, workforce, and2250        procurement commitments.2251            Sincerely,2252                                                Jan Sramek,2253                                                     Founder & CEO.2254                                              Craig Hooper,2255                                 Director, Defense Industrial Base.2256                                               Justin Esch,2257                                           VP Business Development.2258                                 ______22592260           Prepared Statement of Roberto Llames, President,2261                   SMART Development Institute (SDI)2262    Dear Chairman SEN Dan Sullivan; Ranking Member SEN Lisa Blunt2263Rochester; and Members of the Subcommittee:22642265    Thank you for the opportunity to submit this Statement for the2266Record in support of the SHIPS for America Act. I commend the2267Subcommittee for its leadership in strengthening our Nation's maritime2268industry and advancing policies that restore America's shipbuilding2269capacity.2270    I am Roberto Llames, President of the SMART Development Institute2271(SDI), a nonprofit organization dedicated to building sustainable and2272resilient communities through workforce and technology innovation.2273SDI's mission is to align talent and innovation with national2274priorities that promote economic growth and security. SDI's Shipbuild2275Talent Hub initiative was established to help revitalize the U.S.2276shipbuilding and maritime sectors by connecting American shipyards with2277global engineering, technical, and training talent. This is not merely2278an economic initiative--it is a matter of national security and2279industrial readiness.2280    The SHIPS for America Act represents a decisive step toward2281revitalizing America's maritime base. It aligns directly with the April22829, 2025 Executive Order, '' America's Maritime Dominance,'' which2283called for a modernized shipbuilding workforce to meet the demands of2284national security and economic growth.2285The Workforce Challenge2286    The Government Accountability Office (GAO) recently reported that2287``U.S. shipbuilders remain over budget and behind schedule due to2288worker shortages for meeting the Navy's demands,'' noting that2289shipyards continue to struggle to recruit and retain staff with the2290technical skills needed for construction and repair. These workforce2291and capacity constraints threaten the timely execution of national2292shipbuilding goals and highlight the urgent need for a coordinated2293strategy to expand training and strengthen technical capacity across2294the maritime industrial base.\1\2295---------------------------------------------------------------------------2296    \1\ U.S. Navy Shipbuilding Is Consistently Over Budget and Delayed2297Despite Billions Invested in Industry, GAO, April 8, 2025, https://2298www.gao.gov/blog/u.s.-navy-shipbuilding-consistently-over-budget-and-2299delayed-despite-billions-invested-2300industry#::text=The%20Navy%20initially%202301planned%20to,at%20blog@gao.gov.2302---------------------------------------------------------------------------2303    The challenge facing America's shipbuilding industry is not just2304about infrastructure or capital--it is fundamentally a workforce2305problem. As the U.S. Naval Institute observed, ``while the physical2306plant and financial capital hold great importance, human capital2307determines the survival or collapse of a shipyard.''\2\ As shipyards2308invest in modernization, physical assets can be rebuilt; a skilled2309workforce cannot be reconstituted overnight. Furthermore, a recent2310McKinsey & Company analysis underscores this same point, noting that2311America's shipyards ``face myriad challenges--from talent gaps to2312outdated operating models'' and that increasing output will require2313addressing ``the strained supply of skilled-trade and engineering2314talent.'' \3\2315---------------------------------------------------------------------------2316    \2\ Tylet Pitrof, The Shipyard Shortage Is a People Problem, U.S.2317Naval Institute, September 2024, https://www.usni.org/magazines/2318proceedings/2024/september/shipyard-shortage-people-problem2319    \3\ Charting a new course: The untapped potential of American2320shipyards, McKinsey & Company, June 5, 2024. https://www.mckinsey.com/2321industries/aerospace-and-defense/our-insights/charting-a-new-course-2322the-untapped-potential-of-american-shipyards2323---------------------------------------------------------------------------2324Workforce Development and Augmentation2325    The domestic pipeline alone cannot meet the near-term demand for2326skilled labor or instruction. Workforce development is constrained by a2327shortage of qualified teachers who can train welders, machinists, and2328other essential trades. To accelerate capacity building, the United2329States must complement domestic training with workforce augmentation2330that brings in experienced trainers and technical specialists from2331allied nations.2332    These professionals can help sustain shipyard operations while2333transferring knowledge to new American workers, strengthening the long-2334term workforce base. This approach supports national security2335priorities, fulfills congressional intent to revitalize the maritime2336industry, and ensures that investments in training and modernization2337deliver measurable results.2338Policy Barriers: H-1B and National Interest Exception Requirements2339    Recent Executive Action imposing a $100,000 application fee per H1B2340visa has significantly hindered the ability of shipyards, training2341centers, and technical institutes to access the specialized expertise2342needed to strengthen America's shipbuilding capacity. This decapitating2343setback places the United States at a disadvantage just as Congress2344considers the SHIPS for America Act for passage. While the Executive2345Action included a National Interest Exception (NIE) provision to be2346administered by the Department of Homeland Security (DHS), it has been2347hindered by the ongoing government shutdown. The shipbuilding industry2348must be granted an NIE as a matter of national security and economic2349necessity.2350    Unless the $100,000 H1B application fee is rescinded and an NIE2351established for shipbuilding, even if Congress passes the SHIPS for2352America Act, its goals will remain constrained. Allowing allied nation2353experts and instructors to contribute legally and securely will2354accelerate workforce development, protect production timelines, and2355advance America's national security.2356Conclusion2357    The SHIPS for America Act offers a path to restore America's2358shipbuilding strength, but legislation alone cannot rebuild the2359Nation's industrial capacity. Its success depends on a workforce that2360is skilled, supported, and ready to deliver. Congress must act2361decisively to pass the Act, establish a National Interest Exception for2362the shipbuilding industry, and remove the $100,000 H1B application fee2363that blocks access to essential technical expertise. These actions will2364ensure that America's shipyards, maritime training centers, and allied2365partners can work together to achieve the goals of this vital national2366initiative and protect our Nation's enduring security interests. Thank2367you again to the Subcommittee for the opportunity to submit this2368Statement for the Record and for your continued leadership in advancing2369America's maritime strength and national security.2370                                 ______23712372      Prepared Statement of Gary Aucoin, President, SCHOTTEL, Inc.2373    Chairman Sullivan, Ranking Member Blunt Rochester, and Members of2374the Committee, thank you for the opportunity to submit a statement for2375the record and express our support for the SHIPS for America Act to2376revitalize the U.S. commercial maritime industrial base. My name is2377Gary Aucoin, and I serve as the president of SCHOTTEL, INC.2378    SCHOTTEL first began to operate in the United States in 1961, it is2379a subsidiary of the German-based SCHOTTEL Group and is a leading2380provider of marine propulsion systems and services to the U.S. maritime2381industry. We are dedicated to our mission of enhancing vessel2382efficiency, safety, and sustainability through innovation, domestic2383partnerships, and workforce development. With facilities in Houma,2384Louisiana, and support operations across the United States, SCHOTTEL is2385committed to supporting American shipyards, vessel operators, and the2386broader maritime workforce through the supply of advanced propulsion2387technology.2388    SCHOTTEL works closely with U.S. shipbuilders and operators across2389commercial, government, and defense markets. We are deeply invested in2390the revitalization and longevity of our domestic maritime industrial2391base and believe that the SHIPS for America Act is a necessary2392catalyst.2393    SCHOTTEL strongly supports the SHIPS for America Act and its2394objectives to rebuild domestic shipbuilding capacity, modernize2395maritime infrastructure, and strengthen the Nation's supply chain2396resilience. We recognize that a vibrant and technologically advanced2397domestic maritime industry is crucial to U.S. national security and2398economic competitiveness. This bill is a necessary investment in the2399future of American shipbuilding. Our belief is strong in the face of2400mounting challenges for the maritime industrial base.2401    Competition worldwide from highly subsidized shipbuilding2402industries, particularly in China, has and continues to erode the U.S.2403market share. In addition to the implications of ever-increasing global2404competition, the U.S. must address its aging maritime infrastructure2405and declining shipyard capacity. The nation's ability to meet2406commercial and defense needs is constrained by a variety of factors2407that the SHIPS for America Act would address.2408    As the maritime sector moves toward lower emissions and greater2409efficiency, SCHOTTEL is playing a leading role in introducing hybrid2410and electric propulsion systems for U.S.-built vessels. Federal support2411for ship construction and modernization will accelerate the adoption of2412these efficient technologies in the United States rather than overseas.2413SCHOTTEL represents the kind of advanced manufacturing presence that2414the SHIPS for America Act seeks to sustain and grow.2415    SCHOTTEL is proud to stand with American shipbuilders, mariners,2416and maritime supporters in strong support of this legislation. SCHOTTEL2417urges the committee to promptly pass the SHIPS for America Act to2418ultimately strengthen our domestic shipbuilding sector. We thank the2419Committee for the opportunity to share our perspective.2420            Respectfully,2421                                               Gary Aucoin,2422                                                         President,2423                                                         SCHOTTEL, Inc.2424                                 ______24252426Prepared Statement of Billy Thalheimer, Co-founder and Chief Executive2427                      Officer, REGENT Craft, Inc.2428    Chairman Sullivan, Ranking Member Blunt Rochester, and Members of2429the Committee,24302431    Thank you for the opportunity to submit this statement for the2432record in strong support of the SHIPS for America Act. REGENT Craft is2433a Rhode Island based maritime company developing next-generation2434seagliders. Seagliders operate over the water and provide high-speed,2435low cost coastal transportation to commercial and defense markets.2436REGENT's mission is to revolutionize maritime mobility while2437strengthening the U.S. industrial base, expanding economic opportunity,2438and enhancing national and homeland security.2439    The United States has long relied on its maritime industrial base2440as a cornerstone for global commerce, national defense, and economic2441resilience. Yet decades of underinvestment have left America's2442shipbuilding and repair capacity diminished, with critical supply2443chains increasingly dependent on foreign sources.2444    REGENT is part of a new generation of American shipbuilding2445innovators rebuilding domestic maritime capabilities. Our company2446employs hundreds of skilled workers and partners with U.S. suppliers,2447shipyards, and fabrication facilities to design and produce advanced2448vessels that complement traditional maritime fleets. Our work directly2449supports shipyard modernization, workforce training, and component2450manufacturing, which are central tenants of the SHIPS for America Act.2451    As the CEO and co-founder of REGENT Craft, I strongly supports the2452SHIPS for America Act and commends Congress for recognizing the urgent2453need to revitalize U.S. shipbuilding capacity, maritime innovation, and2454workforce development. Investment in the maritime industrial base is2455critical for our economic and national security.2456    This legislation represents a critical step toward ensuring that2457the United States can design, build, and maintain vessels within its2458own manufacturing base. It creates pathways for advanced technologies,2459like electric and hybrid propulsion, modular vessel construction, and2460automation, to enter the domestic fleet.2461    The Act's focus on shipyard revitalization and apprenticeship2462programs aligns with REGENT's workforce development partnerships, where2463we are working alongside state governments to establish training2464pipelines and create durable, high-wage maritime jobs. Sustained2465investment through this legislation will ensure that these efforts2466scale nationally and that the next generation of American shipbuilders,2467technicians, and engineers are trained in emerging maritime2468technologies.2469    By expanding domestic shipbuilding capacity and incentivizing the2470use of U.S.-built hulls and components, the SHIPS for America Act2471directly supports strategic sealift readiness and maritime defense2472logistics. REGENT's Seagliders, which use maritime infrastructure and2473operate under Title 46 vessel classification, can play a vital role in2474distributed logistics, coastal mobility, and humanitarian response,2475complementing defense and commercial fleets.2476    The Act's inclusion of programs for advanced propulsion and vessel2477efficiency mirrors the innovation happening at REGENT and across the2478maritime sector. Federal support for these technologies will not only2479accelerate U.S. competitiveness but also position the United States as2480a global leader in Advanced Maritime Mobility.2481    I urge the Committee to ensure sustained funding for workforce2482training and shipyard modernization programs under the Act, prioritize2483incentives for the integration of emerging maritime technologies,2484including hybrid & electric propulsion, and wing-in-ground-effect2485craft, and strengthen collaboration between the Department of Defense,2486MARAD, and the Department of Transportation to align SHIPS for America2487Act implementation with the National Maritime Strategy and the Coast2488Guard's innovation agenda.2489    I applaud the Committee's leadership in advancing the SHIPS for2490America Act and urges swift passage of this essential legislation.2491Rebuilding America's maritime industrial base will strengthen our2492national security, revitalize coastal economies, and ensure that2493innovation in shipbuilding and vessel design remains a hallmark of2494American ingenuity.2495    Thank you for your consideration and for your continued commitment2496to the U.S. maritime sector.2497                                                  Billy Thalheimer.2498                                                     REGENT Craft, Inc.2499                                 ______25002501      Prepared Statement of the Passenger Vessel Association (PVA)2502    Chairman Sullivan, Ranking Member Blunt Rochester, and members of2503the Subcommittee: The Passenger Vessel Association (PVA) appreciates2504the opportunity to submit testimony in strong support of efforts to2505strengthen and expand America's shipbuilding capacity. PVA represents2506more than 500 operators of U.S.-flagged passenger vessels and their2507supporting shipyards, naval architects, suppliers, and vendors. Our2508members operate ferries, excursion vessels, dinner boats, and overnight2509cruise vessels that carry more than 200 million passengers to and from2510U.S. ports annually along the coast, on the Great Lakes, and on our2511Nation's rivers and harbors.2512The Role of Small and Mid-Sized Shipyards2513    U.S. flagged passenger vessels are designed and built almost2514entirely in small and medium-sized U.S. shipyards, many of them family-2515owned businesses that are vital to regional economies and workforce2516development. Within the PVA membership, there are nearly 39 shipyards2517in 17 states. These yards construct all types of passenger vessels that2518fly the U.S. flag and are eligible for coastwise service; they also2519build other types of American vessels. In addition, PVA boasts 15 naval2520architects in nine states that envision and design vessels. See the2521attached list of PVA members that are shipyard and naval architects.2522    PVA supports the Jones Act and the Passenger Vessel Services Act.2523These laws ensure that American shipyards can produce a steady stream2524of U.S. passenger and other types of vessels for the coastwise trades.2525This segment of the commercial U.S. shipbuilding industry is thriving.2526Because of these laws, the Administration does not face the uphill2527battle to restore shipbuilding capability for small and medium yards,2528as it does yards that build oceangoing vessels in international trade.2529    The Small Shipyard Grant Program, administered by the Maritime2530Administration, has been helpful in sustaining this network. By2531providing modest but strategic investments in equipment, training, and2532infrastructure, the program has allowed small U.S. shipyards to2533modernize facilities, improve efficiency, and retain skilled workers.2534    The Small Shipyard Grant program leverages Federal support for2535local economic growth. Every Federal dollar invested generates many2536more in private capital and sustained employment. PVA urges Congress to2537continue and expand the Small Shipyard Grant Program to meet rising2538demand, address inflationary costs, and ensure that small builders2539remain part of America's shipbuilding future.2540Ferry Construction as a Force Multiplier2541    In addition to shipyard grants, several Federal programs directly2542support the construction of U.S. built passenger ferries--an essential2543link in America's maritime transportation network.25442545   The Federal Transit Administration's three ferry grant2546        programs (the Passenger Vessel Ferry Grant Program, the Ferry2547        Service for Rural Communities Program, and the Electric or No-2548        Emitting Ferry Pilot Program) have enabled communities across2549        the Nation to build new vessels and terminals that are modern,2550        efficient, and fully compliant with the Buy America Act. These2551        ferries not only expand public transportation but also sustain2552        high-quality shipyard jobs and create repeat orders that keep2553        skilled welders, electricians, and engineers employed.25542555   The Federal Highway Administration's Ferry Boat Program,2556        which provides formula funding to states for ferry construction2557        and improvement, remains another key element in sustaining2558        small and mid-sized shipyards. Many states rely on this2559        consistent source of support to maintain vessel replacement2560        schedules and ensure safe, reliable service for rural and2561        island communities.25622563    Together, these programs ensure that shipbuilding activity occurs2564across the United States--not just in the major naval yards, but in the2565smaller regional facilities that are the backbone of our domestic2566maritime capability.2567Strengthening America's Maritime Workforce2568    Rebuilding U.S. shipbuilding capacity is inseparable from2569developing a robust maritime workforce. PVA members partner with2570vocational schools and maritime academies to create career pathways for2571welders, machinists, marine engineers, and captains. Continued support2572for Federal shipyard and ferry programs sustains this talent pipeline2573and ensures that American workers--not foreign competitors--will build2574and operate the vessels that keep our economy moving.2575Conclusion2576    The Passenger Vessel Association commends Chairman Sullivan and the2577Subcommittee for focusing national attention on the future of U.S.2578commercial shipbuilding. The Small Shipyard Grant program, the FTA's2579three ferry promotional grant programs, and the FHWA Ferry Boat Program2580are proven, effective tools that expand domestic industrial capacity,2581create good-paying American jobs, and enhance national resilience.2582    We encourage Congress and the Administration to preserve the Jones2583Act and the Passenger Vessel Services Act and to fully fund and2584strengthen these grant programs as part of the broader effort to ``Make2585Shipbuilding Great Again'' and ensure that America maintains a2586competitive, secure, and sustainable maritime industry.2587                                 ______25882589        Prepared Statement of Robert Sheen, President and COO,2590                        Ocean Shipholdings, Inc.2591    Chair Sen. Dan Sullivan, Ranking Member Sen. Lisa Blunt Rochester2592and Members of the Committee,25932594    We wish to thank the Chairman, Ranking Member and Members of the2595Committee for the opportunity to submit a statement in support of the2596SHIPS for America Act, which we believe is vital not only to our2597national defense, but to the survival of the U.S. Merchant Marine and2598our shipbuilding infrastructure.2599    Ocean Shipholdings, Inc., is a U.S. flag ship operator based in2600Houston, TX, currently operating 17 vessels for the U.S. Navy's2601Military Sealift Command and the Dept of Transportation's Maritime2602Administration. We have operated both commercial and government owned2603vessels under the U.S. flag since 1981. These vessels employ U.S.2604citizen Merchant Mariners and support U.S. Navy operations worldwide as2605well as provide the sealift required in the event of a national2606emergency or activation in support of U.S. national interests.2607    We very strongly believe that the sealift resources of the United2608States, both commercial and government owned are, in many cases,2609antiquated and in desperate need of upgrade, refurbishment and/or2610replacement. As strong supporters of the Jones Act, we believe in U.S.2611built and operated vessels; however, the capability and number of U.S.2612shipyards available to build new tonnage, the number and experience of2613trained mariners to man our ships as well as the opportunity for2614employment of U.S. mariners is severely restricted and not in2615proportion to the foreign built and operated vessels which employ2616foreign mariners and call every day at U.S. ports.2617    Our company strongly supports the SHIPS for America Act because it2618strengthens domestic shipbuilding, enhances national security and2619supports American workers. The U.S. shipbuilding industry and U.S.2620flagged merchant fleet are currently on a downward spiral and soon2621there will not be enough vessels to support national security or to2622provide employment for U.S. shipbuilders and mariners.2623    Approximately 90 percent of the goods imported into the United2624States are carried on ships. The U.S. is a maritime nation, in spite of2625the fact that it has a minimal merchant fleet. At one time, U.S.2626flagged merchant ships could be found everywhere on the planet, sadly,2627this is no longer the case. The U.S. does not have sufficient ships to2628carry U.S. goods overseas or to bring foreign goods back to the2629country. In the event of a national crisis that requires sealift, there2630are insufficient vessels and mariners to provide adequate support.2631    The U.S. has relied upon its merchant fleet since the beginning of2632our country to support our national interests, support our allies and2633provide experienced personnel to the U.S. Navy when such is required.2634Currently, there is severe doubt that there will be enough shipyards,2635ships, shipbuilders and mariners to support our national interests in a2636crisis contingency. For example, and per the Bureau of Transportation2637Statistics, in 2000 there were 282 commercial vessels over 1,000 Gross2638Tons and excluding non-merchant types and/or U.S. Navy-owned vessels.2639By contrast, in 2025, there are only 188 such vessels, a loss of nearly2640100 vessels.2641    The U.S. Ready Reserve Fleet needs recapitalization, new U.S. flag2642merchant ships need to be constructed in order to support our national2643interests, both commercial and security related. The U.S. Navy has2644identified that it requires a large number of tank vessels to support2645fleet operations in the Pacific region should hostile operations2646commence. This is troubling as there are very few commercial U.S. flag2647tankers available to support the Navy as well as support the Jones Act2648requirements along our coasts.2649    Similarly, the military has previously relied upon afloat2650prepositioned vessels to store and provide military equipment and2651supplies that would be needed in the event of hostilities. Currently,2652the U.S. Army and Marines are shifting to a shore-based system for2653prepositioning material, which has a fatal flaw in that they need ships2654to deliver the material where it would be required. Without sufficient2655U.S. bottoms to carry this material, it would be of very limited use to2656the armed forces and could place our forces in extreme jeopardy.2657    Only through legislation such as the SHIPS for America Act, could2658American shipyards be revitalized and expanded, new, modern, more2659capable ships be built and jobs be created to support U.S. mariners.2660The expansion of U.S. shipbuilding, U.S. flagged vessels and increased2661shipbuilder and mariner jobs will directly support U.S. interests2662nationally and internationally.2663    It is critical that the United States has a creditable merchant2664fleet capable of supporting American commerce as well as providing2665support for the Armed Forces when called upon to do so. The U.S. needs2666shipbuilders and merchant mariners, but only through the building of2667new ships and the creation of new jobs would a strong and resilient2668merchant fleet be created.2669    Because of the critical condition of the U.S. Merchant Fleet, which2670we view with concern, we are making the following recommendations:26712672  1)  We urge the Committee to ensure sustained funding for2673        shipbuilding workforce development programs.26742675  2)  We urge the Committee to support amendments that incentivize the2676        use of U.S. built vessels.26772678  3)  We urge the Committee to consider programs to publicize the2679        opportunities available for young people in the Merchant Marine2680        throughout the United States--these are high paying positions2681        with strong benefits and educational opportunities.26822683  4)  We urge the Committee to strongly endorse existing laws and2684        regulations which mandate government sourced cargo carriage2685        onboard U.S. flag ships.26862687  5)  Finally, we urge the Committee to recognize the effect on2688        national security of a healthy, fully engaged merchant fleet2689        capable of supporting national interests in times of crises and2690        conflict and to understand the effects should that not be the2691        case.26922693    In conclusion, we strongly urge the committee to promptly pass the2694SHIPS for America Act.2695    Sincerely,2696                                              Robert Sheen,2697                             President and Chief Operating Officer,2698                                               Ocean Shipholdings, Inc.2699                                 ______27002701                                           Oceantic Network2702                                                   October 28, 20252703Chairman Dan Sullivan,2704U.S. Senate Committee on Commerce, Science, and Transportation2705            Subcommittee on Coast Guard, Maritime, and Fisheries,2706Submitted electronically via e-mail27072708Re: Oceantic Comments for the Record of the ``Sea Change: Reviving2709            Commercial Shipbuilding''2710Hearing on October 28th, 2025 in Support of the SHIPS for America Act27112712Dear Chairman Sullivan, Ranking Member Blunt Rochester, and Esteemed2713            Members of the Subcommittee,27142715    On behalf of myself, my colleagues at the Oceantic Network, and our2716more than 400 members, thank you for the opportunity to submit this2717statement for the record in support of the SHIPS for America Act (SHIPS2718Act).2719    The Oceantic Network is a 501(c)(3) nonprofit organization2720dedicated to advancing the offshore energy market and building a2721strong, locally driven supply chain. Since 2013, Oceantic Network has2722connected businesses and governments to support policies that drive2723industry growth while equipping companies with the education, tools,2724and connections needed to succeed. With over 400 supply chain members--2725including shipyards, vessel owner/operators, naval architects, engine2726and component manufacturers, steel mills, and maritime colleges--the2727Oceantic Network's mission is to ensure offshore wind and other2728maritime renewable energy development strengthens the economy, expands2729domestic manufacturing, enhances national security, and delivers2730reliable, affordable clean energy to the American citizenry.2731    Offshore wind energy is already becoming one of the foundational2732energy sources that coastal states depend upon, and maximizing the2733economic benefits it offers--including economic development and2734enhancing national security through stronger steel and maritime2735sectors--coincides with the spirit of the SHIPS Act. For the past four2736years, the U.S. offshore wind industry has been a major market for new2737commercial oceangoing support and construction vessels, despite its2738relative infancy. At present, 6 GW of power generation is under2739construction, creating a demand for more than 70 newbuild and retrofit2740vessels--a demand worth more than $1.8 billion in shipyard activity.2741This is just a fraction of the overall market, with another 50+ GW2742currently leased to private companies ready to begin development2743activity, and with total demand from states exceeding 116 GW. The2744pursuit of that full buildout and the harnessing of the subsequent2745economic opportunity for vessel demand by new and/or expanded shipyards2746falls directly in line with the established goals of the SHIPS Act and2747President Trump's April 9th, 2025 Executive Order titled ``Restoring2748America's Maritime Dominance'' \1\.2749---------------------------------------------------------------------------2750    \1\ The White House ``Restoring America's Maritime Dominance'',2751April 9, 2025 (https://www.whitehouse.gov/presidential-actions/2025/04/2752restoring-americas-maritime-dominance/)2753---------------------------------------------------------------------------2754    Oceantic Network supports the SHIPS Act because the fleet of Jones2755Act-certified vessels is essential to building the energy2756infrastructure needed to meet rising AI-driven power demand and ensure2757a stable, affordable grid for American citizens. At our current rate,2758the Department of Energy\2\ anticipates the U.S. will require2759additional power capacity demand to increase by 132 GW, driven2760primarily by the rise in AI and data centers. Offshore wind is a2761proven, reliable energy source that can scale easily to meet this2762demand with 6 GW of capacity under construction and another 10 GW2763shovel-ready. Last year in its first full year of operation, America's2764first commercial-scale project, South Fork Wind (132 MW) demonstrated2765baseload energy generation ability by staying online 92 percent of the2766time and achieved a 53 percent capacity factor in the first half of27672025\3\--on par with traditional energy sources\4\. This reliable2768performance is achieved while also driving down ratepayer costs in New2769England\5\ and Virginia\6\.2770---------------------------------------------------------------------------2771    \2\ Department of Energy/Berkley Lab 2024 Data Center Energy Usage2772Report, December 20, 2024 (https://escholarship.org/uc/item/32d6m0d1)2773    \3\ ;rsted ``One year of South Fork Wind'' (https://us.orsted.com/2774renewable-energy-solutions/offshore-wind/south-fork-wind-report)2775    \4\ U.S. Energy Information Administration ``Natural gas combined-2776cycle power plants increased utilization with improved technology'',2777November 20, 2023 (https://www.eia.gov/todayinenergy/2778detail.php?id=60984)2779    \5\ CT Dept of Energy & Environmental Protection (https://2780portal.ct.gov/deep/news-releases/news-releases--2025/deep-stoppage-of-2781revolution-wind-project-will-increase-costs-for-ct-and-new-england-2782ratepayers-make)2783    \6\ Dominion Energy Q2 2025 earnings call, August 1, 2025 (https://2784s2.q4cdn.com/510812146/files/doc_financials/2025/q2/2025-08-01-DE-IR-27852Q-2025-earnings-call-slides-vTCII.pdf)2786---------------------------------------------------------------------------2787Offshore Wind Has a Proven Record of Creating Shipbuilding Demand2788    Oceantic Network, by way of its in-house database Offshore Wind2789Market Dashboard\7\ tracks contracts, investments, and jobs tied to2790offshore wind vessel construction and operations. These figures are2791collected from publicly available records or disclosed directly from2792our members. The following are top-line numbers from the Dashboard:2793---------------------------------------------------------------------------2794    \7\ Oceantic Network Offshore Wind Market Dashboard (https://2795oceantic.org/market-dashboard/)27962797    Since 2020, more than $1.8 billion worth of domestic vessel2798        orders and shipyard upgrades has been kindled by U.S. offshore2799---------------------------------------------------------------------------2800        wind development.28012802    More than 170 U.S.-flagged, Jones Act-compliant vessels can2803        be documented as having performed work related to the U.S.2804        offshore wind industry.28052806    Twenty-five shipyards in 14 states have built new or2807        retrofitted 43 vessels for the U.S. offshore wind industry with2808        a further 18 vessels under construction, on order, or optioned.28092810    More than 3,500 shipbuilding jobs have been supported by2811        offshore wind vessel construction at only 6 of the above-2812        mentioned 25 shipyards, those where information was publicly2813        available or disclosed to Oceantic.28142815    Four of the vessels launched this summer used a combined2816        30,000 tons of U.S. steel from Alabama, North Carolina, Texas,2817        and West Virginia.28182819    The above facts are conservative to only what Oceantic can2820accurately and independently verify. The 170 US-flagged vessels do not2821include dozens of harbor tugs and port tenders, private research2822vessels, or fishing vessels chartered for scouting and safety. The2823shipbuilding jobs represent just some of the shipyards that have worked2824in the industry, and many of those where Oceantic was unable to verify2825figures are small, independent shipyards. Additionally, Oceantic cannot2826accurately quantify upstream jobs at the U.S. steel mills and component2827manufacturers across 30 states which feed shipyard supply chains, nor2828can we accurately define the hundreds of jobs performed by U.S.2829mariners aboard these vessels currently working at offshore wind2830projects. A map is included at the end of this document visualizing2831shipyards and steel that provided vessels for the offshore wind2832projects currently under construction.2833    These figures represent the flurry of actively largely based on2834just 6 GW of power generation; however much larger potential exists. A283550+ GW pipeline could bring the long-term demand needed to incentivize2836investments in larger, nearly $1 billion dollar installation vessels. A28372022 National Renewable Energy Laboratory report\8\ suggests that2838efficient and effective buildout will require five U.S.-flagged Wind2839Turbine Installation Vessels (WTIVs), four U.S.-flagged cable lay2840vessels (of which there are currently zero), and two U.S.-flagged scour2841protection vessels (of which there is only one, launched this year). To2842put context to the demand, this year there were nine foreign-flagged2843WTIVs and comparable Heavy Lift Vessels (HLVs) operating in the U.S.2844market to complete the 6 GW buildout against only Dominion Energy's2845Charybdis, delivered from its Brownsville, TX shipyard in August\9\. In28462024, approximately 64 percent of the vessels operating at U.S.2847offshore wind projects were U.S.-flagged, with the majority of capital-2848class vessels being foreign-flagged solely because the U.S. does not2849possess these kinds of vessels\10\. The demand for vessels will grow2850with the increasing industry, and developers will turn either to our2851domestic shipbuilders, or the opportunities will be lost to foreign2852entities. As/if the U.S. produces more of the necessary vessels, as2853listed above, the reliance on foreign-flagged vessels will diminish,2854and the benefits will remain in the United States.2855---------------------------------------------------------------------------2856    \8\ NREL 2022, ``The Demand for a Domestic Offshore Wind Energy2857Supply Chain (https://docs.nrel.gov/docs/fy22osti/81602.pdf)2858    \9\ Maritime Executive 2025, (https://maritime-executive.com/2859article/first-u-s-built-wtiv-charybdis-arrives-in-virginia-to-begin-2860installations)2861    \10\ Clarksons presentation at Oceantic's International Partnering2862Forum (IPF), April, 20252863---------------------------------------------------------------------------2864A Healthy Offshore Wind Market Supports the Offshore Oil and Gas Market2865    Offshore wind utilizes much the same technology and supply chain as2866the offshore oil & gas market. Yet, the demand for O&G-dedicated2867vessels has entirely dried up and offshore wind has helped Gulf2868shipyards and vessel operators weather the lapse in demand. Between28692022 and April 2025, there were zero U.S.-flagged Platform Support2870Vessels (PSVs) built for the oil & gas industry\11\, whereas in that2871time no fewer than 10 of these very vessels--or rough equivalents--2872received upgrades to work for U.S. offshore wind, including three2873complete retrofits; another three of these vessels are currently under2874retrofitted. Two newbuild offshore wind-dedicated Service Operations2875Vessels (SOVs), which are comparable to large PSVs, were launched in2876this time as well, with a third expected to launch in the next few2877months.\12\2878---------------------------------------------------------------------------2879    \11\ Clarksons IPF presentation, April, 20252880    \12\ OSW Market Dashboard2881---------------------------------------------------------------------------2882    At a time when an increasing number of offshore O&G-dedicated2883vessels are entering dry (read: long-term) storage as operators are2884finding maintaining them in active fleets is too expensive for the2885vessels' owners\13\, offshore wind is providing an extremely lucrative2886revenue stream for Gulf operators. For example: last year at Revolution2887Wind--the project most recently targeted with a Federal Stop Work2888Order--the revenue for vessel operators exceeded $500 million across 502889vessels\14\. Oceantic anticipates growing demand in the offshore wind2890sector as construction accelerates across three new projects and2891projects already under construction enter the long-term operations &2892maintenance phase\15\. At only 704 MW, Revolution is small compared to2893incoming projects, with at least one project off New York and a few off2894New Jersey expected to exceed 3,000 MW in size. If/when oil & gas's2895demand for vessels returns, those vessels built for the offshore wind2896industry can easily turn around and perform work for that industry. The2897SHIPS Act is propagated on the backbone of industry demand, and the2898U.S. offshore wind industry offers the clearest long-term demand signal2899in the offshore energy space while heavily supporting a dual-usage2900future.2901---------------------------------------------------------------------------2902    \13\ Clarksons IPF presentation, April, 20252903    \14\ Clarksons IPF presentation, April, 20252904    \15\ Clarksons e-mail to Oceantic, October, 20252905---------------------------------------------------------------------------2906Chinese Competition Threatens to Suffocate U.S. Shipbuilders2907    There is significant demand from the U.S. offshore wind industry2908for newbuild, American vessels. The limiting factors are 1.) permitting2909certainty, 2.) cost, and 3.) shipyard availability, two of which the2910SHIPs Act proposes to tackle. At present, a vessel owner cannot justify2911building WTIVs and other capital-class vessels in the United States.2912For the same cost to build one vessel here in five years\16\, a vessel2913owner could receive two WTIVs from Chinese shipyards, completed in2914three years\17\ \18\. Developers want to use U.S.-flagged vessels, but2915the lack of WTIVs means they are themselves unable to justify the cost2916of delay in queueing for Charybdis without risking cost overflow. For2917example: Charybdis, crewed by Americans, was supposed to install2918turbines at Revolution Wind and Sunrise Wind\19\. Instead, delays meant2919it was unavailable\20\, and developer ;rsted had to look2920internationally to stay on time and on budget.\21\2921---------------------------------------------------------------------------2922    \16\ Offshore Engineer, ``First US-Built Wind Turbine Installation2923Vessel Starts Sea Trials,'' (https://www.oedigital.com/news/522592-2924first-us-built-wind-turbine-installation-vessel-starts-sea-trials),2925February 20252926    \17\ Offshorewind.biz, ``First Steel Cut for Cadeler's Third A-2927Class Wind Foundation Installation Vessel,'' (https://2928www.offshorewind.biz/2025/07/16/first-steel-cut-for-cadelers-third-a-2929class-wind-foundation-installation-vessel/), July 20252930    \18\ Cadeler, ``Cadeler Takes Delivery of First A-Class Vessel and2931Enters New Strategic Chapter in Offshore Foundation,'' (https://2932www.cadeler.com/news/cadeler-takes-delivery-of-first-a-class-vessel-2933and-enters-new-strategic-chapter-in-offshore-foundations), September293420252935    \19\ ;rsted, ``Dominion Energy, ;rsted and Eversource Reach Deal on2936Contract to Charter Offshore Wind Turbine Installation Vessel,''2937(https://us.orsted.com/news-archive/2021/06/contract-to-charter-2938offshore-wind-turbine-installation-vessel), June 20212939    \20\ CT Examiner, ``;rsted-Eversource Partnership Announces2940Cancellation of Agreement for Charybdis (Updated),'' (https://2941ctexaminer.com/2024/05/22/orsted-eversource-partnership-announces-2942cancellation-of-agreement-for-charybdis/), May 20242943    \21\ Heavy Lift News, ``Cadeler's Wind Scylla installs first wind2944turbine for Revolution Wind Offshore Wind Farm in the US,'' (https://2945www.heavyliftnews.com/cadelers-wind-scylla-installs-first-wind-turbine-2946for-revolution-wind-offshore-wind-farm-in-the-us/), September 20242947---------------------------------------------------------------------------2948    Oceantic supports creating a Maritime Security Trust Fund with $2502949million annually for oceangoing vessel construction and $100 million2950per year for small shipyards. Targeted cost relief, paired with2951predictable schedules, is essential to de-risk orders and keep2952construction onshore.2953    The international backdrop underscores the urgency to support2954American shipyards. In 2023, Chinese yards accounted for roughly 902955percent of global WTIV builds (33 of 37)\22\--during that time U.S. was2956in the middle of constructing one--completely outpacing Western2957shipyards. In 2024, a report by the U.S. Naval Institute identified 202958large Chinese yards and 140 drydocks. Oceantic Industry knowledge and a29592021 MARAD report ``The Economic Importance of the U.S. Private2960Shipbuilding and Repairing Industry'' identify that there are only a2961few U.S. shipyards producing oceangoing commercial vessels, and only a2962fraction of those shipyards is capable of producing a vessel like a2963WTIV\23\. Most of America's drydocks are in yards that exclusively work2964on Navy contracts. The General Dynamics NASSCO shipyard in San Diego is2965the only shipyard that has enough docks and produces commercial2966vessels\24\, but it restricts itself to container ships and tankers in2967between its contracts for the Navy. Herein lies the purpose of the2968SHIPS Act, as exemplified by offshore wind's difficulty. The industry2969demand for large capital-class vessels was both an opportunity and a2970challenge for shipyards like Seatrium AmFELS shipyard (now2971Karpowership) in Brownsville and Hanwha Philly Shipyard in2972Philadelphia, the latter of which built the U.S.'s only subsea rock2973installation vessel--the second largest vessel in the fleet after2974Charybdis. Furthermore, even if it wanted to build a WTIV, NASSCO's2975largest drydock is 174 feet wide, while Charybdis is 184 feet wide\25\,2976an additional compound on the scarcity.\26\2977---------------------------------------------------------------------------2978    \22\ Hellenic Shipping News, ``Chinese Shipyards See Demand for2979Offshore Wind Installation Vessels,'' November 2023, (https://2980www.hellenicshippingnews.com/chinese-shipyards-see-de2981mand-for-offshore-wind-installation-vessels/)2982    \23\ MARAD ``The Economic Importance of the U.S. Private2983Shipbuilding and Repairing Industry'', March 30, 2021 (https://2984www.maritime.dot.gov/sites/marad.dot.gov/files/2021-06/Econo2985mic%20Contributions%20of%20U.S.%20Shipbuilding%20and%20Repairing%20Indus2986try.pdf)2987    \24\ General Dynamics NASSCO Company Information (https://2988nassco.com/about-us/company-overview/company-information/)2989    \25\ London Maritime Academy ``Virginia Welcomes the First2990American-Built WTIV Charybdis to Start Installations'', September 23,29912025 (https://www.lmitac.com/news/virginia-welcomes-the-first-american-2992built-wtiv-charybdis-to-start-installations)2993    \26\ General Dynamics NASSCO Company Information (https://2994nassco.com/about-us/company-overview/company-information/)2995---------------------------------------------------------------------------2996    There are also broader strategic considerations. Large offshore2997wind vessels are highly capable platforms with potential dual-use value2998across energy infrastructure and national security. The jack-up2999technology present in Charybdis is the same displayed by Chinese3000amphibious assault landing barges first reported in January of this3001year\27\. As previously stated, in the time that the United States3002built one of these vessels, the Chinese completed 33, with more on3003order. Many of these vessels are Chinese owned and operated--84 in3004total capable of installing turbines\28\.3005---------------------------------------------------------------------------3006    \27\ Naval News ``China Suddenly Building Fleet Of Special Barges3007Suitable For Taiwan Landings'', January 10, 2025 (https://3008www.navalnews.com/naval-news/2025/01/china-suddenly-building-fleet-of-3009special-barges-suitable-for-taiwan-landings/)3010    \28\ Bloomberg ``There Aren't Enough Ships to Install Giant3011Turbines Across Asia'', February 1, 2023 (https://www.bloomberg.com/3012news/articles/2023-02-01/asia-faces-shortage-of-ships-to-install-3013offshore-mega-wind-farms?sref=lDgLmqjg)3014---------------------------------------------------------------------------3015    China's expanding domestic fleet has contributed to its own3016offshore wind buildout. To date, the Chinese have installed 42.7 GW of3017offshore wind energy generating capacity, more than half of the3018offshore wind for the entire world\29\. This additional grid space3019allows them to fuel their own AI development. If America wants to3020compete with a severely advantaged Chinese AI sector, then we must3021close the vessels gap and build the offshore wind industry. Otherwise,3022we will be racing with our shoelaces tied together.3023---------------------------------------------------------------------------3024    \29\ Global Energy Monitor ``China's solar and onshore wind3025capacity reaches new heights, while offshore wind shows promise'' July,30262025 (https://globalenergymonitor.org/report/chinas-solar-and-onshore-3027wind-capacity-reaches-new-heights-while-offshore-wind-shows-promise/3028#::text=3029China's%20coastal%20provinces%20collectively%20outlined,the%20country's%303020total%20offshore3031%20capacity.)3032---------------------------------------------------------------------------3033The Next Generation American Workforce3034    Building the offshore wind merchant marine provides transferable3035skills to mariners and shipwrights alike. Union workers aboard heavy3036lift vessels, transport vessels, or support vessels can transfer their3037abilities to the oil & gas industry and the commercial shipping3038industry. Welders, carpenters, millwrights, and electricians building3039America's fleet can easily adapt from shipyards to construction,3040infrastructure, and more. Oceantic supports the modernized workforce3041development provisions in the SHIPS Act, because we believe a highly3042skilled American maritime workforce is both exportable and demandable.3043In 2024, the first cohort of U.S. offshore wind workers--members of3044Pile Drivers Local 56--were exported for work at projects in Europe3045aboard DEME's installation vessel Orion\30\ These men are examples of3046the international demand for skilled offshore workforce, one that the3047U.S. can provide if prioritized.3048---------------------------------------------------------------------------3049    \30\ E&E News ``In a first, U.S. offshore wind workers install3050turbines in Europe'', March 14, 2024 (https://www.eenews.net/articles/3051in-a-first-us-offshore-wind-workers-install-turbines-in-europe/)3052---------------------------------------------------------------------------3053    The standards imposed by the offshore wind industry are the highest3054in the maritime sector. As offshore wind's buildout builds the domestic3055workforce, not only do more Americans have access to above-medium-3056household-income jobs but also the skills necessary to reach beyond3057this sector. A modernized workforce is a competent one, and a competent3058workforce builds both the infrastructure demanded of it and the next3059generation of competent workers, with the effects compounding3060continuously.3061Additional Recommendations for the SHIPs Act3062    The SHIPS Act should be expanded to include added incentives for3063Heavy-Lift Vessels (HLVs) and Anchor Handling Tug Supply (AHTS)3064vessels. Oceantic recommends an additional 10 percent tax credit and3065government loan priority for these dual-use vessels. Dual-use vessels3066are those that can perform both commercial services and military3067missions.3068    HLVs, for example, can commercially carry monopiles or offshore oil3069& gas drilling rigs, and in military service they also can transport a3070battle-damaged destroyer\31\ or submarine out of theater or transport3071multiple barges or landing craft into theater. To qualify for dual-use3072incentives, an HLV should be semi-submersible to at least 40 ft (12 m)3073of water over the deck and have minimum dimensions of 770 ft (235 m)3074overall length, beam of 180 ft (55 m), and molded depth of 50 ft (15 m).3075---------------------------------------------------------------------------3076    \31\ U.S. Transportation Command ``MV Blue Marlin to lift, move USS3077Cole'', October, 2000 (https://www.ustranscom.mil/cmd/3078panewsreader.cfm?ID=28888CAE-5056-A127-59 DCA60757A307943E07&yr=2000#::text=WASHINGTON%20(USTCNS)%20%2D%2D%2D%20Heavy%20lift,r3080ise%20to%20meet%20the%20destroyer.)3081---------------------------------------------------------------------------3082    Likewise, oceangoing AHTS vessels capable of towing and installing3083floating turbine platforms can also deploy, recover, and relocate3084mobile drilling units and floating production, storage and offloading3085(FPSO) vessels commercially used in the offshore oil & gas industry,3086and military FPSOs as might be used to support forward basing and joint3087logistics over the shore. AHTS vessels also can be used to tow damaged3088capital ships, and they typically are equipped with equipment to fight3089fires at sea and act as standby vessels during offshore operations. To3090qualify for dual-use incentives, an AHTS vessel should have a minimum3091bollard pull of 242 to 275 short tons (220 to 250 metric tons) and a3092back deck area of at least 8,000 to 8,600 square feet (750 to 8003093square meters).3094    By further incentivizing construction of these dual-use vessels,3095not only does the SHIPS Act promote more strongly the buildout of our3096commercial offshore energy resources; it also advances our Navy's3097expeditionary warfare and humanitarian aid capabilities.3098Conclusion3099    The U.S. offshore wind industry is on a clear and deliberate path3100toward a strong, self-sufficient domestic supply chain. It has a3101quantifiable demand that has already sparked significant investment in3102U.S. commercial shipbuilding, and its vessels are adaptable to every3103other maritime need. The SHIPS Act will support this service. A strong3104offshore wind merchant marine must be established for both national3105energy and military security, and to do so requires Federal kindling3106into the Nation's shipyards. America must capitalize on the3107opportunity.3108            Sincerely,3109                                              Sam Salustro,3110               Senior Vice President of Market and Policy Strategy,3111                                                      Oceantic Network.3112                                 ______31133114 Prepared Statement of Brad Ford, Executive Vice President, Plate and3115                 Structural Products, Nucor Corporation3116    Chair Wicker, Ranking Member Schatz, and Members of the Committee,3117thank you for the opportunity to submit this statement on an issue of3118vital importance to the American economy, American national security,3119and the American steel industry. I am Brad Ford, Executive Vice3120President for Plate and Structural Products at Nucor Corporation3121(``Nucor''). With approximately 33,000 teammates at 300 locations3122throughout North America, Nucor is the largest and most diversified3123steel producer in the United States.3124    As a major supplier of steel to both civilian and military3125shipbuilding customers, Nucor understands the critical links between3126robust civilian shipbuilding capacity and the ability to produce3127sufficient tonnage for military applications in the event of a3128conflict. Nucor has supplied steel plate for both large commercial3129vessels and for some of the most advanced military shipbuilding and3130maritime applications. This includes steel plate for multiple Ford3131class aircraft carriers, Virginia and Columbia class submarines, guided3132missile frigates, and amphibious assault ships.3133    Unfortunately, in recent decades, the U.S. position in the global3134shipbuilding industry has been whittled away by competition from3135heavily subsidized, state-led industries in countries like China. The3136United States Trade Representative recently conducted an investigation3137under Section 301 of the Trade Act of 1974 into China's Targeting of3138the Maritime, Logistics, and Shipbuilding Sectors for Dominance. It3139found that, as a result of numerous unfair acts, policies, and3140practices,3141    China's market share in the global shipbuilding industry increased3142from just 5 percent in 1999 to more than 50 percent as of 2023, while3143deliveries from U.S. shipyards all but disappeared.