Big govt regulation also at fault for LA shipyard decline

As noted recently, unwise defense policy by the Pres. Barack Obama Administration precipitated a naval contracting crisis that means Louisiana, unless unlikely events unfold, will lose thousands of jobs in shipbuilding over the next few years. But the actions of Obama to ratchet back unnecessarily naval forces, described more precisely, acted as just the straw that broke the camel’s back, with an interesting parallel to the same rationale that caused the Democrat-run federal government to allow the oil spill disaster in the Gulf of Mexico to turn into a catastrophe.

Also as recently noted, adherence to an ideology that government knows best and that puts special interests over the common good has afflicted the Obama Administration’s response to the crisis. One manifestation of this attitude was the refusal of Obama to waive the Merchant Marine (Jones) Act of 1920, which needlessly delayed cleanup assistance. This same law also played into the dynamics that put the U.S. shipbuilding industry into a delicate position where now loss of government contracts can doom shipyards like Avondale.

After World War II, with tremendous capacity and little competition, U.S. shipyards reigned supremely. But they did not change as did the times. Foreign competition heated up while domestic builders continued to kowtow to union demands, raising costs to build. Further, regulations like the Jones Act created tremendous disincentives for a domestic industry: why build domestic ships when the cost of using them in transport became so high that it is now cheaper is many instances for U.S. industries to transship from a U.S. to foreign port and then back to the U.S., or to use only foreign materials, than to ship U.S. products directly from port to port?

Even as market pressures have reduced the wage differential that the largely-unionized shipyards in the U.S. had to suffer (not without bitter fights in the past), and the U.S. isn’t the only part of the developed world to have experienced shipbuilding decline, that past has put U.S. shipyards in a noncompetitive posture too dependent upon government contracting with few commercial contracts. Ill-advised defense policy then pushes more and more of them out of business.

A welcome change in defense philosophy could turn things around, but, absent that, this reality adds another imperative for repeal of the Jones Act. The clock can’t be turned back to restore the industry or to have the Obama Administration act more expeditiously without the Jones Act to have prevented oil slick damage, but ridding us of it going forward at least would stop U.S. taxpayers from subsidizing maritime-related jobs to the tune of nearly $4 million each annually, to give the shipbuilding and carriage industries a chance to get new markets, and to reduce costs to other U.S. manufacturers. Other anti-competitive regulatory regimes must be reviewed and altered with the goal of reviving the U.S. maritime industry in mind.

It’s bad enough that the Democrat-run federal government put its boot on the vulnerable neck of Louisiana first by Obama’s inadequate response to the oil spill, then increasing the pain by his politically-motivated drilling moratorium that serves no useful purpose . Worse now, it increases the pressure still more by policies to cripple more than just the state’s offshore drilling sector. This needs to change before these policies damage the state further.