...now that I'm out of day-to-day life in Philthydelphia, I've slacked off on keeping tabs on what's going on with Aker Philly's wrap-up shipbuilding program. Aker's 4-year blitz of building OSG tankers is in it's twilight, and, with nothing on the books, and the next potential customer being only potential, and 3 years away from keel-laying, it looks grim for the folks at Aker.
I'm a fan of the Jones Act, the law that requires that port-to-port calls in the US be carried preferentially on American-built and operated tonnage. I interact regularly with foreign-built and manned ships, and, while the construction of these vessels is usually superior to ours (sorry, my opinion), the manning is insanely variable- Filipinos and Indians make up the largest proportion of unlicensed crew in the world, and have a high standard of training that makes them good seafarers- other guys? Not so much, IMHO. There are a lot of North Africans and Russians that do scary stuff while I'm in eyeball range as part of my job... but for $500 a month, sometimes less, what do you expect? The absolute shit treatment that unlicensed international crew can expect to receive is not conducive to productivity. I've been fortunate enough to work with some good companies that do better for their people, and the variation of quality in the help is far less.
So, I'd rather see well-paid and well-trained people out on deck on all ships- American ships should have ultra-superior crew, considering the pay, though this is not the case. The truth is that most American unlicensed crew can make more money shoveling elephant shit for the circus.
Now, with the market being what it is, and the supply of tonnage to haul oil being sufficient to meet our needs, there's no demand whatsoever for new ship tonnage in the US. This is seen in the current rates for small- and medium-sized parcel jobs on the spot market. The economy of scale here in the US favors smaller vessels. While ships can deliver large cargo to market in bad weather faster than smaller ATB's and tank vessels, the market still favors the cheaper-to-build (and maintain, operate, crew and insure) limited-tonnage vessel for Jones Act trade.
So, in order to keep the shipbuilding talent pool local, Aker Philly, a subsidiary of the nordic superconglomerate Aker companies, is building two more ships on speculation... meaning on speculation that they'll find a buyer. This is insane on many levels, but more on that later.
Now, unless a military contractor is secretly operating under the table elbow-deep in Aker's operations department, I can't think of anyone who wants a $130 million dollar tanker for Jones Act trade. It's not like they're building homes on spec, where eventually a buyer will be found... oh, wait, yes it is. It's exactly like that, where NO ONE is doing such things anymore.
Aker, to their credit, offered up a sacrificial lamb this week, by putting an inexperienced 20-something year old kid in charge of the shipyard- said kid, of course being a scion of Aker's CEO. I was impressed by both the ruthlessness of this move and the political deck-stacking that this does for the Aker family. It's not a novel idea, putting a new captain on the titanic somewhere between the time of the iceberg and the mandatory swimming lessons- it's a good way to learn, when there's almost no chance of success- failures can be pointed at as the fault of the last administration, while any modicum of success is all your own... much like the current US President's administration.
Anyhow, because shipbuilders are in high-demand in other trades (imagine an apprenticeship where you are given an education in steelwork, electric, pipefitting, HVAC and plumbing all in one... making you a polyglot of the building trades), a closed yard creates a diaspora in the talent pool. Aker is trying to avoid that, even though there's still not enough work to get them to the next potential shipbuilding contract.
Enter the insanity. Aker isn't going to pay for this crazyness. The City of Philadelphia is. The people of Philly are paying for two ships that no one will want. In a city where poverty is the norm, two 600-foot long white elephants are being built for fun and profit...for a European family. Yes, the tradesmen will be kept working for another year... but should taxes be used to keep tradesmen working, when those tradesmen are the most desired and sought-after tradesmen available? It's not like the city is taking an ownership stake in the yard. Exactly what are they getting for their efforts. And not to belabor a point, but if someone wanted a Jones Act Tanker, there's a 90% complete twin-engine variant sitting in Mobile, AL, available for a fraction of the cost of one of these Aker ships courtesy of a bankruptcy auction... why buy a new economy car when you can get a Cadillac for 1/3 of the price or less?
Anyhow, I'm saddened and disturbed by all this, and, as someone who spent almost 2 years working around the Philly waterfront, I know that there are plenty of kids who are going to bed hungry in that city,and $200,000,000 would buy a lot of dinner.
On the other hand, let me give a pre-construction congratulations to MARAD and the Military Sealift Command, who will now be given more federal tax dollars after next year to care for these ships that no one wants. I suspect that MARAD won't exist after next year, so I'm assuming that MSC will take over for them.
So then, I guess, these aren't just Philadelphia's tankers. They're everyone's. Your tax dollars at work.