\1\ This has had3144ripple effects throughout the supply chain, including in the steel3145industry, which has lost a significant source of downstream demand as3146domestic shipbuilding capacity closed down.3147---------------------------------------------------------------------------3148    \1\ Report on China's Targeting of the Maritime, Logistics, and3149Shipbuilding Sectors for Dominance, Section 301 Investigation, U.S.3150Trade Representative (Jan. 16, 2025) at vii.3151---------------------------------------------------------------------------3152    The American steel industry, however, remains capable of supplying3153the steel required to support a reversal of trends in American3154shipbuilding. In recent years, Nucor has been undertaking a $14 billion3155investment plan to ensure that it can produce the steel needed for any3156application, anywhere in the American economy. These investments3157include a $1.7 billion state-of-the-art plate mill in Brandenburg, KY,3158and a $280 million modernization of Nucor's plate mill in Tuscaloosa,3159AL. Along with our plate facility in Hertford County, NC, Nucor has the3160combined capacity to produce 3.5 million tons per year, all of which is3161made from start to finish in the United States by American workers. As3162noted above, these mills have long supplied plate for both civilian and3163military shipbuilding, including large commercial vessels and some of3164the Navy's most advanced warships.3165    According to data collected during the U.S. International Trade3166Commission's recent sunset review, the American industry had around 8.33167million tons of steel plate production capacity in 2021, while3168operating at less than 70 percent capacity utilization.\2\ This means3169that it could supply around three million additional tons per year.3170While these numbers are several years old, they are still a reasonably3171accurate snapshot of the industry's position today. If anything, they3172underestimate the domestic industry's capabilities because they do not3173include Nucor's Brandenburg mill, which began operations in 2022.3174---------------------------------------------------------------------------3175    \2\ Carbon and Alloy Steel Cut-to-Length Plate from Austria,3176Belgium, Brazil, China, France, Germany, Italy, Japan, South Africa,3177South Korea, Taiwan, and Turkey, Inv. Nos. 701-TA-560-561 and 731-TA-31781317-1328 (Review), USITC Pub. 5399 at C-9 (Table C-1).3179---------------------------------------------------------------------------3180    As a critical link in domestic shipbuilding supply chains, Nucor3181has previously expressed its support for both the SHIPS for America Act3182and for the U.S. Trade Representative's actions in response to China's3183unfair acts, policies, and practices. We reiterate that support here.3184Concerted government action to incentivize American shipbuilding3185capacity will be needed to revitalize domestic shipbuilding supply3186chains. While the steel industry has sufficient capacity to support3187these efforts, building resilience throughout the supply chain requires3188ensuring that new shipbuilding demand is supplied by American steel3189producers. This means tying, to the greatest extent possible, any3190incentives for new shipbuilding capacity to the use of steel that is3191melted and poured in the United States.3192    Thank you for the opportunity to submit this statement for the3193record. Nucor is prepared to submit any additional information that the3194Subcommittee may require.3195                                 ______31963197       Prepared Statement of the Navy League of the United States3198    Chair Sullivan, Ranking Member Rochester, and Members of the3199Committee,32003201    Thank you for the opportunity to submit this statement for the3202record on this important hearing on the state of the American3203commercial shipbuilding industry. The Navy League of the United States3204appreciates the Subcommittee's leadership on strengthening the U.S.3205maritime industrial base.3206    The Navy League of the United States is a nonprofit, civilian3207organization that supports strong, well-equipped U.S. sea services (the3208Navy, Marine Corps, Coast Guard, and U.S.-flag merchant marine) and a3209robust maritime industrial base. Our membership includes active-duty3210and retired military and maritime professionals, industry leaders,3211shipbuilders, maritime policy experts, and patriotic citizens who share3212a deep commitment to America's sea services. We regularly engage with3213workforce, industrial base, and sealift-readiness issues that affect3214national security and economic resilience, publishing a Maritime Policy3215Report to fulfill our mission to support the services, educate the3216public on the need for strong sea services, and advocate to national3217leaders on the needs of the services. Our fundamental belief is that3218the United States is a maritime nation whose national security and3219global prosperity depend on assured access to the global commons, the3220seas.3221    We are grateful that our national leaders have decided to seriously3222consider the health of our maritime industrial base. The Navy League3223strongly supports the efforts of the President's Executive Order and3224the bipartisan SHIPS for America Act because it reinvests in domestic3225shipbuilding capacity, improves surge sealift and sustainment3226resilience, and preserves skilled American maritime jobs. Revitalizing3227the commercial maritime industrial base is critical to national3228security, economic competitiveness, and supply chain stability.3229    A healthy commercial shipbuilding and repair sector provides the3230robust industrial base that the Department of Defense and Department of3231Homeland Security need during crises. Most shipyard jobs are dedicated3232to government shipbuilding or the domestic Jones Act market. The3233foundation of Jones Act shipyard jobs, which the Navy League has long3234supported, must be built upon to restore our commercial shipbuilding3235for international trade.3236    Domestic yards and a trained workforce shorten mobilization3237timelines for surge shipbuilding and repair. Decades of underinvestment3238and inconsistent funding for military shipbuilding have reduced the3239pool of skilled shipfitters, welders, naval architects, and marine3240engineers. Targeted investment in apprenticeship programs, community-3241college partnerships, and tuition support will restore capability more3242quickly and cost-effectively than rebuilding lost skills later. The3243Navy League is proud of its support for the Sea Cadets, as exposing3244youth to the importance of the sea services and the maritime industry3245creates a lifelong interest in maritime careers. The SHIPS Act makes3246multiple investments in workforce development.3247    Shipyards anchor regional economies and sustain supplier networks3248that produce gear and components critical across defense and commercial3249sectors. Assured cargo and incentives for U.S.-built commercial vessels3250will generate private-sector confidence to invest in retooling,3251automation, and workforce training.3252    Most significantly, dependence on foreign-built tonnage and3253components increases strategic risk. Incentivizing U.S. construction3254and domestic sourcing for critical components (hull sections,3255propulsion, navigation/electronics) reduces exposure to geopolitical3256disruption. The time to act is now: since the 1960s, 14 U.S. shipyards3257that constructed ships for the Navy have closed, and three have left3258the defense industry. Only one new shipyard has opened. As a result,3259just eight shipyards, owned by five prime contractors, build large Navy3260warships and Coast Guard cutters today.3261    The commercial shipbuilding industrial base also has similar3262concerns. Several of the larger classes of surface combatant and3263auxiliary ships have been built in only one or two shipyards. As a3264result, price and technical competition are limited, and the ability to3265increase production to meet future requirements is constrained without3266major infrastructure investments. Low throughput rates have also caused3267major cost increases from domestic suppliers, which also may need3268financial support to ensure domestic or allied sources of critical3269components and weapon systems.3270    The ship repair industrial base presents its own set of problems.3271The Navy's four government-owned shipyards are incapable of keeping up3272with the current nuclear ship repair demand, and they need major3273capital investments to upgrade infrastructure and modernize workflows.3274Also, additional drydocks are needed, and some must be upgraded to3275accommodate the large Virginia payload module and Columbia-class3276submarines. To address these deficiencies, the Navy established the3277Submarine Infrastructure Optimization Program (SIOP), initially3278programming $21B in expenditures over 20 years. However, recent bids3279indicate that much more funding will be needed, and the likelihood of3280increased submarine production will require acceleration of this3281effort. The movement of some nuclear ship repairs to commercial yards3282has not gone as planned, and it will require additional time and3283expense before they can accommodate the additional workload. The lack3284of dry-dock facilities has hampered conventional ship maintenance and3285repair. Investment to expand such capabilities will require new3286acquisition strategies that ensure stable workloads to justify such3287expenditures. All shipbuilding is related; a wider industrial base like3288that created by the SHIPS Act will have benefits for government3289shipbuilding.3290    This situation calls for a new maritime transportation strategy3291that generates future sealift requirements and capabilities to support3292the new National Defense Strategy focused on peer competition with3293Russia and China. That strategy also must generate sufficient U.S.-flag3294shipping to provide economic security during peacetime economic3295competition and during wartime conflict in a contested environment3296where attrition is inevitable. It also needs to include domestic3297commercial shipbuilding/repair to address wartime attrition of3298commercial and Naval vessels, battle damage repair, and maritime labor3299issues, shipyard and shipboard. It must encompass all other aspects of3300the U.S. maritime industry, the U.S. Marine Transportation System from3301port infrastructure to maritime cybersecurity in support of U.S.3302national and economic security. Without this domestic supporting3303infrastructure, the U.S.-flag merchant marine and military sealift3304capabilities would not be capable of supporting our national and3305economic maritime security.3306    Per our Maritime Policy Strategy, the Navy League recommends:33073308   Fully supporting the immediate passage of the SHIPS for3309        America Act. Many of its provisions are fully aligned with the3310        recommendations provided below.33113312   Administration promptly releasing the National Maritime3313        Transportation Strategy as called for in the FY2023 National3314        Defense Authorization Act and including implementing policies3315        and funding in future budget submissions if not included in the3316        SHIPS for America Act.33173318   Maintaining and defending the Jones Act. Weakening the law3319        would negatively impact national and economic security by3320        diminishing the seafaring and shipbuilding industrial bases.33213322   Robust support for the Maritime Security Program. Congress3323        should authorize and appropriate increased funding to account3324        for post-COVID-19 inflation to keep these 60 ships under the3325        U.S. flag.33263327   Full funding to account for actual costs and COVID-193328        inflation for at least the authorized 20 vessel Tanker Security3329        Program (more depending on TRANSCOM requirements included in3330        the yet to be released Center for Analysis study produced to3331        inform MARAD's forthcoming National Maritime Strategy) and for3332        a two-ship Cable Security Program.33333334   Full funding for the RRF to match combatant commander3335        readiness and capacity requirements as specified by reports3336        that are called for in the FY 2026 NDAA bills.33373338   Strong U.S. cargo-preference laws. We support increasing the3339        requirement to 100 percent of all government funded cargoes to3340        be carried on U.S.-flag ships (additional bulk ships3341        legislatively permitted to accommodate the requirement) to3342        increase the number of U.S.-flag ships and the mariners needed3343        to operate them, as well as enactment of the Energizing3344        American Shipbuilding Act for the carriage of domestic sources3345        of LNG and crude oil. (Both included in the SHIPS for America3346        Act).33473348   Building dual-use vessels. The Navy and MARAD should work3349        rapidly on recapitalizing the RRF by operationalizing the dual-3350        use vessel concept on AMH (commercially owned and operated3351        U.S.-flag, U.S.-built militarily useful ships operating on the3352        U.S. coastwise trades) or propose another viable alternative3353        such as allowing the operation of ships built under the3354        currently authorized 10-ship sealift vessel program in the3355        coastwise domestic trades where there is no existing commercial3356        service. These active RRF alternatives should be included in3357        the SHIPS for America Act.33583359   Full funding for RRF recapitalization, a responsibility that3360        Congress shifted from Navy to MARAD, using best commercial3361        practices for both new construction and used ship acquisitions3362        to meet USTRANSCOM/Navy wartime requirements.33633364   Full authorized funding of the U.S. Merchant Marine Academy3365        and six state maritime academies to meet the operational,3366        maintenance and capital improvements requirements, including3367        expanding the Student Incentive Program to fully meet demand.33683369   Providing dedicated funding for the authorized Maritime3370        Centers of Excellence, including graduate studies, to attract3371        new entrants into the maritime industry and to provide funding3372        for K-12 programs to help attract, educate and train the next3373        generation of mariners.33743375   Increasing the size of the maritime workforce by funding new3376        education, recruitment, development and retention programs that3377        will attract all population segments and ages.33783379   Ensuring a strong strategic sealift officer component in the3380        U.S. Navy Reserve. This ensures critical skills and experience3381        are retained to support Navy and sealift transportation and to3382        provide a backup pool of licensed mariners.33833384   Implementation of a robust military-to-mariner program. This3385        facilitates the transition of former Army, Navy and Coast Guard3386        Sailors/Mariners to certificated/licensed merchant mariner3387        positions to help address projected shortfalls.33883389   Updating the mariner availability study (drafted more than3390        seven years ago) to determine the adequacy of the current STCW-3391        qualified ocean-going workforce to crew surge sealift ships for3392        initial activation and protracted periods of operation.33933394   Use of National Defense Features on other vessels. Navy3395        funding of such features on both U.S.-and foreign-built onboard3396        TSP and MSP vessels (e.g., TSP CONSOL systems) is needed to3397        enhance their military utility in support of contingency3398        operations.33993400   Increased funding for marine highway corridors, connectors,3401        and state freight systems as part of the National Freight3402        Strategic Plan to improve infrastructure and developing AMH3403        vessels to expand the use of coastal waterways for freight and3404        passengers.34053406   Funding MARAD's energy conservation programs with resources3407        to promote sustainability throughout the MTS, including3408        research and technology in areas such as ballast water,3409        alternate fuels, small nuclear reactors, and energy management.34103411   Funding Title XI: At least $30 million is needed now,3412        followed by about $30 million in annual appropriations to keep3413        up with the potential demand, including replacement Jones Act3414        tankers and other vessels recently announced to be constructed3415        for foreign trades.34163417    The SHIPS for America Act is a timely, strategic investment in3418national security, economic resilience, and American workers. The Navy3419League urges the Committee to advance the bill with the recommendations3420above to ensure a sustained, modern commercial maritime industrial base3421capable of meeting 21st-century security and economic demands.3422    The views expressed are those of the Navy League of the United3423States and do not necessarily reflect the views of any individual3424member or affiliate.34253426                                              Mike Stevens,3427                                           Chief Executive Officer,3428                13th Master Chief Petty Officer of the Navy (Ret.),3429                                      Navy League of the United States.3430                                 ______34313432    Prepared Statement of Nathan Sandel, Director of Education and3433                    Community Development, Nauticus3434    Chair Sullivan, Ranking Member Rochester, and Members of the3435Committee,34363437    Thank you for the opportunity to submit this statement for the3438record. We are honored to contribute to this important conversation on3439the future of America's maritime workforce and the role the SHIPS for3440America Act can play in revitalizing it.3441Introduction3442    My name is Nathan Sandel, and I serve as the Director of Education3443and Community Development at Nauticus, a maritime discovery center and3444educational institution located in Norfolk, Virginia. We exist to3445benefit our community through education, impactful experiences and by3446sharing access to maritime resources. We serve thousands of students3447annually through hands-on STEM and maritime workforce development3448programs.3449    We are on the front lines of maritime education, working with3450students from diverse backgrounds, many of whom have never considered a3451future in the maritime industry. I submit this statement to highlight a3452critical gap in our national workforce strategy: the need to reach both3453underserved and gifted students before high school, or risk losing them3454to other industries or losing them entirely from the workforce.3455Statement of Position3456    Our organization strongly supports the SHIPS for America Act as it3457strengthens domestic shipbuilding, enhances our national security, and3458supports American workers. This legislation is a critical investment in3459our future. The maritime industrial base depends not only on ships and3460infrastructure, but on the people who will build, operate, and lead3461them.3462Analysis3463    Each year, thousands of high-paying, STEM-rich jobs in3464shipbuilding, seamanship, port operations, and naval architecture go3465unfilled. Yet two groups of young people who could fill this gap are3466being overlooked:34673468  1.  Underserved students from urban and rural communities, who rarely3469        see maritime careers as accessible-or even know they exist.34703471  2.  Gifted students who are funneled toward traditional elite paths,3472        with little exposure to maritime science, engineering, or3473        leadership opportunities.34743475    Both groups represent untapped talent. Unless we reach them before3476high school, we risk losing them forever.3477Recommendations3478  1.  Invest in Early Maritime Exposure (Grades K-8)34793480     Fund maritime STEM programming in elementary and3481            middle schools.34823483     Invest in maritime based afterschool programs.34843485  2.  Position Maritime as Elite STEM34863487     Target gifted programs and magnet schools with3488            messaging that frames maritime as intellectually rigorous3489            and globally significant.34903491     Highlight careers in naval architecture and3492            engineering.34933494     Make maritime visible and aspirational, like aviation3495            and space have done.3496Conclusion3497    America's maritime workforce future depends on talent we are3498currently overlooking. By reaching underserved students who don't see3499themselves in maritime, and gifted students who are not told it's for3500them, we can build an equitable, resilient, and elite workforce3501pipeline.3502    The time to act is now. We urge the Committee to pass the SHIPS for3503America Act and ensure that workforce development, especially early,3504inclusive outreach is a core component of its implementation.3505    Thank you for your leadership and for the opportunity to contribute3506to the record.35073508                                             Nathan Sandel,3509                   Director of Education and Community Development,3510                                                              Nauticus.3511                                 ______35123513         Prepared Statement of New American Industrial Alliance3514    Dear Chairman Sullivan, Ranking Member Blunt Rochester, and Members3515of the Committee:35163517    I write on behalf of the New American Industrial Alliance, an3518association of more than seventy companies and institutional investors3519focused on strengthening the U.S. industrial base. Our members3520represent sectors ranging from aerospace and defense to nuclear energy,3521maritime industry, critical minerals, machine tools, auto supply3522chains, medical manufacturing, and beyond, along with investors active3523in multiple asset classes.3524    We strongly support the SHIPS for America Act and the need to3525revitalize the commercial maritime industrial base. In addition to this3526proposed legislation's direct positive impact on America's maritime3527industry, we encourage the Committee to also consider the importance of3528a healthy commercial shipbuilding industry to a broad array of3529manufacturing supply chains and innovation ecosystems. A strong3530shipbuilding sector provides demand for and foundational support to3531other critical industries, such as machine tools, robotics, advanced3532manufacturing technologies, including AI for manufacturing,3533fabrication, critical minerals processing, and more.3534    A 2021 U.S. Maritime Administration (MARAD) report found that the3535U.S. private shipbuilding and repairing industry generated3536approximately $30 billion of GDP and over 276,000 jobs through indirect3537impacts, even though only three oceangoing commercial ships were3538produced in the United States in that year. A stronger commercial3539shipbuilding sector could, therefore, produce significant benefits3540throughout the economy, and particularly in manufacturing sectors.3541    At the same time, however, shipbuilding is a capital-intensive,3542cyclical business subject to intense competitive pressure from3543government-subsidized foreign rivals. Every major shipbuilding nation3544provides billions of dollars in subsidies to shipbuilders. A recent3545USTR Section 301 Investigation report details hundreds of billions of3546subsidies provided by China, in particular. China's commercial3547shipbuilding capacity now exceeds U.S. capacity by a factor of more3548than 200 to 1.3549    The decline of U.S. shipbuilding represents a major national3550security risk. It also represents the loss of jobs, workforce3551capabilities, process knowledge, forgone technological innovation, and3552reduced opportunities across U.S. manufacturing and manufacturing3553technology sectors.3554    For these reasons, we strongly urge the committee to pass the SHIPS3555for America Act, a critical step to strengthen U.S. shipbuilding3556capacity, enhance national security, and support the revival of3557America's broader industrial base. Thank you for your consideration.3558            Sincerely,3559                                              Julius Krein,3560                                                         President,3561                                      New American Industrial Alliance.3562                                 ______35633564Prepared Statement of Marine Engineers' Beneficial Association, AFL-CIO3565                               (M.E.B.A.)3566    Chairman Sullivan, Ranking Member Blunt Rochester, and Members of3567the Subcommittee, thank you for the opportunity to submit this3568statement for the record on behalf of the Marine Engineers' Beneficial3569Association (M.E.B.A.). M.E.B.A. is the Nation's oldest maritime labor3570union, proudly representing the licensed deck and engineering officers3571who crew the U.S.-flag commercial fleet--men and women who serve as the3572backbone of our Nation's merchant marine.3573    Today's hearing titled ``Sea Change: Reviving Commercial3574Shipbuilding?'' arrives at a pivotal moment for America's maritime3575future. For decades, the United States has witnessed the slow erosion3576of its commercial shipbuilding base and the decline of its U.S.-flag3577fleet, once the envy of the world. At the end of World War II, the3578United States commanded over 5,500 oceangoing commercial vessels flying3579the American flag, representing nearly sixty percent of the world's3580merchant tonnage. Today, that number has fallen to less than two3581hundred ships, representing less than just one percent of the world's3582shipping capacity. The consequences of this decline are profound as3583each lost ship means fewer skilled mariners, diminished shipyard3584capacity, and weakened national readiness.3585    By contrast, China has over the years developed a shipbuilding3586industry that overshadows the rest of the world. Backed by massive3587governmental subsidies, state-owned enterprises, and a national3588strategy to dominate global logistics, shipping, and shipbuilding,3589China has created a maritime ecosystem that now builds, finances,3590insures, and operates the majority of the world's vessels. This3591dominance has not occurred by accident--it has been carefully3592constructed to secure China's control over nearly every aspect of3593global commerce. As a result, America's dependency on foreign-flagged3594ocean carriers, particularly those operating under foreign ``flags of3595convenience'' pose not only an economic risk, but a clear threat to our3596national security.3597    The global pandemic made this reality impossible to ignore. When3598COVID-19 disrupted international trade, more than one hundred ships3599idled off American ports, exposing the fragility of supply chains3600dominated by foreign carriers. The bottlenecks that followed rippled3601through every sector of the U.S. economy, driving up costs for3602consumers, small businesses, and farmers alike. It is now abundantly3603clear that the United States cannot depend on foreign shipping3604interests to move the goods that sustain our economy. Rebuilding3605America's maritime industrial base--including our shipyards, merchant3606fleet, and pool of mariners--demands a decisive and unified ``whole of3607government'' approach. As such, Congress and the Administration must3608develop and execute a robust national maritime strategy that aligns3609U.S. industrial policy, defense readiness, trade competitiveness, and3610workforce development with one clear objective: to restore American3611maritime dominance.3612    That is why this hearing is so important. Reinvigorating U.S.3613shipbuilding cannot succeed unless we simultaneously strengthen the3614economic foundations that support it. Without policies that foster3615access to commercially imported and exported cargoes made available for3616U.S.-flag carriers, we may build as many ships as possible, but we3617would still have no cargo for them to move.3618Simply put, we must build a demand signal.3619    The bipartisan SHIPS for America Act introduced by Senators Mark3620Kelly (D-AZ) and Todd Young (R-IN) represents a commendable first step3621toward restoring American shipbuilding capacity, expanding shipyard and3622mariner employment, and strengthening the U.S. merchant marine.3623M.E.B.A. applauds the leadership behind this legislation and the3624recognition it has received from both Congress and the Administration.3625Subsequently, President Trump's recent Executive Order on ``Restoring3626American Maritime Dominance'' and the U.S. Trade Representative's3627Section 301 investigation into China's targeting of the maritime,3628logistics, and shipbuilding sectors underscore a renewed commitment to3629maritime policy at the highest levels of government. Together, these3630initiatives signal a turning point in our national policy: an3631acknowledgment that a strong American maritime industry are3632foundational to our economic and military strength.3633    While these measures lay important groundwork, they do not yet3634address the central obstacle preventing U.S.-flag vessels from3635competing in global commerce: cost. The average total cost of operating3636an American vessel in foreign commerce is approximately 2.7 times3637higher than a foreign-flag equivalent. This is largely driven by3638foreign exploitation of labor costs, circumvention of U.S. taxes,3639skirting of safety and environmental standards, and the heavy subsidies3640foreign competitors receive from their respective governments. If we3641are to close this gap, Congress and the Administration must consider3642policies that directly level the playing field for U.S.-flag carriers.3643    One of the most promising approaches is a ``Ship American'' tax3644deduction, modeled on the analysis conducted by the American Maritime3645Congress (AMC) earlier this year. That study, prepared by Price3646Waterhouse Cooper (PwC), evaluated the economic and revenue effects of3647allowing U.S. importers and exporters to claim a 200 percent deduction3648for shipping expenses associated with the use of U.S.-flag vessels. The3649results were striking. The proposal would reduce the after-tax cost of3650shipping on an American vessel by roughly twenty-five percent,3651effectively erasing much of the cost differential between U.S.-flag and3652foreign-flag carriers. The study estimated that such a policy could3653increase demand for U.S.-flag shipping by approximately twenty3654percent--an equivalent to adding 18 to 20 new vessels to the U.S.-flag3655fleet over ten years.3656    This kind of incentive-based policy would not only make U.S.-flag3657shipping more competitive but would also strengthen American3658manufacturing and logistics networks. Much like the ``Buy American''3659and ``Build American'' provisions that sustain domestic production, a3660``Ship American'' tax incentive would encourage major shippers (i.e.,3661retailers, agricultural exporters, and industrial producers, etc.) to3662voluntarily move more cargo on American ships. By leveraging the U.S.3663tax code to reward companies that invest in the national interest,3664Congress can generate real, market-based demand for American shipping,3665creating the commercial foundation necessary to sustain U.S.-built3666vessels, American shipyards, and American mariners. Constructing ships3667without providing incentives for cargo is akin to building trains3668without tracks, or creating cities that are inaccessible. Establishing3669cargo incentives via legislation for U.S.-flag vessels will serve as a3670definitive demand signal, indicating to the world that the American3671maritime industry is open for business and poised for future growth.3672    Ultimately, the health of the American maritime industry cannot be3673restored through a single executive order or piece of legislation. It3674requires a comprehensive, long-term national maritime strategy that3675ties together shipbuilding, workforce development, port infrastructure,3676and commercial competitiveness for U.S. shipping lines. It requires3677that we produce maritime policy not as a niche industrial concern, but3678as a cornerstone of national strength. America's ability to project3679power, deliver military and humanitarian aid, and control its domestic3680supply chains is based upon its ability to move goods and sustain3681global trade under its own flag.3682    Thank you once again for convening this important hearing and for3683your continued, bipartisan support of the American maritime industry.3684We urge the Committee to consider a legislative markup for the SHIPS3685for America Act as the Trump Administration develops a Maritime Action3686Plan (MAP) this year. But we must go even further. We must ensure that3687U.S.-flag ships can compete for the world's cargoes so that American3688shipyards can have the contracts to build, that will ultimately expand3689future opportunities for our maritime workforce. Only by generating3690sustained commercial demand and leveling the global playing field can3691we restore America's rightful place as a maritime leader.3692    M.E.B.A. and its members stand ready to work with Congress, the3693Administration, and our maritime industry partners to revitalize U.S.3694shipbuilding, strengthen our maritime workforce, and ensure that the3695United States is no longer dependent on foreign interests to move its3696own goods and commerce. Thank you for the opportunity to share our3697views ahead of the hearing.3698                                 ______36993700Prepared Statement of Rear Admiral James Watson (USCG, ret.), on behalf3701  of the Maritime Accelerator for Resilience (MAR) and the authors of3702                            Zero Point Four3703    Dear Chairman Sullivan, Ranking Member Blunt Rochester and members3704of the Committee,37053706    We thank the Committee for the opportunity to submit a statement.3707On behalf of the Maritime Accelerator for Resilience (MAR) and the3708authors of Zero Point Four, we offer these comments to encourage a3709harmonized approach to maritime industrial policy--one that aligns3710trade, national security, and shipbuilding revitalization goals. Our3711organization strongly supports the SHIPS for America Act to provide a3712coherent framework for a revised National Maritime Strategy.3713The Need for a new Strategic Maritime Policy3714    The United States has taken important steps in recent months to3715reassert maritime competitiveness and resilience. The bipartisan SHIPS3716for America Bill, Executive Orders to address U.S. dependence on3717Chinese Maritime Supply Chains, and bipartisan recognition of maritime3718vulnerabilities all point toward the same imperative: rebuilding3719industrial capability for the construction and maintenance of3720commercial and military-relevant vessels.3721    Our national maritime security includes national security, economic3722security, food and energy security, climate security and American3723workforce security. Currently our Nation's maritime leaves us with3724vulnerabilities in all these areas. This legislation begins to address3725our weakened state of having less than 200 seagoing U.S. flagged3726commercial ships compared to the 55,000+ global foreign owned, foreign3727crewed, foreign government controlled ships (0.4 percent). Enacting the3728SHIPS for America Act will motivate U.S. private investment and public3729focus to capture enormous untapped opportunities and improve our3730maritime competitiveness.3731Near-term recommendations of Zero Point Four3732    The SHIPS Act and the Zero Point Four framework both call for a3733revitalization of U.S. maritime manufacturing through targeted, long-3734term incentives. For example:37353736   Recommendation #12 of Zero Point Four encourages reforming3737        MSP to give preference to newer vessels and to ships built in3738        the U.S. or by allied nations.37393740   Recommendation #22 highlights the power of regulatory3741        preferences to de-risk private capital and spur new shipyard3742        investment.37433744   Recommendation #38 calls for reducing dependence on3745        adversarial build, finance, and flag arrangements in the U.S.3746        sealift system.3747Modernization of the MSP Fleet: A Timely Opportunity3748    Currently, 48 of the 60 vessels in the MSP fleet are more than 153749years old and are likely to be replaced within the next 2-3 years. This3750replacement cycle presents a unique opportunity to shift toward newer,3751more capable ships built in the U.S. or allied shipyards. However, if3752exemptions are not time bound or appropriately structured, program3753participants may opt to replace aging tonnage with more affordable--but3754strategically misaligned--Chinese-built vessels.3755    We recognize the concern that limiting eligibility to U.S.-built3756(or allied-built) vessels may increase costs to the government in the3757short term. However, the magnitude of these increases is manageable3758when contextualized:37593760   A Chinese-built vessel may cost approximately $60 million,3761        while a U.S.-built equivalent could be in the $180-200 million3762        range.37633764   This represents a capital cost differential of $120-1403765        million per ship, but when amortized over a 20-year lifecycle,3766        it equates to an annualized cost of $6-7 million per ship.37673768   For the 8 Chinese-built vessels currently in MSP, the3769        additional cost over 3 years is roughly $168 million, or $563770        million/year.37713772   However, these same vessels already receive $127 million in3773        subsidies over the same period under MSP, suggesting that the3774        marginal cost of shifting to U.S.-built ships is relatively3775        modest and can be further mitigated with phased procurement.37763777    Moreover, incorporating U.S. allies such as South Korea and Japan3778into the eligibility framework can serve as a practical bridge--3779offering more competitive pricing than U.S.-built ships while still3780reinforcing secure supply chains.3781Strategic Commercial Fleet: 250 Vessels in International Commerce3782    We support Title 4 of the SHIPS for America Act that proposes3783creating a Strategic Commercial Fleet.3784    There were about 80,000 foreign vessel port calls into U.S. ports3785last year involved in $1.9 trillion of traded goods and commodities.3786Assuming that involved about 3,000 distinct ships, then increasing the3787U.S. flag fleet to 450 ships (200 plus 250 Strategic Commercial Fleet3788ships) making regular U.S. port calls could be about 15 percent of the3789port calls. Although that would not be enough capacity to support the3790U.S. economy, it's reasonable to assume that no more than half of the3791normal foreign flag fleet would abandon the U.S. trade in favor of a3792strategic competitor, therefore the import/export trade might only be3793reduced by 33 percent instead of 50 percent.3794    Beyond our own economy, the United States national security depends3795on deterrence and free trade. The UN Convention on the Law of the Sea,3796implemented in 1982, has provided the framework for the peaceful,3797shared use of the high seas for over 40 years. In 1982, the U.S.3798negotiators of UNCLOS would likely have assumed the U.S. would maintain3799around 800 U.S. flagged and crewed commercial ships (the fleet number3800at that time) to assist the USN and USCG to monitor compliance and3801benefit from the convention. Rebuilding that fleet back to at least 4503802ships via the Strategic Commercial Fleet provision of the SHIPS for3803America Act would begin to reverse the deteriorated national security3804expectations of UNCLOS that we are currently experiencing. Finally, we3805point to the disparity between U.S. flag international commercial3806aircraft and U.S. flag international commercial ships. Both go hand in3807hand supporting the U.S. economy and strategic logistics. Yet, whereas3808U.S. flag international commercial aircraft are 10 percent of all3809international aircraft, U.S. flag seagoing commercial ships are 0.43810percent of international seagoing ships.3811Recommendations3812    We encourage the Committee to pursue the revival of vibrant3813shipbuilding industrial base and workforce. The pathway to success is3814embedded in the SHIPS for America Act. We particularly recommend the3815following as presented in detail in the book Zero Point Four:38163817   Launch a public awareness campaign in partnership with key3818        industry, academic and public organizations (MARAD, DoD, and3819        DHS). Increase the general understanding about shipping,3820        highlight the security risks of a weak U.S. maritime sector,3821        and attract new career-minded workers to the industry.38223823   Invest in a sustainable U.S. economic security plan to3824        increase the amount of U.S.-controlled, ocean-going tonnage,3825        engaged in international trade. This recommendation is3826        reflected in the various sections of the SHIPS for America Act.38273828   Create a network of maritime innovation hubs to pool co-3829        invested capital from government and industry for competitive3830        maritime technology advancements. This recommendation is3831        reflected in Subtitle C of the SHIPS for America Act.38323833   Establish the U.S. as the leader in small modular reactors3834        for international commercial ships. The U.S. is in a unique3835        position to pioneer the integration of nuclear propulsion into3836        the global commercial fleet. Other countries may supply the3837        hulls and superstructure, but the U.S. can completely control3838        the engine room.38393840    These and other recommendations published in Zero Point Four would3841provide the necessary clarity and runway for fleet operators,3842shipyards, and investors to act and achieve the sorely needed3843principles of maritime security for the United States.3844Conclusion3845    The U.S. maritime industrial base will not revitalize itself3846through one-time deals, tax incentives or subsidies dependent on one3847appropriation. It requires coherent, aligned, and predictable policy3848signals across the regulatory and trade landscape. By passing the SHIPS3849for America Act, we can achieve national resilience goals in a way that3850is both affordable and strategically sound.3851    We stand ready to support further consultations and thank the3852Committee for their consideration to advance these goals.38533854                     Rear Admiral James Watson (USCG, ret.)3855                   On behalf of the Maritime Accelerator for Resilience3856                                     and the authors of Zero Point Four3857Attachment: Bios of MAR/Zero Point Four co-authors3858                                AUTHORS3859Rear Admiral James Watson (USCG, Ret.)3860    James Watson is currently an independent consultant providing3861business development services to maritime clients. He previously held3862the position of Senior Vice President of American Bureau of Shipping3863Global Government Services, where he was responsible for the government3864market sector across the four ABS divisions and technology. Before3865becoming Senior VP of Global Government Services, Watson was President3866and COO for the Americas Division where he was responsible for all3867operations of the American Bureau of Shipping in the Western3868Hemisphere. Prior to joining ABS, Watson served as Director of the3869Bureau of Safety and Environmental Enforcement at the U.S. Department3870of Interior. In this role he provided regulatory oversight for energy3871exploration and production on the U.S. Outer Continental Shelf. Before3872becoming BSEE Director, Watson served as the U.S. Coast Guard's3873Director of Prevention Policy for Marine Safety, Security and3874Stewardship, where his responsibilities included commercial vessel3875safety and security, ports and cargo safety and security and maritime3876investigations. He was also designated as the Federal On-Scene3877Coordinator for the government-wide response to the Macondo incident in3878the Gulf of Mexico. Watson earned a Bachelor's of Science in Marine3879Engineering from USCGA in 1978. He received his Master of Science in3880Naval Architecture and his Master of Science in Mechanical Engineering3881from the University of Michigan in 1985. Watson earned an additional3882Master of Science in Strategic Studies at the National Defense3883University in 2001.3884Carleen Lyden Walker3885    Carleen Lyden Walker is the Chief Evolution Officer of3886SHIPPINGInsight, leveraging off her experience as a marketing and3887communications professional in the commercial maritime industry with3888over 40 years of experience. She specializes in identifying, developing3889and implementing strategic programs that position SHIPPINGInsight as3890the most effective forum for shipowners and solution providers to3891advance optimization and innovation in the maritime sphere. In 2015,3892Ms. Lyden Walker was appointed a Goodwill Maritime Ambassador by the3893International Maritime Organization (IMO). She is a member of WISTA3894(Women's International Shipping and Trading Association), the3895Connecticut Maritime Association, WIMAC (Women in Maritime Association,3896Caribbean) and is a Past-President of the Propeller Club Chapter of the3897Port of NY/NJ. She was also elected to the Board of the New Era Academy3898(Baltimore Harbor School). Ms. Lyden Walker is also CEO of Morgan3899Marketing & Communications, Co-Founder/CEO of NAMEPA, and Founder of3900both CARIBMEPA and the Consortium for International Maritime Heritage.3901In 2010 she was awarded the Certificate of Merit by the United States3902Coast Guard, and in 2014 a Public Service Commendation for her work on3903World Maritime Day and AMVER, respectively. In 2023, the USCG presented3904her with the Distinguished Service Medal.3905Rich Mason3906    A 25+ year veteran of technology titans such as AT&T, Lucent3907Technologies' Bell Labs, and Honeywell International, Rich Mason3908possesses deep expertise in the fields of cyber security, physical3909security, and enterprise resilience. His last corporate post was as3910Honeywell's Global Vice President and Chief Security Officer (CSO).3911Prior to that, he held the role of Chief Information Security Officer3912(CISO). Honeywell is a Fortune 100 conglomerate with a market cap3913exceeding $130B. Honeywell Global Security, a converged unit within3914Honeywell that provided cyber, physical, product, and classified3915security services, achieved a number 1 global ranking in the Industrial3916and Manufacturing sector during his tenure (Security Magazine, Security3917500 Report). Rich now leads Critical Infrastructure LLC, a boutique3918Virginia-based consultancy, where he combines his unique experience, a3919Honeywell Operating System (HOS) and Six Sigma mindset, and a3920relentless focus on innovation, trust, and resilience as business3921enablers. His visioneering approach enables startups, venture capital3922firms, corporate boards, and think tanks to challenge assumptions,3923positively disrupt markets and digitally transform the world. An3924engaging communicator, demonstrated practitioner and creative thinker,3925Rich is well-respected among his peers in the cyber, information, and3926physical security domains. He is vocal about how the practical3927application of theory should be present at all layers of an3928organization, and passionately challenges the idea of 'tick box' (vs3929actual) security. Mason is a is an active member of the George Mason3930University's National Security Institute (NSI) Cyber and Technology3931Center, a contributor within a U.S. maritime security accelerator3932coalition, a former member of the Secret Service's New York Electronic3933Crimes Task Force, a graduate of the FBI's Executive Academy, and a3934retired member of the FBI's National Security Business Alliance Council3935(NSBAC) and Domestic Security Alliance Council (DSAC). An Alumni with3936honor from Michigan State University, Mason received his Criminal3937Justice bachelor's degree with a specialization in Security Management.3938Jonathan Kempe3939    Jonathan Kempe is an entrepreneur, founder, and technology3940strategist with over 23 years of professional experience across a broad3941array of disciplines. Jonathan has held a number of diverse roles over3942his working life: From senior positions in large corporations, founding3943and running several small businesses, holding trusted roles in3944nationally accredited NFPs and NGOs, and providing technical services3945to the Australian Defense Force sector. When running Sydney-based3946Verifai, Jonathan developed deep experience in global supply-chains,3947including the implementation of unique security solutions--involving3948PhySec, CyberSec, IoT, biometrics, and a range of communication3949standards--to solve practical problems related to theft and cargo3950tampering, and to provide tracking services for product provenance.3951Jonathan is well connected within the Australian and New Zealand3952business communities, has lectured in universities, and spoken at3953conferences across the world, and regularly contributes to industry3954advocacy efforts through the provision of unique insights, research and3955ideation. Jonathan now leads Source Consulting, an innovative strategic3956consultancy, based in New Zealand. He is passionate about solving3957global problems, loves to work alongside like-minded individuals, and3958is dedicated to building impactful solutions that positively transform3959the world.3960Nishan Degnarain3961    Nishan Degnarain is a Harvard-educated Development Economist3962working on addressing sustainability with fast-growing technologies. He3963is currently co-founder and Managing Partner of The ExO Organization, a3964leading Silicon Valley technology and sustainability advisory firm. He3965has given keynote addresses to Governments, various United Nations3966agencies, the IUCN, World Bank and IMF, and has worked with some of the3967biggest technology companies on breakthrough innovations for the ocean.3968In 2017, he launched the World Economic Forum's Center for the Fourth3969Industrial Revolution in San Francisco to harness the power of3970technology to address some of the world's most pressing environmental3971problems. Since 2013, Nishan has chaired the World Economic Forum's3972Global Agenda Council on the Ocean, a group of leading ocean experts3973from around the world that meet at Davos each year. He sits on several3974boards, and was previously on the Monetary Policy Committee of the3975Central Bank of Mauritius and helped establish the National Ocean3976Council for their newly created Ministry of Ocean Economy. Prior to3977this, Nishan worked at McKinsey and Company, the World Bank, the UK3978Prime Minister's Strategy Unit under Tony Blair, and as a broadcast3979journalist for the BBC. Nishan holds an undergraduate degree from the3980University of Cambridge and a postgraduate degree from Harvard3981University's Kennedy School of Government in International Economic3982Development. He is the author of Soul of the Sea in the Age of the3983Algorithm (2017), on how exponential technologies can heal our oceans,3984and has won several international awards, such as being recognized as a3985Young Global Leader by the World Economic Forum and winning the3986Economist's Ocean Economy Innovation Prize.3987Captain Anuj Chopra3988    Captain Anuj Chopra is an international executive, enterprise risk3989manager, and an ESG champion who has successfully forged client3990relationships in the maritime industry for more than three decades. He3991co-founded ESGPlus LLC, an international consulting firm focused on3992bringing sustainability, resiliency, efficiency, and independent board3993advisory to clients invested in a sustainable global maritime supply3994chain. Before his time at ESGPlus, Captain Chopra spent nearly a decade3995as a Vice President Americas of RightShip, negotiating high-level due3996diligence and compliance agreements in developing business across3997Americas. Prior to his time at RightShip, he served as the President of3998Anglo-Eastern Houston, with direct oversight of vessels visiting U.S.3999ports, risk evaluation, and government relations. Captain Chopra began4000his seafaring career as a deck cadet, working his way up to Captain. He4001has commanded large bulk carriers and tankers and holds a Commonwealth4002Extra Masters Certificate of Competency, Shipping Management from the4003Indian Institute of Management, Ahmedabad, India, and ACUE4004Certification. Captain Chopra currently serves as a Fellow of The4005Nautical Institute (Chairperson of the U.S. Gulf Branch), is on the4006Board of Directors at the Houston International Seafarers Center,4007Member of NOAA FACA HSRP, Advisory Board member of Houston Maritime4008center, and is an Adjunct Professor for the Supply Chain & Logistics4009Technology program at the University of Houston, where he has served as4010a lecturer and teacher for more than 32 years.4011                         ABOUT ZERO POINT FOUR4012    Dive into ``Zero Point Four,'' a compelling collaboration by six4013maritime, ocean and security experts, led by U.S. Coast Guard veteran4014Rear Admiral James Watson, as they illuminate the alarming decline of4015the U.S. maritime industry. The United States, a maritime nation, is on4016a precipice. Where once over half the world's ocean-bound vessels flew4017the U.S. flag after WW2, today, U.S.