CONGRESS SLASHES FUNDING IN SHIPBUILDING INITIATIVE

CONGRESS SLASHES FUNDING IN SHIPBUILDING INITIATIVE

Congress dealt a blow to U.S. shipbuilders this week when it wrapped up a defense funding bill that provides about $200 million less than shipyards had expected for loan guarantees and technology development.

The shipbuilding initiative, a major part of a three-pronged maritime reform package of tax changes and subsidies developed by House maritime leaders, originally envisioned $200 million in federal guarantees for financing ship construction and shipyard modernization, and another $100 million for research into shipyard production technologies.But House and Senate negotiators slashed those totals, providing $50 million in loan financing guarantees and about $47 million for technology research.

One shipyard source, who requested anonymity, said, "We're real disappointed. Although we appreciate whatever Congress gives us, this is a heck of a lot less than what the authorizers gave us."

The source was referring to legislative action on a separate track that authorizes defense programs. House and Senate conferees on the defense authorization bill for fiscal 1994 approved a loan guarantee program of $146 million, and $50 million in research dollars.

But the House and Senate conference committee on the defense appropriation bill, which sets actual outlays, allocated only $97 million for both programs.

John Stocker, president of the Shipbuilders Council of America, was traveling Wednesday and unavailable for comment.

The House Wednesday approved the compromise $240.6 billion defense appropriations bill for fiscal 1994. The Senate was expected to approve it and send the measure to the president.

The appropriation bill also provides a whopping $1.54 billion for the national defense sealift program to build or acquire cargo ships for supply operations during military emergencies. The $50 million in shipyard loan guarantees comes out of that total.

But the substantial chunk of the sealift money probably won't be available, said congressional sources.

That's because the money is linked to a controversy surrounding construction of an aircraft carrier. Conferees accepted the House's position that provided no funding for advance procurement of the carrier, but they agreed that if the carrier is authorized in future legislation, $1.2 billion could be transferred from the sealift account.

That future authorizing legislation is likely, said a House source. If that occurs the fiscal 1994 addition to the sealift fund would amount to $340 million, about $150 million less than originally approved by the House.

Conferees included language directing that vessels constructed or operated with sealift defense funds be crewed with U.S. merchant mariners "to the extent possible," with preference given to qualified former military personnel released from active service as a result of Defense Department downsizing.

The conference agreement also provides $1.9 billion for six C-17 transport aircraft used for military airlift operations, and $2.5 billion for defense economic conversion projects.