Homeland Security Helps Shipbuilder Outsource Jobs from Philadelphia

Why is the Department of Homeland Security helping a company ignore an 80-year old law that protects US shipyard workers?  

Aker-Philadelphia Shipyards Inc. (APSI), in partnership with Hyundai Mipo Shipyards (HMD) in South Korea, is assembling the first of 10 planned MT-46 Veteran Class double hull tankers which it will use in shipping goods between U.S. coastal ports.  While it is illegal under the 1920s Jones Act, these vessels will consist of thousands foreign-built parts from propellers, stern tubes, bulbous bows, deck winches, completely assembled cargo cranes, assemblies and miles of piping right down to anchor winches, crew ladders and crew quarters.

Every thing that will make up each ship is being supplied by Hyundai, though the Jones Act, passed in 1920, ensures that only ships built in the United States can qualify for coastal trade between U.S. ports.

The U.S. Coast Guard, like FEMA a part of the Homeland Security Department, gave a green light to Aker on May 24, 2006, to load up on foreign-parts. Since then Aker has off-loaded more than 300 container-loads of foreign parts and completed sub assemblies for its first ship.  

More recently, even San Diego-based NAASCO has announced a similar plan in partnership with Daewoo Shipbuilding, also of Korea and is lobbying the Department of Homeland Security to allow it to do the same thing.

Besides the Jones Act, Aker is also violating the terms of a formal agreement it made with an alliance of business, government and labor organizations that conveyed more than $500 million in subsidies to bring the shipbuilder into the old Philadelphia Naval Shipyard in 2001.  The subsidies, which included tax dollars from the federal government, the city of Philadelphia, from the states of Pennsylvania, New Jersey and Delaware, were given on the condition of a company promise to create a minimum of 600 full-time shipyard jobs and another 300 contractor jobs in Philadelphia.  This was done in the wake of the closing of the Philadelphia Shipyard by the BRAC Commission in the 1990s.

Several unions affiliated with the AFL-CIO Metal Trades Department even were coaxed into providing a billion and a half dollars worth of concessions to Aker after 7,000 workers were laid off from the Philadelphia shipyard, just to get Aker to build its ships in Philadelphia.  

The bare minimum number of jobs in this agreement that Aker must keep to avoid penalties and fined are 600, which is what the company currently maintains to stay just above the law.  Instead of building ships, those workers are just welding the completed pieces together, the completed pieces which are sent to the US from abroad where they are actually manufactured and assembled.

Even today, without any intention of coming clean on its promise of new jobs in the wake of the subsidies and concessions it received, Aker's website includes projections of as many as 6,000 new jobs in the region supposedly growing out of the subsidy deal for Aker.

Pumps, pipes, valves, hatches and other systems that are built for these ships must meet durability and performance standards that are far superior to those specified by the European Union and other governmental entities.  These new regulations were put in place for a reason, they were instituted after the Exxon Valdez disaster to ensure that one does not happen again.

Besides threatening the environment, the outsourcing of America's shipping industry threatens the National Security that the Homeland Security Department is supposed to protect.  

The American shipbuilding industry consists of a loose network of small to mid-sized firms that manufacture pipe, anchor chain, valves, pumps and all the assorted material that the Akers of the industry are intent on securing from cheaper offshore sources.

Of course, even if the Department of Homeland Security can ignore the laid off workers in Philadelphia, shouldn't it be just a little concerned about the country's ability to control its own shipping?