-flagged ships amount to less than40180.4 percent. This staggering decline threatens America's National4019Security, Economic Security, Energy and Food Security, Climate4020Security, and Workforce Security.4021    In this groundbreaking book, the authors introduce the ZP44022Framework, evaluating the U.S. maritime industry's importance through4023five lenses. From the scarcity of military support vessels to threats4024against U.S. dollar-denominated trade, and from the shortage of U.S.4025mariners and vessels for energy and food security, to the urgent need4026for climate-resilient maritime operations, the book meticulously4027dissects America's maritime vulnerabilities.4028    The authors don't just identify problems; they present a visionary402957-point Action Plan to revolutionize the U.S. maritime sector within a4030decade. This plan, vetted by experts and industry leaders, offers bold4031proposals for a new and holistic U.S. National Maritime and Blue4032Economy Strategy.4033    As the world grapples with uncertainty--pandemics, conflicts, and4034climate crises--America's reliance on a robust maritime sector has4035never been more crucial. The authors passionately argue that the ZP44036Framework isn't just a call to action; it's a roadmap to a more secure,4037preeminent, and viable United States.4038    Join the authors on this urgent mission to strengthen America's4039maritime destiny. The seas beckon, and the security of a nation hangs4040in the balance. With practical solutions within reach, ``Zero Point4041Four'' is a rallying cry for business, workforce, public and military4042leaders to safeguard America's maritime interests and secure its4043future.4044                                 ______40454046                                 Lake Carriers' Association4047                                     Westlake, OH, October 21, 202540484049Hon. Ted Cruz,4050Chairman,4051Committee on Commerce, Science, and Transportation,4052Washington, DC.4053Hon. Maria Cantwell,4054Ranking Member,4055Committee on Commerce, Science, and Transportation,4056Washington, DC.40574058Dear Chairman Cruz and Ranking member Cantwell:40594060    The Lake Carriers' Association (LCA) supports the enactment of4061S.1541, the SHIPS for America Act of 2025.4062    Since 1880, LCA has represented the U.S.-flag Great Lakes fleet,4063which today can move more than 90 million tons of cargos annually that4064are the foundation of American industry, infrastructure, and energy:4065iron ore, stone, coal, cement, and other dry bulk materials such as4066grain, salt, and sand. Our largest Lakers are over 1,000 feet long and4067can carry 70,000 tons of cargo.4068    Now more than ever, our national and economic security depends on a4069reliable and resilient Great Lakes maritime transportation system. To4070compete with the rise of China and its rapidly growing Navy, the United4071States needs not only a larger and more capable Navy, but also a more4072robust merchant fleet to move goods needed by the American people and4073our Armed Forces. Building more ships requires a lot of steel, most of4074which is manufactured in Great Lakes States using raw materials also4075obtained from Great Lakes States. LCA's member companies are proud to4076transport the raw materials needed to produce that steel.4077    The U.S. has already taken some steps to increase the resiliency of4078the Great Lakes industry supply chain, such as the U.S. Army Corps of4079Engineers (Corps) project to build a new navigation lock at Sault Ste.4080Marie, MI, and increased Corps maintenance of the Great Lakes4081Navigation System. Other key support elements of Great Lakes shipping4082are under stress and require increased attention from the Maritime4083Administration and the U.S. Coast Guard (USCG).4084    U.S.-built, U.S.-flagged Lakers compete for trade between the4085United States and Canada with Chinese-subsidized and built, Canadian-4086flagged vessels. The USCG Great Lakes icebreaker fleet is too small and4087too old to keep the Great Lakes Navigation System open during the4088winter, which can put the steel industry's winter stockpile of iron ore4089at risk. U.S.-flagged Lakers don't leave the Great Lakes, so they4090depend on Great Lakes shipyards to repair and maintain them, however,4091there are few U.S. Great Lakes shipyards and those yards struggle to4092retain qualified workers and reinvest in infrastructure. U.S.-flagged4093Laker crews are highly qualified and work hard in one of the coldest4094operating environments in the U.S. merchant fleet, but like any4095workforce, they age out and new crew members must be attracted to the4096industry, trained and qualified.4097    The SHIPS for America Act would improve programs that can assist4098with many of these challenges. The shipbuilding financial incentive4099provisions in Title V of the bill and the workforce development4100programs in Title VI of the bill are especially applicable to4101supporting the U.S. Great Lakes maritime industry. For this reason, LCA4102supports Senate Commerce Committee approval of the SHIPS for America4103Act of 2025.4104            Sincerely,4105                                       James H. I. Weakley,4106                                                         President,4107                                            Lake Carriers' Association.4108                                 ______41094110  Prepared Statement of Ryan Lynch, President and CEO, Hanwha Shipping4111    Chairman Sullivan, Ranking Member Blunt Rochester, and4112distinguished members of the Subcommittee,41134114    Thank you for the opportunity to submit this statement for the4115record on behalf of Hanwha Shipping, a global maritime logistics4116company committed to advancing the competitiveness, resilience, and4117security of allied commercial shipping networks. We appreciate the4118Subcommittee's leadership in convening this critical hearing on the4119future of American shipbuilding and the broader maritime ecosystem that4120supports it.4121Introduction and Background4122    Hanwha Shipping operates across global trade routes, linking4123energy, defense, and industrial supply chains that underpin the4124prosperity and security of allied nations. We view the revitalization4125of America's commercial maritime base as inseparable from its national4126security posture. Ships are not just instruments of commerce; they are4127the backbone of logistics, deterrence, and wartime surge capability.4128    The United States once led the world in shipbuilding and global4129shipping presence. Today, dominance has shifted abroad, not because of4130a lack of ingenuity or workforce quality, but because of an eroded4131demand signal and fragmented policy environment. The passage of the4132SHIPS for America Act would be a long-overdue turning point.4133Statement of Position4134    Hanwha Shipping strongly supports the SHIPS for America Act and4135broader policies aimed at restoring American maritime strength.4136Rebuilding U.S. maritime dominance is not simply about revitalizing4137shipyards; it requires restoring the sustained demand signal and4138mariner workforce that give a nation true maritime power.4139    This is not a purely commercial challenge. The same mariners and4140ships that power trade in peacetime form the logistics surge margin in4141wartime. America's adversaries, particularly China, understand this4142principle deeply. The People's Republic of China has perfected and4143deployed a model of civil-military fusion in the maritime domain, using4144commercial fleets and shipyards to project strategic power while4145maintaining global market dominance. The United States must reclaim4146that balance through smart, sustained investment.4147Recommendations4148    Passing the SHIPS for America Act will help address multiple4149interlocking vectors necessary for maritime revitalization:41504151  1.  Establishing a Strategic Commercial Fleet (SCF)4152     The SCF is essential to creating predictable, long-term demand for4153        U.S. shipyards and to bridging the cost delta between4154        international and American construction and operation. The more4155        vessels ordered under this framework, the more economies of4156        scale will drive down that delta and strengthen domestic4157        capacity.41584159  2.  Leveraging U.S. Energy Dominance4160     Energy cargo preference policies can turn America's position as4161        the world's leading energy exporter into a maritime advantage.4162        Ensuring U.S.-flag and U.S.-built ships transport our LNG and4163        other critical cargoes protects national and economic security.4164        The alternative, allowing adversaries to dominate LNG transport4165        capacity, creates a critical vulnerability to the U.S.'s4166        burgeoning LNG export market by allowing a scenario where China4167        could, in effect, ``turn off'' America's energy exports at4168        will. That outcome would fulfill one of Beijing's long-stated4169        strategic objectives and provide the PRC with leverage to wield4170        against the U.S. for decades to come.41714172  3.  Investing in Mariner Training4173     A modern commercial fleet is useless without skilled mariners to4174        crew it. Sustained investment in training pipelines, licensing,4175        and career mobility is essential. Without it, we risk losing4176        the human infrastructure required for any meaningful maritime4177        surge.41784179  4.  Creating a Maritime Trust Fund4180     Aviation and surface transportation have long benefited from4181        revolving trust funds that ensure steady infrastructure4182        investment. Maritime has not. Establishing a Maritime Trust4183        Fund would provide predictable, long-term financing for4184        shipyard modernization, port upgrades, and logistics4185        resilience--closing a critical policy gap.41864187    Reviving American shipbuilding cannot be achieved by focusing4188solely on the shipyard gates. It requires rebuilding the entire4189ecosystem--ships, mariners, cargoes, and capital.4190    The SHIPS for America Act is a decisive step toward restoring the4191maritime balance between the United States and its competitors.4192    As I have said within our company and to our partners across the4193industry:41944195        ``No great naval power has ever existed without a great4196        commercial fleet behind it. The United States can and must4197        reclaim that foundation.''41984199    Hanwha Shipping stands ready to work with this Subcommittee and4200Congress to make that vision a reality. Thank you for your leadership4201and for including this statement in the hearing record.4202                                             Ryan C. Lynch,4203                                                 President and CEO,4204                                                       Hanwha Shipping.4205                                 ______42064207      Prepared Statement of David Kim, CEO, Hanwha Philly Shipyard4208    Chairman Sullivan, Ranking Member Blunt Rochester, and4209distinguished members of the Subcommittee, Thank you for the4210opportunity to submit this statement for the record on behalf of Hanwha4211Philly Shipyard.4212    We commend the Subcommittee's focus on the policies and investments4213necessary to rebuild U.S. shipbuilding capacity and revitalize the4214Nation's maritime industrial base.4215Introduction and Background4216    Hanwha is one of the world's leading shipbuilders, with a long4217track record of delivering technologically advanced vessels to global4218markets. Through Hanwha Philly Shipyard, our goal is to bring that same4219standard of excellence to the United States by transforming the4220Philadelphia shipyard into a world-class facility--expanding capacity,4221modernizing infrastructure, and integrating the best of Hanwha's global4222shipbuilding expertise with the innovation and skill of the American4223workforce.4224    This partnership between world-class Korean shipbuilding capability4225and American industrial strength is designed to strengthen the U.S.4226maritime workforce, industrial resilience, and national security.4227However, this transformation depends on a sustained demand signal and4228targeted government investment to restart the commercial industry that4229has been allowed to atrophy.4230    While the defense industrial base has received consistent support4231for decades, the commercial shipbuilding industry has not. Since the42321980s, support has waned, and the United States has seen its once-4233dominant position in the global shipbuilding market collapse. What4234remains is a domestic industry surviving on limited coastwise trade4235that, while critical, cannot alone sustain the ambitions America should4236have as a maritime power. The SHIPS for America Act can change that.4237Statement of Position4238    Hanwha Philly Shipyard strongly supports the SHIPS for America Act4239as the policy foundation necessary to restore the competitiveness and4240capacity of U.S. commercial shipbuilding. The combination of4241predictable demand, infrastructure investment, and workforce4242revitalization can catalyze a true rebirth of the American shipbuilding4243enterprise.4244Recommendations4245   Stable Demand Signal:4246    A strong and predictable pipeline of ship orders is the single most4247        important factor in restoring competitiveness. The Strategic4248        Commercial Fleet program can provide this foundation. As order4249        volume increases, economies of scale and specialization drive4250        efficiency, reducing the cost delta between U.S. and foreign4251        ship construction. Consistent demand also justifies long-term4252        investments in facilities, tooling, and workforce expansion.42534254   Infrastructure and Modernization:4255    The transformation of Hanwha Philly Shipyard depends on modern4256        docks, cranes, and fabrication facilities capable of handling4257        the next generation of commercial and dual-use vessels. A4258        Maritime Trust Fund, modeled after successful transportation4259        sector programs, would provide the sustained capital necessary4260        for shipyard modernization. These investments will ensure that4261        American yards can build efficiently at scale and compete4262        globally.42634264   Workforce Development:4265    Revitalizing American shipbuilding requires a blue-collar4266        renaissance. These are family-sustaining, high-skill jobs that4267        can anchor communities for generations. Federal and state4268        governments should invest not only in training and4269        apprenticeship programs but also in shifting cultural4270        attitudes--encouraging young Americans to see trades and4271        manufacturing careers as paths of pride and prosperity.42724273   Technology Transfer and Supply Chain Co-Production:4274    Hanwha is committed to partnering with U.S. industry to facilitate4275        the transfer of technologies and capabilities that currently4276        exist entirely outside the United States. This includes4277        advanced LNG carrier production, integrated digital design4278        systems, and next-generation propulsion technologies. These4279        partnerships must be structured around clear plans to bring4280        these capabilities onshore, strengthening the domestic supply4281        chain and creating high-value American jobs.4282Conclusion4283    The SHIPS for America Act represents a generational opportunity to4284rebuild American shipbuilding from the ground up. With stable demand,4285modern infrastructure, skilled workers, and global technology4286partnerships, the United States can once again become a nation that4287builds the ships that power and protect its prosperity.4288    As we often say at Hanwha:42894290        ``Shipbuilding is not just about steel and cranes; it is about4291        national capacity. A strong shipyard builds more than ships--it4292        builds sovereignty.''42934294    Hanwha Philly Shipyard stands ready to partner with Congress and4295industry to make that future a reality.4296                                                 David Kim,4297                                           Chief Executive Officer,4298                                                Hanwha Philly Shipyard.4299                                 ______43004301    Prepared Statement of Heartland Fabrication, LLC, on behalf of4302                         Heartland Fabrication4303    Chair Sullivan, Ranking Member Rochester, and Members of the4304Subcommittee:43054306    Heartland Fabrication appreciates the opportunity to submit this4307statement for the record for the subcommittee hearing ``Sea Change:4308Reviving Commercial Shipbuilding'' to strongly voice our support of the4309Shipbuilding and Harbor Infrastructure for Prosperity and Security4310(SHIPS) for America Act. We commend Congress for advancing the most4311comprehensive Federal effort in a generation to rebuild the U.S.4312commercial shipbuilding base and maritime workforce. The Act's4313combination of durable financing through a new Maritime Security Trust4314Fund, robust tax incentives, strategic fleet commitments, and workforce4315development programs provides the foundation necessary to restore4316American shipbuilding capacity, competitiveness, and long-term national4317resilience.4318    Heartland Fabrication LLC, located on the Monongahela River in4319Brownsville, Pennsylvania, carries forward more than a century of4320shipbuilding heritage at its site. The company employs over 400 skilled4321workers in good-paying, family-sustaining careers and is evaluating4322capacity expansion that would add more than 100 new jobs. Since 2005,4323Heartland has modernized and expanded operations with advanced4324fabrication, blasting, and coating capabilities using American-made4325steel. We invest over $30 million annually in salaries and benefits,4326supporting both our employees and the regional economy. Our state-of-4327the-art training center, located onsite, allows us to train and pay4328employees as they develop their craft, ensuring a steady pipeline of4329skilled tradespeople ready to meet national shipbuilding needs.4330    Heartland builds inland river hopper and deck barges that are vital4331to the movement of bulk agricultural commodities, energy products,4332steel, and other goods. These vessels transport cargo efficiently,4333safely, and with a fraction of the environmental impact and cost of4334alternative modes of transport.4335    Our workforce includes skilled welders, fitters, painters, and4336machine operators, who we consider among the best in the country and4337the heart of America's inland maritime industry. As part of a4338vertically integrated group of affiliated Heartland companies,4339operations extend beyond vessel construction to leasing, management,4340and maintenance of inland marine assets, providing end-to-end support4341for the inland waterway fleet. This combination of domestic production,4342workforce expertise, and integrated asset management enables rapid4343response to operational needs while reinforcing supply chain4344reliability, industrial capacity, and national security.4345    Heartland Fabrication exemplifies the critical role inland, or4346``brown-water,'' shipyards play in the U.S. maritime industrial base.4347By sustaining a skilled American workforce, producing vessels4348domestically from American steel, and supporting the inland waterway4349fleet that underpins commerce and strategic transport, Heartland4350demonstrates why brown-water shipbuilding must be explicitly recognized4351and supported under the SHIPS for America Act.4352    The SHIPS for America Act presents a historic opportunity to4353revitalize the U.S. shipbuilding industrial base. If implemented with4354stable revenues, timely rulemaking, and clear administrative guidance,4355the Act could meaningfully shift the economics of U.S. ship4356construction and repair over the next decade. However, one essential4357component of the national shipbuilding industrial base risks being4358unintentionally excluded--the inland or ``brown-water'' shipyards that4359build and maintain the barges, towboats, and workboats operating on4360America's rivers and intracoastal waterways.4361    Inland shipyards are the backbone of the domestic maritime economy.4362More than 200 small and medium-sized shipyards across 38 states employ4363tens of thousands of skilled workers--welders, fitters, machinists, and4364marine electricians--who construct and maintain the vessels that move4365over 500 million tons of bulk commodities each year, including grain,4366petroleum, steel, chemicals, and aggregates. The inland waterway system4367is essential to national supply chain resilience and economic security.4368Without these yards and the vessels they sustain, blue-water ports and4369export terminals could not function.4370    Several provisions of the SHIPS for America Act--such as the 254371percent Shipyard Investment Tax Credit, the Shipbuilding Financial4372Incentives Program, and the Small Shipyard and modernization grant4373programs--are drafted broadly enough to cover shipyards that construct4374or repair inland vessels.4375    However, many of the Act's signature initiatives focus explicitly4376on oceangoing vessels or international trade. Without further4377clarification, these inland yards may be ineligible for the Act's4378principal tax, financing, and modernization incentives.4379    To ensure that the SHIPS for America Act supports all components of4380the U.S. shipbuilding industrial base, Congress should adopt technical4381clarifications and modest structural adjustments to ensure inland4382shipyards are fully eligible for its programs. Specifically:43834384  1.  Define ``shipyard'' in statute to include facilities engaged in4385        the construction, repair, or modernization of inland barges,4386        towboats, and other vessels used in domestic commerce to remove4387        any interpretive ambiguity that inland facilities are covered.43884389  2.  Establish a modest funding set-aside--for example, 10 to 154390        percent of Trust Fund and shipyard grant resources--to ensure4391        inland and brown-water shipyards have equitable access to4392        assistance.43934394  3.  Clarify workforce eligibility so that training and apprenticeship4395        grants may support inland trades such as towboat engineering,4396        barge fit-up, and marine welding.43974398  4.  Incorporate inland vessel modernization and environmental4399        upgrades, including low-emission repowering and hull-life4400        extension projects, into eligible activities.44014402    These provisions are straightforward, cost-neutral, and consistent4403with the Act's stated objectives of strengthening America's4404shipbuilding base, protecting supply chains, and creating family-wage4405maritime jobs. The inland waterway system moves freight at one-tenth4406the fuel cost per ton-mile of trucks, reducing congestion, emissions,4407and logistics costs nationwide. Supporting inland shipyards advances4408both economic and environmental goals while reinforcing U.S.4409transportation resilience.4410    Inland shipyards are America's quiet maritime infrastructure--often4411out of sight, but indispensable. They are an integral part of the4412shipbuilding ecosystem that the SHIPS for America Act seeks to restore.4413A clear statutory definition and modest funding allocation will ensure4414that inland and brown-water facilities are not unintentionally excluded4415during implementation and that the benefits of this historic4416legislation extend across the full U.S. maritime industrial base.4417    As a working example of the inland shipbuilding industrial base,4418Heartland Fabrication stands ready to expand production, train the next4419generation of skilled maritime tradespeople, and continue supporting4420the inland waterway fleet that is critical to U.S. commerce and supply4421chain resilience. By ensuring that inland shipyards like Heartland are4422explicitly included in the SHIPS for America Act, Congress will4423reinforce the full maritime industrial ecosystem and help secure4424American shipbuilding leadership for decades to come. Congress should4425ensure that inland shipyards and the brown-water fleet are explicitly4426included in the SHIPS for America Act's eligibility definitions and4427funding mechanisms.4428    For these reasons, Heartland Fabrication urges Congress to ensure4429that inland shipbuilders are fully included in any national4430shipbuilding revitalization strategy or legislation. The inland4431maritime sector is an indispensable component of the U.S. maritime4432industrial base and merits equitable recognition and support alongside4433coastal and blue-water shipyards.4434            Respectfully submitted,4435                                          Ted Stilgenbauer,4436                             President and Chief Operating Officer,4437                                                 Heartland Fabrication.4438                                 ______44394440              Prepared Statement of Fraser Industries LLC4441    On behalf of Fraser Shipyards, Lake Assault Boats and Northern4442Engineering, wholly owned subsidiaries of Fraser Industries, I am4443pleased to express our strong support for the SHIPS Act. Fraser4444Industries is unique among North American shipyards. We have over 1004445acres available for immediate expansion as well as an under-employed4446maritime workforce ready to go to work. We can IMMEDIATELY begin4447repairing in our two (2) underutilized graving docks the backlogged4448U.S. Navy vessels awaiting repair, and IMMEDIATELY begin constructing4449additional new vessels, additive to our existing four (4) United States4450Navy contracts and numerous police and fire boats currently under4451construction and delivered across the United States and globally.4452    Fraser Industries strongly supports the SHIPS for America Act4453because it strengthens domestic shipbuilding, enhances national4454security, and supports American workers. The SHIPS Act helps realize4455the full commercial and military maritime potential at Fraser4456Industries and other shipyards across the United States. We ask your4457support by signing on as cosponsor of the Ships Act and to attend the4458            Sincerely,4459                                             Patrick Kelly,4460                                           Chief Executive Officer,4461                                                 Fraser Industries LLC.4462                                 ______44634464   Prepared Statement of Dan Thorogood, President and CEO, Fairwater4465    Chair Cantwell, Ranking Member Cruz, and Members of the4466Subcommittee:44674468    Thank you for the opportunity to submit this statement for the4469record in support of the SHIPS for America Act and the Subcommittee's4470efforts to strengthen the U.S. commercial maritime industry.4471    Fairwater is a leading provider of petroleum and chemical4472transportation solutions under the Jones Act and Tanker Security4473Program. Our company operates along every U.S. coastline and plays a4474critical role in the safe movement of energy that reliably fuels4475American communities and industries 365 days a year. With deep4476experience across the U.S. maritime sector, we understand the strategic4477importance of a robust Jones Act industry, flourishing U.S.-flag fleet4478internationally and a strong U.S. shipbuilding and repair base.4479    We are heartened that Congress is taking long-overdue steps to4480revitalize the Nation's maritime policy through the SHIPS for America4481Act. Fairwater supports this legislation, which will increase the4482number of U.S.-flag tankers in international trade, expand job4483opportunities for American mariners and strengthen national and energy4484security. By rebuilding commercial shipbuilding capacity and promoting4485U.S.-flag participation in international trade, this legislation will4486help ensure that critical maritime expertise and infrastructure remain4487under American control.4488    We urge the Committee and Congress to advance and enact the SHIPS4489for America Act to restore U.S. maritime strength and reaffirm our4490Nation's leadership on the world's oceans.4491    Thank you for your consideration and continued commitment to4492America's maritime future.4493                                       Daniel J. Thorogood,4494                                                       CEO.4495                                 ______44964497               Prepared Statement of Elizabeth Kennedy,4498               Director of Government Relations, Activate4499    Chair Cruz, Ranking Member Cantwell, Subcommittee Chair Sullivan,4500Ranking Member Blunt Rochester, and Members of the Subcommittee:45014502    Activate appreciates the opportunity to submit this statement for4503the record in support of the SHIPS for America Act and the broader4504bipartisan, bicameral effort to rebuild America's maritime industrial4505base.4506    Founded in 2015, Activate is a 501(c)(3) nonprofit organization4507that enables scientists and engineers to bring their critical research4508to market through a two-year fellowship program. Activate has supported4509nearly 300 fellows leading to nearly 250 startup companies across4510industries of national importance including advanced manufacturing,4511robotics, energy, and materials science in more than 25 states, which4512have raised more than $5 billion total in follow-on funding and created4513over 3,000 jobs. Our partners include the U.S. Department of Energy4514(DOE), the National Science Foundation (NSF), the Defense Advanced4515Research Projects Agency (DARPA), and the Department of Commerce4516through the CHIPS R&D Office.4517    Today, the United States builds roughly 0.1 percent of the world's4518commercial ships, down from about 5 percent in the 1970s. This dramatic4519decline has eroded U.S. shipyard capacity, supply chain expertise, and4520maritime workforce development posing serious risks to both national4521and economic security. The SHIPS for America Act seeks to reverse this4522trajectory by proposing approximately $20 billion in strategic4523investments to modernize shipyards, rebuild maritime infrastructure,4524and catalyze innovation across the sector. We are thankful for the4525strong bipartisan support for this legislation and the shared vision of4526restoring U.S. leadership in shipbuilding through cutting-edge science4527and technology. We are particularly supportive of the $50M included for4528a national maritime innovation accelerator supporting new innovation in4529ship-building and systems.4530    Modern shipbuilding is no longer defined by steel and dry docks4531alone. It is increasingly dependent on advanced materials, electronics,4532and sensors: domains where U.S. innovators excel but where early-stage4533support remains limited. Developing domestic technologies across these4534fields is critical to protecting the Nation's warfighters, ensuring4535supply chain independence, and maintaining a technological advantage4536over global adversaries. An example from the Activate network is4537Enertia Microsystems Inc., an Activate company developing the world's4538most precise MEMS inertial sensors, offering over 1,000x greater4539accuracy than conventional MEMS sensors. These sensors are vital for4540next-generation navigation systems across ships, submarines, and4541autonomous maritime platforms. Innovations like this illustrate how4542investing in the early-stage R&D ecosystem strengthens the industrial4543base that underpins U.S. maritime dominance.4544    The SHIPS for America Act thoughtfully provides direct resources4545for maritime innovation programming, the incubation of new4546technologies, and a diverse array of public private partnerships to4547better harness the American industrial base. Once passed, Activate and4548our peers look forward to connecting our innovation networks into this4549new, critical infrastructure for shipping innovation.4550    America's maritime leadership has always been rooted in innovation.4551The SHIPS for America Act represents a once-in-a-generation opportunity4552to rebuild our shipbuilding capacity, restore industrial resilience,4553and secure our technological edge at sea. Activate stands ready to4554support Congress, the Administration, and the maritime community in4555achieving this goal, ensuring that the ships of the future are4556designed, built, and powered in the United States.4557    Thank you for the opportunity to submit this statement.45584559                                         Elizabeth Kennedy,4560                                  Director of Government Relations,4561                                                              Activate.4562                                 ______45634564   Corpus Christi Regional Economic Development Corporation4565                               Corpus Christi, TX, October 27, 202545664567Hon. Dan Sullivan,4568Chairman, Subcommittee on Coast Guard, Maritime, and Fisheries,4569Committee on Commerce, Science, and Transportation,4570United States Senate,4571Washington, DC.45724573Re: Statement for the Record--''Sea Change: Reviving Commercial4574            Shipbuilding'' Hearing before the Subcommittee on Coast4575            Guard, Maritime, and Fisheries October 28, 202545764577Dear Chairman Sullivan and Members of the Subcommittee:45784579    On behalf of the Corpus Christi Regional Economic Development4580Corporation (CCREDC), I respectfully submit this statement for the4581record in support of the Subcommittee's hearing titled ``Sea Change:4582Reviving Commercial Shipbuilding. ``We commend the Subcommittee for its4583leadership in examining policies to strengthen and modernize the United4584States' commercial shipbuilding and maritime industrial base.4585    The Corpus Christi region is one of America's most strategically4586significant coastal hubs, serving as the Nation's largest energy export4587gateway and a center for heavy industry, maritime logistics, and4588defense activity. Our port complex and industrial corridor are integral4589to U.S. economic security and national resilience, with growing4590capacity to support ship repair, fabrication, and advanced4591manufacturing operations that complement the Nation's broader maritime4592goals.4593    Revitalizing commercial shipbuilding presents an extraordinary4594opportunity to align national defense priorities with regional economic4595development. The Gulf Coast-and particularly South Texas-is uniquely4596positioned to advance this effort due to its deepwater infrastructure,4597industrial workforce, and access to key supply chains for steel,4598energy, and fabrication. Targeted Federal investment in domestic4599shipyard capacity, workforce development, and innovation incentives4600would yield measurable returns in employment, industrial productivity,4601and national security readiness.4602    In partnership with Del Mar College, Texas A&M University-Corpus4603Christi, and the Port of Corpus Christi, CCREDC is working to expand4604workforce pathways in maritime technology, ship systems engineering,4605and industrial trades. These programs are directly responsive to the4606needs of a revitalized shipbuilding ecosystem and can serve as models4607for regional collaboration in support of Federal maritime goals.4608    We commend the Subcommittee-particularly Chairman Sullivan and4609Senator Cruz-for advancing a national dialogue on the future of4610American shipbuilding. The Corpus Christi Regional Economic Development4611Corporation stands ready to collaborate with Federal and industry4612partners to ensure that the Gulf Coast remains a cornerstone of4613America's maritime resurgence.4614    Thank you for your consideration of this statement and for your4615continued leadership on this critical issue.4616            Respectfully submitted,4617                                           Mike Culbertson,4618                                                 President and CEO.4619              Corpus Christi Regional Economic Development Corporation.4620                                 ______46214622                   Prepared Statement of DNV USA Inc.4623Craig Koehne, Regional Manager, DNV Maritime Region Americas and Steven4624         Sawhill, Director, U.S. Government and Public Affairs4625    Chairman Sullivan, Ranking Member Blunt Rochester, and Members of4626the Committee, thank you for holding this hearing and for the4627opportunity to submit a statement on this most important and timely4628topic--reviving commercial shipbuilding in the United States, renewing4629the U.S. merchant fleet, and reinvigorating the maritime industry4630across the country.4631    About DNV--DNV is an independent global assurance and risk4632management company and the world's leading maritime classification4633society.\1\ DNV was established in Norway in 1864 and has been4634operating in the United States for more than 125 years, since 1898.4635Today, DNV USA is headquartered in Houston, Texas, with 36 offices4636across 22 states. DNV USA is an integral and contributing member of4637U.S. society and the U.S. maritime sector, employs some 1700 Americans,4638and pays millions in U.S. Federal and state corporate income taxes. A4639recognized and approved classification society by the U.S. Coast Guard,4640DNV has delegated statutory certification authorities for U.S.-flag4641vessels under 46 CFR Parts 2 and 8, and is a trusted maritime technical4642service provider to the U.S. Departments of Defense, Homeland Security,4643and Commerce (Navy, Military Sealift Command, Army Corps of Engineers,4644Coast Guard, NOAA).4645---------------------------------------------------------------------------4646    \1\ A maritime classification society is a non-governmental4647organization that establishes and maintains technical standards for the4648construction and operation of ships and offshore structures.4649Classification societies certify that ships are designed, built, and4650maintained according to specific standards, which helps ensure safety4651and reliability at sea. This certification is often required for ship4652registration and obtaining marine insurance, and it is mandatory under4653current international regulations for ships trading in international4654commerce.4655---------------------------------------------------------------------------4656    Position statement--DNV supports the bipartisan resolve of the4657Congress and the Administration to revitalize the United States'4658maritime industry with programs and policies that enable the growth of4659U.S. shipyards and the maritime industrial base, expand the U.S.4660maritime workforce, and rejuvenate the international fleet of vessels4661of the United States. DNV agrees this requires a comprehensive strategy4662that includes securing consistent, predictable, and durable Federal4663funding, and commends the sponsors and cosponsors of the SHIPS for4664America Act (H.R. 3151 and S.1541) and the Building Ships in America4665Act (S.1536) for the proposals they have put forward to do so.4666    The Administration has also emphasized the need to look to the4667United States' allies and partners and facilitate contributions from4668companies domiciled in allied nations--such as DNV--to help strengthen4669the shipbuilding capacity of the United States (EO 14269, Restoring4670America's Maritime Dominance). DNV agrees and offers suggestions to4671improve the bills' ability to ensure their active and beneficial4672participation.4673    Shipyard and ship-building incentives--Among various incentives to4674expand and establish shipyards and build ships in the United States,4675the bills propose to create a new Credit for Construction of Shipyard4676Facilities in Sec. 48G of the Internal Revenue Code (Ref: H.R. 31514677Sec. 706 and S. 1536 Sec. 7) and a new United States Vessel Investment4678Credit in Sec. 48F of the Internal Revenue Code (Ref. H.R. 31514679Sec. 701 and S. 1536 Sec. 2).4680    These provisions take a similar approach to energy investment,4681production, and advanced engineering project credits, which have been4682successful in incentivizing investment and employment in their4683associated sectors for many years. The 25 percent Shipyard Facility4684Credit and the 33 percent Vessel Investment Credit are good examples of4685incentivizing, non-discriminatory measures to promote American4686shipbuilding; DNV supports them.4687    However, the bills also propose an additional bonus tax credit of 24688percent if a newly built American vessel is classified by the American4689Bureau of Shipping--one of seven global maritime classification4690societies currently recognized and approved by the U.S. Coast Guard and4691to which it delegates statutory certification authorities for U.S.-flag4692vessels.\2\4693---------------------------------------------------------------------------4694    \2\ Congress gave ABS a statutory monopoly for providing4695classification services to U.S. Government vessels in 46 USC4696Sec. 3316(a), but not for U.S. commercial vessels or offshore4697facilities, for which they authorized the Coast Guard to delegate4698statutory certification authorities to ABS and foreign classification4699societies (Sec. Sec. 3316(b) and (d)).4700---------------------------------------------------------------------------4701    As currently proposed, the vessel classification credit is4702discriminatory and will hinder foreign direct investment, competition,4703and innovation--all to the detriment of the SHIPS for America Act's4704intentions of revitalizing the U.S. maritime industry and all in4705contravention of the policy objectives in the President's maritime4706executive order.4707    This bonus credit will drive monopolization in the U.S. maritime4708classification market. Monopolization will not only increase the cost4709of shipbuilding in the United States, it will also deny the U.S.4710maritime industry the wealth of international knowledge, expertise, and4711innovation that all approved classification societies have to offer,4712and all of which the industry needs to truly revitalize and4713reconstitute itself as a force on the global stage.4714Position--4715   DNV supports the general, non-discriminatory Sec. 48F Vessel4716        Investment Credit and Sec. 48G Shipyard Facility Credit in4717        S.1536, Sec. Sec. 2 and 7.47184719   DNV opposes the discriminatory bonus credit for classifying4720        U.S. ships in S.1536, Sec. 2.4721Recommendation--4722   Congress should strike the 2 percent vessel classification4723        credit from S.1536 Sec. 2 and reprogram it by increasing the4724        general Vessel Investment Credit from 33 percent to 35 percent.47254726   Congress should ensure that any classification-related4727        incentives are available to all classification societies4728        recognized and approved by the U.S. Coast Guard.4729Ship classification in the United States today4730    The U.S. Coast Guard delegates certain statutory authorities to4731recognized ship classification societies, allowing them to conduct4732vessel inspections, surveys, and certifications on behalf of the Coast4733Guard under programs such as the Alternate Compliance Program (ACP).4734These delegations are governed by Federal regulations (notably 46 CFR4735Parts 2 and 8), and only societies that meet rigorous standards for4736experience, technical capability, and international standing are4737approved.4738    There are seven classification societies currently recognized by4739the U.S. Coast Guard: the American Bureau of Shipping (ABS), Bureau4740Veritas (BV), Det Norske Veritas (DNV), Indian Register of Shipping4741(IRS), Lloyd's Register (LR), Nippon Kaiji Kyokai (NK), and Registro4742Italiano Navale (RINA). They provide classification services to a4743global market where they are globally competitive, with the four4744largest societies--ABS, DNV, LR, and NK--having global market shares4745from 15.2 to 17.2 percent with respect to commercial vessels in4746international trade.\3\4747---------------------------------------------------------------------------4748    \3\ Class market share (by gross tonnage) of commercial vessels of4749100 gross tons or more, with certificates for international trade;4750includes non-ship structures such as mobile offshore drilling units,4751and excludes vessels that are non-self-propelled, non-commercial, or4752class unknown (S&P Global, August 2025).4753---------------------------------------------------------------------------4754    These delegations benefit the U.S. maritime industry by leveraging4755the global expertise, technical standards, and resources of these4756independent organizations. This arrangement streamlines regulatory4757compliance, promotes international best practices, and enhances safety4758and innovation in ship design and operation. By allowing multiple4759qualified societies to participate, the Coast Guard ensures4760competition, which helps control costs, fosters technological4761advancement, and supports the competitiveness of U.S. shipyards and4762vessel operators in the global market.4763    Conclusion--The Building Ships in America Act (S.1536) should be4764revised to ensure all classification societies recognized and approved4765by the U.S. Coast Guard can contribute to the revitalization of the4766U.S. maritime industry on a competitive, non-discriminatory basis.4767Bipartisan antitrust principles emphasize that competition protects4768innovation, resilience, and consumer interests, and both current and4769previous administrations have challenged monopolistic practices,4770especially where market fairness and consumer choice is at stake.4771    Chairman Sullivan, Ranking Member Blunt Rochester, and Members of4772the Committee, thank you again for holding this hearing and for the4773opportunity to submit our statement. DNV has been part of the U.S.4774maritime industry for more than a century; we look forward to working4775together with you and your colleagues to ensure it can grow and thrive4776into the next century.4777                                 ______47784779  Prepared Statement of David Levy (Austin, TX), Software Executive,4780                       Maritime Technology Sector4781    Chair Cruz, Ranking Member Cantwell, and Members of the4782Subcommittee:47834784    Thank you for the opportunity to submit this statement in support4785of the SHIPS for America Act. I write as a software executive in the4786maritime technology sector with seven years of experience at one of the4787world's most prominent vessel performance optimization companies,4788working daily with shipowners and operators to improve efficiency and4789reduce emissions.4790    I strongly support the SHIPS for America Act. This legislation4791represents a critical investment in both economic security and national4792security through the revitalization of America's commercial maritime4793industrial base.4794Economic and National Security Imperative4795    The decline of U.S. shipbuilding capacity is not merely an economic4796concern--it is a national security vulnerability. A robust domestic4797maritime industry ensures that America can build, maintain, and operate4798the vessels critical to both commerce and defense. Countries that4799dominate shipbuilding today--China, South Korea, and Japan--understand4800what we have forgotten: maritime capability is foundational to economic4801and military power.4802    From my perspective in maritime technology, I witness daily how4803vessel operators worldwide invest in modern, efficient ships while4804America's commercial fleet ages and our shipyards struggle. The SHIPS4805for America Act would reverse this trend, creating the conditions4806necessary for American shipbuilders to compete and for American4807operators to invest in U.S.