Metal Trades Department (AFL-CIO) Sues US Coast Guard over Shipbuilding Practices

Following through on previously threats to address controversial rulings that they say violate the 80-year-old Jones Act by allowing U.S. shipbuilders to mass produce so-called “kit ships,” the Metal Trades Department (MTD) of the AFL-CIO has sued the U.S. Coast Guard on January 12th.

The suit was filed in the U.S. District Court for the Eastern District of Pennsylvania, and charges 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. According to the MTD press release, “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.” Ron Ault, MTD President said, “If these ill-considered, illogical and unacceptable regulations remain in place, America will lose its shipbuilding industry completely.”

According to the MTD suit, The MTD and PMTC appealed this ruling to the Commandant of the Coast Guard. On November 15, 2006, the Commandant denied the appeal of the MTD and PMTC and reaffirmed the decision of the NVDC Director. The Commandant’s denial constitutes final agency action under Section 704 of the APA, 5 U.S.C. § 704.

MTD asserts that both Aker and NASSCO 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. On September 19, 2006, Aker launched the first in a series of what MTD calls “10 kit ships” that it plans to lease through one of its subsidiaries.

Regarding agreements to import parts from the Korean sources, MYTD President Ron Ault said, “Aker and NASSCO got into this process willingly, but the remaining yards will be forced to follow or die,” Ault said. MTD estimates that 55,000 skilled shipbuilding workers it represents are directly imperiled and another 250,000 jobs which revolve around pipe and chain manufacturers, specialty steel mills, valve producers, and manufacturers making propulsion equipment and specialty fittings would also be affected.

Aker Philadelphia Shipyard spokesman Tom Marinucci told MarEx late Wednesday that Aker would have no comment except to say that the matter was between the Coast Guard and the MTD union. Marinucci added, “We’ve been in compliance with the law, all along.”

Formed in 1908, the Metal Trades Department is a constitutional department of the AFL-CIO. It 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.