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Marine Log

January 12, 2007

Metal Trades Department sues Coast Guard

The Metal Trades Department of the AFL-CIO has filed suit in the U.S. District Court for the Eastern District of Pennsylvania, charging that a ruling issued on May 24, 2006 and affirmed on November 15, 2006 by the Coast Guard's National Vessel Documentation Center, ignores the requirements of the Jones Act that stipulate that ships moving between U.S. ports must be "built in" the U.S.

The Metal Trades Department says that the Documentation Center's rulings effectively authorized plans by Aker Shipyards Philadelphia (APSI) and NASSCO, a division of General Dynamics, to produce a series of tankers that are assembled from thousands of parts and modules imported from Korea.

According to the Metal Trades Department, "Aker and NASSCO each entered into partnerships with two of Korea's giant shipbuilding companies -- Hyundai Mipo and Daewoo Shipbuilding, respectively. The terms of those contracts provide proprietary Korean designs for new tankers, along with stipulations that require the U.S. partners to exclusively use bow and stern assemblies, piping, winches, even entire engine rooms and crew quarters supplied by the Korean partners."

According to the lawsuit, "the preassembly and pre-outfitting of equipment modules and piping systems in foreign facilities is inconsistent with the plain language of the Coast Guard's regulation, which ... requires a vessel to be assembled entirely in the United States in order to qualify as 'United States built.' The preassembly and pre-outfitting of equipment modules and piping systems at foreign facilities is also inconsistent with the Jones Act, which was enacted specifically to protect the capability of the United States, and, by extension, United States shipyards and their employees, to produce commercial vessels, such as product tankers."

The Metal Trades has also called into question the Coast Guard's timing in issuing regulations that enabled Aker and possibly NASSCO to begin these projects ahead of the effective date of new global safety standards issued by the International Association of Classification Societies. Any ships contracted before April 1, 2006 are exempt from the new rules.

In a press release announcing its law suit, the Metal Trades Department notes that "in November, the Coast Guard Documentation Center was named in a lawsuit filed by the Shipbuilders' Council of America (SCA) and Pasha Hawaii Transport, challenging a decision to allow Matson Lines to refit three transport vessels in China at a cost of $45 million. Ironically, Aker is one of the 36 corporate members of the SCA."

The Metal Trades release says the department has "called upon lawmakers and policy officials at the local, state and federal level to investigate if Aker is in compliance with a regional compact with the Philadelphia Shipyard Development Corporation requiring Aker to provide training and shipbuilding jobs and to cultivate a network of suppliers and subcontractors in Philadelphia and surrounding regions in return for $500 million in subsidies provided when the shipyard was converted from the old Philadelphia Naval Shipyard into the hands of private investors."

Formed in 1908, the Metal Trades Department acts as an umbrella organization, negotiating collective bargaining agreements under the National Labor Relations Act in multi-union private sector shipbuilding industrial, mining and petrochemical operations throughout the U.S. The Department provides the same services to affiliate unions in federal facilities

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