-built vessels.4808Creating Pathways for Young Americans4809    This legislation should be understood as a job creation act--one4810that will produce tens of thousands of well-paying, skilled jobs.4811Shipbuilding and maritime operations offer exactly the kind of careers4812that young men and women need: work that is tangible, meaningful, and4813builds real capability.4814    Young men in particular are struggling to find their place in the481521st-century economy. The maritime sector offers a solution: careers in4816welding, engineering, operations, logistics, and technology that4817provide purpose, dignity, and economic security. These are not jobs4818that can be outsourced. They are American jobs that build American4819strength.4820    Revitalizing U.S. shipbuilding means creating apprenticeships,4821technical training programs, and career pathways for a generation that4822needs opportunity. This is an investment in people as much as in ships.4823Recommendation4824    I urge the Committee to pass the SHIPS for America Act without4825delay. This legislation addresses a strategic weakness that grows more4826acute with each passing year. Rebuilding America's maritime industrial4827base is not optional--it is essential to our economic competitiveness,4828our national security, and our ability to offer meaningful work to the4829next generation.4830    Thank you for your consideration of this critical legislation and4831for your leadership in strengthening American maritime capability.4832            Respectfully submitted,4833                                    David Levy, Austin, TX,4834                                                Software Executive,4835                                            Maritime Technology Sector.4836                                 ______48374838             Prepared Statement of Dave Matsuda, Founder,4839                     Small Shipyard Grant Coalition4840    The Small Shipyard Grant Coalition, representing U.S. vessel4841construction and repair facilities as well as U.S. shipyard equipment4842manufacturers, strongly supports the SHIPS for America Act. This4843visionary legislation strengthens America's maritime industrial base by4844investing in our country's small shipyards, helping ensure the U.S.4845remains competitive in shipbuilding and repair.4846    By proposing increased funding for the Small Shipyard Grant Program4847to $1 billion over the next ten years, the SHIPS for America Act builds4848on the success of a proven, efficient public-private partnership model.4849The model uses Federal grants to incentivize investments in U.S.-4850manufactured shipyard equipment as well as worker training programs.4851Since 2008, the program has worked to modernize U.S. shipyards, support4852good paying jobs and promote the success of America's workboat4853operators, including operators of government and commercial boats.4854    The SHIPS Act recognizes the efficiency of the Small Shipyard Grant4855Program addresses the one major challenge the program has faced: lack4856of funding. We are grateful to Senators Kelly and Young, and4857Congressmen Garamendi and Kelly, for their leadership in championing4858this critical initiative.4859Proven Success and High Demand4860    The Small Shipyard Grant Program is among the most efficient4861Federal programs supporting industrial modernization. Since its4862inception, developed by legislation proposed by the U.S. Senate4863Committee on Commerce, Science and Transportation, MARAD has4864successfully administered 17 rounds of grants, awarding more than 3804865grants across 34 U.S. states and territories and in every maritime4866region of the country. Agency staff have fine-tuned the program to4867quickly get funding on projects, while making fair allocation decisions4868and ensuring that funding directly supports shipyard productivity4869improvements.4870    The program's success relies upon:48714872   Discretionary, shipyard-driven projects: Every shipyard is4873        different, and the program allows each to propose projects that4874        reflect their own efficiency and modernization priorities.48754876   Simplified application process: Only essential technical and4877        statutory information is requested, minimizing administrative4878        burden.48794880   Rapid evaluation: The program's short, 60-day evaluation4881        period minimizes cost uncertainty and allows applicants to be4882        able to make timely capital decisions whether they receive a4883        grant award or not.48844885   Proactive environmental review: Agency staff are available4886        to provide pre-application consultations to assist applicants4887        in identifying potential environmental risks before application4888        submission; this helps prevent delays and budget overruns.48894890   Targeted project types: MARAD encourages projects with high4891        likelihood of rapid completion and measurable operational4892        benefits, including acquisition of proven U.S.-built equipment4893        and worker training programs, while discouraging high-risk,4894        long-duration projects.48954896   Minimized reporting burden: Project updates are only4897        required during the grant period, and closeout reporting is4898        typically completed within one year.48994900    The program's track record demonstrates tangible benefits: funded4901projects are completed quickly, grant funds are spent efficiently, and4902shipyards achieve measurable operational improvements that support both4903commercial and national security needs.4904Importance of Increased Funding4905    As documented in a recent study by the Government Accountability4906Office (p. 28, GAO-25-107304), the Small Shipyard Grant Program is4907consistently over-subscribed, with many meritorious projects unable to4908receive funding under current levels, which have historically maxed out4909at $20 million per year. The SHIPS for America Act, consistent with the4910President's FY2026 budget proposal, would provide $100 million--five4911times the recently appropriated maximum--and provide dedicated funding4912through a multi-year trust fund. This reliable source of increased4913funding is essential to growing America's maritime industrial base.4914    Operating a commercial shipyard requires costly investment in4915waterfront infrastructure that inland industrial facilities do not have4916to face. But, unlike larger shipyards, small shipyards often do not4917have access to capital to continuously modernize the facility and4918equipment. This hurts their competitiveness. Further, these small4919shipyards face the challenge of competing in the same labor market with4920larger shipyards and inland industrial facilities, putting pressure on4921their competitiveness through higher labor costs, as well.4922    Small shipyards rely on targeted investments from the Small4923Shipyard Grant Program to produce significant results, some of which4924can be transformative. Accomplishing transformative changes at larger4925shipyard facilities often involve complex projects requiring4926significantly higher investments. The proposed increase in funding will4927allow the program to fully leverage its proven efficiency and deliver4928transformative impact in many parts of the U.S. maritime industrial4929base that do not have access to other Federal programs.4930Conclusion4931    The Small Shipyard Grant Program is a model of success for the4932rapid modernization of a key part of the U.S. maritime industrial base.4933The SHIPS for America Act proposal ensures that small shipyards can4934continue to modernize efficiently, remain competitive globally, and4935support national security interests through job creation, supply chain4936resilience, and enhanced efficiency and capabilities. Increased funding4937is not just desirable--it is urgently needed to meet the proven demand4938for these critical investments.49394940                                              Dave Matsuda,4941                                                           Founder,4942                                        Small Shipyard Grant Coalition.49434944    Disclaimer: the view expressed in this statement are those of Mr.4945Dave Matsuda--founder of the Small Shipyard Grant Coalition and 17th4946U.S. Maritime Administrator--and do not necessarily reflect those of4947each individual Coalition member or participant. The Small Shipyard4948Grant Coalition is an informal coalition sponsored by Matsuda &4949Associates, LLC.4950                                 ______49514952         Prepared Statement of Sean Kline, President and CEO,4953                  Chamber of Shipping of America (CSA)4954    Chairman Sullivan, Ranking Member Rochester, and Members of the4955Committee:49564957    Thank you for the opportunity to submit this statement of the4958Chamber of Shipping of America's support for the SHIPS for America Act.4959    CSA represents 37 U.S. based companies that own, operate or charter4960oceangoing tankers, container ships, car carriers, special purpose and4961other merchant vessels engaged in both the domestic and international4962trades, as well as other entities that maintain a commercial interest4963in the operation of such oceangoing vessels. CSA's members own and4964operate U.S. flag and non-U.S. flag vessels.4965    For over 100 years, CSA has represented shipowners in a variety of4966areas including the U.S. legislative process, the U.S. regulatory4967process and at the International Maritime Organization (via our4968participation on the delegation of the United States and the4969International Chamber of Shipping) and the International Labor4970Organization.4971    CSA's goal and mission to our members is to represent the4972shipowners interests in the development of effective and comprehensive4973safety and environmental legislation, regulation and international4974instruments. Our obligation to members is to advise them on current and4975future requirements which will be applied to their vessels to ensure4976full compliance with these legal requirements. We provide a voice of4977the maritime industry operating in the U.S. to support sound public4978policy through legislative and regulatory initiatives.4979    The Chamber of Shipping of America is proud to support the SHIPS4980for America Act because it enhances national security, strengthens the4981maritime transportation system, and supports American opportunity and4982maritime jobs. The concepts included in this legislation will ensure4983the reinvigoration of the U.S. flag fleet trading internationally and4984our domestic shipbuilding industry which is critical for our national4985security and economic wellbeing. This comprehensive approach, which4986will establish national oversight and consistent funding for the U.S.4987maritime industry, is essential to rebuilding the U.S. maritime4988industry to a level which can support our national security and4989economic needs, including ensuring supply chain security.4990    We advocate for the Committee to ensure sustained funding for the4991U.S. commercial maritime industry which has been long overlooked, and4992to support amendments that incentivize our maritime industry. We thank4993the sponsors for their efforts and stand ready to provide additional4994comments and urge the committee to promptly pass the SHIPS for America4995Act.4996    CSA appreciates the opportunity to submit this statement and would4997be pleased to answer any questions related to the SHIPS for America Act4998or stimulated by our comments.4999            Sincerely,5000                                                Sean Kline,5001                                                 President and CEO.5002                                 ______50035004     Prepared Statement of Mikal B Enhance industrial capacity and modernization: enabling5005        small shipyards to upgrade drydocks, cranes, and fabrication5006        technology to meet the evolving needs of both commercial and5007        government fleets.50085009   Bolster workforce development: ensuring a pipeline of5010        skilled tradespeople--welders, fitters, machinists, and marine5011        electricians--who are essential to sustaining the U.S. maritime5012        sector.50135014   Improve regional economic resilience: supporting good-paying5015        jobs and strengthening local economies that depend on maritime5016        industry vitality.50175018    These investments are not abstract--they directly translate into5019ship repair and maintenance capacity that supports the U.S. Navy, Coast5020Guard, and the commercial maritime sector. They ensure that critical5021vessels remain operational, safe, and mission ready.5022    Colonna's Shipyard urges Congress to enact the SHIPS for America5023Act and fully fund Section 501 to continue empowering small shipyards5024to contribute to our Nation's economic and national security.5025    Thank you for your leadership in advancing this important5026legislation and for your ongoing commitment to American shipbuilding.5027            Respectfully submitted,5028                                               Jordan Webb,5029                                     President and General Manager,5030                                               Colonna's Shipyard, Inc.5031                                 ______50325033   Prepared Statement of Austin Gray, Co-Founder, Blue Water Autonomy5034    Chair Sullivan, Ranking Member Blunt Rochester, and Members of the5035Subcommittee,50365037    Thank you for the opportunity to submit this statement in support5038of the SHIPS for America Act and the Committee's work to rebuild5039America's commercial maritime strength.5040    My name is Austin Gray, and I am the Co-Founder of Blue Water5041Autonomy, a shipbuilding and technology company developing highly5042autonomous, mission-flexible ships to expand the capacity, resilience,5043and lethality of our Nation's navy tonight and serve key commercial5044maritime industries tomorrow. Our team includes engineers, veterans,5045and shipbuilders who believe that America's maritime power is5046inseparable from its industrial base. Technology, when paired with5047policy foresight, can help both thrive again.5048Why This Bill Matters5049    The SHIPS for America Act is more than an industrial policy; it is5050a generational commitment to restore America's maritime5051competitiveness. It recognizes what many of us working in the field5052already know: that innovation, workforce, and industrial capacity must5053rise together if we are to maintain leadership at sea.5054    Blue Water Autonomy strongly supports this bill's provisions that:50555056   Incentivize innovation through R&D and technology programs,5057        which enable startups like ours to prototype and test advanced5058        ship systems here in the United States.50595060   Offer tax credits for domestic ship construction and5061        modernization, which directly lower the barriers for small and5062        emerging builders to compete and partner with established5063        yards.50645065   Invest in workforce development and apprenticeships,5066        ensuring that the next generation of American shipbuilders can5067        build both steel and software with equal mastery.50685069    These measures do not just help our company; they help sustain the5070ecosystem we depend on: naval architects, small suppliers, coastal5071communities, and the shipyards that once defined our national strength.5072A Vision for Renewal5073    We see this bill as part of a larger story--one where America5074rediscovers how to build. Not just ships, but confidence that we can5075once again make hard things here at home, faster and better than anyone5076else.5077    At Blue Water Autonomy, we are building unmanned vessels that5078reduce operational risk, lower lifecycle costs, and multiply naval5079presence. But we cannot succeed in a vacuum. We need welders as much as5080coders, shipfitters as much as AI engineers. The SHIPS for America Act5081recognizes that by pairing twenty-first century technology investment5082with twentieth century industrial muscle.5083    This legislation does not only benefit innovators like us; it5084strengthens the whole foundation--from legacy yards to next-generation5085startups--that keeps America's maritime capability alive.5086Conclusion5087    We urge the Committee to move swiftly on this bill. The SHIPS for5088America Act is not just sound policy; it is a signal of national5089resolve. It tells every engineer, welder, and sailor that America still5090builds, and that we intend to lead the seas not just with the best5091ships, but with the best ideas.5092    Thank you for your leadership and for including the perspectives of5093emerging companies like ours in this vital discussion.5094            Very respectfully,5095                                               Austin Gray,5096                                Co-Founder, Chief Strategy Officer,5097                                                   Blue Water Autonomy.5098                                 ______50995100         Prepared Statement of Bayonne Dry Dock & Repair Corp.5101    Chairman Sullivan, Ranking Member Blunt Rochester, and Members of5102the Subcommittee:51035104    Bayonne Dry Dock & Repair Corp. appreciates the opportunity to5105submit this statement in strong support of the SHIPS for America Act5106and the Subcommittee's focus on reviving the U.S. maritime industrial5107base. Bayonne Dry Dock & Repair is a privately operated ship repair5108facility in the Port of New York and New Jersey. We boast one of the5109Nation's Largest Graving Docks (1092' LOA) and Highest-Capacity Mobile5110Boat Hoists (``Travel-Lift'') at 1280 Metric Tons. For decades we have5111supported Military Sealift Command (MSC), Maritime Administration5112(MARAD), and United States Coast Guard (USCG) vessels, providing dry-5113docking, complex repairs, and readiness support in a critical port5114region. Our skilled workforce including welders, machinists,5115electricians, and coatings professionals, anchors a capability that is5116difficult and costly to reconstitute once lost.5117    We support the SHIPS for America Act's approach. A credible5118national strategy must pair new-build incentives with stable, modern5119repair and maintenance capacity, the practical backbone of fleet5120availability and logistics readiness. Today, unpredictable Federal5121repair awards can leave high-capacity dry docks and their workforce5122idle despite a well-documented maintenance backlog. On the East Coast,5123the number of large commercial dry docks capable of handling federally5124utilized ships is limited; aging infrastructure can idle an entire node5125of capacity for months. Access infrastructure matters as well:5126strategic ports require reliable channels and in-yard systems to keep5127vessels on schedule. Finally, workforce retention rises and falls with5128demand stability5129    Recommendations to maximize the bill's impact and implementation51305131  1.  Treat repair and overhaul as co-equal with new builds. In5132        implementation plans and oversight (Title I), ensure MSC/MARAD5133        treat repair predictability as a readiness metric and align5134        with the bill's sealift objectives (Title III, Part H).51355136  2.  Stabilize Federal repair pipelines. Direct transparent schedules,5137        timely awards, and advanced notice of changes to allow5138        qualified yards to plan and staff efficiently (Title III--5139        sealift policy, prioritization, and reports).51405141  3.  Modernize critical yard infrastructure and enable critical5142        projects via:51435144     Assistance for Small Shipyards enhancements (Title V,5145            Subtitle A),51465147     Shipbuilding Financial Incentives/Title XI5148            modernization (Title V, Subtitles A & C), and51495150     DoD/Industrial Base coordination, including a DPA plan5151            of action (Title V, Subtitle B).51525153  4.  Fund port access where authorized. Encourage USACE to initiate5154        feasibility/design (PED) for navigation improvements that5155        unlock repair throughput in strategic ports and prioritize such5156        work in Corps planning (Title V, Subtitle C--Marine5157        Infrastructure Readiness assessment; coordination with Energy &5158        Water appropriations).51595160  5.  Grow and retain the workforce. Expand targeted apprenticeships5161        and training grants, leveraging the bill's workforce pipeline5162        and incentives (Title VI, Subtitles A-D), with periodic5163        reporting on backlog reduction and private-yard utilization.51645165    America cannot achieve maritime dominance if ships are unavailable5166due to lack of timely repair. SHIPS for America is an important step,5167paired with predictable repair pipelines, targeted modernization,5168improved access, and sustained workforce investment, it can deliver the5169reliable industrial base our national security and economy demand.5170Bayonne Dry Dock & Repair stands ready to assist the Subcommittee and5171to execute this mission on the East Coast.5172            Submitted by:5173                                      Ryan Patrick Woerner,5174                      Executive Vice President and General Counsel,5175                          Bayonne Dry Dock & Repair Corp. (Bayonne, NJ)5176                                 ______51775178    Prepared Statement of Association for Uncrewed Vehicle Systems5179                         International (AUVSI)5180    Chairman Sullivan, Ranking Member Blunt Rochester, and Members of5181the Subcommittee:51825183    On behalf of the Association for Uncrewed Vehicle Systems5184International (AUVSI) and our members, we would like to express our5185gratitude for holding this important hearing on the critical need for5186revitalizing the U.S. commercial shipbuilding industry to support the5187safe and efficient integration of uncrewed maritime systems (UMS) into5188the Nation's maritime transportation system (MTS). This hearing is5189timely, and we applaud you for conducting this important oversight.5190    AUVSI is the world's largest industry association representing over5191400 corporations and 8,000 professionals across more than 60 allied5192countries in industry, government and academia. Our members span the5193defense, civil, and commercial sectors. Today, we submit testimony to5194the Subcommittee on Coast Guard, Maritime, and Fisheries representing5195our UMS members, including uncrewed surface vehicles (USVs) and5196uncrewed underwater vehicles (UUV) maritime operations.5197    Maritime security and efficiency demand vigilance, innovation, and5198progress. We must address two key questions:51995200  1.  How do we modernize shipbuilding to meet current and future5201        challenges?52025203  2.  How can autonomy enhance safety, efficiency, and resilience in5204        the maritime ecosystem? The solutions require urgency and5205        purpose.52065207    We are at a pivotal moment, with UMS unlocking benefits in safety,5208technological leadership, economic activity, and workforce5209opportunities. Supporting the advanced maritime and autonomy industry5210must be a national priority to expand the economic and safety benefits5211for the commercial shipping industry, as well as extending the5212operational reach of our U.S. Navy and U.S. Coast Guard. We also must5213consider geopolitical and global economic considerations. Today, the5214United States has fewer than 80 oceangoing ships in international5215commerce and limited shipbuilding capacity, while People's Republic of5216China has both the largest commercial shipping and naval battle force,5217and commands over 50 percent of global shipbuilding and over 70 percent5218of new orders. This is a concerning metric for national security and5219economic competitiveness that demands urgent attention and significant,5220ongoing investment.5221    AUVSI and our members are prepared to help address this challenge.5222The UMS industry delivers cost-effective solutions for commercial5223shipping, environmental monitoring, offshore energy, fisheries,5224infrastructure assessments, defense, and beyond. These systems5225transform vessel design, propulsion, sensors, and navigation, unlocking5226innovative capabilities for coastal and open-ocean operations while5227enhancing productivity and safety. U.S. companies are investing in5228high-rate production facilities, generating thousands of manufacturing5229jobs across numerous congressional districts and states. However, while5230the U.S. shipbuilding industry supports initial UMS adoption, scaling5231these technologies demands revitalization. Key barriers--aging5232infrastructure, outdated construction methods, and workforce5233shortages--must be addressed to fully realize the potential of UMS and5234strengthen U.S. maritime leadership.5235    The U.S. has an opportunity to lead in this space, recapitalizing5236our domestic fleet and becoming a global exporter of UMS technology,5237but to do so, sustained investment into domestic capacity is required.5238Additionally, the U.S. must make meaningful progress on regulations for5239digital navigation, commercial, and civil use of UMS.5240    To revitalize the maritime industry, Congress must:52415242  1.  Pass the SHIPS for America Act. AUVSI and our maritime members5243        staunchly support the passing of this legislation to expand the5244        U.S.-flag fleet, rebuild the industrial base, and provide5245        incentives like tax credits. AUVSI encourages garnering as many5246        bipartisan cosponsors possible to expeditiously move the SHIPS5247        for America Act through the legislative process.52485249  2.  Increase Federal investment in UMS. Fund research, development,5250        and deployment of UMS to enhance maritime domain awareness,5251        automation, and digitalization for both commercial and defense5252        applications.52535254  3.  Develop collaborative UMS traffic management. Create safe,5255        efficient traffic management systems for UMS in coastal and5256        open-ocean settings, avoiding restrictive regulations that5257        hinder innovation in uncrewed maritime technologies.52585259  4.  Expand workforce training programs. Invest in technology-driven5260        training to address skilled labor shortages, equipping workers5261        with expertise in UMS manufacturing, operation, and5262        maintenance.52635264  5.  Implement innovation-friendly regulations. Adopt flexible, risk-5265        based UMS regulations that ensure safety while fostering5266        innovation and testing of novel uncrewed maritime systems.5267        Avoid overregulation that stifles commercial growth, essential5268        for U.S. global leadership and national security.52695270  6.  Incentivize automation and digital tools. Encourage industry5271        adoption of cost-saving automation and digital technologies5272        that uphold safety standards.52735274  7.  Advance AI-driven navigation and data systems. Support investment5275        in AI-powered navigation, real-time data sharing, and crewed-5276        uncrewed coordination to enhance operational efficiency.52775278  8.  Strengthen workforce development. Fund specialized UMS training,5279        recruitment, and education programs to build a future-ready5280        maritime workforce.52815282    A revitalized industry is key to UMS potential, ensuring safety,5283efficiency, and economic vitality. AUVSI is ready to collaborate with5284Congress, U.S. Federal agencies, and industry stakeholders to advance5285the SHIPS for America Act and build a resilient, future-ready maritime5286ecosystem.5287    Thank you for your leadership and consideration. We look forward to5288working with the Subcommittee for realizing the transformative benefits5289of UMS for all stakeholders.5290                                 ______52915292     Prepared Statememt of Roger Camp, President and CEO, American5293                   Shipbuilding Suppliers Association5294    Dear Chairman Sullivan, Ranking Member Rochester and Members of the5295Committee52965297    Thank you for the opportunity to submit a statement on behalf of5298the members of the American Shipbuilding Suppliers Association (ASSA).5299ASSA is a member driven, national organization, advocating for the5300American Shipbuilding Supplier Base to the U.S. Congress, Navy, Coast5301Guard and shipbuilders to ensure the long-term stability of the U.S.5302national maritime industry.5303    Our members are involved in this issue because we represent5304thousands of American citizens who rely on the domestic shipbuilding5305suppliers industry to provide for their families and protect the5306national security of this Nation. Our members have expertise in the5307field as manufacturers of the systems and components needed to build5308Navy and Coast Guard ships and we have decades of experience to serve5309as a resource to this committee.5310    ASSA applauds Congress' intent to include participants from the5311maritime industrial base in the governing organizations which will5312guide implementation of the National Maritime Strategy. The decades of5313industry leadership on the waterfront and in the factories will provide5314valuable insights for the government-led efforts.5315    Our organization strongly supports the SHIPS for America Act5316because it strengthens domestic shipbuilding, enhances national5317security and supports American workers. We believe strongly that every5318effort should be made to ensure that this act does in fact include5319language that protects the U.S. Shipbuilding suppliers.5320    In the United States, there are but a few shipyards focused on5321building Navy and Coast Guard ships, and a far fewer number focused on5322building ocean-going vessels for commercial use. At the shipbuilding5323supplier level, we have many components that are provided by a5324manufacturer who may be one of the few, if not the sole, remaining5325means of production. Such is the case of Lister Chain, the last5326manufacturer of anchor chain in the United States. Fairbanks Morse5327Defense and Thrustmaster of Texas are other examples of the remaining5328single source domestic manufacturers.5329    As noted in the SHIPS Act, American industry must work with our5330industrial partners in NATO and Allied nations but also invest in our5331American workforce and capabilities. The elements of Buy America5332legislation incorporated in this Bill are important to reaching this5333goal.5334    Importantly, the SHIPS for America Act provides resourcing for5335small shipyards from the Maritime Security Trust Fund for over a5336decade. As noted by the drafters, a sustained demand signal and5337resourcing is necessary for many of the small and mid-size businesses,5338which are the backbone of the industrial base, to operate successfully,5339deliver their contribution to shipbuilding and repair, and provide pay5340and benefits to their workforce.5341    The SHIPS for America Act goes beyond giving a sense of priority5342and importance, and on into concrete ways the U.S. can grow our5343shipbuilding, leading to an increased fleet of commercial vessels, from5344high visibility programs like Strategic Sealift, the Cable Security5345Fleet, and the Tanker Security Fleet, all the way down to how we make5346an impact on the future mariners and workforce through resourcing the5347Merchant Marine Academies and the U.S. Naval Sea Cadet Corps.5348    However, any legislation/policy that provides increased business to5349the U.S. shipyards without providing some assurances for U.S.5350shipbuilding suppliers will fall short of the national mission to5351revive the entire U.S. shipbuilding industrial base. ASSA is requesting5352consideration in the SHIPS Act that will help to sustain critical U.S.5353shipbuilding suppliers.5354Some of the problems we face are as follows:53555356   The March 2023 Annual Industrial Capabilities Report to5357        Congress highlights a 70 percent decline of shipbuilding5358        suppliers over the last three decades (i.e., 17,000 suppliers5359        in the 1980s to approximately 5,000 in 2021), which has ``. . .5360        . created supply chain bottlenecks and reduced supplier5361        capacity and capability that have not been offset by new5362        sources of supply or a commercial industrial base that might be5363        converted to defense production'' This exposes a serious risk5364        for U.S. national security.53655366   During the 1980s the U.S. had a strong commercial5367        shipbuilding industry, which additionally benefited the5368        construction of U.S. naval vessels. With the proposed buildup5369        of a 600 ship Navy the Reagan administration ended in 1981 the5370        Construction Differential Subsidy (CDS) program, which had been5371        in place since 1936. This in turn led to a significant decline5372        in the U.S. commercial shipbuilding industry.53735374   Typically, U.S. shipbuilders will work with U.S. suppliers5375        in the design stage then often replace them with less expensive5376        competitors after design and performance requirements have been5377        identified. U.S. suppliers spend millions of dollars on5378        Government programs only to be changed out at the last step,5379        creating excess cost and a huge issue of distrust.53805381   A recent survey conducted by the Amphibious Warship5382        Industrial Base Coalition (AWIBC) found that only 10 percent of5383        amphibious warship suppliers are operating at full capacity.5384        For the top 25 major components on amphibious warships, 815385        percent are single or sole source providers.53865387Some examples of problem areas are as follows:5388  1.  Early in the Polar Security Cutter (PSC) program, an engine5389        manufacturing company and ASSA members, worked for 3 years with5390        the shipyard on the propulsion system design. This supplier5391        spent millions of dollars on this sales campaign, performing5392        free design work for the shipyard (which is necessary to gain5393        the contract). At the last moment, the shipyard switched to a5394        cheaper foreign-made engine that fit the same envelope,5395        although with poorer fuel consumption and higher life-cycle5396        costs. The foreign manufacturer then announced the closure of5397        their German plant, making it necessary for the Coast Guard to5398        expedite buying three ship sets of engines (total of 18)--still5399        yet to be used. The foreign manufacturer reported that they5400        could not complete the required ABS Naval Vessel Rules (NVR)5401        qualification, so the Coast Guard then waived those testing5402        requirements that are critical to demonstrating performance,5403        which is of particular importance when operating in the harsh5404        and isolated polar regions. Those engines now sit in a5405        warehouse at great expense to the Government, and once5406        installed it is questionable whether they will be supported5407        over the life-cycle of the ships.54085409  2.  While the Polar Security Cutter (PSC) was under design at the5410        original shipyard, the program was significantly delayed in5411        large part due to the complete distrust between the shipyard5412        and the suppliers (see above example). The design agent for the5413        ship was unable to progress the design because suppliers would5414        not share their data (VFI or ``Vendor Furnished Information'')5415        without some assurance of a contract. The shipyard could not5416        receive funding to get suppliers under contract due to5417        insufficient design maturity, resulting in a circular no-win5418        situation and causing unresolvable delay. Three years after5419        contract award the shipyard only had less than 5 percent of5420        suppliers under contract.5421Some recommended long-term solutions are as follows:5422    ASSA recommends policy and/or legislation that would strengthen the5423entire U.S. shipbuilding supply chain. We recommend adoption of the5424model used within the automotive industry, as follows:54255426   Global auto manufacturers do not recompete components with5427        each new year model.54285429   They instead develop long-term partnering agreements with5430        preferred suppliers with the expectation that suppliers will5431        improve delivery schedules, cut costs and drive innovation.54325433   Auto manufacturers actively manage their supply chains,5434        using scorecards and long-term contracts.54355436   In exchange the suppliers have predictability in multi-year5437        contracts, which then allows them to invest in R&D, workforce5438        development, infrastructure improvements and innovation.54395440    This is a much more efficient method, as several foreign shipyards5441have discovered and refined as a means of ensuring efficiency and5442minimizing wasted time and money.5443Several foreign shipbuilders have a similar model of partnership with5444        suppliers.5445    Foreign shipyards--especially in major shipbuilding nations like5446China, South Korea, and Japan--operate through highly structured and5447vertically integrated supply chains, as follows:54485449  1.  Tiered Supplier Systems--Shipyards in these nations often use a5450        tiered supplier system, similar to the automotive industry,5451        where Tier 1 suppliers provide major components and Tier 2 and5452        Tier 3 suppliers provide subcomponents, raw materials, or5453        services (e.g., steel plates, valves, pipes).54545455  2.  Long-Term Strategic Partnerships--these foreign shipyards often5456        establish long-term partnerships with key suppliers, especially5457        for complex or high-value components. This allows for5458        coordinated R&D efforts, improved quality control, reduced lead5459        times and price stability.54605461  3.  Modular Construction and Just-In-Time Delivery--Shipbuilding in5462        the example nations is highly modular. Suppliers deliver5463        prefabricated modules or kits to shipyards for final assembly.5464        This requires high-precision coordination, Just-in-Time (JIT)5465        logistics, and advanced project management systems. This system5466        has been adopted by at least one U.S. shipyard.54675468  4.  Digital Integration and Supply Chain Management--These non-US5469        shipyards increasingly share digital platforms to integrate5470        suppliers into their design and production systems.54715472  5.  Government and Industry Support--In countries like China,5473        suppliers often receive state support to align with national5474        shipbuilding goals (e.g., dual-use technology for military and5475        civilian vessels). This can include subsidies, mandated5476        sourcing, and centralized R&D initiatives.54775478  6.  Competitive Pressure and Cost Management--In nations with free5479        market economy-based commercial model, shipyards expect5480        suppliers to compete aggressively on price, quality, and5481        delivery speed. Many conduct regular benchmarking and audits.5482One near-term consideration could be as follows:54835484   In 1991, when Congress created the National Defense Sealift5485        Fund (NDSF) as a fix to the previous difficulties in funding5486        sealift and auxiliary mission ships, they recognized the need5487        to help preserve critical shipboard suppliers on government5488        programs that were more commercial in nature, and more5489        susceptible to foreign encroachment.54905491   ASSA's proposed language is not a new requirement but rather5492        would ensure the restoration of a nearly 25-year policy5493        initially put into law through the FY 1991 NDAA and5494        subsequently amended through the establishment of the National5495        Defense Sealift Fund (e.g., Section 814 of the FY95 NDAA). This5496        policy helps to preserve critical U.S. manufacturing5497        capabilities.54985499   Absent further direction from Congress, future Sealift and5500        Ready Reserve Force ships will not be subject to the statutory5501        requirement for U.S. manufacture of components that had5502        successfully been included within the NDSF statute and that has5503        been restated in every annual appropriations bill since the5504        NDSF establishment. Several Japanese and South Korean firms5505        have invested in U.S. Shipbuilding and suppliers with the5506        assumption that the laws will continue to promote U.S.5507        shipbuilding content.5508ASSA's Legislative Ask for the SHIPS ACT5509   As an interim step towards a stronger U.S. shipbuilding5510        supply chain, ASSA is asking for a return to legislation that5511        has been successfully used for decades.55125513   Proposed language: Within Section 501 of the Ships for5514        America Act, Sec. 53801, ``Shipbuilding financial incentives'',5515        add the following to (c)(2)(A):55165517        ``(iv) agree to prohibit any of the following components if5518        these components are not manufactured within the United States;55195520        I. Air circuit breakers.55215522        II. Welded shipboard anchor and mooring chain.55235524        III. Powered and non-powered valves in Federal Supply Classes5525        4810 and 4820 used in piping.55265527        IV. Machine tools in the Federal Supply Classes for metal-5528        working machinery numbered 3405, 3408, 3410 through 3419, 3426,5529        3433, 3438, 3441 through 3443, 3445, 3446, 3448, 3449, 3460,5530        and 3461.55315532        V. Auxiliary equipment for shipboard services, including pumps.55335534        VI. Propulsion equipment, including engines, propulsion motors,5535        thrusters, reduction gears, and propellers.55365537        VII. Shipboard cranes.55385539        VIII. Spreaders for shipboard cranes.55405541        IX. Rotating electrical equipment, including electrical5542        alternators and motors.''55435544    We urge the Committee to ensure sustained funding for shipbuilding5545workforce development programs, and to support amendments that5546incentivize the use of U.S. built vessels.5547    We urge the committee to promptly pass the SHIPS for America Act.5548Thank you for your consideration.5549            Respectfully,5550                                                Roger Camp,5551                                                 President and CEO,5552                           American Shipbuilding Suppliers Association.5553                                 ______55545555    Prepared Statement of Association for Materials Protection and5556                           Performance (AMPP)5557    Chair Sullivan, Ranking Member Blunt Rochester, and Members of the5558Subcommittee:55595560    Thank you for the opportunity to submit this statement on behalf of5561the Association for Materials Protection and Performance (AMPP) in5562support of the SHIPS for America Act of 2025. We commend the5563Committee's leadership in considering this bipartisan legislation to5564rebuild the U.S. shipbuilding and maritime industrial base as vital to5565our Nation's economic and national security.5566About AMPP5567    AMPP is the leading global authority on corrosion control,5568coatings, and materials performance, representing more than 38,0005569professionals in over 150 countries. Our members design, maintain, and5570protect the infrastructure that underpins U.S. maritime operations.5571    AMPP's mission is to protect infrastructure, ensure asset5572integrity, and extend the life of materials critical to public safety5573and economic resilience. Our expertise is directly relevant to the5574long-term success of the SHIPS for America Act.5575Position5576    AMPP strongly supports expeditious consideration and passage of the5577SHIPS for America Act of 2025. The legislation's focus on domestic5578shipbuilding, port modernization, and workforce development will5579strengthen America's maritime resilience, sustain skilled industrial5580jobs, and reduce dependence on foreign shipyards.5581Rationale5582        The problem--5583        The number of U.S.-flagged oceangoing vessels in international5584        trade has dropped from more than 1,000 in the 1950s to fewer5585        than 90 today, according to the U.S. Maritime Administration.5586        Meanwhile, China and South Korea now build over 95 percent of5587        large commercial ships. Reinvigorating domestic shipyards is5588        essential to maintaining the capability to design, build, and5589        repair ships in times of crisis or conflict.55905591        How AMPP Membership figures in--5592        Corrosion costs the U.S. maritime sector an estimated $205593        billion annually\1\ Our membership extends vessel life,5594        improves performance, and significantly reduces long-term5595        maintenance costs. Through applied research, standards5596        development, and hands-on inspection training, our community5597        delivers proven methods that improve safety, sustainability,5598        and lifecycle reliability across fleets and facilities.5599---------------------------------------------------------------------------5600    \1\ U.S. Government Accountability Office, Department of Defense--5601Additional Corrosion Prevention Measures Could Enhance Readiness, GAO-560219-39 (Washington, DC: GAO, 2018), https://www.gao.gov/products/gao-19-39.56035604        How AMPP figures in--5605        The maritime industrial base faces acute workforce shortages in5606        the skilled trades, particularly among certified corrosion5607        professionals like coating applicators, inspectors, and5608        corrosion technicians. The SHIPS Act's workforce provisions5609        align with AMPP's training and certification programs, which5610        prepare hundreds of thousands of skilled workers annually in5611        materials protection and asset integrity.56125613        Big Picture--5614        Revitalizing domestic shipyards supports good-paying American5615        jobs, strengthens supply chains, and re-affirms the United5616        States as the international maritime leader.5617Recommendations5618  1.  Sustain Workforce Investments: AMPP supports Federal efforts to5619        modernize, expand, and maintain funding for technical training5620        and certification programs vital to the maritime industrial5621        base. Additionally, AMPP encourages the adoption of modern5622        workforce strategies that prioritize innovative operating5623        models, skill-based hiring, skill acceleration, and technology-5624        enabled workforce augmentation. AMPP also stresses the value of5625        innovative recruitment approaches that increase workforce5626        participation, close severe workforce gaps, and create5627        alternate entry points into corrosion-related trades through5628        apprenticeships, industry partnerships, community initiatives,5629        and veteran transition programs.56305631  2.  Align Standards and Certification Requirements: AMPP advocates5632        for greater alignment among Federal shipbuilding programs,5633        naval maintenance facilities, and commercial shipyards to5634        ensure consistent training, certification, and quality5635        standards. Harmonizing these requirements will bolster the5636        industrial base, minimize redundancy, and enhance quality5637        assurance and safety across the U.S. fleet.56385639  3.  Maritime Materials Performance: AMPP believes the Center for5640        Maritime Innovation, found in Sections 521 & 522, should5641        prioritize materials performance, including life cycle cost5642        calculations which fully account for corrosion protection. Such5643        an initiative would foster collaborative research and5644        development of advanced, sustainable marine materials,5645        coatings, and corrosion prevention methods while standardizing5646        testing and data sharing between industry (including AMPP),5647        academia, and government.5648Conclusion5649    The SHIPS for America Act of 2025 presents a timely opportunity to5650restore U.S. shipbuilding capacity, reinforce national security, and5651create sustainable, high-skilled employment. AMPP, and our diverse,5652talented membership stand ready to contribute technical expertise and5653workforce training to advance these goals.5654    We respectfully urge the Committee to advance and pass the SHIPS5655for America Act of 2025. Thank you for your attention and commitment to5656strengthening America's maritime future.5657                                               Alan Thomas,5658                                                               CEO,5659           Association for Materials Protection and Performance (AMPP).5660                                 ______56615662          Prepared Statement of American Maritime Partnership5663    The American Maritime Partnership (AMP) is the largest maritime5664industry legislative coalition ever, representing all elements of the5665U.S. domestic maritime industry including shipping companies, mariners,5666shipyards, pro-defense organizations, and others. AMP's sole focus is5667the Jones Act, the fundamental law of the U.S. domestic maritime5668industry.5669    AMP appreciates the Subcommittee's decision to hold a hearing5670addressing the important issue of how to accelerate U.S. commercial5671shipbuilding while strengthening America's broader maritime industrial5672base. During Chairman Sullivan's questioning of the panel, he asked5673about what went wrong with commercial shipbuilding in the United5674States. Thank you for the opportunity to share our thoughts on this5675important subject.5676    The Jones Act is the essential foundation of America's maritime5677industry that ensures U.S. control of our supply chain, maritime domain5678awareness, and a critical mass of mariners and shipbuilding capability.5679U.S. shipyards have pioneered innovations like Articulated Tug Barges5680(ATBs), LNG-fueled containerships, and other cutting-edge technologies.5681As a result, the United States has over 45,000 U.S.-owned, U.S.-built,5682and U.S.-crewed vessels that enable us to meet our needs for domestic5683maritime transportation on America's waterways, oceans, and coasts5684safely, securely, and efficiently.\1\5685---------------------------------------------------------------------------5686    \1\ Bureau of Transportation Statistics, U.S. Flag Vessels by Type5687and Age, available at: U.S. Flag Vessels by Type and Age | Bureau of5688Transportation Statistics.5689---------------------------------------------------------------------------5690    This framework supports an annual economic impact of more than $1505691billion and approximately 650,000 U.S. jobs. This is a testament to the5692strength and vitality of American maritime commerce.5693    While we agree with the panel that there are challenges facing U.S.5694commercial shipbuilding, the Jones Act is not the cause of these5695challenges. In fact, exactly the opposite is true: the United States5696maintains a thriving presence in the commercial shipbuilding market5697because of the Jones Act. Countries around the world that have removed5698or weakened their own cabotage requirements, such as the United5699Kingdom, have seen their merchant fleets significantly decrease and5700shipyards become uncompetitive.