SNAME Keynote
Address
"The
Marine Industry's Role in the Global Economy"
Thank you Joe. I’m delighted to be here at Disney World,
home of one of the larger “navies” in the world. Before I really start, I’m going to offer you a freedom that somebody by the name of Adlai
Stevenson once offered when he was making an address, probably in a situation
similar to this where folks had just arisen from a comfortable slumber. When he came on he said, “It’s my job today
as speaker to talk. It’s your job today
as the audience to listen. If you get
finished before I do, please feel free to get up and leave.” It’s probably better to sleep in bed than in
these conference chairs, except for the students who are used to sleeping in
class on hard chairs!
The last time SNAME met at Disney World was the 1973 Spring Meeting,
which was fittingly devoted to small ships.
This year our meeting’s theme is the Marine Industry’s role in the
Global economy. There is no doubt that
our industry’s role is great, perhaps its role is even more evident after the
tragedy of September 11th.
Those terrorist attacks sent shock waves surging through the economy.
Not just that of the United States, but throughout the world. Consider that major stock market indices
plunged as much as 15% in Germany to 7% in Japan with Hong Kong, the Dow and
the CAC in Paris plunging 13, 12, and 10% respectively in the ten days
following the attacks. If anyone
doubted we have a global economy, that event should quell that doubt. We now find ourselves engaged in a war. But it is a new kind of war against an
unseen and unknown enemy. While the
complete role of merchant shipping and naval forces is still unfolding, it is
already evident that they will have an important role.
Four days from today at just about
this very time of day naval historians will mark the 187th
anniversary of the launching of a unique vessel Demologos or as it was more commonly called “Fulton the 1st”. Why do I bring this up today? Well at that time October 29, 1814, America
was at war with Great Britain, now perhaps our greatest ally. This war was waged on U.S. soil, and one of
the major threats to America was the vaunted British Navy. That Navy carried the war directly into the
harbors of our major cities. The small
U.S. navy was ill prepared to defend all our cities from this threat. Robert Fulton, an America’s genius, proposed
to build a steam powered battery designed as a catamaran with the paddlewheel
located below the main deck and between the two hulls to provide as much
passive defense as possible for the propulsion system. It was his belief that steam propulsion not
only would provide effective maneuverability, but would allow successful
attacks on the blockading Royal Navy during periods of protracted calm, when
sail powered warships were nearly helpless.
The idea was to pick off the blockaders one-by-one, by this heavily
armed steamboat. This ship was the
first steam-propelled warship. Whether
it would have lived up to its tactical promise remains unknown since on
December 24th the Treaty of Ghent was signed ending the war. It is important to note that during a series
of sea trials the ship was found to be practical and to exceed the government’s
requirements in all respects.
Besides the parallel of America’s
homeland being under attack, this concept is indicative of the way ingenuity is
brought to bear on emerging challenges and problems. Clearly our new war on terrorism will not require a steam
battery, but I would suggest there are likely to be new developments in the art
and science of warfare and quite possibly some of these will emerge from the
sea. I wonder who the Robert Fulton of
the 21st century might be?
When our president, Joe
Cuneo, invited me to be he keynote speaker I reflected on the forty-two years
I’ve spent in our business since my first days as a student at Webb
Institute. In that period I’ve had the
excitement of trying to revitalize the American Merchant Marine when Andrew
Gibson lead the Maritime Administration; I’ve had the challenge of helping to
create a six-hundred ship Navy when John Lehman was Secretary of the Navy; and
I have been a consumer and user of sailboats and small boats for recreational
purposes. In a sense I’ve had a foot in
all parts of the marine industry, and I can’t think of any thing more
interesting, challenging and rewarding.
This morning I want
to discuss our marine industry in the global economy, and I plan to touch on
several major aspects. These include commerce
and trade, naval forces, recreational boating, and education.
Turning first to commerce, I can recall when I first began working in
the profession of naval architecture, someone told me “Ships don’t move
cargo. Cargo moves ships!” I believe that is still true today. If it is true, there should be some evidence
to support that opinion. The United
Nations Conference on Trade and Development publishes an annual “Review of
Maritime Transport” and I believe their data proves the point. First the World output grew at an annual
rate of 2.4% during the last decade of the 20th century. This growth has been a factor in at least
fourteen consecutive years of expanding sea borne trade through 1999, which was
the most recent year data has been published.
