SPACER SPACER SPACER SPACER SPACER SPACER
MARINE LOG MAGAZINESave the dates!
SPACER SPACER SPACER SPACER SPACER SPACER
CURRENT ISSUE

OFFSHORE WIND
What size market will offshore wind farms create for the U.S. marine industry?

Huge
Quite substantial
Limited
Negligible

February 9, 2010

Jones Act offshore services segment has major economic impact

A new study, commissioned by the Offshore Marine Service Association (OMSA), indicates that U.S. flag vessels that support offshore energy facilities and the shipyards that build those vessels are responsible for about $18 billion in annual spending and more than 100,000 jobs, paying about $4.6 billion in wages.

It is the first known study that looks specifically at the economic impact of the Jones Act fleet of offshore vessels -- owned by Americans, crewed by Americans and built in America. Currently, the U.S. Government is reviewing its longstanding policy that governs when U.S. vessels must be used instead of foreign vessels in the offshore industry.

"This study confirms our belief that offshore energy activity, whether it is oil, gas, wind or hydro-power, has critically important national benefits, not only for our coastal areas but for the entire U.S. economy overall. This is perhaps more important now than ever before," said Otto Candies, III, OMSA Chairman and secretary and treasurer of marine transportation company, Otto Candies LLC.

The study, "The Economic Impact of the Shipbuilders and Vessel Operators Servicing the Offshore Exploration, Development, and Production Industry on the U.S. Economy," was conducted by Loren C. Scott & Associates.

FINDINGS

In the study, Loren C. Scott and Associates estimates four separate impacts generated by offshore vessel operators and the U.S shipbuilders that construct vessels for that market: (1) new sales for firms in the U.S., (2) new household earnings for residents in the U.S., (3) new jobs in the U.S. and (4) federal, state and local tax collections in the U.S. Our findings can be summarized as follows:

Annually, the economic activity of U.S. shipbuilders and offshore vessel operations servicing the offshore exploration, development and production industry generates substantial benefits to U.S. businesses and workers.

U.S. businesses experience about $18.1 billion in new sales annually as a result of economic activities within this segment

New business sales spawned by these specific U.S. shipbuilders and vessel operations help to generate about $4.6 billion in new household earnings annually for U.S. workers.

Approximately 103,160 jobs are supported by the economic activities of these U.S. shipbuilders and offshore vessel operators. This includes direct employment within these two industries of at least 29,000 workers. These estimates suggest a job multiplier of about 3.6---that is, for every one job created in these two sectors 2.6 other jobs are created elsewhere in the U.S. economy.

These new jobs appear to be well-paid, with average annual earnings of approximately $43,992.

Chief beneficiaries of the spillover effects generated by U.S. shipbuilders and offshore vessel operators servicing the offshore exploration, development and production industry appear to be businesses and workers in the manufacturing and transportation sectors of the nation's economy. For example:

About 52.4 percent ($9.5 billion) of new annual business sales spawned by these U.S. shipbuilders and offshore vessel operators occurs within the manufacturing and transportation sectors.

About 42.9 percent ($1.9 billion) of new household earnings generated by the multiplier effects benefits workers within these two sectors of the nation's economy.

Approximately 31.3 percent of the new jobs attributable to U.S. shipbuilding and offshore vessel operations can be found within the manufacturing and transportation sectors---13,679 and 18,587 jobs respectively.

Annually the economic activity of U.S. shipbuilders and offshore vessel operations servicing the offshore exploration, development and production industry generates the following federal and state/local tax revenues:

The study estimates that the federal government collected nearly $1.4 billion annually in taxes directly and indirectly in 2008 due to the operations of these two industries. Of this total, $385.3 is in direct taxes paid and just over $1 billion is in indirect taxes generated via the multiplier effect.

The study estimates that state and local governments received about $770.8 million annually in taxes in 2008. Of this total, $78.9 was in direct taxes paid and nearly $700 million was in indirect taxes generated via the multiplier effect.


marine log logo