\2\ The Jones Act, by contrast, has5701preserved and strengthened America's domestic maritime capability.5702Looking to the rest of the world, 105 countries accounting for 855703percent of the world's coastline have cabotage laws similar to the5704Jones Act, a number that has increased over the last seven years,5705showing other countries understand the importance of maintaining a5706national fleet.\3\5707---------------------------------------------------------------------------5708    \2\ See The Guardian, How Britain sank its shipping industry by5709waiving the rules (August 2016).5710    \3\ Seafarers Rights International, Cabotage Laws of the World5711(September 2025), available at: https://seafarersrights.org/seafarers-5712subjects/cabotage/.5713---------------------------------------------------------------------------5714    When critics discuss the diminishment of the U.S.-flag fleet, they5715are often referring to large, oceangoing ships active in international5716trade. Shipbuilders Council of America President Matthew Paxton5717identified this misconception in his written testimony to the esteemed5718members of this committee.\4\ These vessels are not required to be5719built in the United States. In the U.S. domestic fleet, where the Jones5720Act governs, America enjoys a strong and growing fleet of tens of5721thousands of vessels.5722---------------------------------------------------------------------------5723    \4\ See Testimony of Matthew O. Paxton, President Shipbuilders5724Council Of America, available at: https://www.commerce.senate.gov/5725services/files/ECC43D59-8557-45A1-9B33-04C1450485285726---------------------------------------------------------------------------5727    Where we do have a gap is in U.S.-built vessels trading5728internationally, where U.S. shipyards must compete with heavily5729subsidized foreign shipyards both from our friends and our foes. This5730is the real challenge facing American shipbuilding competitiveness in5731the global market.5732    Furthermore, the Jones Act serves as a critical stabilizer for5733shipyards that also work on government ships. Take the Hanwha Philly5734Shipyard, for example. While the government's order of five National5735Security Multi-Mission Vessels (NSMVs) from that shipyard in 20205736certainly played a leading role in its revitalization, the Philly5737Shipyard could not survive on government orders alone. Two large Jones5738Act-qualified companies filled the gaps, ordering four vessels for5739construction over a period of six years. This public-private synergy5740demonstrates how the Jones Act strengthens our entire shipbuilding5741ecosystem.\5\5742---------------------------------------------------------------------------5743    \5\ See also Coalition for a Prosperous America, How to Solve5744America's Shipbuilding Crisis (September 2025), available at https://5745prosperousamerica.org/wp-content/uploads/2025/10/CPA-Economic-Report-5746How-to-Solve-Americas-Shipbuilding-Crisis.pdf (stating ``Without the5747Jones Act--and without Navy contracts--the U.S. would likely have no5748shipbuilding industry left today.'')5749---------------------------------------------------------------------------5750    As Steve Carmel, the nominee for the position of Maritime5751Administrator, stated this week in front of the full Committee, the5752Jones Act (along with the Maritime Security Program and cargo5753preference laws) is critical to sustaining our fleet. While these5754programs are not on their own going to solve the U.S.-flag5755international trade issues, they are ``critical to making sure we don't5756go backwards.''5757    We welcome the leadership of the Trump Administration, the5758bipartisan sponsors of the SHIPS for America Act, and the bipartisan5759leadership of this Committee in helping us build on the foundation of5760the Jones Act and make American Maritime Great Again in the5761international trades. Commercial shipbuilding in this country benefits5762extensively from the Jones Act, and with the right policies to address5763international competition, we can expand American maritime excellence5764to global markets while maintaining the strong domestic foundation the5765Jones Act provides.5766                                 ______57675768            Prepared Statement of American Maritime Congress5769    Chairman Sullivan, Ranking Member Blunt Rochester, and Members of5770the Subcommittee: American Maritime Congress (AMC) sincerely5771appreciates the opportunity to submit this statement for the record. In5772its nearly fifty years of advocating for the United States Merchant5773Marine, AMC has never seen a time more promising for revitalizing5774America's maritime dominance than the present.5775    AMC's membership is made up of twelve U.S.-flag internationally5776trading carriers, all of which are crewed by American mariners and5777owned by American companies, as well as the oldest maritime union in5778the nation, the Marine Engineers' Beneficial Association. For decades,5779AMC has proudly served in an educational capacity for virtually every5780major piece of maritime-related legislation considered by the Federal5781Government.5782    America's maritime sector has long been fundamental to our national5783and economic security. From the Merchant Marine that carried our forces5784to victory in World War II to the vessels that sustain our global5785supply chains today, our maritime strength has always reflected our5786national strength. Yet over the past several decades, that foundation5787has weakened. Today, fewer than 200 U.S.-flag ships operate in5788international trade, accounting for less than one percent of global5789shipping capacity. Each vessel lost means fewer jobs for American5790mariners, reduced economic activity in our ports, and a diminished5791capacity to advance and protect U.S. interests abroad.5792    Meanwhile, foreign competitors such as the People's Republic of5793China have undertaken deliberate and coordinated action over decades to5794unfairly dominate global shipping and shipbuilding. Through a5795combination of targeted industrial policy, long-term state investment,5796and close coordination between government, military and industry, China5797has built a maritime system intended to permeate and control every5798facet of the world's commerce. This has left the United States5799increasingly dependent on foreign carriers and crews to move its own5800goods and sustain its economic security and preserve its supply chain.5801America must not rely on others to deliver the goods and materials that5802keep our economy and military strong. We must restore the capacity to5803move our own commerce under the U.S. flag.58045805[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]58065807Strengthening the Entire Maritime Industry5808    Rebuilding U.S. maritime capability requires a comprehensive5809approach that supports not only shipbuilding, but also mariner5810training, port infrastructure, ship repair, logistics, and perhaps most5811importantly: policies that foster cargo for U.S. ships. Ships,5812shipyards, mariners, and cargo are mutually dependent; strengthening5813one element without the others will not restore America's maritime5814resilience.5815    The American Maritime Congress strongly supports the bipartisan5816SHIPS for America Act, introduced by Senators Todd Young (R-IN) and5817Mark Kelly (D-AZ). This legislation represents an important and timely5818step toward renewing the U.S.-flag fleet and ensuring that American5819seafarers, shipyards, and carriers return to their status as global5820leaders in the maritime industry. The SHIPS for America Act recognizes5821that rebuilding this industry requires sustained commitment and5822partnership between government and the private sector. By fostering5823long-term operational capacity and investment, the bill lays the5824groundwork for a true national maritime renaissance. Of particular5825importance within the SHIPS Act, is Subtitle B focused on bringing more5826cargo to the U.S.-flag fleet, including Section 422: the promotion of a5827specific organization or entity that will develop incentives for U.S.5828shippers to foster increased use of U.S. ships for their cargo.5829    Congress must also consider low-cost tax proposals to incentivize5830private U.S. exporters and importers to choose U.S.-flag vessels for5831their commercial cargo. An initiative as simple as expanding the5832current tax deduction that U.S. shippers employ for shipping cargo on5833foreign carriers to an increased level if U.S. ships are used would5834drastically increase the demand for U.S. ships. An August, 2025 PwC5835analysis of such an enhanced deduction found that nearly eliminates the5836cost differential between the use of foreign-flag vessels and U.S.-flag5837vessels, and would increase the demand for U.S.-flag vessels by5838approximately 20 percent.58395840[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]58415842 Impact of increasing current shipper tax deduction by 200 percent on5843  overall cost of shipping, U.S. vs. foreign-flag carriers, PwC 08-255844    A targeted ``Ship American'' deduction would align economic5845incentives with national interests, encourage the use of U.S.-flag5846carriers in global trade, and create a stronger commercial foundation5847for our shipyards, operators, and mariners. The following example5848illustrates the basic operation of the proposal.5849    Every major trading nation treats maritime capability as a5850cornerstone of its economic and national security strategy. The United5851States cannot afford to be the only maritime power without a fully5852capable fleet to call its own. The SHIPS for America Act, together with5853renewed bipartisan support from Congress and the Trump Administration,5854provides a rare opportunity to rebuild America's maritime capability.5855This effort must include investment in shipyards, active collaboration5856between government and industry to grow commercial shipping, and a5857long-term maritime strategy that aligns America's trade, defense, and5858workforce goals.5859    Reviving American shipbuilding and increasing the size of the U.S.5860flag commercial fleet is not only an industrial challenge but a5861strategic necessity. The ability to move goods, materials, and military5862cargo under the U.S. flag is fundamental to both our economic5863independence and national defense.5864    The American Maritime Congress applauds the Subcommittee's5865leadership in convening this hearing and urges swift, bipartisan action5866to advance policies that strengthen the entire maritime industry. Thank5867you for the opportunity to share the views of the American Maritime5868Congress and for your continued commitment to advancing America's5869maritime interests. Restoring America's maritime dominance will require5870determination, investment, and vision. It begins with a clear5871commitment: America must once again build, crew, and ship American.5872                                 ______58735874      Prepared Statement of Kevin M. Dempsey, President and CEO,5875                   American Iron and Steel Institute5876    Chairman Sullivan, Ranking Member Blunt Rochester and Members of5877the Subcommittee:58785879    On behalf of the American Iron and Steel Institute (AISI), below5880please find comments for the subcommittee hearing entitled ``Sea5881Change: Reviving Commercial Shipbuilding.'' AISI appreciates the5882subcommittee holding today's hearing and for its focus on the5883commercial shipbuilding and maritime sector, which plays an essential5884role in our defense industrial base, and as such, our national and5885economic security.5886    AISI serves as the voice of the American steel industry in the5887public policy arena and advances the case for steel in the marketplace5888as the preferred material of choice. AISI's membership is comprised of5889integrated and electric arc furnace (EAF) steelmakers, steel pipe and5890tube manufacturers and steel processors and fabricators, reflecting the5891production and distribution of both carbon and stainless steels. These5892steels are critical to America's national and economic security,5893including roads and bridges, buildings, the electrical grid, defense5894applications, cars and trucks and all clean energy technologies. AISI5895also represents associate member companies who are suppliers to or5896customers of the steel industry.5897    Reviving U.S. shipbuilding capabilities has the potential to create5898tens of thousands of jobs at U.S. shipyards and within the entire5899shipbuilding supply chain at manufacturing operations that produce key5900inputs across the Country. The American steel industry is one of the5901primary suppliers of critical raw materials to America's shipbuilding5902industry. Steel, especially steel plate, is a critical and5903irreplaceable material used for construction of commercial and military5904ships. The U.S. has significant steel plate production, including5905specialty plate for shipbuilding applications, which is currently5906substantially underutilized. In fact, the U.S. International Trade5907Commission, in a recent trade remedy proceeding, found that capacity5908utilization in the cut-to-length (CTL) plate sector was an average of590967.8 percent over the period examined.\1\ Since that case, domestic CTL5910plate capacity has only increased, with additional new capacity coming5911online. U.S. steel producers are fully prepared to meet the steel needs5912of shipbuilders as they increase their build rates.5913---------------------------------------------------------------------------5914    \1\ Carbon and Alloy Steel Cut-to-Length Plate from Austria,5915Belgium, Brazil, China, France, Germany, Italy, Japan, South Africa,5916South Korea, Taiwan, and Turkey, Inv. Nos. 701-TA-560-561 and 731-TA-59171317-1328, USITC Pub. 5399 (Jan. 2023) at C-9 (Table C-1).5918---------------------------------------------------------------------------5919    In order to maximize the benefits of revitalizing our shipbuilding,5920industry including for suppliers to the sector, Congress and the5921Administration must institute policies that incentivize utilization of5922domestic supply chains, not just final assembly.5923    AISI strongly supports policy efforts to revitalize domestic5924shipbuilding. In particular, we have endorsed S. 1541, the Shipbuilding5925and Harbor Infrastructure for Prosperity and Security (SHIPS) for5926America Act of 2025 introduced by Senators Mark Kelly and Todd Young.5927This bipartisan legislation would enable a comprehensive approach to5928revitalize the United States shipbuilding and commercial maritime5929industries. We appreciate the leadership of Senators Kelly and Young on5930this key legislation, as well as the Senate cosponsors of the bill. The5931work of Representatives John Garamendi and Trent Kelly to advance the5932SHIPS for America Act in the U.S. House of Representatives is also5933critical. AISI endorses this key domestic shipbuilding legislation and5934looks forward to working with the broad coalition of supporters to5935enable its passage in both houses of Congress.5936    AISI and our member companies look forward to continuing to work5937with Congress to create and implement policies that will increase the5938demand for domestic steel products that are essential for a revitalized5939American-made shipbuilding industry.5940                                 ______59415942            Prepared Statement of Scott N. Paul, President,5943               Alliance for American Manufacturing (AAM)5944    Chair Sullivan, Ranking Member Blunt Rochester, and Members of the5945Subcommittee:59465947    The Alliance for American Manufacturing (AAM) appreciates the5948opportunity to submit this statement for the hearing record in strong5949support of the SHIPS for America Act (S. 1541/H.R. 3151). We commend5950the subcommittee for convening this timely hearing to address the5951urgent need to strengthen America's commercial shipbuilding capacity, a5952cornerstone of our economic and national security that has been eroded5953by both neglect and the predatory policies of the People's Republic of5954China.5955    AAM is a non-profit, non-partisan partnership formed in 2007 by5956some of America's leading manufacturers and the United Steelworkers.5957Our mission is to strengthen American manufacturing and create new5958private-sector jobs through smart public policies. We believe that an5959innovative and growing manufacturing base is vital to America's5960economic and national security, as well as to providing good jobs for5961future generations. AAM achieves its mission through research, public5962education, advocacy, strategic communications, and coalition building5963around the issues that matter most to America's manufacturers and5964workers.5965    AAM strongly supports the bipartisan, bicameral SHIPS for America5966Act, introduced by Senators Kelly (D-AZ) and Young (R-IN) and5967Representatives Kelly (R-MS) and Garamendi (D-CA). This landmark5968legislation provides the strategic framework and resources necessary to5969rebuild U.S. commercial shipbuilding, expand the U.S.-flag fleet, and5970revitalize the maritime industrial base and workforce. The SHIPS for5971America Act complements the ongoing Section 301 trade action targeting5972China's unfair practices in shipbuilding and maritime logistics.5973Together, these measures represent a coordinated national strategy to5974restore America's maritime power and to ensure that our commercial and5975defense needs are met by America's workers, shipyards, and supply5976chains.5977    A strong domestic shipbuilding and maritime sector is indispensable5978to U.S. national security, economic resilience, and industrial5979independence.59805981   National Defense: More than 90 percent of U.S. military5982        equipment and supplies moves by sea, underscoring the5983        indispensable role of domestic shipbuilding in sustaining5984        strategic sealift capacity. Strategic sealift capacity depends5985        on having shipyards, suppliers, and mariners capable of5986        producing, maintaining, and operating vessels under the U.S.5987        flag. Without a viable commercial shipbuilding base, we cannot5988        sustain naval readiness or scale logistics in a major conflict.59895990   Economic and Supply Chain Security: Over 80 percent of5991        global trade moves via ocean shipping. The United States must5992        break its dependence on foreign shipbuilding, particularly that5993        of China. Moreover, our capacity to independently produce5994        ships, ship-to-shore cranes, port equipment, data systems, and5995        other maritime infrastructure necessary to move critical5996        cargoes stands at a critical juncture.59975998   Jobs and Industrial Strength: U.S. shipbuilding supports5999        over 400,000 jobs across steel, advanced manufacturing,6000        logistics, and maritime operations. These are high-skill, high-6001        wage positions that sustain entire regional economies. A single6002        commercial ship can require 13,000 tons of steel, 60,0006003        gallons of paint, and 130 miles of cable--all products that can6004        and should be made by America's workers.60056006    America's commercial shipbuilding industry has suffered a dramatic6007collapse. According to the USTR's January 2025 report on China's6008Targeting of the Maritime, Logistics, and Shipbuilding Sectors for6009Dominance, the U.S. now builds fewer than five commercial vessels6010annually, while China produces over 1,700 per year--marking a major6011reversal from the mid-1970s when the U.S. led the world with over 706012ships on orderbooks annually. The U.S.-flag international fleet has6013dwindled to fewer than 80 merchant vessels, while China operates over60145,500. More than 70,000 shipbuilding jobs and 20,500 suppliers have6015disappeared from our industrial base.6016    Meanwhile, China's global shipbuilding expansion is part of a6017deliberate, state-directed campaign to control critical supply chains.6018It produces 95 percent of shipping containers and 80 percent of ship-6019to-shore cranes. Its LOGINK platform operates in over 20 major ports6020worldwide, gathering sensitive logistics information that can be6021weaponized against the United States and its allies. Many Chinese6022shipyards serve both civilian and military production, directly6023bolstering the People's Liberation Army Navy (PLAN), now the world's6024largest by ship count with more than 370 ships and submarines in6025service compared to the U.S. Navy's approximately 292 ships.6026    The good news is that the Federal government has begun taking6027decisive steps to remedy these alarming trends. In March 2024, a6028coalition of labor unions--including USW, IAM, IBEW, and IBB--filed a6029Section 301 petition documenting China's maritime industrial targeting.6030USTR concluded in January 2025 that China's actions are unreasonable6031and discriminatory, burdening U.S. commerce and threatening our6032national security. The Trump administration has seamlessly continued6033taking the steps necessary to revive U.S. shipbuilding. In April 2025,6034President Trump signed the Executive Order on Restoring America's6035Maritime Dominance, calling for a Maritime Action Plan (MAP) that will6036soon be released. And, most recently, USTR began implementing6037responsive actions called for under the Section 301 action, including6038port fees on Chinese-built ships, restrictions on LOGINK, and6039benchmarks for U.S. energy exports on U.S.-flagged vessels.6040    For its part, a bipartisan group of members in both the House and6041Senate have introduced the SHIPS for America Act, which provides the6042long-term investment framework and Federal leadership necessary to6043sustain these efforts. The legislation establishes a national goal to6044build 250 U.S.-flagged commercial vessels over ten years, incentivizing6045construction and operation of U.S.-built ships. Critically, the bill6046would codify the establishment of a Maritime Security Trust Fund6047financed through user fees and Section 301 collections to sustain6048investments in shipyard modernization, infrastructure, and workforce6049development. While it is imperative that we strengthen U.S. shipyards6050and the health of our supply chains, we must not overlook mariner6051recruitment, retention, and training programs to rebuild a skilled6052maritime workforce.6053    For decades, the U.S. has watched its shipbuilding industry decline6054due to foreign state intervention and policy neglect. The SHIPS for6055America Act offers a historic opportunity to rebuild this vital sector,6056restore the U.S.-flag fleet, and secure our maritime future. AAM urges6057swift passage of the SHIPS for America Act and robust implementation of6058complementary Section 301 and executive actions.6059    Thank you for holding this hearing and for the opportunity to share6060our views.6061                                 ______60626063        Prepared Statement of Blue Sky Maritime Coalition (BSMC)6064    The Blue Sky Maritime Coalition (BSMC) is pleased to provide this6065submission to the Senate Committee on Commerce, Science, and6066Technology's Subcommittee on Coast Guard, Maritime, and Fisheries for6067consideration in the hearing entitled ``Sea Change: Reviving Commercial6068Shipbuilding.'' The Blue Sky Maritime Coalition (BSMC) appreciates the6069opportunity to submit this statement for the record regarding the6070critical topic of reviving commercial shipbuilding in the United6071States.6072INTRODUCTION TO BSMC6073    The Blue Sky Maritime Coalition (BSMC) appreciates the opportunity6074to submit this statement for the record regarding the critical topic of6075reviving commercial shipbuilding in the United States. BSMC is a non-6076profit, strategic alliance launched in June 2021 to accelerate the6077transition of waterborne transportation in the United States and Canada6078toward net-zero greenhouse gas emissions. With over 100 member6079organizations, BSMC brings together industry, community, government,6080academia, and other stakeholders across the maritime value chain to6081pursue projects that remove barriers, encourage innovation, and promote6082policies supporting zero emissions.6083STATEMENT6084    The maritime sector is responsible for delivering more than 806085percent of traded goods globally, yet it often receives less attention6086compared to other transportation modes. BSMC does not take a specific6087position on the SHIPS Act but wishes to highlight the importance of6088research and development, particularly Section 521, which expands the6089United States Center for Maritime Innovation program. This Center6090exemplifies the value of public-private partnerships in accelerating6091the commercial development of fuels and integrated supply chains,6092supporting a sustainable and competitive maritime industry.6093    BSMC also emphasizes the importance of workforce development for6094the future of the maritime industry. Sections 611, 613, and 617 of the6095SHIPS Act present significant opportunities to provide funding,6096training, and infrastructure to support the next generation of mariners6097and ensure the continued growth of sustainable pathways for the6098industry.6099    The Coalition was established to unite all parties involved in the6100North American waterborne value chain and collaboratively develop a6101roadmap to net-zero greenhouse gas emissions by 2050. This includes6102identifying and removing barriers to decarbonization through6103demonstration projects and other initiatives.6104    We urge careful consideration of the total system impacts of6105legislation such as the SHIPS Act to ensure that the energy and focus6106on maritime issues establish a framework supporting a sustainable6107future for the entire maritime value chain.6108    Respectfully submitted,6109                                          David H. Cummins,6110                                                   President & CEO,6111                                           Blue Sky Maritime Coalition.6112                                 ______61136114        Prepared Statement of Rye Barcott, Co-founder and CEO,6115                           With Honor Action6116    Chairman Sullivan, Ranking Member Blunt-Rochester, and Members of6117the Subcommittee,61186119    With Honor Action is pleased to submit this statement for the6120record, and appreciates the subcommittee for recognizing this6121consequential issue of maritime security and for holding today's6122hearing. We are a bipartisan, nonprofit organization that strives to6123strengthen democracy and fight polarization in Congress through6124principled veteran leadership. This includes endorsing legislative6125solutions to our Nation's most pressing threats, connecting Members6126across the aisle to forge bipartisan bonds, and building coalitions of6127like-minded organizations to demonstrate overwhelming support for6128commonsense policies. With Honor works with the 37 members of the For6129Country Caucus in the House of Representatives, all of whom are6130military veterans, and have taken our pledge of integrity, civility,6131and courage. We also work closely with our 11 Senate allies, which6132includes the leaders of the SHIPS for America Act, Senators Todd Young6133(R-IN) and Mark Kelly (D-AZ), both military veterans. These6134Congressional leaders leverage their military experience and leadership6135to build support for and pass legislation in the national security,6136national service, and veterans spaces. The issue of maritime security6137and our maritime industrial base is just one area where we have worked6138on a bipartisan basis to drive support for much-needed legislation.6139    With Honor Action strongly supports the SHIPS for America Act6140because it strengthens domestic shipbuilding, enhances our national6141security, and revitalizes our industrial base. This legislation has6142strong bipartisan and bicameral support with over 110 House cosponsors6143and 9 Senate cosponsors. Senators Young and Kelly, both military6144veterans, and both from states without a history of shipbuilding, have6145championed the SHIPS Act not for political gain, but because it is the6146right thing to do for our country.6147    In the United States, commercial shipbuilding has receded to an all6148time low. In the last 10 years, China has built 6,765 commercial ships,6149Japan has built 3,130 commercial ships, South Korea has built 2,4056150commercial ships while the U.S. has only produced 37 commercial6151ships.\1\ Gaps between the United States' and China's shipbuilding6152capacities surpass a simple overreliance on Chinese manufacturing-it is6153society-wide. According to the Congressional Research Service, in 2022,6154there were 1,794 ships under construction at Chinese shipyards,6155compared to only five in the U.S.\2\ In terms of ``gross tons,'' or the6156measure of a ship's volume, China, Korea, and Japan build over 906157percent of the world's tonnage, compared to the United States' 0.26158percent.\3\6159---------------------------------------------------------------------------6160    \1\ ``USW Continues to Lead Drive to Rebuild Shipbuilding6161Industry--United Steelworkers.'' United Steelworkers, 13 Aug. 2025,6162usw.org/news/usw-continues-to-lead-drive-to-rebuild-shipbuilding-6163industry.6164    \2\ Frittelli, John. ``U.S. Commercial Shipbuilding in a Global6165Context.'' Congressional Research Service, 15 Nov. 2023,6166www.congress.gov/crs-product/IF12534.6167    \3\ Ibid.6168---------------------------------------------------------------------------6169    The United States' minuscule market share of global shipbuilding6170predates China's ascension to the majority of the market. The last time6171America was a leader in peacetime global shipbuilding was during the6172early 1800s, when ships were still made of wood. Ship manufacturing6173exploded during the World War era, but these cargo ships were soon sold6174to private merchants and replaced with more efficient foreign-6175manufactured ships.6176    There is finally an issue of worldwide overcapacity. Despite being6177enormous companies (the three largest shipbuilding firms in China,6178Korea, and Japan, nine in total, account for 75 percent of global6179shipbuilding capacity), firms in Korea and Japan often operate at a6180loss, requiring government bailouts or relying heavily on subsidies.\4\6181They alternatively may be a part of a large conglomerate (e.g., Samsung6182and Hyundai) where profit margins in more profitable areas of the6183company help weather losses in shipbuilding. In China, 36 of the 1006184largest shipyards are owned by the national government, 10 by local6185governments, and 54 are privately owned.\5\ The government-owned yards6186accounted for 64 percent of ship tonnage built in China in 2021.\6\ The6187United States' commercial maritime industry simply cannot compete on6188such an unfair playing field.6189---------------------------------------------------------------------------6190    \4\ Ibid.6191    \5\ Ibid.6192    \6\ Ibid.6193---------------------------------------------------------------------------6194    Our policy makers and industry leaders need to work together to6195develop innovative solutions to bring back commercial shipbuilding to6196the United States. With Honor Action applauds the efforts of Senators6197Young and Kelly as well as Congressmen Kelly and Garamendi.6198    With Honor Action urges the Committee to ensure sustained funding6199for the shipbuilding workforce development programs, and to support6200amendments that incentivize the use of U.S.-built vessels. We thank the6201Committee for holding today's hearing and for their consideration of6202this vital legislation. By supporting this legislation, we are6203demonstrating that we view maritime capacity not as a relic of the6204past, but as a strategic asset for the future. With Honor Action is a6205strong supporter of the SHIPS for America Act and we urge Congress to6206pass this important national security legislation as soon as possible.6207                                 ______62086209Prepared Statement of Michael Roberts, Senior Fellow, Hudson institute6210          and Director, American Maritime Security Initiative6211    Chairman Sullivan, Ranking Member Rochester and Members of the6212Subcommittee--62136214    My name is Michael Roberts and I am a Senior Fellow at the Hudson6215institute and director of its American Maritime Security initiative.6216American Maritime Security Initiative | Hudson Institute. I write to6217emphasize three primary points:62186219   Because America all but abandoned its maritime industrial6220        base, our country is at extreme risk in preparing for and6221        deterring major conflict with China. Our commercial6222        shipbuilding industry is far too small, which impacts our on-6223        going naval shipbuilding capabilities and our ability to scale6224        up in a conflict. America has almost no control over the6225        maritime supply chains that feed our economy, while China has6226        more control over those supply chains than any other country.6227        And our fleet of American ships is too small even to supply our6228        own troops if deployed in a major overseas conflict.62296230   We do not have very much time or resources to fix this6231        problem. Even under the best of circumstances it will take6232        years to restore America's maritime self-sufficiency let alone6233        achieve maritime dominance. Some amount of smart government6234        investment will be needed. Yet as important as this is,6235        government resources and other priorities limit the amount that6236        can be invested to address this priority. Such investment must6237        be deployed wisely to achieve realistic and important6238        objectives.62396240   The SHIPS For America Act is excellent legislation and6241        should be enacted this year. It is comprehensive legislation6242        that reflects a cogent strategy designed to grow and modernize6243        the American maritime industry, using government and private6244        sector investment. It will halt the decline in America's6245        shipbuilding industrial base and provide a platform for6246        technology-led growth. It will close the gap in America's6247        sealift capacity and help secure our maritime supply chains.6248        Because of the strategic approach it follows, the costs to6249        taxpayers would be a small fraction of what might be expected--6250        and those costs would be fully covered by the penalties imposed6251        on Chinese ships calling at American ports.62526253    We cannot afford to spend years groping for consensus or fine-6254tuning legislation. This may be the last opportunity to begin to6255rebuild America's maritime strength. I urge you to pass the SHIPS Act6256this year.6257Background6258    Before joining the Hudson Institute at the beginning of 2022, I6259spent a full career involved in the American commercial maritime6260industry. From 1984 to 1991, I was an attorney in private law practice6261focused on maritime, aviation and other transportation matters. I6262joined the Washington office of Crowley Maritime Corp. in 1991 as6263counsel to its liner shipping division and was promoted to VP6264Government Relations in 1994. I left Crowley in 2000 and returned to6265private practice but continued to represent the company on legislative6266and other matters. I returned to Crowley in 2008 as Senior VP and6267General Counsel and remained in that role until leaving the company at6268the end of 2021. I was also President and Chairman of the American6269Maritime Partnership (AMP), the largest coalition of American maritime6270interests, for a two-year term in 2020-2021.6271    From 1994 forward I was actively involved in the formulation and6272drafting of American maritime policy and legislation. This included the6273Maritime Security Act of 1996 (creating the Maritime Security Program6274(MSP) and the Voluntary Intermodal Sealift Agreement implementing the6275MSP), as well as the container shipping deregulation bill in 1998,6276Coast Guard Authorization Acts and other matters.6277Discussion6278    Throughout my work in the industry, I have been keenly aware of the6279challenges faced by America's commercial maritime industry. The6280international shipping industry is a textbook example of free trade6281economics. Ships serving American import-export trades can be built6282anywhere in the world, owned and operated by businesses anywhere and6283crewed by citizens of any country. This means that because American6284shipping and shipbuilding companies are based on American soil and6285operate in American waters according to American standards, they face6286much higher costs to build and operate ships as compared to competitors6287in the rest of the world. They can and do compete vigorously with each6288other within US domestic markets where all must comply with US rules.6289But the massive cost disadvantages American maritime companies face in6290international markets led most of them eventually to make rational6291business decisions to abandon those markets.6292    Congress last reset the policies for supporting America's shipping6293and shipbuilding industry during the post-Cold War euphoria of the62941990s. The world was at peace. America was the world's only superpower,6295and the general belief was that it would remain so indefinitely. The6296world embarked on one of the most ambitious free trade experiments in6297history with the creation of the World Trade Organization in the mid-629890's and the eventual accession of China into the WTO in 2001. Despite6299the key role played by America's maritime dominance in winning World6300War II, most Americans simply had no understanding of the maritime6301industry. Very few people in the 1990's believed that maintaining a6302substantial American shipping and shipbuilding capability would ever6303again be important to our national security.6304    Beginning in the mid-2010's I became increasingly aware of the6305threat to American interests posed by China's growth and geopolitical6306ambitions, and by its increasing dominance of the commercial maritime6307industry. Where America had all but abandoned its maritime industry,6308China was moving in precisely the opposite direction, deploying a6309whole-of-government strategy in support of its maritime industry. As6310President of AMP, I had the opportunity to host podcast interviews with6311senior experts on China and maritime matters, including Adm. James6312Stavridis, National Security Advisor Robert O'Brien, Author Michael6313Pillsbury, Rep. Mike Gallagher and others. The basic message in each of6314these interviews was the same. America was no longer the world's only6315superpower, as China presents a formidable competitor with explicit6316designs to displace America as the global leader. And industrial6317strength--particularly shipping and shipbuilding capabilities--is a key6318element of China's strategy.6319    Because these facts contradict the most basic assumptions6320underlying US maritime policies since World War II, and most certainly6321since the 1990's, I believed that a review of those policies was in6322order. I joined the Hudson Institute at the beginning of 2022 and began6323to dig into the key questions: How do the maritime industries of the US6324and China compare? What risks to American national and economic6325security are created by China's growing dominance of the maritime6326industry? How and to what extent can America rely on support from6327allies--particularly Korea and Japan--to cover for America's relatively6328weak maritime industrial base? And what realistic policies could6329America adopt to turn around its own shipping and shipbuilding6330industries to compete more effectively with China?6331    The Hudson Institute published the results of this analysis in6332three monographs: Rewriting the Future of America's Maritime Industry6333to Compete with China | Hudson Institute; Staying Afloat: Why America6334Needs the Jones Act to Compete with China and What to Do Next | Hudson6335Institute; and Shoring Up the Foundation: Affordable Approaches to6336Improve US and Allied Shipbuilding and Ship Repair | Hudson Institute6337(with Bryan Clark). Other recent writings include America's maritime6338wake-up call: Competing with China at sea (Washington Examiner) and6339``Why Budget Hawks Should Support the SHIPS Act'' (LinkedIn post6340October 21, 2025).6341    The massive gap between America's and China's maritime industries6342is by now well known, although it is worse even than many suggest.6343China's maritime dominance means it can threaten America's maritime6344supply chains and grow its navy three times faster than America can.6345America's commercial fleet is far too small, lacking even the ability6346to resupply American troops deployed overseas in a conflict involving6347China. America can and should work with allies to secure the vessels6348needed to close current gaps in maritime deterrence and to modernize6349America's commercial shipbuilding industry. But working with allies is6350only a partial answer, as America must become self-sufficient in6351building and operating the vessels it will need in the event of serious6352conflict.6353    In developing possible solutions, the starting place was to6354consider the existing programs. In particular, the MSP is conceptually6355sound and proved to be very effective in supporting the Pentagon6356through the Persian Gulf wars. Under MSP the government pays the cost6357to ``Americanize'' the operation of a small number of commercial ships6358operating in international trades. The owners, operators and American6359citizen crews of those ships agree to collaborate with the Pentagon in6360planning and providing maritime logistics services in the event of6361conflict. Use of MSP vessels saved US taxpayers tens of billions of6362dollars in prosecuting the Persian Gulf wars as compared to what it6363would have cost to have the military itself provide those services.6364    The MSP is inadequate, however, to meet the maritime challenges we6365face with China. The number of US flag ships in the program is far too6366small. Conservative estimates, including by former Maritime6367Administrator and Commander of the Military Sealift Command Mark Buzby,6368set the requirement at about 250 ships, almost three times the number6369of US flag ships currently in international trade. This reflects the6370far greater challenges in providing maritime logistics in a Western6371Pacific scenario, with massive fuel transport requirements, much6372greater distances and contested air and sea environments as compared to6373the Persian Gulf conflicts.6374    It is not as simple as just expanding the MSP, however, because the6375economic model underpinning MSP does not scale. Revenues needed to6376incentivize participation in MSP include three components--ordinary6377commercial freight charges; freight charges to carry government6378preference cargo; and stipends in amounts set by statute. The size of6379the US flag fleet thus depends in part on the volume of government6380preference cargo. Many in government and industry indicate that there6381is not enough government preference cargo today to sustain the existing6382MSP fleet (including tankers under the Tanker Security Program), let6383alone a fleet three times larger.6384    A third concern with MSP in context of the China threat is that it6385does nothing to support the US shipbuilding industry. This reflects a6386grudging willingness in the context of the 1990's to provide only6387operating support for US flag ships and not support to build those6388ships in the United States. Responding to China's maritime dominance6389requires not only a larger US flag fleet, but also a much larger6390American shipbuilding industrial base. The fleet of US flag ships6391supporting our sealift needs provides an obvious source of demand to6392help restore our shipbuilding industry.6393    Finally, MSP was arguably flawed from its inception in that6394participants receive what are essentially permanent slots in the6395program rather than long term contracts that are periodically6396recompeted. This has precluded many qualified American companies from6397participating in the program.6398    The recommendation made in my first report (Ch. 5 of ``Rewriting. .6399.'') was thus based on adapting MSP, which was very effective in6400providing the needed support to deal with a regional threat in Iraq, to6401the new paradigm dealing with a peer competitor in China. It would6402expand the US flag fleet to 250 ships. It would phase in a requirement6403that those ships be built in US shipyards, with specifications that may6404include any number of advanced technologies. And it would require that6405participation in the new program be based on competitive bidding by6406teams that could include US and foreign shipping companies,6407shipbuilders, technology companies and others. Rather than have6408stipends set by statute, those bidders would indicate the amounts of6409support they would need to build their ships in America and operate6410them in international trades under the US flag. Proposals that offer6411the best value to the government would be awarded seven-year contracts,6412with participation recompeted at the end of each seven-year term. The6413SHIPS For America Act has adopted and modified this proposal and6414included it as the Strategic Commercial Fleet Program (SCF), Section6415401 of the bill.6416    The primary objective of the SHIPS Act must be to grow the American6417maritime industry, and the SCF is arguably the most significant aspect6418of the bill in providing a path for growth. A fleet of 250 US flag6419ships will close sealift gap and provide the Pentagon with more6420capacity that it could use to resist Chinese gray zone tactics.6421American shipbuilders will be presented with consistent demand for6422eventually twenty ships each year under the program. This is twice as6423many ships as were delivered by US shipyards in the single highest year6424in recent history. It is enough demand to drive government and private6425sector investment to grow and modernize the industry, and to build up6426the workforce and supply chains needed for long-term success.6427    The goal to restore America's maritime strength cannot6428realistically be to match China hull-for-hull, which would cost6429hundreds of billions of dollars with doubtful outcomes. Rather, the6430goal should be to grow and reposition America's maritime industry to6431increase its presence in international trades and provide a platform6432for modernization rather than continued decline. The SCF would do6433exactly that. The estimated costs for the SCF would not be tens or6434hundreds of billions of dollars, but $11 billion over ten years, or an6435average of $1.1 billion annually. That amount would be fully covered by6436the funds generated by the USTR Section 301 penalties on Chinese ships.6437    The proposed SHIPS Act includes many other provisions that are6438intended to grow the industry and update the entire American maritime6439ecosystem. Together they reflect a depth of thought that takes6440seriously the challenges we face in restoring America's maritime6441industry and the steps needed to meet those challenges. I urge you to6442move forward with this legislation.6443    Thank you very much for your attention.6444            Sincerely,6445                                        Michael G. Roberts.6446                                 ______64476448                 Prepared Statement of Patriot Maritime6449    Chairman Sullivan, Ranking Member Blunt-Rochester, and Members of6450the Subcommittee:64516452    Patriot Maritime appreciates the opportunity to submit this6453statement for the record. As one of the Nation's leading U.S.-flag6454shipping and logistics operators supporting the Department of Defense,6455Military Sealift Command (MSC), and the Maritime Administration6456(MARAD), and as U.S. owned small-business, Patriot strongly supports6457the bipartisan SHIPS for America Act (S.1541) and commends the6458Subcommittee for its leadership in restoring America's maritime6459strength.6460Patriot Maritime: Trusted to Deliver. Ready to Respond.6461    Patriot Maritime is a shipping and vessel management company6462managing a diverse fleet of over twenty U.S.-flagged vessels sustaining6463readiness and logistics around the world as well as commercial trade.6464Our ships include ten Ready Reserve Force vessels for MARAD, eight6465Watson-class and two Bob Hope-class Large, Medium-Speed Roll-on/Roll-6466off ships for MSC, the training ship for California State University6467Maritime Academy, one MR tanker for Federated Maritime, and the Haina6468Patriot, a shallow-draft chemical/oil products tanker owned by Patriot.6469Over more than 25 years, Patriot has successfully executed more than6470100 on-time vessel activations supporting both exercises and real-world6471operations such as Operation Enduring Freedom and Operation Iraqi6472Freedom.6473America's Strategic Maritime Deficit6474    For decades, the United States has allowed its commercial maritime6475base--shipbuilding, repair, and the U.S.-flag fleet--to erode. Today,6476fewer than 200 U.S.-flag ships operate in international trade, while6477China's state-controlled fleets dominate global shipping and ship6478construction. The United States is increasingly dependent on foreign-6479flag carriers and shipyards to move its own commerce and defense6480materials--a vulnerability that undermines both economic security and6481military readiness.6482Reviving U.S. Commercial Shipbuilding Requires Cargo Preference6483    Rebuilding U.S. shipbuilding and the maritime workforce depends on6484a single essential factor: cargo. When there is steady cargo moving6485under the U.S. flag, investment follows--shipyards expand, mariners6486train, and private operators commit capital. The SHIPS Act's cargo6487preference provisions are therefore indispensable. They ensure that6488U.S.-government cargoes and taxpayer-funded exports are carried on6489U.S.-flag vessels, strengthening the very foundation of our maritime6490industrial base.6491    Cargo preference, properly administered, creates the demand signal6492that drives private ship orders, provides the employment base for6493trained U.S. mariners, and sustains the Nation's commercial sealift6494capability. The more cargo reserved for U.S. ships, the greater the6495incentive for private investment in U.S. yards and crews--and the6496stronger our Nation becomes.6497Building on Proven Programs6498    Patriot strongly supports the Maritime Security Program (MSP) and6499Tanker Security Program (TSP), public-private partnerships that provide6500critical readiness capacity for U.S. Transportation Command. These6501programs have proven that commercial operators can deliver reliability6502and efficiency in both peacetime and contingency operations. Congress6503must continue to fully fund these programs and expand them as new ship6504construction and emerging cargo opportunities come online.6505    Likewise, full enforcement of cargo preference laws, combined with6506the creation of modest but meaningful tax incentives--such as a ``Ship6507American'' deduction for companies that use U.S.-flag carriers--would6508substantially reduce the cost differential between U.S.-and foreign-6509flag service. Such steps align economic incentives with national6510interests and would produce immediate benefits for U.S. mariners,6511shipyards, and operators.6512The SHIPS Act: A Generational Opportunity6513    The SHIPS for America Act recognizes that shipbuilding revival6514cannot occur in isolation. Its comprehensive approach--pairing6515workforce development, industrial expansion, and cargo preference--is6516the most significant maritime policy initiative in a generation.6517Subtitle B's focus on ensuring sustained cargo for U.S.