That year the total trade amounted to a record high of 5.23 billion
tons, which is more than twice the tonnage being shipped in 1970. It takes a lot of ships to carry that
tonnage!
Crude oil and petroleum products
account for over 2.2 billion tons, dry bulk contributes another 1.2 billion
tons with other dry cargo accounting for 1.75 billion tons. Iron ore, coal and grain account for the
majority of the dry bulk cargoes, and more than half of the other dry cargo is
containerized - 975 million tons in 1999.
While statisticians track the tonnage moving, tonnage is not the
correct measure for shipping demand.
Ton-miles are a better yardstick.
In 1999 there were nearly 21.5 billion ton-miles of shipping performance
or demand. The world has been on a
plateau near this level for several years, but this figure, too, is more than double the demand of 1970.
Clearly the
world economy would be vastly different were it not for the maritime
industry. Simply put, the Maritime
Industry includes shipbuilders, ship operators, and all the associated supply
and support infrastructure to safely operate those ships in world
commerce. It also includes a large
number of ships and craft used for military and pleasure purposes and their
supporting industries. For naval
architects and marine engineers the size and diversity of our business means
limitless opportunities for innovation, creativity and intellectual
challenge.
Some might point to more recent bad economic news as a sign of the
future. The economic slowdown on the
Pacific Rim has had a strong adverse impact on shipping in the Pacific. Add to this the introduction of large new
containerships and the problem is further exacerbated. John Fossey, of Drewry Shipping Consultants
recently said, “There has been a marked reduction (in freight rates) as the
year has gone on. We believe that
September 11 will soften the trade even further.” How often over my career I’ve witnessed the hand wringing and
lamentations during the down times.
Clearly trade and the global economy will be volatile until we minimize
the threat of terrorism, but I believe President Bush will be successful in
leading the peace loving peoples of the world to a victory over terrorism. When that happens I believe the historical
momentum of world trade will take over, and there will be renewed opportunities
for shipping worldwide. Given the laws
of physics there is nothing on the horizon that will displace ships from being
the workhorses of global trade and hence the global economy.
Consider the various segments of the world fleet: tankers, dry bulk
carriers, containerships, liquid gas carriers, and ferries /passenger
ships. All have been increasing in
total tonnage in recent years. The rate
of growth may look small, it was only growing a 1.3% between 1998 and 1999, but
that is because over thirty million DWT tons of capacity was broken up that
year. Ship scrapping, too, can be a
lucrative business, but it is the replacement of the obsolete tonnage that
affords the opportunity to apply our skills in the most productive way.
If I may turn to how the United States shares in this global trade,
consider that:
· Ships remain the vital link our international commerce carrying over
95% of American foreign trade, the world's largest.
· Domestically, marine vessels and craft still carry a high percentage of
goods and people over the nation's 25,000 miles of coastal and inland waterways
in a marine transportation system that annually:
· Moves more than two billion tons of domestic and international freight
· Imports 3.3 billion barrels of oil
· Transports 134 million passengers by ferry
· Serves 78 million Americans in recreational boating
· Supports a commercial fishing fleet of over 110,000 vessels
· Hosts more than 5 million cruise ship passengers
Despite the competing
inroads of other transportation and communication systems employing "space
age" technology, water-borne commerce remains man's preferred and most
economical and environmentally friendly means of moving people and cargo --
and, for our Navy, in protecting our nation's critical sea-lanes of
communication and far-flung interests abroad.
Turning now to the naval segment, I submit that an essential and
exciting part of the marine industry worldwide is the design, construction and
operation of naval ships. Navies are
essential to assure freedom of the seas for commerce and trade of peace loving
nations. My personal experience has
been with the United States Navy, but our navy was a window on the world. Consider our sixth fleet alone. This is the bicentennial year of the U.S.
Navy’s forward presence. Two hundred
years ago President Thomas Jefferson sent a squadron of U.S. Navy ships to the
Mediterranean. The October issue of the
Navy League’s magazine Sea Power had
a most timely story on this event. The
four ships included the USS President, USS Essex, USS Philadelphia, and USS
Enterprise. Jefferson said, “ I sent a
small squadron of frigates into the Mediterranean with assurances to that power
of our sincere desire to remain at peace, but with orders to protect our
commerce against threatened attack.” By
the way, that attack was coming from the Barberry pirates – the terrorists of
their time. Two hundred years later the
motives may be different, but the tactics are not so changed. Terrorists continue to prey upon civilians
just trying to do their jobs and earn a living.
