Explanation of advantages— Science Diplomacy

Shipbuilding makes stimulus policies effective with internal and external

The U.S. shipbuilding and repairing industry is comprised of establishments that are primarily engaged in operating shipyards, which are fixed facilities with drydocks and fabrication equipment. Shipyard activities include ship construction, repair, conversion and alteration, as well as the production of prefabricated ship and barge sections and other specialized services. The industry also includes manfacturing and other facilities outside of the shipyard, which provide parts or services for shipbuilding activities within a shipyard, including routine maintenance and repair services from floating drydocks not connected with a shipyard. The purpose of this report is to measure the economic importance of the U.S. shipbuilding and repairing industry. The importance of the industry is not limited to the direct output and employment it generates (i.e., “direct impact”). Companies in the shipbuilding and repairing industry purchase inputs from other domestic industries, contributing to economic activity in those sectors (i.e., "indirect" impact). Employees spend their incomes, helping to support the local and national economies (i.e., "induced" impact). Thus, the economic importance of the U.S. shipbuilding and repairing industry includes direct, indirect, and induced effects. Put differently, the report seeks to document what happens in the shipbuilding and repairing industry and its relationships to the broader economy. It is important to note that the term “economic impacts” as used in this report reflects the association of employment, labor income, and gross domestic product (GDP) with the shipbuilding and repairing industry, but does not imply that some of this economic activity would not otherwise exist without the industry (particularly with regard to induced impacts). The MIG model, an input-output (I-O) model based on Federal government data, was used to estimate the industry's overall economic impact. I-O modeling is typically employed to analyze how a change in economic activity in one sector of the economy affects activities in other sectors of the economy. In a so-called “marginal” impact analysis, I-O model results can be viewed as showing the impact of small changes in activity in one sector (e.g., shipbuilding) on the rest of the economy before any price adjustments and before businesses, workers, and consumers adjust their activities. The ultimate economic impact of a change in activity will be less pronounced than shown in initial I-O results, particularly if induced price changes are large.

Investment in US commercial shipbuilding solves the health of the ship industry and serves as an economic stimulus

M.T. 11
(Metal Trades Department of the AFL-CIO is a trade department of the AFL-CIO. It was founded June 15, 1908, and has a membership of 5 million in 14 AFL-CIO unions., “The Way Forward--US Commercial Ship Building: A Strategic National Asset” pg online at http://www.metaltrades.org/?zone=/unionactive/view_article.cfm&HomeID=209195&page=Shipbuilding//sd)

