DEMISE OF THE MERCHANT FLEET

As you read these lines, the final act in the long decline of the U.S.-flag maritime industry is being played out in Washington. It is ironic that the principal players are neither Congress, leaders of the Bush administration, seafaring unions, nor senior managers of our commercial ocean carriers.

Instead, the group orchestrating the maritime industry's demise is a band of civilian bureaucrats in the military hierarchy. The Department of Defense is well on its way to nationalizing what remains of the U.S.-flag merchant marine.The failure of the maritime industry, the administration and Congress to create a viable maritime policy has left a vacuum that allowed these empire builders to act.

The plan came to light in recent hearings by the Office of Management and Budget. It was outlined by entrenched bureaucrats of the Military Sealift Command - the arm of the Defense Department that coordinates ocean transportation.

What the Military Sealift Command plans to do is eliminate the Maritime Administration and take over the Ready Reserve Fleet. This will start the process of nationalizing our merchant marine.

Nationalization of the merchant marine by the Department of Defense? How can that be? Believe it: The government's actions and statistics tell the story.

Commercial seagoing employment has shrunk from 43,000 jobs in 1970 to 12,800 jobs today. At the same time, federal government of mariners by the Military Sealift Command is proposed to increase from the current level of 4,250 to 5,950 in 1995.

Already the largest single employer of seagoing mariners, the Military Sealift Command will absolutely dominate maritime employment when its plan takes effect. When it takes control of Ready Reserve Fleet ships from the Maritime Administration, the Military Sealift Command will add another 2,000 mariners to the federal work force.

The next stage in the demise of the U.S. merchant marine will take place when government operating subsidies are phased out in the late 1990s. Those subsidies are intended to compensate for the low wages paid to foreign seamen. At that point, U.S.-flag carriers are likely to put their ships under foreign flag.

The Defense Department and the Military Sealift Command will then claim - on the basis of national security - that military cargo cannot be entrusted to ships crewed by foreign seamen. They then will activate the Ready Reserve Fleet and start carrying military cargo.

Since the Defense Department is the largest outbound shipper of cargo, the loss to American shipping will be massive. A vast federalized merchant marine will develop, subsidized by the American taxpayer.

This de facto nationalization of the merchant marine has its roots in the Command's history. The bureaucratic empire now known as the Military Sealift Command grew over the years since World War Two until it was elevated to ''fleet status" in 1970, with a vice admiral in charge.

Manipulated by the civilian bureaucracy within the Command, the admirals were blithely led down the path of nationalization during their short tenures in charge. The bureaucrats dangled before them the promise of an ever-growing fleet and stressed that the only way to get the job done is to have the Navy do it.

The Command has proven to be very adroit in its political maneuvering. When its 65-ship passenger service was outmoded by jet aircraft, it changed its mission to include fleet auxiliary ships, oilers, and tugs.

When its 85-ship cargo fleet became outmoded by containerization and could no longer compete with the commercial merchant marine, the Command again changed the mission to encompass the operation of specialty ships, such as oceanography, hydrographic survey, cable laying and missile tracking vessels.

Faced with a requirement to put its ship operating programs up for public bidding during the Reagan administration, the Command quoted cost as if it were price, ignored its government subsidy and overlooked the unfunded federal retirement costs of its work force.

It also omitted its capital, insurance and cash flow costs. The Command was repeatedly guilty of inaccurate accounting practices when comparing its costs to those of civilian bidders.

The few resulting Military Sealift Command contracts were so unattractive to prudent businessmen that most bidders walked away in disgust. As a result, the Command's empire remained intact.

The relationship between the Command and its few contractors has been difficult, characterized by defaults, lawsuits and failures.

Once the Command takes over the Maritime Administration, the same adversarial game will begin again. Any competent civilian ship manager will abandon the program - and the Sealift Command will inherit the operation of the ships.

The policy void that is permitting the Command to nationalize the merchant marine has sealed the commercial industry's fate. Much of the commercial industry supports in principle an end to maritime subsidies. They have little fear of foreign competition in shipping - if the playing field is level.

But without government assistance in leveling that field, they will do what good business sense dictates: They will put their fleets under foreign flag, and buy future ships from foreign yards in order to remain competitive.

A careful study of the public comments of the chief executives of our U.S.-flag ocean carriers is revealing. Their apparent lack of interest, and their failure to comment on what is going on in Washington, says more than if they had reacted with a collective howl of protest.

In effect, they have struck their colors and given up the ship. Now we can sit back and watch as our commercial fleet goes foreign flag, and as government bureaucrats nationalize the merchant marine, using the military as their unknowing dupes.

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