OP-ED: Rebuilding America and Creating Jobs - A Jones Act Initiative

The maritime industry holds the key to economic recovery and job creation.

By Tony Munoz, Editor-in-Chief of the Maritime Executive Magazine and the MarEx Newsletter

It’s been a tough five years. In 2006 the U.S. economy began coming apart at the seams and started its descent into crisis. By 2008 the true scope of the crisis became clear as the stock market collapsed, credit dried up, unemployment soared, banks folded and real estate values tumbled, sending home foreclosures to historic levels. Every American was affected. The crisis over the debt ceiling and the ongoing decline in the value of the dollar have only added to our woes.

Making matters worse is the fact that government revenues are dramatically down. In fact, tax receipts are expected to drop 18 percent this year, the single largest decline since the Great Depression. Personal income taxes are down 22 percent and corporate taxes (in part due to incentives and tax breaks) are down 57 percent. The eleventh-hour congressional vote to reduce federal spending and increase the national debt ceiling not only failed to save the country’s triple-A credit rating but will have little impact on creating jobs or addressing the nation’s long-term fiscal challenges.

The #1 Issue Is Jobs

Read just about any poll taken about the state of affairs in the U.S. and overwhelmingly more than 50 percent of respondents say that job creation is the most important problem facing the nation. Close to 68 percent say Congress and the President are spending way too little time focusing on jobs. We can do something about that.

The American people voted for change, but it has been business as usual on Capitol Hill as the parties continue to lock horns while creating an atmosphere of political gridlock. Over the past decade, the laissez-faire economy of greed made Americans way too euphoric about their financial health. Today, the vast majority carries way too much debt in the form of mortgages, credit cards, medical bills and student loans, undermining the theory that consumer spending will eventually lead to economic recovery. The July unemployment rate of 9.1 percent wholly underestimates the reality that more than 20 percent of Americans are unemployed and another 20 percent are under-employed. Did you know that more than two-thirds of American households cannot come up with $2,500 in cash without selling assets?

Manufacturing Is Not the Problem

We have all heard time and again that “nothing is made in American anymore” or “American labor is way too costly so we build it overseas.” Well, the decline, demise and death of American manufacturing have been greatly exaggerated. Sure, more than 7 million manufacturing jobs have been lost since 1970, but U.S. manufacturing output now exceeds $2 trillion, which is twice the production of factories of the 1970s. Since Henry Ford created the automobile assembly line the production of cars has moved from days to just 22 hours per unit. The U.S. has plenty of factories, but it simply takes fewer employees to run them.

Despite China’s gains in manufacturing output, which surpassed Germany in 2001 and Japan in 2007 and made it #2 in the world, U.S. output in 2009 was almost 46 percent higher than China’s ($2.15 trillion vs. $1.48 trillion) and accounted for more than 20 percent of global manufacturing output. Today, a U.S. factory worker produces more than $180,000 of annual output, which is double the 1993 worker ($90K) and triple the 1970s worker ($60K).      

The Maritime Solution

Since the end of World War II the share of ocean cargoes carried by U.S. carriers has been in decline. By 1980 less than 4 percent of the U.S. exports and imports moved on U.S. vessels. Candidate Reagan promised to rebuild the U.S. merchant marine with a nine-point maritime program. But once elected, President Reagan went along with an Office of Management and Budget (OMB) report which stated that national security arguments were not strong enough to justify public assistance to the maritime industries.

Unfortunately, OMB analysis seems to always become political reality, and soon President Reagan discontinued Construction Differential subsidies, Operating Differential subsidies and, for a while, Title XI ship construction loan guarantees. Sadly, not much has changed since. The only significant investment in the U.S. maritime sector was the passage of the 1995 Maritime Security Act, which established the Maritime Security Program (MSP).

Yet the potential is enormous. The U.S. maritime infrastructure is already in place and could immediately produce millions of new jobs in shipbuilding, ship and port operations by training new mariners and relicensing former mariners attracted by new job opportunities.

America’s maritime resources are second to none. The U.S. has about 86,000 miles of coastline and 25,000 miles of inland waterways. The federal government could begin a maritime renaissance by releasing the entire $6.5 billion (by year’s end) in the Harbor Maintenance Tax Trust Fund because it’s a trust fund meant to dredge ports and inland waterways and to rehabilitate locks along the riverways.

After bailing out the auto industry with $25 billion in loans and guarantees, the government turned around and provided another $25 billion for the industry to retool its plants to compete on world markets. The experiment succeeded, and American cars and trucks are now among the best in the world. The maritime industry needs similar help. U.S. shipyards need federal support in the form of loans and guarantees for retooling purposes so they too can begin mass production of ships and compete on an equal footing against foreign yards.

Here are two more ideas: (1) Fund vessel operators with low-interest loans and tax incentives so they can build a new fleet of ships, which would create hundreds of thousands of jobs for mariners, shoreside staffs and port workers; and (2) repeal the Harbor Maintenance Tax on domestic cargoes moving through U.S. ports because it restricts the flow of commerce.

What Are We Waiting For?

Congress already has numerous studies in hand showing that the maritime industry is the safest, most environmentally compliant and best-trained mode of transportation in the world. If this Administration wants to put Americans back to work and increase revenues, all it has to do is remove a few barriers and use an infrastructure that already exists. The environmental benefits alone would pay for themselves. Waterborne transportation relieves highway congestion and reduces harmful emissions. One barge equals about 60 trucks. A typical 15-barge tow means 900 fewer trucks on the road. Which would you rather have: one 15-barge tow on America’s Marine Highway or 900 tractor-trailers on I-95?

We believe strongly in the merits of the maritime solution as a way to revive the American economy and create millions of new jobs. That’s why we’re forming a new organization called StrongShips for America and holding a series of Jones Act conferences to generate support. If you feel the same way, let me know. Then join the Maritime Executive and StrongShips for America this October 12th and 13th at the Conference Center at the Maritime Institute in Baltimore to begin a year-long campaign to make Congress and the American people aware that the U.S. maritime sector stands ready and willing to help rebuild the economy and create what America needs most – jobs. – MarEx   

Tony Munoz can be reached at [email protected]