Describing the
heroic exploits of the small schooner USS Enterprise Jefferson said, “The
bravery exhibited by our citizens on that element will, I trust, be a testimony
to the world that it is not the want of that virtue which makes us seek their
peace.” Obviously Jefferson had a
passion for peace and an understanding of the powerful role of sea power in
securing and preserving that peace.
Two centuries
later the names sakes of these early frigates, the nuclear powered aircraft
carrier ENTERPRISE and the fast attack submarine PHILADELPHIA are deployed to
the same part of he world. Recently
their mission has changed from that of forward presence to aiding in the war on
terrorism. Typically America’s Sixth
Fleet alone is typically composed of 25 ships, 120 aircraft and 15,000 sailors
and marines serving in the Mediterranean and Black Seas. Today that fleet is considerably
larger. It is the Sixth Fleet that has
a role in Europe and Africa. Once again
the role of the marine industry in the global economy can be seen. This stabilizing influence impacts a region
responsible for 87 percent of all foreign investment flows into the United
States and 53 percent of all U.S. investments abroad. In fact, the combined value of investments and trade makes the
European Union America’s largest economic partner according to U.S. Census
Bureau statistics.
Understanding
why our Navy is so important in war and peace is vital for the American public
because those ships that provide the technical and engineering challenges that
we naval architects and marine engineers address cost lots of money. The Defense Department is today continuing
to study the efficacy of the large deck aircraft carrier, which carries a price
tag of about $5 billion dollars. I
should note that 4 of these ships are currently deployed to the Middle East
region – 33% of the active fleet of carriers.
In the United States many engineers have been engaged in designing the
fleet of tomorrow. They have been
working on:
· The DD-21 with its complex strike weaponry and advanced passive defense
capabilities;
· The T-AKE auxiliary dry cargo carrier where the Navy is trying to bring
modern logistical techniques to address an increasingly critical aspect of
naval warfare – keeping the deployed fleet supplied with everything from beans
to bullets. This at a time when the
auxiliaries in the fleet are becoming almost as old as me!
I would be
remiss if I did not mention another element of our armed forces with an
important and long standing maritime role, namely the United States Coast
Guard. The Coast Guard traces its
military roots to the August 4, 1790, establishment of the Revenue Cutter
Service by Alexander Hamilton under the Treasury Department. They have a number of important roles
focusing on Safety, Protection of Natural Resources, Mobility, Maritime
Security, and National Defense. In carrying
out these roles the Coast Guard relies on a number of air, sea, and command and
control assets. Most notable among
these are its deepwater ships. Several
years ago under the direction of then Commandant Bob Kramek the U.S. Coast
Guard recognized the limitations of its aging cutters. As a fleet they are the 40th oldest of 42 similar
fleets worldwide, and the demands on them are greater than their
capabilities. As a consequence the
Coast Guard initiated the Deepwater Capability Replacement Project.
These aging
Deepwater platforms have excessive operating and maintenance costs, lack
essential capabilities in speed, sensors, and interoperability, which limits
overall Deepwater mission effectiveness and efficiency.
The Deepwater
Project uses commercial and military technologies and innovation to develop a
completely integrated, multi-mission, and highly flexible system of deepwater
assets, at the lowest total ownership cost. The Deepwater Project is the
largest and most comprehensive re-capitalization effort in Coast Guard
history. These challenges are easily as
exciting and challenging as those facing naval ship designers. And once again there are similar
organizations around the globe contributing to international safety and
security at sea.
Yachts & Recreational
Boating
For many, yachts and small
craft are the most exciting areas of our profession. While many budding naval
architects have visions of designing an America’s Cup winner, few will. However those who have the opportunity to
work on those designs will be on the cutting edge of all the technologies that
can be brought to bear from the latest in carbon fibre development for spars,
fittings and hull construction to computational fluid dynamics, to structural
finite element analysis. The
concentration of R&D money on these programs used to make my mouth water
when I was helping to defend Navy R&D budgets.
Few outside
the recreational boating community realize what a big business this is. In 2000 over $25 billion dollars were spent
in the US alone for all new and used boats.