The United States needs a fleet of modern coastal container and trailer ships and modern commercial shipyards that are up to the task. This new fleet is essential to the nation’s economic security and viability. It will be one element of a strategy to address the nation’s freight capacity requirements at a time of crisis in landside infrastructure funding. New ships will replace an aging, inefficient Jones Act container fleet at a time when strict, new environmental standards are enforced for the North American Emissions Control Area. Construction of these vessels and their deployment along America’s coastal corridors will create tens of thousands of new direct, indirect and induced jobs on the water, in the ports, and in our yards. We expect that a new fleet of American container feeder ships, servicing a vibrant US coastal marine highway, will join rail in offering competitive intermodal transportation services for domestic and import/export goods. Today, the United States is the largest economy in the world. However, America’s standing as a commercial sea power has been in decline since the mid-twentieth century. The U.S. is 97 percent reliant on foreign ships to transport its imports and exports. Ships flying the American flag in international commerce are few in number. This state of affairs has prompted congressional hearings and an awaited study by the Maritime Administration into impediments to US flag registry. Fewer still were actually built in an American shipyard and thus are Jones Act qualified to serve in the domestic coastwise trade. [1] Further, it is becoming more apparent that while US shipyards can be competitive in producing certain, smaller vessel types the United States will no longer possess the ability to build most merchant ships on a commercially viable world class scale. America has gone from the number one ship building nation in the world to ranking below many small nations and, arguably, to be one that no longer registers on any measurable scale anywhere in the world. This is true regardless of the fact that U.S. ingenuity invented most of the world’s modern ship building techniques including welding, block and series construction—and containerization, now the backbone of the oceangoing world trade. To be sure, U.S. shipyards will continue to construct military ships. Indeed, it is the stated policy of publically traded companies such as General Dynamics, Huntington Ingalls Industries (HII), and Lockheed Martin that they would rather build ships for the military, than for commercial trade. Building ships for the military is profitable—Wall Street wholeheartedly supports military shipyards because the U.S. government needs the ships for its Navy and is willing to pay top dollar for the vessels. Is it a foregone conclusion that we can no longer build commercially viable ships in the United States? Hopefully not. Indeed, we are convinced that this trend and the downward spiral of the commercial ship building industry can and must be reversed. As our Nation’s transportation infrastructure continues to crumble, gridlock worsens and there appears to be consensus that fewer government funds will be available to maintain, upgrade and expand America’s land-based transportation systems we need, more than ever, to take advantage of America’s Marine Highways. Our coastal marine corridors are the country’s natural transportation assets on which this Nation was built, but today they are also the most underutilized. How many ships do we need to develop a viable hub and spoke port network? We would need in the range of 300-500 vessels constructed in U.S. shipyards over the next 25 years in order to transform our Nation’s coastal highways from unused assets into vibrant water connectors. Today the corresponding number of coastal feeder ships servicing northern Europe and the Mediterranean is approximately 2,000. In contrast the US has zero ships and a few barges in feeder service. The challenges will be two-fold. First we must overcome the waning interest of shipyard owners to build commercial ships. Second we must immediately modernize commercial shipyards and adopt modern shipbuilding methods and techniques that are effectively and efficiently utilized worldwide. Based on our experience in the international ship construction world we firmly believe that with the proper supervision, U.S. shipyards can build commercially viable coastal container ships. The United States faces an imminent transportation infrastructure crisis and marine transportation should figure into an appropriate “National Response” that is grounded in economic reality. Shipyards are strategic assets and the use of our coastal waters to efficiently transport domestic cargo is “mission critical” to the future of America’s transportation system and economy. The U.S. Marine Highway is an important element in a viable strategy to address America’s imminent transportation crisis. America’s Marine Highways are uniquely positioned to help mitigate land-based vehicle congestion with the most environmentally sound and fuel efficient ships ever to traverse the waterways of the United States. So as a start, we must reinvigorate the U.S. commercial shipbuilding sector in order to build the required ships for our coastal corridors. This endeavor will require a sea change in thinking, short term incentives for shippers to affect the modal change, and significant, one-time capital investments to modernize our outdated commercial yards. While -challenges lie ahead, we believe America is up to the challenge.

Commercial shipbuilding is distinct from Navy ships, but the economic stimulus is the same

Meyers 10

(Nicholas Defense Legislative Fellow at House of Representatives, Naval Postgraduate School, Naval Nuclear Power School and Prototype, “An economic analysis of investment in the United States shipbuilding industry” pg online at http://calhoun.nps.edu/public/bitstream/handle/10945/5245/10Jun_Meyers.pdf?sequence=1//sd)

One possible source of an additional ship production demand of $1 billion would be government orders for U.S. Navy vessels. However, this particular model makes no distinction between military and civilian contracts, nor between Navy and commercial shipbuilding. If the private market were to demand an additional $1 billion in commercial ship construction, then the economic activity estimates would be the same as those created from Navy demand. Since the Leontief function is a linear model, output results will vary proportionally with those generated in Table 1. For instance, entering $2 billion increased output demand into the model will yield results that are double those in Table 1, while inputting $500 million will yield results that are half of those in Table 1.

Investment in commercial shipyards is necessary for cost-effective naval shipbuilding

GAO 10

(Government Accountability Office, “Guidance Needed on Navy's Use of Investment Incentives at Private Shipyards” pg online at http://www.gao.gov/assets/310/307651.html//sd)

The Department of Defense's ability to afford the long-range shipbuilding plan is of importance to both the Navy and privately owned shipyards. The Navy has repeatedly reshaped and changed this long-range shipbuilding plan, placing its goal of a 313-ship fleet in jeopardy. In May 2009,[Footnote 2] we reported on several best practices used by commercial shipbuilders to deliver ships on time and within budget that could be adopted by the Navy. Based on this work, we made several recommendations to the Secretary of Defense aimed at improving shipbuilding programs including retiring technical risk and stabilizing design at key points and moving to fixed-price contracts for the first ships built in a class. As the department works to implement some of these best practices, privately owned shipyards can also contribute to the overall affordability of ships. One way that shipyards can contribute is by making capital investments to modernize facilities and equipment to improve efficiency, which could ultimately decrease the overall cost of ships by reducing the number of labor hours needed to build each ship.