-flag vessels is6518especially vital. Without it, newly built ships will have no work; with6519it, we can sustain an expanding fleet, employ more American mariners,6520and reestablish the United States as a true maritime power.6521Conclusion6522    Patriot Maritime commends the Subcommittee and bill sponsors for6523their leadership in addressing the decline of the U.S.-flag fleet.6524Reviving America's maritime capability is not just an industrial goal--6525it is a national security imperative. The SHIPS for America Act offers6526a path to restore the balance between government partnership and6527private investment that built and operated the greatest merchant marine6528in history.6529    Patriot urges Congress to enact this legislation swiftly and to6530reaffirm the principle that American cargo should sail on American6531ships, crewed by American mariners, built in American shipyards. This6532is how we rebuild the fleet, strengthen our economy, and secure our6533Nation's future.6534    Thank you for the opportunity to share the views of Patriot6535Maritime.6536                                 ______65376538  Prepared Statement of Matthew Garner, President, TAI Engineers, LLC6539    Chair Sullivan, Ranking Member Rochester, and Members of the6540Committee,65416542    Thank you for the opportunity to submit a statement for the record6543regarding the SHIPS for America Act. We believe this is an important6544piece of legislation deserving the full attention of Congress.6545    TAI Engineers, LLC (TAI) is one of the few U.S. companies6546exclusively dedicated to full-ship design, engineering, and6547integration--providing essential services to the U.S. maritime6548industrial base. TAI's vision is to provide ``Solutions that Enhance6549Value.'' Our business focus encompasses all aspects of ship design6550integration, program and ship construction management from concept6551through detailed design, incorporating operational innovation,6552optimization, risk mitigation, and best-value tradeoffs through6553production, testing, delivery, and the operational life cycle. Our goal6554is to develop and sustain true Naval Architecture and Integrated6555Logistics expertise in the United States.6556    Our team of 150 maritime professionals--predominantly engineers,6557specialized designers, and drafters--has served as the design agent for6558thousands of vessels since 1993. We began in commercial ship design,6559supporting small U.S. shipyards. Working primarily on commercial6560vessels, we built the knowledge, skills, and abilities that enabled us6561to successfully transition to government work as commercial6562shipbuilding declined. Every ship design contract supports dozens of6563high-skill engineering jobs and hundreds of follow-on production jobs6564at U.S. shipyards and suppliers.6565    Over the past decade, TAI has delivered design contracts for the6566U.S. Navy's LAW/LSM, NGLS/T-AOL, and MSV(H) programs as a prime6567contractor, as well as numerous designs for shipyard partners. We have6568successfully executed Vessel Construction Manager prime contracts for6569six design-and-construction programs for the U.S. Army, the U.S. Army6570Corps of Engineers, and the National Park Service.6571    Our organization strongly supports the SHIPS for America Act and6572the urgent need to revitalize the commercial maritime industrial base.6573It should be recognized that the maritime industrial base includes not6574only shipyards and suppliers, but also the naval architects and marine6575engineers who design and engineer ships in the United States. Our6576experience assisting shipyards in the commercial maritime industry6577strengthens our technical capabilities and positioned us to6578successfully support government programs. We are a clear example of how6579a healthy commercial shipbuilding and engineering sector directly6580benefits the government. Commercial shipbuilding strengthens6581engineering talent, which strengthens government programs.6582    Robust naval architecture efforts lead to more mature designs that6583support efficient production, minimizing construction costs and delays.6584The U.S. commercial maritime industry will benefit greatly from a6585strong naval architecture community capable of delivering mature6586designs. Mature designs have been shown to reduce risk and cost in6587shipbuilding programs, as documented by GAO-24-105503. We support6588revitalizing commercial shipbuilding because it sends a strong demand6589signal for more naval architects and marine engineers--a signal6590necessary to attract new talent into the field.6591    We recognize the importance of maintaining a vibrant national6592shipbuilding infrastructure, as our Nation's shipyards are critical6593national security assets. We also believe that U.S. ship design and6594maritime engineering capabilities have not been adequately prioritized6595in recent years. This workforce is essential to solving emerging6596maritime challenges, strengthening U.S. commercial maritime capacity,6597supporting national emergencies, and providing high-quality STEM6598careers for both high school and college graduates. The United States6599has a long history of leadership in ship design, and continued6600advancement of this skillset is critical to our maritime future--6601particularly in large-volume ship design.6602    As part of the SHIPS for America Act's workforce development6603pillar, we recommend several additional actions to strengthen U.S.6604naval architecture and marine engineering capabilities:66056606  1.  Invest in Education and Scholarships. Reduce barriers to entry6607        through expanded scholarship programs--ideally a naval6608        architecture-specific equivalent to the DoD SMART program--with6609        guaranteed internships and post-graduation employment. Fully6610        fund tuition and living expenses for B.S., M.S., and Ph.D.6611        students in naval architecture and marine engineering.66126613  2.  Modernize Digital Engineering Infrastructure. Adopt and support6614        advanced digital tools, including modeling, simulation, and6615        digital twin technologies, to enhance productivity and6616        collaboration. The government can accelerate adoption by6617        funding shared digital engineering infrastructure and software6618        licenses for qualified partners; sponsoring training and6619        certification in tools such as MBSE, CAD/CAE, and PLM; and6620        requiring open digital standards in new acquisition programs to6621        ensure interoperability.66226623  3.  Raise the Profession's Visibility. Launch a national awareness6624        campaign featuring real ship design projects and young6625        engineers' stories. Sponsor guest speakers, ship visits, and6626        media content that highlight the critical role of naval6627        architects.66286629  4.  Strengthen University Programs. Provide grants to ABET-accredited6630        NA&ME schools to hire faculty, upgrade facilities, expand6631        distance learning, and develop industry certifications.6632        Establish two to three Centers of Excellence in Naval6633        Architecture.66346635  5.  Build a High School Pipeline. Fund STEM outreach programs in6636        shipbuilding regions. Create summer design camps at partner6637        universities and sponsor national high school design6638        competitions judged by government and industry naval architects6639        and marine engineers.66406641  6.  Incentivize Career Entry and Retention. Offer sign-on bonuses or6642        student loan repayment for naval architects and marine6643        engineers. Fund rotational fellowships across Navy labs,6644        government and commercial shipyards, and design firms. Support6645        continuing education, Professional Engineer exam preparation,6646        and advanced degrees.66476648  7.  Leverage Public-Private Partnerships. Expand collaborative6649        internships and co-op programs tied to the commercial maritime6650        industrial base. Form industry consortia--modeled after the6651        National Shipbuilding Research Program--to co-develop workforce6652        initiatives. Use OTAs and other flexible funding tools to6653        launch pilot programs quickly.66546655  8.  Support Ship Design Companies. Ensure that firms like TAI remain6656        fully engaged on meaningful projects, allowing them to maintain6657        and grow the Nation's design expertise.66586659    We strongly believe that a robust commercial maritime industry6660enables a strong government maritime industry by expanding the overall6661market and providing greater opportunities across the sector. We urge6662the Committee to promptly pass the SHIPS for America Act. America's6663maritime strength relies not only on shipyards, but also on the6664specialized professionals who conceive, design, and integrate the ships6665we build. We urge the Committee to ensure that the SHIPS for America6666Act explicitly includes investments in U.S. ship design, engineering,6667and digital infrastructure--without which revitalizing shipbuilding6668will not be sustainable. Without targeted investment in workforce,6669tools, and partnerships, the U.S. risks losing a capability that takes6670decades to develop and only years to erode. By acting now, Congress can6671ensure that America retains the capacity to design the ships that will6672safeguard its future.6673    We appreciate the opportunity to comment on such an important topic6674for the United States. We thank the committee for your consideration.6675                                 ______66766677  Prepared Statement of Carleen Lyden Walker, CEO, SeaTrain Technology6678    Dear Members of the Committee:66796680    Thank you for addressing the critical position of our maritime6681security. For too long, our Nation has made the decision to ignore the6682role that our maritime industry plays in our daily lives, and has6683outsourced that responsibility to other nations, some of whom are no6684longer working in our best interests.6685    At the end of World War II, the U.S. Flag flew on 50 percent of the6686world's ships--today that number has been reduced to 0.4 percent. This6687loss has opened up vulnerabilities for our Nation that include national6688security, energy and food security, economic security, and workforce6689development.6690    The SHIPS for America Act will put us on the path to recovery as we6691recommit our Nation to this vital industry. I would urge this6692committee, though, to not just agree to throw money at the problem, but6693to take an intentional view as to how we get the maximum benefit from6694our resources.6695SHIPS6696    The Act's goal of 250 ships by 2035 will not be realized if we6697persist in building the same ships. We cannot compete with China in6698this realm. Why not overpower them by launching a new design: SeaTrain6699Technology's remotely operated submersible cargo vessels suitable for6700commercial, energy and defense applications (https://seatraintech.com/6701). We could effectively have 250 SeaTrain gliders operational within 36702years and solve for the shipyard and mariner challenges.6703SHIPYARDS6704    Our shipyards need to be overhauled and modernized to be effective,6705if not competitive, with Asian yards. Let us invest in technologies6706that will support this industrial advancement and springboard our6707shipyards into the 21st century.6708    SeaTrain Technology takes a page out of both Henry Ford's book on6709assembly line manufacturing and Asian yards' practices by creating a6710``series building'' platform that maximizes efficiency and6711productivity.6712MARINERS6713    We are all aware there is a mariner shortage today and in the6714foreseeable future. Further, more and more of our current mariners are6715seeking a work/life balance that doesn't exist in today's deep sea6716shipping world. SeaTrain Technology offers experienced mariners6717shoreside positions monitoring and guiding SeaTrain's gliders from6718variable control centers, thus mitigating time at sea and away from6719families.6720    In conclusion, SeaTrain Technology strongly supports the SHIPS for6721America Act, and hopes that it will provide us with the opportunity to6722demonstrate how we can rapidly answer the needs of our country for6723maritime dominance in the most efficient and effective way possible.6724    Thank you for your consideration,6725                                      Carleen Lyden Walker,6726                                                               CEO,6727                                                   SeaTrain Technology.6728                                 ______67296730  Prepared Statement of Carleen Lyden Walker, Chief Evolution Officer6731                         (CEO), SHIPPINGInsight6732    Dear Members of the Committee:67336734    Thank you for addressing the paucity of maritime assets the United6735States currently deploys. While the U.S. once boasted 50 percent of the6736world's maritime tonnage, that number is now 0.4 percent.6737    The Spanish philosopher, George Santayana once wrote: Those who6738cannot remember the past are condemned to repeat it. To wit,67396740   China: Maritime power until 1421.67416742   Portugal: Maritime power in the 15th and 16th centuries.67436744   Spain: Maritime power until mid-17th century.67456746   Netherlands: Maritime power until mid-18th century.67476748   Great Britain: Maritime power until mid-20th century.67496750   United States: Maritime power at the end of World War II.6751        (50 percent of the world's tonnage)67526753   China: has returned as the maritime power in the 21st6754        century67556756    With all due respect to our European allies, their role as global6757powers is over. Do we want to see the United States suffer the same6758fate?6759    I am writing to urge you to support the SHIPS for America Act. Our6760nation is a world leader in so many arenas; it is imperative that we6761reclaim our position as a maritime power.6762    Key reasons why we need to restore our maritime pre-eminence:67636764   90 percent of the world's goods and energy are transported6765        on ships-``The Engine of Global Trade''67666767   Backbone of a nation's economy and security67686769   Most environmental and efficient mode of transporting bulk6770        goods67716772   Of vital importance to supporting military efforts67736774    I urge you to restore our maritime might.6775    Thank you for your consideration.6776                                      Carleen Lyden Walker,6777                                           Chief Evolution Officer,6778                                                       SHIPPINGInsight.6779                                 ______67806781  Prepared Statement of the American Maritime Officers, International6782 Organization of Masters, Mates & Pilots, Marine Engineers' Beneficial6783 Association, Marine Firemen's Union, Maritime Trades Department, AFL-6784  CIO, Sailors' Union of the Pacific, Seafarers International Union,6785               Transportation Trades Department, AFL-CIO6786    Chairman Sullivan, Ranking Member Blunt Rochester and Members of6787the Subcommittee:67886789    This statement is submitted by the American Maritime Officers, the6790International Organization of Masters, Mates & Pilots, the Marine6791Engineers' Beneficial Association, the Marine Firemen's Union, the6792Maritime Trades Department, AFL-CIO, the Sailors' Union of the Pacific,6793the Seafarers International Union, and the Transportation Trades6794Department, AFL-CIO. Collectively, our unions represent the ships'6795masters, licensed deck officers, licensed engineers, and unlicensed6796merchant mariners working aboard all types of U.S.-flag commercial6797vessels, including all those enrolled in the Maritime Security Program6798and the Tanker Security Program.6799    The development, implementation and funding of programs and6800policies that promote, support and grow the U.S.-flag fleet, enhance6801its economic viability, and increase its ability to compete for and6802secure a larger share of America's commercial commerce are extremely6803important to the jobs of the men and women our organizations represent.6804The jobs that American merchant mariners perform, and the ships that6805they crew, are a vital component of America's economic and military6806security. They provide the commercial sealift readiness capability6807needed by the Department of Defense and, as history has demonstrated,6808are always ready, willing and able to put themselves in harms' way to6809support American troops deployed throughout the world. Consequently, we6810are grateful that this hearing is being held and we appreciate the6811opportunity to submit our statement.6812    At the outset, we wish to reiterate our strong support for the6813bipartisan and bicameral SHIPS for America Act. We thank the sponsors6814of this legislation for their leadership in introducing this6815legislation and we thank all those who have cosponsored this6816legislation for their commitment to revitalize America's commercial6817maritime capability. We assure you that America's seafaring labor6818organizations look forward to working with you and your colleagues to6819enact the provisions in the SHIPS for America Act relating to maritime6820manpower as well as the other far reaching and innovative proposals to6821achieve a stronger maritime industry.6822    We also wish to acknowledge the support for our industry expressed6823by President Trump, Vice President Vance, Secretary of Transportation6824Duffy, and others in the Administration. Their statements demonstrate a6825clear recognition at the highest level of our government that the6826United States needs and must have a stronger and larger U.S.-flag6827maritime industry. Our organizations agree wholeheartedly.6828    In addition, as reflected in the SHIPS for America legislation and6829the actions taken by the Administration, the international shipping6830arena is not a level playing field where all vessels operate under the6831same set of rules and comply with the same operational, manning and tax6832requirements. Rather, U.S.-flag vessels are forced to compete against6833foreign state owned and controlled vessels and other flag of6834convenience vessel operations, as well as those vessels receiving6835significant tax related and other economic incentives that help them6836secure larger amounts of the world's foreign trade.6837    The same holds true for the American shipbuilding industry and our6838labor colleagues who work in America's shipyards or in related service6839and supply industries. We support the steps being taken by the6840Administration to respond to unfair shipbuilding practices by China and6841urge the Administration to ensure that such steps reflect the6842importance of both domestic shipbuilding and U.S.-flag vessel6843operations to the economic and military security of our Nation.6844    It is for these reasons why we strongly urge Congress to consider6845as expeditiously as possible the SHIPS for America legislation. Without6846the critically important initiatives contained in this legislation,6847vessels may be forced to leave the U.S.-flag. This will not only reduce6848the commercial sealift capability available to the Department of6849Defense but result in an outsourcing of critically important American6850maritime jobs causing a dangerous reduction in the number of American6851mariners available to crew the surge and sustainment vessels needed to6852support American troops overseas.6853    In fact, when we lose U.S.-flag vessels and the shipboard billets6854they provide, trained and experienced American mariners lose their6855jobs, their income, their health and other benefits, and their ability6856to provide for their families. When this happens, they have no choice6857but to leave our industry and find employment someplace else. For our6858government, and particularly the Department of Defense, this means that6859a sufficient number of American mariners will no longer be there--will6860no longer be working in our industry--the next time the need to support6861American troops and America's interests abroad arises.6862    It is also extremely important to emphasize that it takes many6863years for an individual to gain the sea-time necessary to obtain Coast6864Guard-issued licenses and endorsements. Simply put, it will take a long6865time for our country and our industry to recover from the further6866downsizing of our fleet and the outsourcing of American maritime jobs.6867Rather, Congress, the Administration and our industry need to work6868together to achieve the goals and objectives contained in the6869Declaration of Policy in the Merchant Marine Act, 1936: namely, that6870``It is necessary for the national defense and development of its6871foreign and domestic commerce that the United States shall have a6872merchant marine (a) sufficient to carry a substantial portion of the6873water-borne export and import foreign commerce of the United States. .6874.''6875    Today, U.S.-flag commercial vessels today carry less than 2 percent6876of America's commercial foreign commerce, clearly not a ``substantial6877portion''. However, the simple fact is that the key element in the6878revitalization of the U.S.-flag shipping industry and its ability to6879protect the international shipping supply chain is to increase the6880share of commercial cargo carried by U.S.-flag vessels in international6881commerce. Without cargo, ships don't sail and if ships don't have the6882cargo they need to operate, then the American merchant mariners who6883crew these vessels will not have work and may in fact be forced to6884leave the industry, reducing the critically important maritime manpower6885pool.6886    To this end, we support the increase in U.S.-flag cargo preference6887shipping requirements to 100 percent as contained in the SHIPS for6888America legislation. We believe very strongly that U.S.-flag vessels6889and their U.S. citizen crews should be responsible for the carriage of6890all U.S. taxpayer financed government cargoes.6891    At the same time, it is important for Congress and the6892Administration to understand that simply increasing the share of6893government cargo to be carried by U.S.-flag vessels will not result in6894the increase in the number of U.S.-flag commercial vessels envisioned6895by the SHIPS for America legislation. It is essential that provisions6896be included that result in the carriage of a greater portion of6897America's foreign trade on American ships.6898    Congress should, for example, consider the establishment of a tax6899credit provided to the shippers or owners of the cargo as an incentive6900to utilize American ships in response to the economic advantages6901enjoyed by foreign flag and foreign crewed ships. In addition, we would6902encourage Congress to consider which tax-related incentives currently6903available to foreign flag vessels should be made applicable to U.S.-6904flag vessels and their American crews. Many nations, for example,6905exclude the income earned by their mariners from their income tax, a6906provision that reduces operating costs to the vessel owner. In fact,6907this foreign source income exclusion is currently available to other6908American workers employed outside the United States pursuant to section6909911 of the Internal Revenue Code but not to American mariners working6910aboard U.S.-flag vessels operating in the foreign trades.6911    We also believe that section 421 in the SHIPS for America Act that6912allows duties on imported cargo to be adjusted if carried on U.S.-flag6913vessels should be utilized and that such incentives should be a part of6914bilateral and multilateral trade negotiations.6915    In short, if we do nothing and our industry is expected to respond6916on its own without the support of the United States government to6917constantly changing conditions in the international shipping arena, the6918stability necessary for the U.S.-flag shipping companies to attract the6919investments they need and the opportunity for maritime labor to recruit6920and retain the mariners our country needs will not be there. Most6921importantly, the failure to act means that the Department of Defense6922will no longer have the certainty that the privately-owned U.S.-flag6923commercial industry will be there to provide the commercial sealift6924capability it needs; will no longer be able to undertake the long-term6925planning necessary for an effective sealift strategy; and will be6926forced to dedicate a significant portion of its limited resources to6927the commercial sealift functions presently provided by the U.S.-flag6928merchant marine at a fraction of what it would cost the government to6929do it all itself.6930    In conclusion, we stand ready to do whatever we can to help put in6931place the programs and policies that result in the operation of a6932greater number of commercial vessels under the United States-flag, that6933create new job opportunities for American mariners, and that increase6934the share of America's foreign trade carried by U.S.-flag vessels.6935                                 ______69366937     Prepared Statement of Captain James Tobin, President and CEO,6938     U.S. Merchant Marine Academy Alumni Association and Foundation6939    On behalf of more than 13,000 living graduates of the United States6940Merchant Marine Academy, I thank Senators Todd Young and Mark Kelly for6941their bipartisan leadership in advancing the SHIPS for America Act and6942for keeping America's maritime strength squarely on the national6943agenda.6944    As the maritime threat from China becomes clearer by the day,6945America must focus on regaining and sustaining dominance of the seas.6946In any future major-power conflict, our Nation's ability to project and6947sustain power across the Pacific will depend on the reliability of6948military sealift--and on the men and women trained to operate it.6949    More than 80 percent of the U.S. Navy's Strategic Sealift Officers6950are service-obligated graduates of the U.S. Merchant Marine Academy6951(USMMA), whose mission is to educate and train the licensed officers6952who command our commercial fleets in peacetime and, in wartime,6953transport the armaments, fuel, and supplies required for victory.6954    The SHIPS for America Act rightly emphasizes rebuilding the6955industrial base--shipyards, vessels, and the skilled workforce that6956sustains them. But a true maritime resurgence also requires rebuilding6957the human base--specifically, the licensed, militarily obligated6958Merchant Marine Officers trained at USMMA who will crew those ships in6959times of war.6960    To ensure a ready cadre of sealift-qualified officers, Congress6961established the U.S. Merchant Marine Academy at Kings Point, New York,6962more than eight decades ago. Today, its 1940s-era campus must be6963modernized to meet 21st-century security demands. Recognizing this6964urgent need, the SHIPS for America Act provides for the modernization6965of the USMMA's infrastructure--a critical link in the chain of6966America's maritime readiness.6967    This bipartisan support in the Senate aligns with efforts at the6968Department of Transportation (DOT), which is advancing a comprehensive6969Campus Modernization Plan consistent with the requirements specified in6970the SHIPS for America Act6971    This is government at its best: Congress, the Administration, and6972DOT all pulling in the same direction to strengthen both the maritime6973industrial base and the human base--the licensed, militarily obligated6974Merchant Marine Officers who will carry the load when it matters most.6975    If the United States is serious about maritime resurgence, it must6976invest not only in ships and shipyards, but also in the service6977obligated midshipmen training at USMMA who will command them into6978contested waters.6979            Respectfully submitted,6980                                    Captain James F. Tobin.6981                                                 President and CEO,6982             Merchant Marine Academy Alumni Association and Foundation.69836984    Senator Young. Dr. Mercogliano, thanks so much for being6985here. You know, it has been said by a number of our witnesses6986today that American shipbuilding has ebbed and flowed, and you6987have each spun I think very related and complementary6988narratives about why right now we have a shipbuilding infirmity6989in this country. And I agree with, I think, Mr. Paxton's6990assessment that it was market forces that led us to chase6991value, you know, the same quality or even better quality at6992lower cost. And we delivered that to the taxpayers, but we lost6993sight of the fact that it is important for us policymakers to6994be baking into the price of certain critical goods, strategic6995goods, a national security or economic security premium.6996    So it is time we updated our economics. If we learned6997anything over the course of a global pandemic, with6998semiconductors and other valuable products, it is that we need6999to do our work up here on the Hill.7000    So this hearing is really important, sir. Our industrial7001capacity, as you have intimated, has cratered since the 1970s,7002with respect to some of these key strategic products. So we are7003in a bind.7004    We are a maritime nation. Alfred Thayer Mahan, a name you7005are familiar with, talked not just about naval power but more7006broadly about sea power. And could you unpack that a little7007bit, explain what that means to be a nation of sea power, and7008explain how the SHIPS Act and the President's Maritime Action7009Plan can get us back on the right course as a sea power nation?7010    Mr. Mercogliano. I would be happy to, Senator Young, and I7011want to thank you and Senator Kelly for your leadership on the7012SHIPS Act. It has been absolutely essential for us.7013    A friend of mine, Nicholas Lambert, wrote a fantastic book,7014``Neptune Factor'', which talks about Alfred Thayer Mahan, in7015looking at this as economics. And that is what he understood.7016He understood sea power to be not just the application of7017military force but economic force. It is trade. It is commerce.7018The whole reason to have a Navy is to ensure that the economics7019and trade is moving and flowing for a nation.7020    We shifted our focus. We have gone kind of back and forth7021between being a continental and a maritime nation and now we7022are obviously a maritime nation, based on our imports and7023exports. And we have seen, since 2021, with Ever Given getting7024stuck in the Suez, we have seen it with incidents along the7025coast of the United States, Dali in Baltimore. We have seen how7026vulnerable our supply chain can be to disruptions, both being7027caused naturally and by other forces, outside forces, the7028Houthi, for example, in the Red Sea.7029    So I think the importance here is that we have kind of7030gotten away from that lesson, but since 2021, it has been7031brought home numerous times through the supply chain crisis.7032    Senator Young. Right. So thank you, sir. And just to put a7033fine point on it, I am quoting Mr. Paxton a lot today, but he7034did say earlier, and I wrote it down, ``Maritime dependency7035makes us a client state.'' So Doctor, what would happen if7036tomorrow China said, ``We are no longer going to allow our7037vessels, our merchant vessels, to stop in U.S. ports,'' and how7038might the SHIPS for America Act offer a solution to that7039challenge?7040    Mr. Mercogliano. Well, as you know, less than 2 percent of7041our imports/exports are on U.S. ships, and a nation like China,7042which has a Chinese overseas shipping company, a major shipping7043firm, can cause disruptions to us. I mean, just by simply7044ordering their ships to slow down and come in two days late7045would cause disruptions to us.7046    By having a SHIPS for the United States we provide us with7047that reservoir, that backlog, so that we are not dependent on7048it. It was the thing that created, actually, the Jones Act in70491920, when we found out that 11 percent of our international7050trade was only carried on American ships. It is much lower7051today.7052    Senator Young. Right. And that legislation, perhaps it can7053be improved in various ways. We want to keep this coalition7054together around the SHIPS for America Act. But it was designed7055to change the cost structure, right, a very similar motivation7056that we are seeking today with the SHIPS for America Act.7057    Mr. Paxton, as my time comes to a close here, there are7058some who doubt that America's shipbuilding industry is capable7059of responding to the enormity of this threat of supply chain7060interruption and all the rest. What do you say to that?7061    Mr. Paxton. I categorically disagree. We have shipyards7062that are building large, oceangoing vessels right now, as we7063speak, up at Philly, at NASSCO, many other shipyards. We have7064the capability and capacity, sir. What we do not have is the7065demand signal your legislation will produce. That would open up7066more capacity in existing infrastructure and probably end up7067opening more shipyards.7068    Senator Young. Thank you. Thank you all.7069    Senator Sullivan. Senator Schatz.70707071                STATEMENT OF HON. BRIAN SCHATZ,7072                    U.S. SENATOR FROM HAWAII70737074    Senator Schatz. Thank you, Chairman and Ranking Member.7075Thank you to all the members and all the testifiers for your7076commitment to this issue.7077    Mr. Vogel, in interacting with Senator Kelly's shop, my7078understanding is that this Act is at least partly designed to7079sort of look at some of the success stories in individual7080shipyards and scale them up. Just for the record, can you tell7081us what is going right in the Philly shipyard and how we can7082sort of replicate that across the country?7083    Mr. Vogel. Yes. Thank you, Senator. So much has gone well7084with the National Security Multi-Mission Vessel Program, by7085removing those regulatory constraints that are in typical7086government shipbuilding. We awarded that contract to the Philly7087Shipyard in April 2020, right at the start of the COVID-197088impact. At that time, they had about 80 employees in the7089shipyard. Despite those challenges, we have been able to7090successfully deliver three of the five vessels on time, on7091budget. We have seen growth at 0.38 percent of the original7092budget. That is compared to often 20, 30, 40, a multitude more,7093percent in terms of growth.7094    Senator Schatz. Why? I get it. So what did you do?7095    Mr. Vogel. So having the vessel construction manager fully7096integrated, we have been able to identify issues before they7097have really arisen. We have removed that sort of gotcha7098mentality of traditional government shipbuilding, where you7099have inspectors in the yard who are trying to bring back sort7100of the demonstration of their value. Instead, we are working7101hand-in-hand with the shipyard, identifying issues, identifying7102things like supply chain, how can we identify the right7103American supply chain and help them to buildup that capacity.7104    Senator Schatz. And are there specific Federal regulatory7105barriers, or is it mostly like a sort of staffing structure,7106where the old school was you would come in and you would sort7107of post audit or prove to the shipyard that they were doing7108something wrong? Is that what you are talking about, or is7109there separately a set of regulations that need to be gotten7110rid of?7111    Mr. Vogel. Yes, it is both, Senator. So the Federal7112Acquisition Regulation places numerous burdens. We have been7113able to reduce that by using a commercial model, minimizing the7114slowdowns. One of the keys for us, too, was to be able to sort7115of break that privity between the government and the shipyard,7116snap that chalk line so that when the design was done we were7117able to move out. Historically, government shipbuilding has7118been plagued by change orders, constant changes to the design.7119By eliminating all of that we have been able to instruct Philly7120to move out on a design that was agreed on, back in 2019 and71212020, and execute upon that to get ships in the water.7122    Senator Schatz. Should I understand this sort of like value7123engineering? Is that kind of what we are talking about?7124    Mr. Vogel. Absolutely, Senator.7125    Senator Schatz. OK. I got it. OK.7126    Mr. Paxton, talk to me broadly about the workforce. I mean,7127if we send the demand signal, that is great, but as we have7128seen markets are not perfect, and there are pipeline issues and7129retention issues. So how do we address that sort of7130concurrently with the other stuff that we are working to do?7131    Mr. Paxton. Yes. Thank you, Senator. I think our workforce7132is sometimes a reflection of kind of the boom-and-bust cycles7133we go through in shipbuilding, both commercial and government.7134When the work is there and we have that long series7135construction, our workforce knows they have a career in that7136shipyard, not a job. So having the work, being able to plan,7137being able to hire up your workforce, that happens because you7138have that long run of work.7139    I know it sounds simple, sir, but in these shipyards that7140are privately held and publicly traded, they are making7141investments based on the best information they have, and they7142cannot keep a workforce employed if they see a strategic pause7143or a reduction in the work.7144    Senator Schatz. OK. Got it. So you need to send a big7145demand signal to kind of establish a foundation for all this.7146    Mr. Paxton. Yes, sir.7147    Senator Schatz. What else?7148    Mr. Paxton. I think we have been doing a good job with7149trying to go down to the middle schools, to the elementary7150schools, to explain that this is a career that you can pursue,7151and it is changing. We are talking about AI. We are talking7152about robotics. We are talking about new technologies coming7153into our shipyards. So the education, Senator, of making sure7154that this is an understood profession as opposed to you have7155got to go get that standard 4-year degree.7156    Senator Schatz. Thank you very much.7157    Senator Sullivan. Thank you. Just a real quick point on7158that. A lot of the budget reconciliation bill, the One Big7159Beautiful Bill, does a lot for this, to jumpstart Navy,7160commercial. But on the workforce side, one of the really7161understated provisions here that has not gotten a lot of7162attention, the Pell Grants funding, which is a lot of Federal7163money, now is able to go to certificate programs, for7164registered apprenticeships, and 529 program that go to these7165registered apprenticeship programs for training. Just what you7166were talking about, Mr. Paxton. I just wanted people to know7167that is a really good part of the program. Senator Curtis.71687169                STATEMENT OF HON. JOHN CURTIS,7170                     U.S. SENATOR FROM UTAH71717172    Senator Curtis. Thank you, Chairman. I would like to begin7173by giving a shoutout to my colleagues, Senator Kelly and7174Senator Young, for their work on this, for their leadership,7175and I look to them as important leaders on this, so thanks for7176their work.7177    Dr. Mercogliano, if there was a theme for this hearing it7178would be where did we go wrong. That seems to summarize all of7179my colleagues' questions. But it was also my question. I will7180not bore down too much into that, but I would like to7181specifically look at China the last 20 years. Yes, we know of7182subsidies. We know the way the Chinese government works. Are7183there other things that we should be learning from the Chinese,7184innovations, and what else should we learn from this? And then7185kind of a follow up to that question is, what could go wrong7186with China dominating? You talked a little bit about that, but7187I would like you to bore down on that a little bit more, the7188problem with China being so dominant?7189    Mr. Mercogliano. Thank you, Senator Curtis. China's7190dominance has been absolutely fascinating to watch. Again, I7191will not quote CSIS again, but what has been interesting is how7192China has gone from small, little shipyards to consolidating7193their shipyards into much larger entities. They took very7194disparate shipyard capability and have built it up into these7195huge conglomerates. Consolidation is the issue we see in7196shipping in almost all areas. And it is that vertical7197integration I think is really the most disturbing that you see7198in them.7199    Obviously, China has the ability to, you know, low labor, a7200lot of money that is freely available to them, not a lot of7201overhead. We talk about the subsidies, the direct and indirect7202subsidies. From 2010 to 2018, they received about $132 billion7203in subsidies. Our Title XI grants during that same period was7204$77 million. So, I mean, it is just proportionally different.7205    But they control other aspects. I mean, they are building7206almost every container in the world and leasing them out. They7207are building the trailers that they carry on. We see Chinese7208mariners becoming much more dominant. The Chinese merchant7209ships are built with military capability in them. One of the7210things that we need to understand, the more military capable7211you build a commercial ship, the less commercially viable it7212tends to be. But the Chinese can do that because they do not7213have to worry about the net profit in the end. So a Chinese7214overseas shipping company can have commercial ships, roll-on,7215roll-off ships, that can carry military capability.7216    In many ways, to go back to what Senator Young was talking7217about, China has swallowed Alfred Thayer Mahan and really7218understand it in a way that other countries have not. So they7219have embraced that.7220    The other issue, too, is that China, Japan, and Korea are7221in a three-way war out there in shipbuilding. If you look over7222the past three years, China's share of shipbuilding has7223increased by 16 percent. That is the exact amount that Japan7224and Korea have lost. It is one of the reasons why you are7225seeing Japan and Korea so interested in investing in the U.S.7226And one of my concerns about the SHIPS for America Act is we do7227not become a SHIPS for Korea Act. We need to make sure that we7228focus it here in the United States. So it is a very coherent7229program put out by the Chinese.7230    Senator Curtis. Thank you. It is very insightful and7231enlightening. I saw a lot of heads shaking up and down as you7232were speaking.7233    Let me go to the U.K. for a minute, because U.K. is a close7234ally. A lot of policies would be similar. While we have7235declined, they have not. What could we learn from the U.K.?7236    Mr. Mercogliano. Well, the U.K. has gone through their7237peaks and troughs too, I would mention. They have had issues7238with their shipbuilding. I would argue that if you look at a7239lot of European shipyards, if I can expand out just a little7240bit----7241    Senator Curtis. Sure.7242    Mr. Mercogliano.--you know, one of the things that we saw7243with specialization in shipyards, so if you go to the Dutch,7244for example, they are building small craft. They are doing7245dredges, very specialized. Germany, you know, realized that7246they cannot do quite the shipbuilding they do, but they produce7247propellers and diesel engines, much more specialized. The7248Italians, Fincantieri building cruise ships. Finland building7249icebreakers. So the realization that specialization came in.7250    I do get concerned if we try to get into a shipbuilding7251competition against China they are going to out-compete us all7252the time. If you look at where China is building today, they7253are number one in all categories of ships, except for cruise7254ships and liquified natural gas carriers, but they are growing7255in that. I think we need to really focus and target in certain7256areas where we need to fill our strategic commercial fleet.7257    Senator Curtis. Thank you. Thanks to all the witnesses. I7258yield my time.7259    Senator Sullivan. Thank you. I don't know if you mentioned,7260Dr. Mercogliano, that we helped finance that too, you know,7261unfortunately. Our Wall Street guys are always helping China,7262which is another challenge of ours. Senator Baldwin.72637264               STATEMENT OF HON. TAMMY BALDWIN,7265                  U.S. SENATOR FROM WISCONSIN72667267    Senator Baldwin. Thank you, Mr. Chairman. Thank you to all7268of our witnesses today.7269    Representing a state in the Great Lakes I want to focus a7270little bit to start with Great Lakes shipbuilding. For nearly7271two centuries, Wisconsin workers have built world-class vessels7272and ships for moving goods to market and also to power our7273Navy. Wisconsin workers in our shipbuilding companies can7274compete with anyone in the world, but they need a level playing7275field to do it. We talked a bit about China. As I have been7276saying for years, China has gotten away with cheating the7277system and undermining our workers, and it is long overdue that7278we stand up to them.7279    Prioritizing efforts to revitalize our domestic7280shipbuilding and repair sector is a matter of both economic and7281national security. I was proud to stand with workers to push7282President Biden and now President Trump to do right by these7283workers. Earlier this year, the Administration announced7284penalties on China for the unfair trade practices in7285shipbuilding.7286    I also strongly support passage of the SHIPS for America7287Act, our bipartisan and comprehensive legislation to revitalize7288the United States shipbuilding and commercial maritime7289industry, and I urge all of my colleagues to review and support7290this legislation.7291    Mr. Paxton, so far this year China has made 717 large7292commercial vessels and the United States has made just 1.7293Wisconsin stands ready to play a key role in revitalizing the7294country's shipbuilding capacity. How does the shipbuilding7295industry see the need to better utilize the Great Lakes7296workforce to meet the needs of the commercial maritime and Navy7297shipbuilding demands?7298    Mr. Paxton. Thank you, Senator, for the question. I know we7299focus on large, oceangoing vessels, and we should, because they7300are important. I would point out last year we delivered 9647301ships of all shapes and sizes, some of them built on the Great7302Lakes. This year we delivered 750 of those ships. So we should7303not just throw away the fact that those are smaller ships and7304specialized vessels. They are being built all over the United7305States, inland waterways, and the Great Lakes. So we do have7306ship capability that is really important. We have got to speak7307to that.7308    I do think, going forward, if we are doing something like7309the SHIPS Act, you are going to see something that they are7310calling now distributed shipbuilding, where you see modules and7311structural assemblies being built in non-traditional areas, in7312not your normal coastline shipyard areas. So that is a good7313thing, trying to get that entire industrial base in on it.7314Where we can parse out pieces and modules, that is a good way7315to utilize our industrial base.7316    Senator Baldwin. Great. I wanted to add to previous7317questions about the Small Shipyard Grant Program. This is7318something that I have championed for years, the funding for7319that Small Shipyard Grant Program. Small shipyards are often7320the lifeblood of coastal communities, and the grant program7321provides resources for smaller shipyards to upgrade equipment7322and support worker training programs. Companies in Wisconsin,7323including Marinette Marine Corporation, Fraser Shipyards,7324Fincantieri, and Marine Travel Lift have all benefited7325tremendously from this program.7326    Mr. Paxton, can you speak to the importance of small7327shipyards in America's maritime industrial base and why7328continued and increased investment in the Small Shipyard Grant7329Program is critical?7330    Mr. Paxton. Yes, it was a program that was authorized right7331in this Committee, and it has a long history, and its history7332is one of, it has always been over-subscribed, meaning when7333there is $100 million in there, there is $1 billion in demand.7334So what we know about the Small Shipyard Assistance Grant7335Program is that it is absolutely utilized the right way and it7336is always over-subscribed. SCA fully supports it. We like the7337SHIPS Act putting $100 million authorization in there for7338sustained investment in the program.7339    Senator Baldwin. Thank you. Ms. Snow, thank you for your7340remarks. I appreciate you mentioning the value of7341apprenticeships and technical colleges. It is critical that we7342support the growth of a maritime workforce concurrent with7343efforts to support the shipbuilding and repair industry. If7344there are no workers available to build ships, these efforts7345are pretty meaningless.7346    There are successful programs underway in my home state of7347Wisconsin. Northeast Wisconsin Technical College provides7348specialized training through a longstanding partnership with7349Fincantieri Marinette Marine to provide career paths through7350good-paying union jobs and a pathway to the middle class. The7351college has expanded this partnership to Fincantieri Bay7352Shipbuilding at their Sturgeon Bay campus.7353    How can industry work better with technical colleges and7354entities like labor unions to grow the maritime workforce?7355    Ms. Snow. Thank you for the question. I think that their7356creating a pipeline from technical schools directly to7357businesses is actually a vital solution to a lot of these7358workforce problems. I would go as far to say as introducing7359them earlier, though. I have created a pipeline with our7360Seattle Public Schools Skills Center, which is a high school7361program, where their final that they take in high school in7362their welding program is our weld test that you take to7363interview. So if they have passed this class in high school,7364they are automatically set up for success at our business. So I7365would encourage other companies to take the personnel leap to7366go and make those pipelines.7367    Senator Baldwin. Thank you.7368    Senator Sullivan. Senator Moreno.73697370               STATEMENT OF HON. BERNIE MORENO,7371                     U.S. SENATOR FROM OHIO73727373    Senator Moreno. Thank you, Mr. Chairman, for holding this7374hearing. I will start with you, Mr. Paxton. You have been, from7375the background materials here, doing and advocating for7376shipbuilding in America for 18 years. What is different today7377that gives you hope versus the last 18 years, where we have7378continued to see inaction by Congress and actually competing in7379shipbuilding?7380    Mr. Paxton. Thank you, Senator, for the question. One of7381the things we have always advocated for was just a simple7382thing, having a National Maritime Strategy. We have these7383things for defense. We have them for other transportation7384modes. We do not have it for the maritime industry.7385    I would say over the last 18 years, a little bit earlier7386than that, that is when we saw China enter the WTO, and we7387thought capitalism would take down communism. It did not7388happen, and China did their 5-year plans and grew.7389    Senator Moreno. Just let me interrupt you real quick. So7390that was 25 years ago. You would agree, I think all of us7391should agree, that that vote 25 years ago was a catastrophic7392disaster.7393    Mr. Paxton. They have played the long game.7394    Senator Moreno. We played the dumb game.7395    Mr. Paxton. Well, I will not speak to that, sir. But I will7396say that that had a bad impact on all global shipbuilding,7397because it has all declined since that moment happened.7398    Senator Moreno. Right. But you would agree, and Dr.7399Mercogliano, you would agree, energy policy does also matter,7400right. To build ships here at scale in America, you need7401affordable, abundant, reliable energy. Would you both agree on7402that?7403    Mr. Mercogliano. Yes, sir. I think we need not just energy7404but an entire strategy dealing with an industry in all aspects7405of it, to really promote shipping.7406    Senator Moreno. So a shipbuilding facility run by solar7407panels is decently unrealistic today?7408    Mr. Mercogliano. I do not think you are going to be able to7409generate enough power for it.7410    Senator Moreno. But 94 percent of all new power generation,7411under the Biden administration, was wind and solar. So energy7412policy matters. Regulatory policy matters, right? That is a big7413hindrance to our industry, to private industry, when you have7414regulatory policy that strangles the private sector. Would you7415agree?7416    Mr. Mercogliano. It is very difficult in the maritime7417sector right now. You see that issue with just manning ships7418and the regulations that U.S. merchant mariners fall under in7419regard to licensing, and even the number of crew on board ships7420makes us very uncompetitive in that way.7421    Senator Moreno. How about tax policy, meaning when you have7422inconsistent tax policy, when you have corporate tax rates that7423are very high, you have a disincentivizing of investment, that7424also makes a difference. Correct?7425    Mr. Mercogliano. I agree, Senator. One of the comments I7426had earlier was Americans are the fourth-largest investors in7427shipping, just not in American shipping. They are putting their7428money offshore.7429    Senator Moreno. And then workforce policies matter. I think7430all of you have talked about that, the importance of trade7431schools, investing in that, expansion of Pell. All of that7432happened in the One Big Beautiful Bill. Every single thing that7433I just mentioned was fixed in the One Big Beautiful Bill. Do7434you think, and I will ask just a quick yes or no, was the One7435Big Beautiful Bill helpful in getting more shipbuilding in7436America? Yes or no.7437    Mr. Paxton. Generational, yes.7438    Senator Moreno. So a huge yes.7439    Mr. Vogel. Absolutely, Senator, and we look forward to the7440funding that has been provided and appropriated to be placed on7441contract quickly.7442    Mr. Mercogliano. Yes, sir. We have never seen this level of7443interest and effort being put into shipping in over 50 years.7444    Senator Moreno. Ms. Snow.7445    Ms. Snow. I do not have an answer for this right now, but I7446can submit a written answer. I am here to talk about workforce7447development.7448    Senator Moreno. OK. The good news is we can thank the Vice7449President of the United States for casting the tiebreaking vote7450on that bill, I guess.7451    How about tariffs? Doctor, how do tariffs play into this7452equation? Should we allow China to continue to go unchecked, or7453do tariffs matter?7454    Mr. Mercogliano. I mentioned, sir, that I think one of the7455efforts we can do to promote cargo on U.S. ships is to give a7456benefit to hauling cargo onto U.S. ships and maybe waive7457tariffs on that. We need to do something to incentivize putting7458cargo onto U.S. ships. Building ships will do no good if we7459cannot generate funds for them, even in the Maritime Security7460Program, Tax Security Program. That money does not provide7461enough for our ships to be competitive and operate out there.7462And I would think we need a tariff strategy to assist in that.7463    Senator Moreno. Perfect. And then last question for you,7464Mr. Paxton. Senator Baldwin mentioned the Great Lakes. I will7465point out that the first entry from the ocean to the Great7466Lakes runs through Ohio. How important is it to keep the St.7467Lawrence Seaway open 12 months a year?7468    Mr. Paxton. I think it is critical. I would just also echo,7469Senator, we need to do more shipbuilding in more places, and we7470can do that if we had that demand signal. You see it happening,7471honesty, with the SIB, the submarine industrial base, where7472they are putting modules and structures in other places,7473nontraditional places. We should be building in those places,7474as well.7475    Senator Moreno. Yes, let me just be clear. Unlike the East7476Coast and West Coast, Ohio is open for business. If there is7477somebody watching that is in the shipbuilding industry, come to7478Ohio. We will make it quick, we will make it easy, and we will7479not absolutely torture you or put you through the wringer.7480    Thank you, Mr. Chairman.7481    Senator Sullivan. Thank you, Senator Moreno. Great7482questions, by the way. I think the generational answer that Mr.7483Paxton mentioned on the One Big Beautiful Bill, it is a really7484important point.7485    By the way, there is shipbuilding now going on in Alaska.7486There is a good company in Cleveland----7487    Senator Moreno. Don't forget your family is from Ohio.7488    Senator Sullivan.