New boat sales peaked at 663,000 in 1995 and have been drifting lower
since with about 578,000 being delivered in 2000. While I do not have complete international statistics, there is
no doubt this too is a global part of our profession. Last year the National Marine Manufacturers Association reported
exports of over $700 million and imports of nearly $1 billion. The current economic downturn has leaders
of this industry predicting a long time before a recovery.
But perhaps one bright note is that designers and manufacturers become
more innovative and creative during an economic slowdown. After all they are in their own version of
“Survivor” with the consumer deciding who survives. Some believe that the companies that remain standing will be the
ones that invested in technology, productivity enhancements and delivered the
best products.
Finally I
should say a bit about education. Last
May Webb Institute completed work on its strategic plan for the 21st
century. In the process of developing
that plan we looked long and hard at what was happening in the industry and at
what we might expect. The effort was
performed by some of the true giants of our profession and they tried to
forecast what we may expect in the coming decades and then look at what we need
to doing at Webb in educating naval architects and marine engineers. Much of what they found applies to education
in naval architecture and marine engineering at any college or university. What do graduate naval architects and marine
engineers need to know? Some examples of what we believe their work will
require include:
· Greater sophistication and more precision in the ship design and
construction, employing a variety of state-of-the-art computerized
hydrodynamic, structural, and machinery design routines for integrated
"total ship engineering" from early concept design through the
production process to ship delivery -- all from a continually evolving uniform
data base;
· In "marine engineering" the increasing emphasis on
ultra-high-performance machinery such as, integrated electric power/propulsion
systems; and environmentally acceptable "zero" emissions systems
operating under highly prescribed waste management strictures calls for
continual tuning of traditional courses in this area;
· All should have increasing knowledge of composites and other
non-traditional materials of construction
· And finally there needs to be continued emphasis on extensive
automation and control theory to achieve minimum manning, which influences the
basics of ship design and maintenance.
These and other emerging
technologies involved in modern ship design and construction pose the
challenges for those of us in education.
Leaders in the education
community and responsible leaders in government and industry have expressed
growing concern about the ability of the United States to continue to produce
educated naval architects and marine engineers.
Last May ONR convened a
national workshop that brought together industry, key leaders of the Navy, the
national academic leaders, and professional society leaders, including our
President Joe Cuneo, to consider how serious the problem was and what might be
done about it. This meeting reaffirmed
the national need for an infrastructure to address the technological challenges
in developing advanced ships and craft.
As a result of that meeting a Marine Board study on “Options for Naval Engineering Research” has been initiated. The study group is comprised of experts with backgrounds in navy missions, industrial research and academia. Their goal is to identify options for ONR to structure naval engineering research programs to assure the nation develops the human capital to meet future national defense needs. The Navy recognizes the importance of maintaining a university infrastructure to develop students and faculty with the needed expertise. Professional societies can and should play a role in attracting young people to the profession by promoting naval architecture, marine engineering, and naval engineering to the American public and secondary schools, in particular. SNAME is well along this path with the focus on students and the student Congress planned for tomorrow. I’d encourage our senior members to visit the Congress and see the look of tomorrow. It’s also a lot of fun!
So, what have I told you
this morning? The industries and
businesses related to our profession are enormous. They will likely keep growing, in part because the laws of
physics dictate that waterborne commerce has a natural advantage over all other
transport modes. In the United States,
we need to do some work on our educational infrastructure, but the right people
are looking at how to strengthen this area.
Many papers at this meeting can help our members to gain insights into
ever-present challenges facing us today, and I encourage you to listen to them
and to visit the many exhibits we have here this week. One of the things we try to instill in our
students at Webb is a sense of life long learning – and this meeting with its
technical program and exhibit is one way for all of us to continue that
process.
While the global picture for naval architecture and marine engineering
looks promising, we must bear in mind that excellence requires commitment and
hard work. If all of us who love the sea and the challenges it provides
remember these requirements, we will meet the challenges across our profession
and achieve success.
My final word is to the students and the younger members present
today. I hope I have conveyed a small
sense of the enormous variety of opportunity that exists in the global marine
industry. There are challenges galore
for those who have the energy to engage them, and there is such a wide
diversity of work that, over a lifetime it should be easy to stay excited about
a career in our business. To me these
challenges and the variety of problems to be solved every day make the marine
industry interesting and exciting!
And on top of all this I will close with a quote from Kenneth Graham’s The Wind In The Willows. “There is
nothing – absolutely nothing – half so much worth doing as simply messing about
in boats.”
Now go do something worth doing – mess about in boats!