AT Navy Resilient

American naval power is at historic lows – low funding hinders resiliance

Cropsey 13, Seth Cropsey is the former U.S. Deputy Undersecretary of the Navy, having served under four Secretaries of the Navy in the Reagan and Bush Administrations. He also served as an officer in the United States Naval Reserve for nearly two decades. Now a Senior Fellow at the Hudson Institute, Cropsey is a frequent contributor to The Weekly Standard, The Wall Street Journal, The Washington Post and other publications. (“Mayday: The Decline of American Naval Supremacy”, http://www.heritage.org/events/2013/08/mayday, 8/1/2013) Kerwin

As with other powerful nations throughout history, maritime supremacy has been the key to America's rise to superpower status and the relative peace of the postwar era. Over the past two decades, however, while Washington has been preoccupied with land wars in the Middle East and targeted drone-centric operations against emerging terrorist threats, the United States Navy's combat fleet has dwindled to historic lows – the smallest since before World War I. At the same time, rival nations such as China have increased the size of their navies significantly and at an extraordinary rate. Within a matter of years or even months, China will likely have the ability to deny or substantially curtail the U.S. Navy's ability to operate in the Pacific and to project power in Asia, which could have drastic consequences for the world economy. In Mayday, Seth Cropsey argues that the precipitous decline of the United States as a great seapower, due in large part to budget cuts, will have profound consequences sooner than we might think. Cropsey tracks the modern evolution of U.S. maritime strength, where it stands now, and the likely consequences if changes are not made to both the Navy's size and shape and to the United States' strategic understanding of how to combine maritime and continental force. With the ascent of new powers not likely to slow, the best way to secure both peace and prosperity for the world may be for America to reinvest in the same naval power that made her great.

Naval power isn’t resiliant – lack of attention and budget cuts are diminishing maritime primacy

Lehman 13, Dr. Christopher M. Lehman served for ten years at senior levels in both the Executive and Legislative branches of the U.S. Government in the national security field. He earned his Ph.D. in International Security Affairs at Tufts University. He served as Special Assistant to the President for National Security Affairs, Senior Director for Legislative and Legal Affairs at the National Security Council, and as the Director of the Office of Strategic Nuclear Policy at the Department of State. (“LEHMAN: The American retreat on the seas At risk is the unquestioned dominance of the U.S. Navy”, http://www.washingtontimes.com/news/2013/jun/4/the-american-retreat-on-the-seas/, 6/4/2013) Kerwin

