Aker Philadelphia Shipyard and Metal Trades Union Ink New Labor Agreement

Aker Philadelphia Shipyard and the AFL-CIO’s Philadelphia Metal Trades Council have announced the ratification of a new collective bargaining agreement between the union and the shipyard. The new pact, the result of many months of difficult negotiations, will extend all the way to January of 2011. The agreement is especially important for Aker as they continue production of their product tanker series. For the union, the four-year pact is good news for its membership and continues the hope that Aker can make a go of it in Philadelphia, where others could not.

As Aker continues on with its ambitious plans to build as many as ten product tankers for the US markets, the stability of a long-term labor agreement is critical to the shipbuilding subsidiary of Aker American Shipping. Both entities are a part of the Norwegian-based Aker companies, whose assets include shipbuilding, fisheries, and other oil, gas, energy, and process industries. Aker spokesperson Tom Marinucci told MarEx on Wednesday that the labor deal “includes increases in both wages and pension contributions” for the union workers, but he declined to discuss specifics of those terms. He characterized the agreement as “a fair contract for all sides.” A MarEx telephone call made to the MTD offices was not returned.

Simmering in the background of the seemingly amicable, new labor accord is the ongoing dispute surrounding Aker Shipyard’s - and others - use of foreign, modular parts in the construction of their series of product tankers. Last month, the MTD union followed through on previous threats of legal action in the matter by suing the United States Coast Guard for allowing the practice to continue. But, Aker’s Marinucci also said, “The contract negotiations were not affected by the suit. These are separate issues.” The Metal Trades Department action is designed to “block controversial rulings that violate the 80-year-old Jones Act to allow U.S. shipbuilders to mass produce so-called kit ships”.

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.