--called American Tank and Fabricating7489Company that is doing good shipbuilding in Cleveland. So it is7490happening all over the country.7491    I want to go to this issue of financing. One thing that7492drives me crazy is how much our American financers still are7493addicted to financing China's rise, including in their7494military. Fortunately, we have a provision in this year's NDAA7495that requires transparency. If you are an American investment7496bank or private equity company and you are investing in Chinese7497shipbuilding or weapons or manufacturing or software7498development or chip manufacturing, we need to know about it.7499    So Dr. Mercogliano, you say, hey, we have this small fleet7500now, but we are big investors. Has American capital been the7501key to the Chinese shipbuilding rise?7502    Mr. Mercogliano. I think we definitely assisted in that in7503both the use of finances and even some industrialization. And7504we have seen that just recently where Italian company,7505Fincantieri, helped them construct their first passenger liner,7506which is going to be a competition for the Europeans.7507    I think there is always the urge that China seems like the7508emerging behemoth, and so people want to join in on that.7509    Senator Sullivan. Yes. We have got to get our Wall Street7510guys off the addiction of funding the rise of our adversary.7511They have been doing it for 40 years. Quite frankly, it is un-7512American, and we are starting to push back on that.7513    Mr. Vogel, I have a request for you. You made a really good7514point on this vessel construction manager model, but also the7515gotcha approach of our own Federal Government with red tape and7516the mentality of catching you as opposed to supporting you. Can7517you give us, for the record, a very detailed list of7518unnecessary regulations from our own Federal Government that7519are inhibiting shipbuilding domestically, both on the DoD side7520and the commercial side? Can we get that from you, for the7521record, a homework assignment?7522    Mr. Vogel. Happy to provide that, Mr. Chairman.7523    Senator Sullivan. You have made a really good point on7524that, and I think we need to make the case.7525    I had a great opportunity to sit down with the former7526Secretary of the Navy, John Lehman, under President Reagan, who7527is the father of the 600-ship Navy, which was quite an7528accomplishment. And I asked him, ``What was the secret sauce?7529How did you do that?'' He was a 38-year-old Secretary of the7530Navy when he started, pretty remarkable guy. The one key thing7531he said was, ``No change orders.'' They put the pencils down.7532They told the industry, ``We are going to do 40 of these7533destroyers, and then if we find something better, for Block 2,7534or Block B, or Block Bravo, we will do a change order.'' But is7535that something we need also?7536    Mr. Vogel. Yes, Mr. Chairman. That is really the key, and7537that has been the key to the success of the National Security7538Multi-Mission Vessel is limit the change orders. Once the7539government has a design, let's move out and build it a7540commercial standard.7541    Senator Sullivan. Good. Senator Cantwell mentioned this7542idea of AI and software development. We actually, once again,7543in the budget reconciliation bill--there is so much good stuff7544in this, by the way, Pell Grants for apprenticeships--there is7545$450 million for software and AI deployment in U.S. shipyards,7546in that bill. What impact do you believe software and AI could7547have in increasing the transparency of building schedules and7548supercharging the existing constrained workforce? Dr.7549Mercogliano, do you have a view on that, or any other7550witnesses?7551    Mr. Mercogliano. I would probably defer over to Mr. Paxton7552on that, sir.7553    Senator Sullivan. Mr. Paxton. You have been given this one7554from your fellow panelist.7555    Mr. Paxton. Absolutely. Look, we are trying to look at all7556technology advancements. In fact, that is one of the things we7557have been doing, Mr. Chairman, with our allies, strategic7558collaboration on the best practices in advanced technology. So7559I do think AI is going to play an important part.7560    Senator Sullivan. So let me just conclude with kind of an7561important question. You know, when you have this kind of7562momentum, bipartisan support, the President leading the One Big7563Beautiful Bill, putting billions--and I mean billions, just the7564Coast Guard's $25 billion investment, $29 billion for7565shipbuilding, these other provisions that are important--what7566are some of the near-term initiatives that the Congress should7567prioritize, such as small shipyard grants, these regulatory7568reforms, workforce training programs, to start to try to get7569momentum. We have dug a giant hole. We have all asked the same7570question--how the heck did this happen? But there is momentum,7571there is bipartisan support, there is a lot of money, right,7572being put into this sector, both in the DoD military side,7573Coast Guard side, but commercial side. What do you think, just7574very quickly, kind of the quick hits that we can do in the next75751 to 3 years to show progress? It is going to take a long time7576to dig out of this hole.7577    Mr. Paxton. Acquisition reform.7578    Senator Sullivan. So what Mr. Vogel has been talking about?7579    Mr. Paxton. That, but also some of the things you have been7580working on with the FoRGED Act and the SPEED Act, things where7581we can really get at our acquisition.7582    Senator Sullivan. OK. I am going to task you, too, Mr.7583Paxton. How about a list of those, as well? Is that all right--7584--7585    Mr. Paxton. Yes, sir.7586    Senator Sullivan.--for the record here? OK, Mr. Vogel, you7587are going to say regulations.7588    Mr. Vogel. Absolutely, Mr. Chairman, regulations. And I7589would also say the Congress needs to focus on those platforms7590that need to be replaced immediately and can be built in7591commercial shipyards. Things like our Missile Defense Agency7592sensor vessels that are over 60 years old. They are a critical7593part of the Golden Dome protection of this country. Things like7594the roll-on, roll-off vessels for our ready reserve force,7595critical to national defense, can be built with simple7596commercial designs, cost effective construction through a7597commercial model.7598    Senator Sullivan. Dr. Mercogliano.7599    Mr. Mercogliano. I would say leadership, sir. Both in World7600War I and World War II we had that leadership, Edward Hurley7601and then Emory S. Land. Who is going to direct this? Where is7602that National Maritime Security Advisor going to be? Because7603there are a lot of moving parts here, and my fear is we get7604past it and we are not cutting steel any time in the near7605future.7606    Senator Sullivan. OK. Ms. Snow.7607    Ms. Snow. I would say education exposure as well as the7608protection of industrial lands.7609    Senator Sullivan. OK, great. Senator Young, I am going to7610give you the final.7611    Senator Young. Well, thank you, Senator Sullivan. There is7612certainly excitement around the SHIPS for America Act and the7613Maritime Action Plan that we have a flyover, it seems, going on7614right now.7615    This has been a great Subcommittee hearing, so I thank all7616our witnesses. Just a couple of things I wanted to follow up on7617before we depart. One, Mr. Vogel, a number of questions have7618been lobbed at you about the regulatory burden of the Federal7619Government as it relates to shipbuilding, and your consistent7620response has been this vessel construction manager program and7621how effective it has been. As I understand it, this is7622effectively a project manager that sits between the private7623sector shipbuilders and Federal Government, and once the7624Federal Government signs off on a contract for specs, there are7625not changes. There are not change orders. You give private7626sector flexibility and best-in-class project management tools7627to that manager, and they go to work and drive costs down.7628    Is that accurate? Is that a fair description?7629    Mr. Vogel. Yes, Senator. That is a perfect summary.7630    Senator Young. OK. And this would overcome, as we think7631about regulatory burden, the regulatory burden associated with7632procurement and change orders. That is, by far, the biggest7633regulatory burden with shipbuilding. Is that accurate?7634    Mr. Vogel. That is correct, Senator. Those pieces are what7635have really hampered our legacy government shipbuilding.7636    Senator Young. OK. And if there is any witness who7637disagrees in regards to another source of regulatory burden to7638be greater, if you would raise your hand right now. But I think7639that is probably a shared belief. OK, great.7640    When we think of regulatory burden up here on Capitol Hill,7641many of us would say especially Republicans tend to associate7642that with OSHA, or the EPA, or these sorts of regulatory7643burdens. But instead we are talking about a procurement process7644and multiple changes. And I just think it is real important to7645bear that in mind.7646    So I would say publicly here, if Senator Sullivan's7647subcommittee gets your list of regulatory burdens that we7648should address, and any of them are not addressed, it is7649certainly my desire, and I know Senator Kelly, the other lead7650on this legislation, to accommodate those concerns as it7651relates to regulatory burdens. No pride of authorship here.7652    And then the last point that I would like to sort of elicit7653from some of you is the amazing workforce opportunities that7654might be realized, up and down the value chain but also7655geographically in this country. Because as someone who has7656spent a little time studying this issue, there is a tight labor7657market near many of our existing shipyards. So in some circles7658there are doubts. There is certainly uncertainty about our7659ability to unlock further labor to come and work at those7660shipyards. So not only do we want to see the modernization, and7661perhaps expansion, in some of those shipyards, we want to7662unlock fallow capacity or brand-new capacity, potentially in7663the coastal state of Indiana, the shores of the heartland.7664    But could anyone speak to these opportunities? And to put a7665little flourish on it, this again is not unlike semiconductors.7666I would describe that as, you know, we are facing novel7667challenges as a country, and this broader problem set of7668economic security is one we policymakers are struggling to deal7669with. And the way I like to describe it is, if we play our7670cards right we have an opportunity to become a better version7671of ourselves, a more resilient version of ourselves, to avoid7672conflict through deterrence, but also to ask rank-and-file7673Americans to play a meaningful role in this generational,7674multigenerational project.7675    So with that, I will ask any of you to speak to this topic?7676    Mr. Paxton. Senator, I will just say if we do this right,7677the SHIPS Act, and other things that would come with a National7678Maritime Strategy, as I mentioned distributed shipbuilding7679means you can build these things, pieces, parts of them,7680anywhere. And we should be focusing on Middle America and some7681of the places where traditionally we have not built ships.7682Because I think if we get it right, that is what is going to7683happen.7684    The last thing I will say, Jeffboat, which was an amazing7685little shipyard, that shipyard used more steel than some of our7686large Navy shipbuilders combined over the course of a year,7687because they would pump out a barge and a half every day. And7688when that yard closed, it hurt our steel industry and it hurt7689the overall industrial base.7690    So we have got to make sure we stay focused on the fact7691that Jeffboat was an important contributor to the shipyard7692industrial base, and when it went away it caused a lot of pain.7693    Senator Young. I am so glad you mentioned Jeffboat. With7694the Chairman's indulgence I am going to give the other7695witnesses an opportunity to respond. But a little flourish7696about my state. Right down the river, the Ohio River, from7697Jeffboat you have Evansville, Indiana. This was, at the end of7698World War II, the leading inland shipbuilder in the country.7699They produced four LSTs per day. Up north we have got major7700steel production. We have got auto component manufacturers who7701could pivot to some marine production. We have Cummins Engine7702and even a Caterpillar presence. Large marine engines are7703already in production. So lots of opportunity for what was once7704considered flyover America. Mr. Vogel.7705    Mr. Vogel. I would absolutely agree, Senator. When we think7706about the work that is actually being done at the shipyard, in7707many ways it is just assembly of sort of components, and there7708is no requirement for those components to be coming from the7709same location as the shipyard.7710    We were recently visiting a shipyard down in the Gulf, and7711we were looking at the development of cable spools, you know,7712miles and miles of cable required for each of these ships, and7713those spools were being developed there onsite. And I was7714thinking about states like Indiana, and that those cable spools7715could have been developed up there, creating great, high-paying7716jobs in Indiana, transporting those down to the yard. That7717allows the yard to use that space, that waterfront space that7718is so limited, to really focus on generating new shipbuilding7719opportunities.7720    Senator Young. Thank you, sir. Doctor.7721    Mr. Mercogliano. As a graduate of a state maritime academy7722I basically went to a 4-year trade school. And so I learned7723very quickly not just that I had a college degree but how to go7724out into the industry. And I think one of the things we need to7725focus and we need to task MARAD, the Maritime Administration,7726to do in their mission to promote the merchant marine is to7727educate our college instructors, our universities out there of7728the opportunities out there in shipyards. We just talked about7729the use of AI and a whole batch of new technologies that we can7730be drawing more population into.7731    I think it is important what Mr. Paxton said. We have got7732to get down to the lower level to get our younger generation7733involved, but also the potential for careers out there in this7734field is not being at all touching those graduates of7735universities, where they can make good money very quickly, deal7736with student debt.7737    Senator Young. Well, as a fellow trade school graduate,7738thank you. Ms. Snow.7739    Ms. Snow. I would double down on exactly the same thing. I7740think investment in education, especially in education of7741adults, and there are a lot of adults that want to change their7742track and maybe just do not know the source to go to. I also7743think an investment in time and energy into even younger than7744colleges. I think that maritime should be introduced as a valid7745career path in kindergarten, just like a doctor or a lawyer.7746    Senator Young. Great stuff. Chairman.7747    Senator Sullivan. Thank you. Thank you, Senator Young.7748Thank you for your passion here. I could not agree more on this7749whole idea, what I have been referring to as our Nation as a7750shipyard. And we had legislation last Congress, the ENSIGN Act,7751that my team wrote, that was very focused on that, primarily on7752Navy shipbuilding. But it is a great point. We have got the JAG7753Shipbuilding company up in Alaska doing this, as well. But you7754are right. All over the country.7755    And I think we have got a really good jumpstart, as Mr.7756Paxton said, a generational advantage with the One Big7757Beautiful Bill, the budget reconciliation bill. It does focus a7758lot on training. So it is an exciting time.7759    The key from my perspective of those whole hearing, the7760Federal Government has got to help, not like stop. You know, we7761have got big challenges, and the Federal Government, for7762decades, especially in Alaska, came up and said, ``How can we7763crush you? How can we stop you? How can we prevent you from7764doing anything that is going to help your constituents or7765America?'' We have got to change that mentality. So Mr. Paxton,7766Mr. Vogel, I am looking forward to getting your list of things7767where the Feds can help us, not continue to hurt us.7768    But again, I want to thank everybody. This was a really,7769really good, informative hearing, good start on an issue that7770is very bipartisan, we need to address. Let's get on it, right?7771We have the leadership from the President and his team,7772Senators like Senator Young and his legislation, which is very7773bipartisan. Money--we have got some pretty good money right now7774in the One Big Beautiful Bill.7775    So with that I want to thank the witnesses. Senators may7776continue to submit questions for the record for the next week7777on this hearing, and upon receipt we ask the witnesses7778respectfully to submit their written answers to the Committee7779by the close of business on November 18. Give you a little bit7780of time to do your homework.7781    And again, I want to thank everybody for an excellent7782hearing today. This hearing is now adjourned.7783    [Whereupon, at 11:48 a.m., the hearing was adjourned.]77847785                            A P P E N D I X77867787    Response to Written Question Submitted by Hon. Dan Sullivan to7788                              Matt Paxton7789    Question 1. Opponents of the Jones Act often argue that it raises7790consumer prices in noncontiguous U.S. regions such as Alaska, Hawaii,7791and Puerto Rico because those areas rely heavily on ocean transport and7792have no practical alternatives. From your perspective, to what extent7793do you believe the Jones Act materially increases shipping or consumer7794costs in these regions--and if those costs are real, do you see them as7795an unavoidable trade-off for the national-security and industrial-base7796benefits you describe, or are there specific policy tools that could7797mitigate them without weakening the Act's core protections?7798    Answer. The Jones Act is the foundation of America's maritime7799security and industrial base. It sustains U.S.-built, U.S.-flagged,7800U.S.-owned, and U.S.-crewed fleets that carry our domestic commerce,7801underpin sealift readiness, and support a nationwide network of7802shipyards and suppliers--at no direct Federal cost. Opponents often7803attribute higher costs in noncontiguous trades to the Act, but the7804drivers are multifactorial: long sea distances, small and variable7805volumes, backhaul imbalance, port and landside constraints, and the7806unique vessel characteristics required for those routes. The premise7807that costs are solely a function of the U.S.-build requirement7808overlooks these structural factors and the significant national-7809security insurance that the Act provides.7810    Even so, Congress has tools to improve affordability without7811eroding the law's core. First, stable, series-based ordering of Jones7812Act vessels--supported by credit enhancements, accelerated7813depreciation, or targeted tax incentives--can lower build prices7814through learning-curve effects and bulk material buys. Additionally,7815aligning Federal cargo preference, MSP/TSP participation, and domestic7816repair requirements to reward U.S. shipyard utilization will strengthen7817the industrial base that serves these routes. Finally, financing tools7818that lower capital costs--loan guarantees, maritime bonds, or risk-7819sharing mechanisms for series construction--can bring down the hurdle7820rates carriers face when renewing fleets, especially for specialized7821ships in thin trades.7822    These measures preserve the core protections--U.S.-build, U.S.-7823flag, U.S.-ownership, U.S.-crew--while pragmatically addressing cost7824drivers. Importantly, weakening the Jones Act would undermine the very7825shipyard and mariner capabilities that the Nation must have in crisis,7826increasing strategic dependence on foreign state-backed fleets. The7827better course is to sharpen policy to capture economies of scale,7828accelerate fleet renewal on common designs, and reduce logistics7829frictions--delivering affordability through competitiveness, not by7830eroding national security.7831                                 ______78327833    Response to Written Questions Submitted by Hon. Brian Schatz to7834                              Matt Paxton7835Workforce7836    Question 1. We've seen proposals, such as the SHIPS Act, which7837recognize that we need a sustainable talent pipeline to support U.S.7838maritime interests. Where are areas of opportunity to not only grow,7839but also retain a strong maritime workforce?7840    Answer. The Jones Act is the foundation of America's maritime7841security and industrial base. It sustains U.S.-built, U.S.-flagged,7842U.S.-owned, and U.S.-crewed fleets that carry our domestic commerce,7843underpin sealift readiness, and support a nationwide network of7844shipyards and suppliers--at no direct Federal cost.7845    The opportunities that are most impactful to the workforce are7846those that convert ``episodic'' demand into reliable multi-year7847pipelines for jobs, training, and capital investment. Congress can help7848support predictable demand for commercial and government work, which is7849the indispensable precondition for recruitment and retention. Where7850programs provide visible backlogs, shipbuilders hire apprentices,7851expand training cohorts, and invest in productivity-enhancing equipment7852with confidence. Second, modernizing and scaling registered7853apprenticeship and pre-apprenticeship pathways--tied to industry-7854validated skills frameworks--will expand throughput in critical trades7855such as welders, fitters, pipefitters, electricians, and marine7856machinists. Third, aligning Federal workforce tools with industry needs7857matters. Targeted support for community and technical college7858partnerships, competency-based training, portable industry credentials,7859and supportive services such as childcare, transportation, and7860relocation assistance will increase completion and retention. Fourth,7861investments that reduce non-productive time and improve quality--7862standardized designs, disciplined change control, and stable funding7863profiles--translate into better schedule performance and more7864attractive, higher-earning jobs that keep workers in the industry.7865Finally, recognizing and measuring the full spectrum of U.S. shipyard7866output--not only large ocean-going tonnage--improves Federal resource7867allocation for training and helps sustain core skills across the7868inland, workboat, and repair segments that are the spine of the7869industrial base.7870Strategic Commercial Fleet Program7871    Question 2. The Strategic Commercial Fleet program phases in a U.S.7872build requirement. How would a phased in requirement support demand7873signals for U.S. shipyards?78747875    Question 3. The Strategic Commercial Fleet program has a process to7876allow one shipyard and carrier to bring multiple vessels into the7877fleet, and is structured to recapitalize every 21 years. What certainty7878would that provide for U.S. shipyards?78797880    Question 4. What economies of scale could be created if we provide7881incentives to have carriers order multiple vessels at once?7882    Answers:78837884   i)  A phased U.S.-build requirement creates an investable demand7885        curve. By sequencing initial tranches and ramping domestic7886        content and U.S.-construction over time, carriers and yards7887        receive a forward signal strong enough to underwrite hiring,7888        apprenticeships, and yard modernization, while giving suppliers7889        time to expand capacity. Well-specified phase-in schedules,7890        combined with design discipline and procurement structures that7891        enable series production, drive learning-curve efficiencies,7892        reduce unit costs, and de-risk capital commitment. Importantly,7893        a build requirement anchored to multi-year fleet7894        recapitalization prevents the ``boom-bust'' cycles that erode7895        workforce and supplier viability.78967897  ii)  Allowing a single yard-carrier team to bring multiple vessels7898        into the SCF under a predictable 21-year recapitalization7899        horizon provides precisely the certainty America's shipyards7900        and suppliers need to invest at scale. A known refresh cadence,7901        combined with portfolio ordering, allows for block buys,7902        advanced procurement, and incremental funding that align7903        material purchase, production planning, and workforce growth.7904        It also incentivizes common hull forms, modularization, and7905        configuration control across a class, increasing throughput and7906        quality. For suppliers, assured series volumes justify7907        investments in capacity, tooling, and domestic substitution of7908        components that have migrated offshore, directly strengthening7909        U.S. industrial resilience.79107911  iii)  Ordering multiple vessels at once, or in a block buy, unlocks7912        the classic learning-curve effects--repeatable work packages,7913        bulk material buys, and standardized quality processes. For7914        complex assemblies, series production reduces marginal costs7915        significantly and shortens cycle times, while enabling7916        investments in automation and advanced machining including7917        welding, cutting, and outfitting technologies. Incentive7918        structures that reward on-time delivery, design stability, and7919        performance improvements can be shared along the supply chain.7920        The result is a virtuous cycle: lower per-unit costs, better7921        schedule adherence, and stronger balance sheets that support7922        reinvestment in people and facilities7923                                 ______79247925  Response to Written Questions Submitted by Hon. Tammy Duckworth to7926                              Matt Paxton7927Question Topic: Surge Production Capacity for Auxiliary Ships7928    Question 1. What is your assessment of the capacity of U.S.7929shipyards to build new auxiliary vessels for the U.S. military at the7930scale and speed necessary to sustain a maritime conflict?7931    Answer. The United States retains substantial latent capacity7932across more than one hundred private shipyards spanning the coasts,7933Gulf, Great Lakes, and inland waterways. While only a handful currently7934build large naval combatants, many mid-tier and smaller yards are7935actively fabricating drydocks, submarine modules, berthing barges,7936tugs, auxiliary oilers, and other government and commercial craft,7937often as subcontractors to the large yards. This distributed network,7938if provided with standardized auxiliary designs, disciplined7939requirements, and multi-year block orders, can be mobilized to produce7940auxiliary hulls, barges, and mission support platforms at scale. The7941principal constraints are not physical space alone; they are7942predictable work, long-lead materials and government-furnished7943equipment, timely approvals, and workforce throughput. With stable7944funding, early material authorization, and portfolio contracting7945aligned to production reality, U.S. yards can increase throughput7946markedly for auxiliaries, particularly where designs emphasize common7947hulls and modular outfitting.7948    I would note that recent independent oversight has highlighted7949shortfalls in the Navy's execution of auxiliary and sealift7950recapitalization that directly suppress demand signals to U.S. yards.7951The Department of Defense Inspector General reported that from 2018 to79522025 the Navy, working with USTRANSCOM and MARAD, extended the service7953life of only 6 of 31 planned Ready Reserve Force vessels, acquired only79547 of an estimated 26 used vessels, and did not initiate any new7955construction after ending the Common Hull Auxiliary Multi-Mission7956Platform effort because of cost concerns--leaving no auxiliary/sealift7957new-build program underway.\1\ The IG further noted the absence of an7958annually reviewed, milestone-driven recapitalization plan and kept its7959recommendation open when the Navy disagreed. These gaps translate into7960uneven backlogs, design churn, and delayed government-furnished7961equipment--precisely the conditions that limit throughput and workforce7962retention in U.S. shipyards. By addressing these failings and locking7963in predictable, series production of auxiliaries, Congress can unlock7964the latent capacity described above and put it to work for national7965readiness.7966---------------------------------------------------------------------------7967    \1\ Evaluation of U.S. Navy Efforts to Recapitalize Surge Sealift7968Vessels (Report No. DODIG-2025-116) > Department of Defense > DoD OIG7969Reports79707971    Question 2. What would be the most impactful authority or policy7972Congress could pass to increase our shipyards' capabilities and7973capacity to accelerate production of these kinds of vessels that enable7974lift of our forces?7975    Answer. The single most impactful step is to pair disciplined,7976government-owned baseline designs with multi-ship, multi-year7977procurement that enables block buys and advanced procurement for7978materials. Congress should authorize portfolio-based awards for7979auxiliary classes with firm configuration control and a defined change7980discipline. This should be coupled with accelerated approvals and7981streamlined oversight that align decision rights with accountability7982for cost and schedule. Acquisition tools such as incremental funding,7983block buys, and advance appropriations for long-lead components would7984de-bottleneck material availability and allow suppliers to scale.7985Finally, ensuring that domestic repair and lifecycle support are7986captured in the contracting strategy will sustain workload between new7987construction peaks, stabilizing the workforce.7988Question Topic: Workforce Skills for Building Auxiliary Ships7989    Question 1. Based on your conversations with shipyards, repair7990facilities and suppliers, what skills gaps do you assess are the most7991critical to fill to ensure that we can build auxiliary vessels for our7992U.S. military in the event of the need to surge production capacity at7993scale?79947995    Question 2. What steps are being taken to fill these skills gaps7996and what can Congress do to help?7997    Answer. Across the country, shipyards are expanding apprenticeship7998cohorts, creating pre-apprenticeship bridges with high schools and7999community colleges, and investing in simulators, training cells, and8000instructor capacity. Many are reorganizing production to improve flow8001and reduce non-productive time, which increases effective workforce8002capacity. Congress can amplify these efforts by funding industry-linked8003registered apprenticeships; enabling equipment and instructor grants8004for high-need trades; supporting mobility stipends where regional8005talent must relocate; and tying workforce grants to multi-year program8006backlogs that give trainees confidence in long-term employment.8007Additionally, aligning immigration pathways for experienced maritime8008trades where domestic supply is insufficient can provide a targeted8009bridge without displacing U.S. workers.8010    The U.S. shipyard industry is fully capable of building auxiliary8011vessels without significantly increasing the skill sets of the existing8012shipyard industry workforce.8013Question Topic: Workforce Exchanges8014    Question 1. Investing in the U.S. workforce is one of my top8015priorities, but in the interim, there may be opportunities to leverage8016the knowledge of our international partners to overcome the gap in8017domestic shipbuilding capacity.8018    What is your view of workforce exchanges or training exchanges with8019international shipbuilding companies--either in the United States or8020abroad--to help expand skill-building for U.S. shipbuilders and8021shipyard workers?8022    Answers. Well-structured, time-bound workforce exchanges can8023accelerate skill-building, particularly in lean ship production,8024outfitting sequence optimization, and design-for-production. Any8025exchanges should occur under strict safeguards that protect U.S.8026intellectual property, exclude adversarial state-backed entities, and8027prioritize trusted allies. Equally important is reciprocity: techniques8028brought home must be translated into curriculum and embedded in U.S.8029yard production systems. The goal is not dependence on foreign8030capacity, but the rapid diffusion of modern methods that increase U.S.8031throughput and quality while we expand domestic training pipelines.8032    It is also critical that beyond workforce exchanges, is that the8033U.S. shipyard workforce needs to have work to utilize the skills8034learned in these potential exchanges. Consistent and stable demand from8035our government and commercial customers is the most significant factor8036in developing our workforce capability and capacity.8037Question Topic: Workforce Growth8038    Question 1. If you could change just one thing at the Federal level8039to make it easier for shipyards to recruit and retain skilled workers--8040whether that's a new incentive, a funding stream or a policy change--8041what would it be?8042    Answer. Stable and consistent demand for the workforce that exists.8043                                 ______80448045    Response to Written Questions Submitted by Hon. Dan Sullivan to8046                               Jeff Vogel8047    Question 1. Opponents of the Jones Act often argue that it raises8048consumer prices in noncontiguous U.S. regions such as Alaska, Hawaii,8049and Puerto Rico because those areas rely heavily on ocean transport and8050have no practical alternatives. From your perspective, to what extent8051do you believe the Jones Act materially increases shipping or consumer8052costs in these regions--and if those costs are real, do you see them as8053an unavoidable trade-off for the national-security and industrial-base8054benefits you describe, or are there specific policy tools that could8055mitigate them without weakening the Act's core protections?8056    Answer. The Jones Act's core protections--U.S. build, ownership,8057crewing, and control of domestic maritime transport--are essential to8058national security and the maritime industrial base. These protections8059ensure that the United States retains merchant mariners, shipbuilding8060and repair capability, and a domestic fleet available in contingencies,8061while supporting over 100,000 high-paying jobs and billions in GDP8062across the private shipbuilding and repairing sector. While shipping is8063one input into delivered cost for noncontiguous regions, the retail8064price impacts are frequently overstated and can reflect multiple8065confounding variables beyond freight--such as energy costs, local8066taxes, real estate, and distribution dynamics. Moreover, in lanes such8067as Alaska and Puerto Rico, U.S.-flag carriers have invested heavily in8068modern, fuel-efficient vessels, LNG propulsion, and integrated8069logistics that drive reliability and resiliency--benefits that become8070salient when global shocks disrupt foreign-flag networks.8071    Any incremental cost concerns can be mitigated through targeted8072policy tools without weakening the Jones Act. Congress should consider8073corrections to the outdated tax code through the bipartisan Maritime8074Fuel Parity Tax Act (S.549/H.R. 2925) to ensure that operators can8075modernize the domestic fleet with cleaner, more efficient propulsion8076and hull forms, improving fuel economy and reliability. In addition,8077Congress must continue to invest in port infrastructure and landside8078intermodal connectors in noncontiguous regions to reduce dwell, improve8079turn times, and lower effective logistics cost. These measures preserve8080the Jones Act's strategic value while acting directly on cost drivers8081and service reliability, which is a better policy path than eroding8082core protections that underpin our security and industrial capacity.80838084    Question 2. In-Hearing Question from Senator Sullivan: Government8085shipbuilding programs have been plagued by inefficiency. In your view,8086what regulatory and bureaucratic hurdles need to be removed from8087government shipbuilding programs to increase efficiency, reduce costs,8088and increase speed of delivery?8089    Answer. Three categories of hurdles consistently impair efficiency:8090requirements overreach, fragmented accountability, and change-8091instability. Requirements overreach occurs when non-combatant ships are8092burdened with military-unique specifications that add cost and delay8093without commensurate mission value. The remedy is to adopt commercial8094design standards and commercial construction practices for eligible8095platforms, as Congress directed for National Security Multi-Mission8096Vessels, and to enforce early requirements discipline that resists8097customization not tied to clear, risk-justified outcomes. Fragmented8098accountability arises when multiple government entities share8099technical, commercial, and integration authority, elongating decision8100cycles and diluting responsibility. The Vessel Construction Manager8101(VCM) model addresses this by consolidating non-construction8102responsibilities under a single, accountable manager with authority8103over schedule, supplier integration, and change control, while the8104shipyard concentrates on production. Finally, change-instability--8105frequent, late-arising design or scope changes--erodes cost and8106schedule performance. Fixed-price VCM contracts, which break the8107contractual privity between the Government and shipyard, with rigorous8108configuration control and measured gates for change requests reduce8109churn and keep production stable.8110    Over the past few decades, Congress has imposed several new8111regulations and directives that apply to numerous shipbuilding8112programs, across the Navy and Coast Guard. These regulations are often8113borne out of failed programs and/or repeated mistakes that come at the8114expense of the taxpayer. While well-intentioned, the cumulative effect8115of these directives results in an acquisition approach that takes years8116to execute, discourages competition, stifles innovation, increases8117cost, limits commercial flexibility, and jeopardizes mission readiness8118when ships are not delivered on time.8119    To allow our shipbuilding industry to thrive and compete on a8120global scale, Congress should immediately remove the barriers outlined8121below to support the rapid construction of non-combatant vessels. The8122term ``non-combatant'' refers to any vessel that can be built to8123commercial standards and can apply the American Bureau of Shipping8124(ABS) rules and regulations. This includes, but is not limited to, the8125following programs:81268127   T-Ships: Including Fleet Replenishment Oilers, Dry Cargo8128        Ships, Expeditionary Fast Transport Vessels, Hospital Ships,8129        Crane Ships, Cable Laying Ships, Towing and Salvage Ships,8130        Command and Control Ships, Missile Range Instrumentation Ships,8131        and Oceanographic Research Ships81328133   Landing Ships: Including Landing Ship Medium (LSM) and8134        Landing Craft Utility (LCU) Vessels81358136   U.S. Coast Guard Vessels: Including icebreakers and other8137        cutters.8138Domestic Content Requirements:8139    For non-combatant programs, prime contracts should impose a8140preference for domestic content, but the thresholds imposed by Congress8141should be eliminated.8142    Under DFARS Subpart 225.70:81438144   225.7004-2: Restrictions on acquisition of foreign-made8145        components for naval vessels (e.g., gyrocompasses, propulsion8146        control systems, welded shipboard anchor chain) unless8147        manufacturer is part of the U.S. national technology &8148        industrial base.81498150    Provisions in the FY 2024/2025 version of the National Defense8151Authorization Act (NDAA) proposed a change to the ``Buy American''8152content thresholds for Navy shipbuilding. The changes begin in January81532026 and require components to be ``manufactured substantially'' in the8154U.S. at a threshold of 65 percent cost for components, scaling up to8155100 percent by January 1, 2033.8156    This requirement could shift significant risk into non-combatant8157shipbuilding programs. Rather than leveraging proven, commercial-off-8158the-shelf (COTS) equipment that could be procured from allied nations,8159the increased thresholds will force prime contractors to procure8160prototype machinery and equipment from domestic suppliers, which often8161adds significant cost, schedule, and performance risk to the program.8162U.S. suppliers are generally not well equipped to manufacture and test8163this certain equipment. For example, on the National Security Multi-8164Mission Vessel (NSMV) program, TOTE Services procured the 4,500 kW8165electric propulsion motors from a reputable manufacturer in France, as8166similar electric motors had been recently produced by this company, and8167there were no domestic equivalents available.8168    Recommended Solution: Allow contractors and the acquisition8169authorities to negotiate thresholds for domestic content on a program-8170by-program basis. Depending on the type of vessel, some programs are8171better suited for increased domestic content requirements. There should8172be an achievable minimum threshold, with additional targets that would8173trigger incentives for the prime contractor. This would allow the prime8174to make commercial trade-off decisions and assume a reasonable amount8175of risk.8176Congressional Phase Gates:8177    Congress requires agency reporting or certification of certain8178milestones (design maturity, functional design completion, workforce8179mandates, etc.) before subsequent contract awards or construction can8180begin. Again, these directives were initiated following several8181combatant shipbuilding programs that were mismanaged and exceeded cost8182and schedule goals. While aimed at reducing risk to the Government and8183the taxpayer, non-combatant shipbuilding programs should be excluded8184from these requirements, which will delay procurement and construction8185by negatively impacting the efficient execution of commercial8186shipbuilding processes.8187    For example, under a commercial Vessel Construction Manager (VCM)8188model, the VCM is the prime contractor and assumes nearly all cost,8189schedule, and performance risk on the program. The VCM would not allow8190the shipyard to procure long lead time materials (LLTM) or begin8191construction unless/until the design is sufficiently mature to mitigate8192risk, while keeping the program on-schedule. The VCM should not be8193subject to Government-imposed phase gates.8194    In the Senate Report for NDAA FY 2025 (S. Rept. 118-188) the8195committee recommended a ``Limitation on the construction of the Landing8196Ship Medium (sec. 123)''. The language would prohibit awarding a8197contract for construction until basic and functional design are8198certified complete. Not only does this impose additional reporting8199requirements and oversight burdens that are unnecessary for this class8200of ship, but it will also delay the total build duration. This text8201limits the prime contractor's ability to leverage concurrent8202engineering approaches and overlapping design/construction activities8203that are commonly employed by commercial shipbuilders, often with8204little risk to the Government.8205    Recommended Solution: Congress should clarify that phase gates and8206certifications are not required for non-combatant programs,8207particularly those managed by an experienced VCM, to avoid delay and8208disruption on these commercial programs.8209Timely Appropriations and Full Funding:8210    Demand signal is a key factor that will support the growth of our8211domestic shipbuilding industry and establishment of a skilled and8212qualified workforce. Congress can support this demand signal by8213providing full funding (vice incremental funding) and timely8214appropriations for non-combatant shipbuilding programs.8215    Of course, we understand Congress must make difficult decisions and8216balance multiple priorities when determining where to allocate money8217and which programs to fund. However, procuring one ship at a time and/8218or incrementally funding a program limits the prime contractor's8219ability to leverage economies of scale and efficiently construct a8220fleet of ships.8221    On the NSMV program, which is a 5-ship program, MARAD had8222sufficient funding for two (2) ships at the time of VCM contract award8223to TOTE Services. When negotiating the construction contract with8224Philly Shipyard, TOTE Services established ``series'' and ``non-8225series'' pricing for hulls 3-5 with specified cutoff dates for the8226timing of the Delivery Orders for follow-on ships. Because the Congress8227provided timely funding for hulls 3-5 prior to the cutoff date, TOTE8228Services could offer MARAD the ``series'' price for these ships, saving8229the taxpayer $55 million.8230    Recommended Solution: For non-combatant shipbuilding programs,8231Congress should provide sufficient appropriations to fully fund at8232least the first two (2) ships in the series and maintain these funding8233lines each year until the program of record is complete.8234Contracting Rules, DFAR Flow Downs, and Oversight Burdens:8235    Contracting rules and regulatory flow downs, whether imposed by the8236Congress or the individual agencies, stifle progress and have negative8237cost and schedule consequences for our non-combatant shipbuilding8238programs. For example, the current price for a T-AO (Oiler) at General8239Dynamics NASSCO is $800 million per ship, while a similarly sized8240commercial tanker could be built at the same shipyard for roughly $3508241million per ship. This cost difference is not attributable to increased8242capabilities or performance of the Oiler, but rather the regulations,8243contract requirements, and oversight requirements imposed on the8244shipbuilder.82458246   The volume and complexity of procurement regulations (FAR/8247        DFARS) increase overhead costs, negatively impact contracting8248        timelines, and discourage non-traditional government8249        shipbuilders from entering the space.82508251   Earned Value Management (EVM) reporting is unnecessary for8252        non-combatant vessels that are built to commercial standards. A8253        milestone-based approach with an appropriate Integrated Master8254        Schedule (IMS) is sufficient and aligns with commercial best8255        practices.82568257   Excessive oversight by the Supervisors of Shipbuilding8258        (SUPSHIP) is common throughout Navy and USCG construction8259        programs. The oversight teams can range from 80--120 government8260        personnel, some of which have little-to-no shipbuilding8261        experience. A commercial VCM would manage the same program with8262        less than 20 people. Excessive oversight requires the builder8263        to employ equally sized and capable staff to manage and respond8264        to government personnel, needlessly increasing overhead costs.82658266    Recommended Solution: Employing a VCM acquisition strategy allows8267the shipyard subcontract to be established on commercial paper, with8268FAR/DFARS flowdowns limited to those mandated for commercial items8269subcontracts as provided by FAR 52.212-5(e) and those that an8270experienced VCM deems necessary to get the vessels in the water as8271quickly as possible, while mitigating the Government's risk. In8272addition, Congress should ensure that agencies fully adopt the VCM8273model, instead of looking to use half measures. Removing government8274inspection regimes and allowing an experienced VCM to efficiently8275oversee inspections, with permissible Government attendance at testing,8276is critical to ensuring success. Accordingly, when directing the use of8277a VCM, Congress should look to codify what has made the NSMV program a8278success, rather than leaving interpretation up to the agencies and8279allowing traditional government shipbuilding practices to erode the VCM8280benefits.8281Tax Policy:8282    The U.S. shipbuilding industry is challenged by rising costs and8283prolonged delivery timelines driven by regulatory complexity,8284fragmented oversight, and the absence of modern economic incentives.8285While structural reforms can streamline processes, the lack of targeted8286tax policy compounds inefficiencies by discouraging investment in8287innovative, cost-effective technologies, such as the utilization of8288liquified natural gas (LNG) as a maritime fuel. Current law creates a8289price disadvantage for alternative fuels compared to diesel, and8290uncertainty around long-term incentives undermines confidence in8291capital-intensive retrofits and new builds. Without corrective action,8292these barriers will continue to stifle innovation, limit commercial8293flexibility, and jeopardize America's ability to maintain a8294competitive, resilient maritime fleet.8295    Recommended Solution: To complement structural reforms, Congress8296should leverage tax policy as a strategic tool to lower costs and8297incentivize domestic shipbuilding. Modernizing the tax code will remove8298economic barriers that currently discourage investment in more8299efficient propulsion systems and advanced fuel technologies. Two8300targeted measures stand out as critical steps to create a level playing8301field, reduce lifecycle costs, and enable rapid adoption of next-8302generation vessels:83038304  1.  