The United States is at a crossroads, and the American people must consider carefully an issue that has been creeping up on us for two decades. For most of the past 70 years, America enjoyed unquestioned naval global superiority, and we could be confident that the U.S. Navy could establish and sustain maritime dominance wherever and whenever needed. However, since the early 1990s, America’s Navy has been in decline with our fleet shrinking from almost 600 ships to just 283 ships by the end of 2012. Now in 2013, President Obama has announced a new defense strategy for America that threatens to accelerate the continued decline of U.S. naval power, particularly relative to a burgeoning Chinese fleet. We don’t have to look far for a cautionary tale. Two year ago, The Wall Street Journal published a front-page article entitled “Sun Setting on British Power: From Ruling the Waves to Waving Goodbye.” The article documented the path of Great Britain from “an island whose forces once dominated continents and ruled the waves to a nation with an army, navy and air force no longer capable of “full spectrum” military operations.” In the years after World War II, Great Britain’s military declined to a point where the British Army and the Royal Navy were (and remain) a shadow of what they used to be. Great Britain’s power and influence around the world waned in parallel, and the once-feared Royal Navy atrophied into what can perhaps best be described as a coastal defense force. Is the United States headed down the same path today? Like Great Britain, America is under tremendous fiscal pressure and, as in Great Britain, powerful voices are pushing for drastic cuts in defense spending — some in order to avoid drastic reductions in social spending and others in order to stem further expansion of our national debt. Great Britain’s loss of world-power status has already taken place, and the defense-spending debate there is really about how to manage further military decline. For America, however, we are not yet at the point of surrendering global naval-power status. Nevertheless, we are moving in that direction, having halved the size of our Navy over the past two decades just as international instability has surged. Today, the U.S. Navy simply doesn’t have enough surface ships, aircraft carriers and submarines to cover the regional hot spots of a volatile world. One recent sign of America’s weakened status is that the U.S. Navy had no aircraft carrier or even an Amphibious Ready Group anywhere in the Mediterranean on Sept. 11 when al Qaeda-linked terrorists attacked and firebombed the U.S. Consulate in Benghazi, Libya. Despite it being the 11th anniversary of the Sept. 11, 2001, terrorist attacks and despite multiple urgent requests for greater protection by Ambassador J. Christopher Stevens, the U.S. military had no forces in the entire eastern Mediterranean at the time of the attack. The result was that American sovereign territory was attacked and our consulate was overrun with four Americans killed, including the ambassador. The question is: Will America wake from its slumber and realize that our nation’s naval power is slipping away? We may still have the largest and most capable Navy in the world, but the important issue is whether our Navy can meet the demands of defending American interests around the world. We have a choice. We can follow the dictates of the Constitution and provide for the common defense as a first priority, or we can ignore them and see American naval power decline. It is time for an honest debate — we can step up, or we can continue to reduce the size of our Navy and see our nation’s power diminish even as other military powers, such as China, continue to grow in capability and reach. America has vital interests at stake. China’s military power is on the rise; North Korea is threatening nuclear war against the United States; and Iran is quickly achieving nuclear capability. Syria’s civil war is getting more violent and radical Islamic jihadists have spread their terrorism into Africa. America’s allies see the warning signs of America’s declining military power, and they have read about the declining readiness of America’s military forces owing to the ongoing budget cuts and sequestration. Allowing America’s military power to decline further would be a costly mistake for the United States and for much of the rest of the world as well. Over the course of history, great military powers have come and gone, but as the noted historian Colin Gray tells us no “sea power, or maritime coalition, has ever been defeated in any of the great military struggles of modern times.” The question before the American people is: Shall we willingly surrender our global leadership by allowing our military power to decline in these dangerous times? Our Navy and our military forces are in decline, and our national interests are increasingly at risk. It’s time for our president and Congress to tell the truth and to lead.

AT Econ High

Employment trends negative—requires government labor investment

Desert Sun 7/14/14

(Morris Beschloss, TDS, “Majority of Financial Officers Turn Positive on US Economy” pg online at http://www.desertsun.com/story/money/industries/morrisbeschlosseconomics/2014/07/14/majority-of-financial-officers-turn-positive-on-us-economy/12645737///sd)

According to the survey, an increasing percentage of respondents were concerned with the growing shortage of trained personnel, within their companies and business segments. However, most felt that the employment picture was slowly improving, but hampered by government regulations, as well as the lessening of “hands-on” labor on both the “shop floor and in the back office.” The impact of technological improvements in both arenas were cited as a long term “worker absorption” problem in the foreseeable future.

AT Manufacturing High

Even with general “positive” trends, manufacturing requires governmental investment to realize future growth

Moutray 7/16/14

(Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM's economic forecaster and spokesperson. “Manufacturing Production Expanded More Slowly in June” pg online at http://www.shopfloor.org/2014/07/manufacturing-production-expanded-more-slowly-in-june/31722#sthash.r2O06Tne.dpuf//sd)

In conclusion, manufacturers continued to expand output, with the sector recovering from softness earlier in the year. Yet, growth slowed in June, and we would like to see improvements coming from a broader base of the manufacturing sector. In general, manufacturers are cautiously upbeat about production in the second half of this year, but for those projections to materialize, we need to see stronger growth in the U.S. and globally. For that reason, policymakers should focus on those initiatives which will keep the economy growing moving forward.

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