For the uninitiated, the Jones Act is a 1920’s law that says any freight carried entirely in U.S. waters must be transported by U.S.-owned ships and crewed by U.S. citizens. Sounds good on the surface, but as with most well-intentioned government action it does not trump the law of unintended consequences, and those consequences are becoming painfully obvious.
The Act was written to protect U.S. shipping jobs against those rascally foreigners, before trucking was seen as reliable or trustworthy. If a European shipper were to cruise into a U.S. harbor and offer to carry U.S. freight at, say, a 10% discount to standard rates, the company would have a distinct competitive edge. To a U.S. shipping company, the foreign firm would appear to be “stealing” jobs (though they would see it as earning new business.) But what if you are a company that needs shipping? Then the low-cost shipping company is good news. Without the Jones Act, high-cost shippers would have to lower their rates to compete. So those that buy shipping services are penalized.
The law of unintended consequences arose in Summer 2010 when oil from a broken well head gushed into the fishing and recreation waters of the Gulf of Mexico. A modest and ill equipped armada of U.S. ships attempted to skim oil from the water’s surface but was overwhelmed by the task. At least one huge Taiwanese vessel, A Whale, designed just for such work and capable of filtering enormous volumes of oily water, was ready and waiting nearby to assist. Many other foreign vessels docked in North Sea ports had offered assistance but were rebuffed for reasons unclear although The Jones Act is often cited. President Obama eventually waived the act but only after precious days were lost.
Now we are presented with a great opportunity of building the first offshore wind farms in the Great Lakes and on the Atlantic Coast. One project scheduled for the waters near Cleveland will be a modest start of five turbines, 20 MW. But before construction begins, enormous investments are needed for support equipment, docks, barges, cranes, and special vessels that the Jones Act says must be owned and crewed by U.S. companies – all for five turbines now and the possibility of more later. Canadian companies might like to share the costs and crews for their offshore work, but the Act forbids common-sense cooperation.
Investments for the offshore work on the Atlantic Coast will be much greater, possibly reaching billions, in jack-up barges and cable-laying vessels that already exist in Europe. It would make better sense to hold costs down by leasing that equipment and experienced crews from the UK, while green U.S. crews get their sea legs. But again, the Jones Act mines that harbor.
Some lawmakers cannot acknowledge that we live in a world economy. If the Act is not modified, or better yet scrapped, the U.S. offshore wind industry may never get off the water. Competition is always healthy and that law, a tax in another form, stifles it. It is time to deep-six the Jones Act.
Filed Under: Policy
Paul Dvorak says
Thanks for your comments, pro and con.
The point of the article is that the Jones Act inhibits the expansion of the wind industry to offshore. It will require trained crews and people certified for particle tasks, not just anyone, and that may require assistance from UK companies. But if wanting to see more Americans off the unemployment line and into gainful and useful service makes me a right-wing proponent, so be it.
Paul Dvorak says
The offshore wind industry will go nowhere if the crews are not trained and right now few facilities are available stateside. The UK crews would be perfect for training US workers.
Paul Dvorak says
Gentlemen, I, Paul Dvorak, wrote the editorial. Please don’t heap criticism on Ms. Zipp.
The suggestion to modify the Act seems reasonable if it helps get the offshore wind industry going. Of course the devil is in the details. But right now, it handicaps the birth of the US offshore wind and that is why it should go (or get modified). No American worker will be harmed on the job if they are not working.
David E. Bruderly PE says
Rather than destroy jobs for Americans and alienate the US Martime and Offshore supply industry by advocating policy that will destroy the last vestiges of the US Flag merchant fleet, why not find ways to support American labor, American shipbuilding and American manufacturing? Jack-up barges and pipe and cable laying ships already exist in the US fleet; make the offshore Wind Industry more sustainable by using American equipment and labor.
James Chambers says
If offshore (foreign rascals ) companies are allowed to use our markets for their profits without taxation while protecting their own markets from us. They should not be allowed in. Our companies are operating without gov assistance and provide a living wage for our workers. We need to protect the last of the manufacturing industries and shipping industries or the US Wind Industry will not exist. It will soon be all owned by offshore corporations.
Certainly there is a global economy, but let’s not fool ourselves that our corps won’t go offshore in a minute if they can skirt tax and regulations in other countries, use low paid workers, and use our markets tax free and put our people out of work. Hopefully, Government attempts to create a level playing field to support it’s citizens and not feed them to the offshore corporations no matter what the industry is. See the “Buy America Act”, “Sherman Anti-trust Act”…
Russ Grote says
Checked out your blog links, George. While third party attempts to help with cleanup of the oil spill may have been unsuccessful, at least according to left wing bloggers citing experts with vested interests, I’m still puzzled about your assertion that Ms. Zipp and Mr. Dvorak are “wrong in general, wrong in particular and just plain wrong.”
It is true, however, that generalizing from a data sample that is too small is “just plain wrong.” The article’s premise that the Jones Act inhibits American productivity and global competitiveness is just plain right. But then self-proclaimed athiest members of the Church of Saul Alinski, have never allowed logic to dissuade them from pursuing an agenda to discount efforts to eliminate protectionist legislation that benefits only a favored special interest group.
Perhaps you’d like to explain to the Windpower Engineering and Development audience how the Jones Act helps all Americans rather than just a favored few.
Rob carrillo says
Read the act. There are protections for the workers in there as well. The act can be updated and still do what it was intended. Only corporations have anything to gain by scrapping it. It is there to extend the protection of the USA to our offshore workforce. How about you suggest to your profession to remove all legislated protection from your industry, let foreign machines and workers and corporations operate without oversight into your profession? You would be without licensing, OSHA, wadge protections, INS, unemployment insurance. Can you see yourself sitting on the bench in front of your building with a sign around your neck “Out of work, Need help, God bless”? Now imagine the sign around your neck is written in Chinese, Korean, Russian and Spanish so it can be read by the people who rushed in to get your job when the corporation you used to work decided to give the world cheaper everything.(at your expense) Do not throw the baby out with the bath water.
Andy Kruse says
No doubt Deep-Sixing the act does requre a “deeper” discussion. However, for what it’s worth, I sit on a Committee for the Secretary of Commerce that is charged with finding ways to improve America’s ability to export renewable energy products. One of our recommendations to the Secretary was to make an exclusion at least for renewable energy products. I have been on other committees in the past and have found that we were able to get most of our recommendations passed. Too early to see if we will be successful on this one. We presented our first round of recommendations three weeks ago.
Paul Dvorak says
Please keep us up to date with your progress.
Thanks for your comments.
Kathleen Zipp says
Thanks for your fine input George. However I can’t take credit for the article. That’s Mr. Dvorak. I’m Jewish.