Maritime Fuel Tax Parity Act (H.R. 2925/S.549)--Current law8305        exempts diesel from Federal excise taxes but penalizes LNG and8306        other alternative fuels, creating a cost disadvantage for8307        cleaner technologies. Aligning tax treatment through parity8308        removes this distortion, reducing lifecycle operating costs and8309        encouraging broader use of LNG and other advanced fuels. This8310        not only improves environmental performance but also supports8311        an all-of-the-above energy strategy that strengthens domestic8312        supply chains and accelerates delivery timelines by making8313        alternative-fueled vessels economically viable.83148315  2.  Alternative Fuel Tax Credit (AFTC)--Reinstatement of the AFTC8316        [Section 6426(d) of the Internal Revenue Code], which expired8317        on December 31, 2024, would incentivize investment in8318        alternative fuel infrastructure and dual-fuel technologies for8319        new builds and retrofits. By lowering fuel costs and supporting8320        modernization, this credit helps shipyards and operators offset8321        upfront capital expenses, enabling faster adoption of cleaner8322        propulsion systems without compromising schedule or8323        affordability. The AFTC functions as an end-user incentive to8324        encourage the adoption of alternative fuels throughout the8325        transportation sector, including maritime use cases. The credit8326        supports alternative fuel dispensing infrastructure and lowers8327        overall costs for fleets, encouraging continued investment in8328        modernization of the industry. Necessary retrofits and new8329        ship-builds demand substantial time and upfront investment,8330        making continued long-term tax incentive certainty essential to8331        support the innovations that will drive the next generation of8332        maritime vessels. The AFTC played a critical role in enabling8333        continued investment in cleaner fuel technologies and8334        infrastructure by helping offset the substantial upfront costs8335        of building new alternative-fueled ships or converting existing8336        diesel-powered vessels to dual-fuel engines, beginning with the8337        world's first LNG-fueled container vessel put into service in8338        2015. Ongoing support for the use of alternative fuels for8339        maritime would allow companies to make critical investments in8340        next generation ships and accelerate offtake markets for LNG8341        and other alternative fuels.83428343    Together, these measures complement regulatory streamlining by8344lowering total ownership costs, improving predictability for8345shipbuilders, and creating the economic conditions necessary for fleet8346renewal.8347                                 ______83488349    Response to Written Questions Submitted by Hon. Brian Schatz to8350                               Jeff Vogel8351Workforce8352    Question 1. The National Security Multi-Mission Vessel (NSMV)8353program at the Hanwha Philly Shipyard has led to workforce growth. Can8354you describe how the NSMV contract helped generate that workforce8355growth, and what lessons we can apply from that experience to future8356commercial ship programs, such as those envisioned under the SHIPS for8357America Act?8358    Answer. The NSMV program catalyzed a rapid and durable workforce8359expansion at Hanwha Philly Shipyard (HPSI) by combining several8360reinforcing elements: a clear multi-hull demand signal, a commercial-8361style contracting approach, and disciplined scope control under the8362Vessel Construction Manager (VCM) model. At subcontract award in April83632020, HPSI had approximately 80 employees, limited prospects, and no8364recent government new-construction experience. Under TOTE Services' VCM8365structure, the shipyard concentrated on core production while the VCM8366assumed non-construction responsibilities, such as vessel outfitting8367and procurement, and applied commercial best practices. This alignment8368enabled recruitment, training, and retention at scale, growing HPSI's8369production workforce to more than 2,000 employees and securing8370additional third-party orders--outcomes that restored the yard's health8371and validated the power of predictable workstreams paired with8372streamlined execution. The VCM construct also supported workforce8373stability by limiting post-contract change growth to approximately 0.388374percent, protecting production cadence and planning while avoiding8375avoidable disruptions that otherwise drive attrition and cost8376escalation.8377    The successful VCM approach can be replicated throughout the8378government, with programs that lend themselves to commercial designs8379for rapid construction at U.S. commercial shipyards. Such platforms8380include the Navy's Landing Ship Medium, hospital ships, command and8381control ships, light replenishment oilers and cable-lay vessels, the8382Coast Guard's National Security Cutters (domestic icebreakers), the8383Maritime Administration's Ready Reserve Force roll-on/roll-off fleet,8384and the Missile Defense Agency's missile instrumentation range safety8385vessels. Each of these programs requires multi-vessel series production8386to address the Government's aging (or non-existent) fleets to increase8387our national security. Execution of these multi-vessel programs through8388a VCM model will allow our shipyards to concentrate on the development8389of shipbuilding skills and workforce growth, instead of misapplying8390their time on bureaucratic oversight and government-driven change8391orders as occurs under the traditional government shipbuilding model.8392In this manner, the shipyards can focus on craft development and8393specialization and growing shipyard worker recruitment and education8394through apprenticeship programs. Supportive policy tools in the SHIPS8395for America Act--such as targeted tax incentives for shipyard capital8396improvements and a Maritime Security Trust Fund--will amplify and8397sustain these workforce investments through market cycles.8398                                 ______83998400  Response to Written Questions Submitted by Hon. Tammy Duckworth to8401                               Jeff Vogel8402Question Topic: Workforce Exchanges8403    Question 1. Investing in the U.S. workforce is one of my top8404priorities, but in the interim, there may be opportunities to leverage8405the knowledge of our international partners to overcome the gap in8406domestic shipbuilding capacity.8407    What is your view of workforce exchanges or training exchanges with8408international shipbuilding companies--either in the United States or8409abroad--to help expand skill-building for U.S. shipbuilders and8410shipyard workers?8411    Answer. Structured workforce and training exchanges can be an8412effective accelerant to domestic capacity when they are narrowly8413tailored, time-bound, and focused on transferable production practices8414that complement U.S. safety, quality, and security requirements.8415Exchanges centered on production system design, outfitting sequence8416optimization, modular construction techniques, welding automation,8417digital work-package integration, and supply-chain synchronization can8418shorten the learning curve for U.S. yards while protecting proprietary8419data and national security. An exchange framework should include clear8420scopes of work, robust technology and data safeguards, alignment with8421U.S. certification standards, and joint curricula with domestic labor8422and training institutions to ensure skills are institutionalized8423stateside.8424    Critically, exchanges are most impactful when married to a stable8425domestic demand signal and modernized contracting models. The Vessel8426Construction Manager approach magnifies the utility of skills transfers8427by embedding commercial discipline into program execution, which allows8428imported best practices to take root in production rather than being8429diluted by change churn or bureaucratic delay. Pairing exchanges with8430VCM-led series production provides the repetition and schedule8431stability required to translate training into durable workforce8432capability. This ensures the benefits of exchanges accrue to American8433workers and the U.S. industrial base, while safeguarding strategic8434technology and supply chains.8435Question Topic: Vessel Construction Manager8436    Question 1. In your opening statement, you wrote ``the VCM8437acquisition strategy has saved the U.S. taxpayer billions of dollars,8438proving that U.S. shipyards can be cost-competitive when bureaucratic8439barriers are removed and a proper demand signal is in place.'' What8440specific bureaucratic barriers did TOTE Services remove by serving as8441VCM?8442    Answer. The VCM construct removes or mitigates several recurring8443bureaucratic failure points associated with legacy government8444shipbuilding approaches. First, it decouples commercial production from8445protracted government-specific requirements development by using8446commercial design standards and practices, thereby avoiding costly8447tailoring that does not add mission value for non-combatant vessels.8448Second, it streamlines decision authority and reduces cycle times on8449technical, schedule, and commercial matters--placing configuration8450control and change discipline under the VCM to limit scope creep.8451Third, it consolidates non-construction responsibilities--such as8452procurement coordination, supplier qualification, logistics, and8453program integration--under a single accountable VCM, so that shipyards8454can focus on building ships rather than navigating multiple contracting8455and bureaucratic lanes. Fourth, the VCM structure supports firm-fixed-8456price contracting aligned with commercial norms, curbing the incentive8457for open-ended modifications and facilitating predictable cost and8458schedule performance.8459    These process improvements have demonstrated quantifiable benefits.8460The NSMV program has achieved delivered pricing on the order of roughly8461$314 million per vessel, in stark contrast to prior projections using8462legacy requirements and contracting methods that ranged from8463approximately $750 million to $1.2 billion per ship. Just as8464importantly, post-award change growth has been limited to well under8465one percent, mitigating the constant change order process that has8466hampered traditional government shipbuilding programs. By8467institutionalizing commercially proven disciplines while maintaining8468appropriate government oversight of the VCM prime contractor, the VCM8469model translates directly into savings, schedule adherence, and8470industrial-base health.84718472    Question 2. In your opinion, what concrete steps should we take to8473scale the VCM model to address other gaps in our ability to build ships8474for the military?8475    Answer. Congress and the Administration can scale the VCM model8476across non-combatant and auxiliary platforms through several practical8477measures. First, direct agencies with substantial non-combatant8478portfolios--the Navy, Coast Guard, Maritime Administration (MARAD), and8479Missile Defense Agency (MDA)--to utilize VCM contracting for eligible8480platforms. Such platforms include the Navy's Landing Ship Medium,8481hospital ships, command and control ships, light replenishment oilers8482and cable-lay vessels, the Coast Guard's National Security Cutters8483(domestic icebreakers), the Maritime Administration's Ready Reserve8484Force roll-on/roll-off fleet, and the Missile Defense Agency's missile8485instrumentation range safety vessels. Second, codify a VCM playbook8486that codifies commercial design baselines, change-control thresholds,8487schedule governance, performance reporting, and integrated supply-chain8488practices to enable rapid stand-up across multiple yards.8489    Critically, there are no half measures. A ``VCM light'' or similar8490concept that allows Government agencies to retain control and8491inspection oversight will lead to the same failures as traditional8492government shipbuilding. Third, align appropriations with multi-hull8493series buys where practical, providing the demand stability that8494enables workforce expansion, vendor qualification, and capital8495investment in facilities and automation. Fourth, apply complementary8496fiscal tools--tax credits for shipyard modernization and creation of8497fuel parity incentives, targeted funding via a Maritime Security Trust8498Fund, and streamlined capital-lease scoring for privately-funded build-8499charter models--to support private investment and reduce government8500risk. Finally, ensure interagency coordination and early requirements8501discipline to resist non-value-adding customization and keep non-8502combatant vessels on commercial standards wherever feasible. These8503actions will replicate NSMV outcomes--on-time, fixed-price delivery8504with minimal post-award changes--across priority recapitalization8505programs while strengthening the domestic industrial base.8506Question Topic: Workforce Growth8507    Question 1. If you could change just one thing at the Federal level8508to make it easier for shipyards to recruit and retain skilled workers--8509whether that's a new incentive, a funding stream, or a policy change--8510what would it be?8511    Answer. Establish a sustained, multi-year, multi-hull demand signal8512for non-combatant vessels executed through VCM-led, commercially8513grounded programs. While training incentives and grant funding are8514valuable, no policy lever is more decisive for recruiting and retention8515than predictable, repeatable work that supports apprenticeship8516pipelines, craft specialization, and learning-curve efficiencies.8517Multi-vessel series buys--anchored by commercial standards and rigorous8518change control--enable shipyards to hire and train with confidence,8519justify capital investment in automation and facilities, and maintain8520high retention by offering stable, family-wage careers. This demand8521clarity is the foundation upon which all other workforce initiatives8522become durably effective.8523                                 ______85248525   Response to Written Questions Submitted by Hon. John Fetterman to8526                               Jeff Vogel8527Tote & VCM Model8528    Question 1. Mr. Vogel, you discussed in your testimony how Tote has8529pioneered innovative and cost-effective ways of building vessels8530faster. Could competitive bid programs like the Strategic Commercial8531Fleet help reward models like the VCM model you've used at Philly8532Shipyard?8533    Answer. When deploying the Strategic Commercial Fleet (SCF)8534envisioned by the SHIPS for America Act, it will be critical for the8535Government to evaluate competition based on total life-cycle cost8536beginning at the construction phase, and to consider schedule8537reliability and shipbuilding industrial-base outcomes. Evaluating bids8538that demonstrate construction and vessel delivery performance, change8539order discipline, and cost control would inherently elevate and reward8540offers that integrate VCM structures and series production. In effect,8541this type of SCF procurement framework would favor the methods that8542have already yielded substantial cost avoidance and schedule adherence8543under the established VCM model. Incorporating evaluation factors to8544consider an applicant's history of delivering commercial and government8545vessels while minimizing post-contract-award change growth and schedule8546deviation would further reinforce the alignment between the SCF program8547goals and VCM-led execution.8548Workforce8549    Question 1. Mr. Vogel, through the National Security Multi-Mission8550Vessel (NSMV) program at Philly Shipyard, now Hanwha Philly Shipyard,8551the shipyard has been brought back to life--growing its workforce and8552putting hundreds of skilled tradesmen and women back on the job. Can8553you describe how the NSMV contract helped generate that workforce8554growth, and what lessons we can apply from that experience to future8555commercial ship programs, such as those envisioned under the SHIPS for8556America Act?8557    Answer. The NSMV contract generated workforce growth by sequencing8558production around a standardized, multi-hull design and embedding8559commercial execution discipline under a Vessel Construction Manager8560(VCM). This model created the planning certainty needed for targeted8561hiring and training in structural fabrication, piping, electrical, and8562outfitting trades; it also supported apprenticeship scalability and8563craft progression within stable, repetitive work packages. The VCM's8564role in supplier integration and schedule control minimized bottlenecks8565and change-induced rework, which often drive morale issues and8566attrition. In addition, having a flexible commercial shipyard8567subcontract--as opposed to a rigid government prime contract--allowed8568TOTE Services to establish financial discipline in the subcontract,8569such as restricting dividends to parent companies and instead requiring8570the shipyard to reinvest profits into workforce growth efforts. As a8571result, HPSI expanded from roughly 80 employees at subcontract award to8572more than 2,000 skilled workers, while securing additional third-party8573commercial work that further stabilized employment.8574    The core lesson for future commercial ship programs is that8575workforce development follows dependable demand and disciplined8576execution. The SHIPS for America Act can embed these lessons by8577structuring multi-hull awards, directing agencies to use VCM-led8578commercial standards for non-combatant vessels, and supporting shipyard8579modernization with targeted incentives. When combined, those measures8580enable sustained hiring, structured training pathways with labor and8581educational partners, and continuous improvement practices that lock in8582cost and schedule gains over successive hulls.85838584    Question 2. Mr. Vogel, you mentioned how the NSMV program helped8585rebuild the workforce at Philly Shipyard. Could you expand on how Tote8586and the shipyard partnered with labor unions, local training programs,8587or technical schools to recruit and train those workers? And how might8588similar partnerships be encouraged or scaled to ensure we have a ready8589workforce for future commercial shipbuilding projects?8590    Answer. Effective workforce rebuilding at HPSI relied on close8591collaboration with labor partners, community colleges, and regional8592training organizations to create clear on-ramps into shipbuilding8593careers. The VCM structure provided stable, forecastable work packages8594and multi-year demand, which allowed unions and schools to tailor8595curricula, expand cohorts, and align certifications with production8596needs. Practical components included pre-hire bootcamps focused on8597foundational safety and basic craft skills; apprenticeships8598synchronized with hull milestones and outfitting sequences; upskilling8599modules in digital work instructions, precision measurement, and weld8600procedures; and concurrent supervisor development to sustain quality8601and throughput. The predictability afforded by the VCM and series8602production was essential to scaling these pipelines and retaining8603graduates.8604    To expand these partnerships nationally, Federal programs should8605prioritize multi-hull awards that enable long-term training8606commitments; encourage standardized curricula aligned to commercial8607standards; and incentivize regional partnerships among shipyards,8608labor, secondary schools, and technical colleges. These partnerships8609translate into a ready, resilient, and mobile maritime workforce that8610can surge across programs while anchoring high-quality employment in8611shipbuilding communities.8612                                 ______86138614    Response to Written Question Submitted by Hon. Dan Sullivan to8615                       Dr. Salvatore Mercogliano8616    Question 1. Opponents of the Jones Act often argue that it raises8617consumer prices in noncontiguous U.S. regions such as Alaska, Hawaii,8618and Puerto Rico because those areas rely heavily on ocean transport and8619have no practical alternatives. From your perspective, to what extent8620do you believe the Jones Act materially increases shipping or consumer8621costs in these regions--and if those costs are real, do you see them as8622an unavoidable trade-off for the national-security and industrial-base8623benefits you describe, or are there specific policy tools that could8624mitigate them without weakening the Act's core protections?8625    Answer. When the Jones Act was passed in 1920, the cabotage8626provision--Article 27--was a single component of a larger national8627maritime strategy that included the regulation of international8628shipping rates, protection for American mariners, support to8629shipbuilding, dispensing the World War One built fleet, and ensuring8630American presence on key shipping routes. Historically, the United8631States has always faced higher wages for its mariners and shipyard8632workers.8633    Cabotage does not just impact Americans in the noncontiguous United8634States. To move cargo by sea from American ports along the East, Gulf8635and West coasts require ships that meet the build, ownership, registry,8636and crewing requirement, as demonstrated on the Great Lakes. In the8637contiguous 48 states, the creation of the Federal Interstate Highway8638and Pipeline systems alleviated the majority of the cargo and need for8639coastal shipping that once existed; and with the deregulation of the8640trucking industry, the cost to move goods by road became the cheapest,8641fastest, and easiest method to deliver goods. In 2023, the United8642States moved 12,975,000,000 tons of cargo by trucks.\1\ That is greater8643than the total global amount of goods moved by sea--12,292,000,000 tons8644in 2023.\2\8645---------------------------------------------------------------------------8646    \1\ U.S. Department of Transportation, Bureau of Transportation8647Statistics, Transportation Statistics Annual Report 2024, 3-5.8648    \2\ United Nations Conference on Trade and Development, 2024 Review8649of Maritime Transport, 3.8650---------------------------------------------------------------------------8651    The higher costs to move goods by sea experienced in Alaska, Puerto8652Rico and Hawaii is a burden that should be addressed; however, I don't8653believe repeal of the Jones Act is the proper measure. The Jones Act,8654in its entirety in 1920, was intended to ensure that the United States8655had a requisite merchant marine, shipbuilding and maritime8656infrastructure to address its domestic and national security needs.8657This was tested in the Second World War and with the amendments from8658the Merchant Marine Act of 1936, the U.S. was able to construct and8659operate the largest merchant marine in the world, capable of delivering8660the Arsenal of Democracy from the home front to the war front.8661    It was in the post-World War Two-era that the United States adopted8662policies that fostered international competition, ensured that our8663allies and previous enemies could rebuild their fleets, and create new8664entities to lower the transportation costs for goods around the world.8665As we did for the world, we should aim to do the same for our citizens8666today.8667    As the United States dismantled the provisions of the Merchant8668Marine Act of 1920, the cabotage requirement maintained a residual of a8669domestic shipbuilding base. It was never intended to support and8670sustain an industry that can compete against the likes of China who8671provides direct and indirect subsidies to their shipbuilding8672corporations.8673    Provisions should be adopted that allow Americans, who ship cargo8674on U.S. ships, particularly those in the cabotage trade, to be eligible8675for tax abatements or deferments to offset the higher transportation8676costs. The Congress should look at measures to fully support and fund8677programs through the Maritime Administration to finance the8678construction of new coastal trading ships and identify such vessels and8679national security assets and participate in an active reserve force in8680time of war or national emergency.8681    The Maritime Administration in the Department of Transportation,8682along with the Departments of Commerce and others, should examine and8683identify key trading routes both within and along the United States and8684overseas and prioritize the support for new vessel construction and8685replacement.8686                                 ______86878688  Response to Written Questions Submitted by Hon. Tammy Duckworth to8689                       Dr. Salvatore Mercogliano8690Question Topic: Workforce Exchanges8691    Question 1. Investing in the U.S. workforce is one of my top8692priorities, but in the interim, there may be opportunities to leverage8693the knowledge of our international partners to overcome the gap in8694domestic shipbuilding capacity.8695    What is your view of workforce exchanges or training exchanges with8696international shipbuilding companies--either in the United States or8697abroad--to help expand skill-building for U.S. shipbuilders and8698shipyard workers?8699    Answer. The connection with American shipyards to foreign companies8700is extensive. NASSCO in San Diego has worked with Korean shipyards in8701the past on the construction of tankers in the mid-2010s. Fincanterri8702in Wisconsin has a connection to its parent company in Italy and Austal8703in Alabama is a subsidiary of an Australian firm.8704    Workforce exchanges and training will be essential to re-8705establishing an American presence in deep draft, blue water ship8706construction. But it will not just be skills that need to be adopted8707but management techniques and philosophies.8708    American shipyards have been dealing with a single customer for a8709while, specifically the U.S. government. Construction of government8710vessels, in particular, ships for the U.S. Navy have an enormous burden8711placed upon the yards due to oversight, restrictions and regulations8712placed on them from the Naval Sea Systems Command (NAVSEA). The8713construction of commercial ships will not have this, as experienced in8714the Hanwha yard in Philadelphia building the National Security Multi-8715Mission Vessels through a Vessel Construction Manager (VCM) contract.8716    In some ways, restarting commercial shipbuilding in the United8717States, will allow the United States to adopt new practices and8718policies, while training new personnel to meet the needs in the new8719shipyards. In several American shipyards, they have worked with local8720community colleges to train new workers. It may be possible to expand8721this idea to a `study abroad' style of operation where Americans can go8722to foreign yards and learn the requisite skills and bring them back.8723Question Topic: China Shipbuilding8724    Question 1. What are your views on the national security risks of8725the Chinese dominating the shipbuilding market and the commercial8726shipping market?8727    Answer. In the 1980s, the United States made the policy decision to8728end the construction and operational differential subsidies for the8729American international trading fleet. This led to the offshoring of8730American ship construction to Europe, Japan, and Korea. At the time,8731this was not viewed as a concern as they were Allies, and the United8732States shifted its private shipyards to support the construction and8733support of a 600-ship Navy.8734    The end of the Cold War, meant a reduction to a 300-ship Navy, but8735with no threat on the world's oceans, and commercial ships providing8736low cost transportation due to construction overseas, open registries8737that provided lower operating costs for ships and crews, and new8738technologies--such as containerization and super tankers, all developed8739by Americans--there was little concern for American imports and exports8740sailing in foreign bottoms.8741    At the turn of the century, with the United States focused on wars8742in the Middle East, China began its rise in shipbuilding. From8743constructing five percent of the world's ships in 1999, they have risen8744to 51 percent in 2024. While many criticized the build quality of8745Chinese ships, today they are the industry standard.8746    While some have compared Chinese domination of shipping to that of8747the British Empire in the eighteenth and nineteenth centuries, their8748current policies are much more elaborate. Today, besides China8749dominating shipbuilding, with their percentages growing, they also8750build most of the world's containers and control their leasing. They8751sell and lease most of the container trailers, along with the ship-to-8752shore cranes in terminals. Chinese mariners are the second largest8753segment sailing the world today. China has an interest in ports around8754the world, and they have the third largest fleet in terms of registry8755(including the ship of Hong Kong). They are also a major owner and8756investor in ships; with the Chinese Overseas Shipping Company being the8757largest shipping line in the world.8758    China's control in so many aspects of global shipping give them the8759means to influence trade and economy through a variety of mediums. In8760many ways this is returning China back to its central position in trade8761it held in the past.87628763    Question 2. How would the average American be harmed by allowing8764China to dominate the shipbuilding and commercial shipping markets?8765    Answer. Average Americans have little visibility or concern how the8766goods they purchased are transported to the United States. Their8767concern is affordability and availability. As the United States relies8768more on Chinese operated and owned ships, this could allow China to8769constrict the flow of goods and material to the United States.8770    The Chinese Overseas Shipping Company (COSCO) is one of the largest8771container lines in the world and they make regular port calls in the8772United States. Should China decide to slow down or restrict the sailing8773of these ships, this could cause disruptions in American ports and8774impact the global supply chain.8775    By investing in more American ships, currently U.S.-flag ships only8776transport approximately two percent of its imports and exports, it8777provides some cushion, and reserve should there be a disruption in the8778flow of goods.87798780    Question 3. How could China use their control of the maritime8781industry to harm the U.S. economy, especially if we're in a scenario8782where China invades Taiwan and wants to pressure the U.S. to stay on8783the sidelines?8784    Answer. China's dominance in the maritime industry provides them8785with leverage that can be used to exert influence that could hinder and8786disrupt the United States' ability to support Taiwan. As noted in the8787previous question, since Chinese owned and built ships transport a8788large portion of American imports, any delays or disruptions could have8789an impact on American port operations, the supply chain, and8790manufacturing as material and goods arrive late.8791    Perhaps the most disturbing aspect is how China has taken the8792lessons of nineteenth-century American naval philosopher Alfred Thayer8793Mahan to heart and have combined together naval power with commercial8794shipping to be a true maritime power.8795    One example would be in their influence in Panama Canal. While8796China does not own or operate the canal, they do have terminals at each8797end. Plus, they have invested heavily in the country, and their ships8798are a major user of the canal. Should China decide to exercise leverage8799against Panama, in a Taiwan scenario they could persuade Panama to8800prohibit the passage of American ships. This would have a direct impact8801on the U.S. ability to transport forces across the Pacific as the8802Atlantic Fleet and two-thirds of all the surge sealift ships in the8803Ready Reserve Force are located on the wrong side of the canal. This8804would necessitate longer sea voyages and delay deployments.8805    China's investment in countries and projects around the world could8806also limit American access to fuel and supplies for its fleet,8807particularly with the closing of the Red Hill facility in Hawaii. Add8808to this, China's extensive network of ports, shipping, fishing fleet8809and maritime militia, provide a real time surveillance and visibility8810of global shipping. Chinese-built ship-to-shore cranes, with hidden8811Internet connectivity, could be instructed to damage themselves thereby8812reducing the number of available loading/unloading capabilities in U.S.8813ports.8814    Chinese ships also provide the feeder service (local movement of8815goods) for many countries around the world, and the removal or8816disruption of these ships could have large economic impact on these8817nations. This could allow China to economically coerce nations toward8818their side.8819                                 ______88208821   Response to Written Questions Submitted by Hon. John Fetterman to8822                       Dr. Salvatore Mercogliano8823Industrialization & Executive Orders8824    Question 1. Dr. Mercogliano, in President Trump's executive order,8825Restoring America's Maritime Dominance, there is a clear mandate for8826new regulatory and tax relief programs to support the industry [Section882712]. Are there proposals circulating within the industry that would8828advance these goals?8829    Answer. One of the major efforts of the SHIPs Act should be to8830encourage the investment in American shipping. According to the United8831Nation's Review of Maritime Transport, Americans are the fourth largest8832investors in shipping (by value). Americans are willing to invest in8833ships, but their focus is overseas due to the favorable tax situations8834and returns.8835    The SHIPs Act does contain a Shippers' Tax Incentive which can be8836expanded to encourage further investment in the U.S. flag. With the8837one-year postponement of U.S. Trade Representative port fees for8838Chinese-owned and flagged ship, there will be less money for the Ship8839Trust Fund. The American Maritime Congress has looked at this in a8840study, and this would shift investment toward the domestic fleet.8841    There have also been suggestions to waive tariffs or port fees for8842cargo shipped on U.S.-flagged ships, thereby incentivizing their use.8843Similarly, tax rebates, deferments or incentives can be provided to8844Americans to ship on U.S.-flag ships, which would not only benefit8845international shipping, but also the closed, cabotage trade.88468847    Question 2. Dr. Mercogliano, you stated in your testimony that8848there are near-term opportunities to modernize our domestic fleet of8849tugboats, towboats, and ferries. Can you provide more specific8850proposals that Congress should consider in helping achieve this goal?8851    Answer. Any deep-draft ship construction initiated will take years8852before we see the results afloat. The U.S. does possess many small and8853medium shipbuilding capacity, but it can be expanded faster than the8854larger shipyards. Currently, many of our Nation's ferries, in8855particular the Washington State system, and our tugboats in our8856harbors,, our towboats along the Mississippi and other inland waters,8857and the Great Lakes are extremely old, outdated and need replacement.8858    The recent NTSB hearing on the allision between MV Dali and the8859Francis Scott Key Bridge noted that the ship sailed out of the harbor8860without a tug escort. Such an escort, which is required in many ports8861around the world, particularly those with narrow channels or of such8862high value that the concern is the closure of the waterway, was not8863provided due to regulations, but also cost and availability of modern8864tugboats.8865    The Maritime Administration should be detailed to provide a study8866that identifies ports that are in danger of similar accidents as8867occurred with Dali. Such high risk ports, particularly those which are8868the busiest in the U.S., such as Los Angeles, Long Beach, Houston,8869Savannah, and New York/New Jersey may be designated to require escorts8870for portions of ship voyages. The Maritime Administration can then8871develop a Vessel Construction Manager system, like the National8872Security Multi-Mission Vessel, to be construction of a standardized8873design tugboat for use in U.S. harbors and lease them to commercial8874firms to operate to meet the new demands. They could also be fitted8875with firefighting capability to strengthen the responses in ports.8876    On the Great Lakes, MV Mark W Barker was the first new U.S.-flagged8877freighter built in forty years. The Maritime Administration, along with8878the Commerce Department, should look at a vessel replacement program8879for the aged fleet operating on the Great Lakes and ways that American8880shipping can be expanded. An expansion of Title XI loans and the use of8881low-interest long term government financing could help encourage the8882further replacement of ships on America's fourth coast.88838884    Question 3. Dr. Mercogliano, as Congress considers proposals to8885revitalize commercial shipping, what role(s) can you envision our Great8886Lakes shipyards, like the shipyard in Erie, PA, playing in advancement8887of this national goal?8888    Answer. On the Great Lakes, MV Mark W Barker was the first new8889U.S.-flagged freighter built in forty years. The Maritime8890Administration, along with the Commerce Department, should look at a8891vessel replacement program for the aged fleet operating on the Great8892Lakes and ways that American shipping can be expanded. An expansion of8893Title XI loans and the use of low-interest long term government8894financing could help encourage the further replacement of ships on8895America's fourth coast.8896China8897    Question 1. Dr. Mercogliano, we've seen how China has used its8898massive commercial fleet not just for trade, but as a strategic asset--8899blurring the line between civilian and military operations. Their so-8900called `shadow fleet' plays a key role in gray-zone activity,8901supporting their ambitions in the South China Sea and potentially8902around Taiwan. Meanwhile, the United States has only a fraction of that8903capacity under the U.S. flag. The SHIPS for America Act would begin to8904close that gap by rebuilding our commercial shipbuilding base and8905expanding our U.S.-flag fleet. From your perspective, how important is8906it that we take this step now--both to ensure economic security and to8907be prepared for the kinds of hybrid or gray-zone maritime challenges8908that China is already using its commercial fleet to pursue?8909    Answer. The emergence of the `shadow fleet' is a disturbing trend8910in global shipping. Sanctions against Iran and Venezuela gave birth to8911a fleet of ships that are designed to evade sanctions. They do this, by8912registering in countries with little oversight--true flags of8913conveniences. They may or not have classification societies inspecting8914them or insurance. This has been expanded by the Russians in their8915attempts to evade G7/EU price caps and specific sanctions against8916companies and ships.8917    China has utilized its commercial fleet as a naval auxiliary, along8918with their massive fishing and maritime militia to scout the world's8919oceans and provide real-time intelligence. These ships could also pose8920threats to ships and ports if they deploy underwater, surface or aerial8921uncrewed vehicles, akin to what we see being used between Russia and8922Ukraine in the Black Sea.8923    U.S. flag ships represent not just a commercial interest on the8924high seas, but sovereign American territory that can also assist in the8925support of our national economy, but also the military in time8926emergency or national defense. The greater the scope of our shipping,8927the more difficult it will be interdict. However, as has been shown by8928the Houthis in the Red Sea, just the threat and the increase cost of8929insurance is enough to force shipping to divert and raise the cost to8930move goods. What makes the U.S.-flag unique is the added protection8931afforded by the U.S. Navy, but that relationship needs to be8932strengthened, exercised and practiced to counter any hybrid or gray-8933zone challenges.8934                                 ______89358936Response to Written Questions Submitted by Hon. Lisa Blunt Rochester to89378938                       Dr. Salvatore Mercogliano8939Question Title: U.S.-Flagged Ships8940    Question 1. Dr. Mercogliano, during the hearing you stated that the8941U.S. must incentivize private shippers to use U.S.-flag vessels to move8942their cargo. What type of incentives could Congress implement to8943encourage shippers to choose the U.S.-flag?8944    Answer. The current situation for U.S.-flag shipping is they either8945operate in the closed cabotage trade, or they participate in8946international trade and receive a stipend through the Maritime or8947Tanker Security Programs. Yet, the stipends are not enough to ensure8948that the ships are profitable and they require cargo, which is provided8949through either government cargo preference or some of the operators8950have agreements with larger foreign shipping lines.8951    The incentives that I would propose, would build on those currently8952in the SHIPs Act that provide a 25 percent investment tax credit,8953transform Title XI Federal Ship Financing into a revolving fund and8954establishing a Shipbuilding Financial Incentives Program. The American8955Maritime Congress has proposed expanding the Shipper's Tax Incentive8956which would encourage the shift in American shipping investment (of8957which the U.S. is fourth in the world in terms of value) from foreign8958hulls to U.S.8959    I contend that waiving tariffs and port fees on cargo shipped on8960U.S.-flagged ships could also encourage a shift of cargo into American8961bottoms. We should look to provide tax rebates, relief, or incentives8962to American businesses to use U.S.-flagged shipping as they would not8963only encourage international shipping but also provide relief for the8964domestic cabotage trade of goods.8965    We also do more to encourage the rapid reflagging of ships into the8966U.S. registry, as we have seen with the CMA CGM Phoenix and American8967Energy. We should examine expansion of the Maritime and Tanker Security8968Program, requiring a percentage of American exports in key commodities8969to be on American ships through cargo preference, work with the State8970Department to incorporate reciprocal trade agreements concerning the8971use of American ships, and discuss measures to waive certain8972restrictions to bring ships into aspects of the American trade while8973new vessels are being constructed.8974    The key today is increasing the number of American ships, as this8975will increase the job market for mariners and the need for ship repair8976facilities and workers. We should support the construction of tug and8977ferry replacement program to jump start small and medium ship8978construction and start building our shipyard workforce. Then we begin8979the programs that will lead to deep draft ship construction and reverse8980the downward trend and prevent China from being the dominant player in8981shipping.8982                                 ______89838984    Response to Written Question Submitted by Hon. Dan Sullivan to8985                               Tuuli Snow8986    Question. Opponents of the Jones Act often argue that it raises8987consumer prices in noncontiguous U.S. regions such as Alaska, Hawaii,8988and Puerto Rico because those areas rely heavily on ocean transport and8989have no practical alternatives. From your perspective, to what extent8990do you believe the Jones Act materially increases shipping or consumer8991costs in these regions--and if those costs are real, do you see them as8992an unavoidable trade-off for the national-security and industrial-base8993benefits you describe, or are there specific policy tools that could8994mitigate them without weakening the Act's core protections?8995    Answer. The Jones Act does not relate to the cost of delivery or8996ocean transportation. Geography, market size, population, remoteness,8997and the inflation of everyday products raise the cost of delivery to8998places such as Alaska, Hawaii, and Puerto Rico. The Jones Act ensures8999reliable, dedicated service to the markets it serves as well as9000boosting our industrial bases and benefiting our national security. A9001good example of this was visible during the Covid Pandemic. We saw the9002cost of internationally delivered goods fluctuate immensely, but those9003fluctuations were not reflected in domestic delivery.9004    The cost of shipping is often a percentage of the cost of cargo. If9005the costs are rising it is due to the cost of products rising. Ocean9006freight does not drive up consumer costs. We would not recommend change9007to The Jones Act.9008                                 ______90099010  Response to Written Questions Submitted by Hon. Tammy Duckworth to9011                               Tuuli Snow9012Question Topic: Workforce Exchanges9013    Question 1. Investing in the U.S. workforce is one of my top9014priorities, but in the interim, there may be opportunities to leverage9015the knowledge of our international partners to overcome the gap in9016domestic shipbuilding capacity.9017    What is your view of workforce exchanges or training exchanges with9018international shipbuilding companies--either in the United States or9019abroad--to help expand skill-building for U.S. shipbuilders and9020shipyard workers?9021    Answer. I believe we lose a very valuable labor market by not9022allowing more people into the United States, every day. Lowering9023barriers for people to immigrate and become citizens would greatly9024boost our workforce. There is terrific value in learning from other9025cultures and countries in all respects, including manufacturing. As I9026spoke about at the Senate hearing on the 28th, there is a huge gap in9027skilled trades people at the mid-career level. Investing in youth is9028vital, but it does not solve this labor problem in the present, only9029the future. Allowing more skilled trades people to come work in9030shipbuilding from other parts of the world is a great solution to this9031issue.9032Question Topic: Workforce Growth9033    Question 1. If you could change just one thing at the Federal level9034to make it easier for shipyards to recruit and retain skilled workers--9035whether that's a new incentive, a funding stream, or a policy change--9036what would it be?9037    Answer. Single payer healthcare. A single payer healthcare system9038would put all employers on a level playing field. Physical health is9039absolutely essential to maintain a robust workforce, especially in9040manufacturing, and we see it as a mandatory benefit. It is repeatedly,9041statistically, proven that employee satisfaction is the key driver in9042employee retention and a robust benefits package is the highest9043requested elements of a new position. Per the Society for Human9044Resource Management 68 percent of job seekers prioritized healthcare9045benefits over anything else in 2024. It is absolutely a key factor in9046my ability to recruit at the capacity I can.9047    Just this year, our health care rates rose 39 percent putting us9048from around $600,000 to over $1,000,000 dollars annually. If this rise9049continues, as a small business, this could push us to ruin.9050                                 ______90519052   Response to Written Question Submitted by Hon. John Fetterman to9053                               Tuuli Snow9054Workforce9055    Question 1. Ms. Snow, during the hearing you spoke about the need9056to bring new people into the workforce and the parallel challenge in9057making sure the workers we already have can keep up with new9058technologies and evolving industry needs. From your perspective as a9059talent acquisition manager, how important is upskilling--continuous9060training and professional development--for retaining workers and9061keeping our shipyards competitive? And what more could be done to9062support that effort?9063    Answer. Incredibly important. Many people are driven by9064opportunities for growth and if those opportunities do not present9065themselves, employees will go somewhere else to learn them. I would9066always prefer to offer an employee the chance to learn something new if9067possible. This not only benefits them, but our business as well. The9068more multifaceted an employee, the better. We will also see a spike in9069need of continuous development as we welcome a large, new workforce9070over the next few years. This could be supported by grants for learning9071and training or government funded trades trainings.9072                                 ______90739074    Response to Written Question Submitted by Hon. Brian Schatz to9075                               Tuuli Snow9076Workforce9077    Question 1. If you could change just one policy at the Federal9078level to improve recruitment and retainment of skilled workers, what9079would it be?9080    Answer. Lowering taxes for small businesses like ours would even9081out the costs we incur in other places, like healthcare, and the rise9082in cost of material. Lowering costs across the board for small9083businesses and making more grants available is vital. Sales and use tax9084on materials and equipment that may already be affected by fluctuating9085tariffs can make business arduous. The MARAD grant we acquired this9086year has already allowed us to expand our business, opening 5-10 new9087positions with the potential for more. There is also the opportunity9088for a swing shift, which would double our available production hours.9089Allocations of funds to small shipyards make it possible to send9090employees to trainings and acquire equipment we may not otherwise be9091able to afford. Grants like these create jobs for new candidates and9092upskill current employees, adding value to their personal skill set as9093well as our business.90949095                               [all]