Comments by "yop yop" (@yopyop3241) on "The Jones Act and American Economic Development" video.

Since the US’s cheap energy is letting it get back into steel and other metals production, will the US also start getting back into ship building? Add in self-driving tech which might be more applicable to ships than to cars and trucks, and maybe we could circumvent the Jones Act restrictions without ever needing Congressional action.
4
@DianeMerriam South Korea and Japan are two of the three main players in global ship building (China is the other). Why can Korea and Japan compete while the US cannot? The US has the advantage in materials and energy, and wages in the US aren’t that much higher than in the advanced East Asian economies. Also, all three of those current major players are aging out. Someone is going to have to take over the industry, why not the US/Mexico?
1
@DianeMerriam That doesn’t answer my question though. The question was about the future. I would also point out that US auto manufacturing lost out to the Japanese, but today, Toyota’s biggest factory is in Kentucky. I wonder if we might see something similar happen with shipbuilding— giant Mitsubishi/Daewoo/etc. shipbuilding facilities popping up in the USA in the coming years. If that happened, would that would that be enough to help get around the Jones Act restrictions?
1
@DianeMerriam The vast majority of the Toyotas in the USA today were manufactured by Toyota Motors North America. It's an incorporated-in-America subsidiary of the main Toyota conglomerate based in Japan. That makes Toyota Motors North America an American company. Most of the workers in the factories in the US are Americans. The cars produced by Toyota Motors North America are legally considered to be Made In America in every way. I would imagine that you'd have a similar setup with Sumitomo Shipbuilding North America, Daewoo Shipbuilding North America, etc. In other words, ships built by Americans in incorporated-in-America companies. Those Made In America ships could be sold to a similarly incorporated-in-America Evergreen Marine North America (with the main conglomerate based in Taiwan). That takes care of the "owned by Americans" criteria. That just leaves the "crewed by Americans" criteria, but I'm pretty sure that that has not been a major hurdle, not compared to the "ships built by Americans in America" criteria. The cost of the crew compared to the volume of goods that can be carried on a modern merchant ship is pretty minimal even at US wage price points. The probably-small cost of meeting the "crewed by Americans" criteria would be further minimized via self-driving technology. And yes, I would trust ships built by Sumitomo Shipbuilding North America. Japan is a trusted ally, and in wartime, the US government would be able to use the Defense Production Act to force Sumitomo Shipbuilding North America to build ships for the US Navy, same as with any other company that is incorporated in America under American laws.
1
@DianeMerriam Makes sense to leave out China, because they impose capital controls that prevent their companies from operating subsidiaries outside of China. Prevents capital flight, but also prevents them from taking advantage of this sort of potential opportunity. Russia and North Korea aren't worth mentioning, because neither has a significant position/expertise in this area. If you're worried, you can impose specific sanctions keeping China/Russia/whoever out. Isn't F-35 manufacturing spread across more than half a dozen countries? Having an American subsidiary of a Japanese company manufacturing ships inside the continental USA is a significantly smaller national security weakness, imo. And again, we aren't talking about what the situation is at this moment. We are talking about the future. In the future, the USA is projected to have advantages in both energy and labor costs due to demographics, shale energy, renewable energy, and likely carbon taxes. In any case, I think it is far more likely that the geopolitical trends will make the Jones Act obsolete long before the US Congress will get off its giant collective derriere and fix this.
1
@DianeMerriam My point was to discuss the fact that the world is in the process of transitioning to a new normal. For the last several decades, we have lived in a world that featured tons of cheap East Asian labor, easy access to energy and mineral resources from Russia, the US as the world's biggest energy importer, and no concern for the carbon content associated with producing anything. We are in the process of transitioning to a very different set of conditions, and the result is going to be a new normal that is going to be correspondingly different. That new normal may include a return of shipbuilding to American shores. Cheap American energy has already spurred a bit of turnaround in American steel production capability. In the US from 2009 to 2017, the number of big, "integrated" steel plants (the ones that can turn iron ore into pig iron and virgin steel) fell from 13 to 9. But from 2017 to 2021, with shale oil and gas reaching maturity and driving down American energy costs to the lowest in the world, that number has rebounded somewhat from 9 to 11. And if American steel production is already becoming more and more competitive, it seems likely that American shipbuilding will also become more competitive. Who else is there to pick up the mantle? There is little doubt that the East Asians are going to have to give it up. Between their baked-in-the-cake plummeting demographic profiles over the next few years, and their dependence on Chinese coal-dependent steel production, there is little doubt that they won't be able to keep the shipbuilding industry in East Asia. Shipbuilding is going to move, the question is, where is it going to go? My bet is that it will come here to the US.
1
@DianeMerriam You seem to be caught up in the misconception that it is the existence of the Jones Act by itself that is the problem. That is incorrect. It is the combination of the Jones Act with the fact that only about 0.05% of global commercial shipbuilding is done in the USA. But my point is that that second part may be about to change. Currently about 95% of commercial shipbuilding is done in China, South Korea, or Japan. All three of those countries are aging out and are facing crippling labor shortages. All three of those countries depend on Chinese steel which is produced using coal, a state of affairs that will be increasingly untenable as countries impose carbon taxes. All three of those countries give huge subsidies to their shipbuilding industries. As they age out, they will have fewer resources to spend that way, and they will need to divert a larger and larger share of their resources to their equivalents of Social Security and Medicare. The probability of those East Asian countries being able to keep the global shipbuilding industry to themselves in the coming years is almost zero. With their baked-in-the-cake bad demographics and their lack of easily accessible natural gas, they simply won't be able to compete. The steel and shipbuilding industries are going to have to move. At least some of that is certain to come to the USA. If the USA can pick up even 10%, the Jones Act's stranglehold will be broken, even if the Jones Act remains in place.
1
@DianeMerriam Wrong again. The courts are going to continue to read the words of the Jones Act the same way. But the words of the Jones Act apply differently when the ships in question are built by foreign workers on foreign soil for a foreign company versus if they are built by American workers on American soil by an American company (that happens to be a subsidiary of a foreign company). The unions will do what they do. But a modern merchant ship generally carries around 1000x as many cargo containers as it carries crew members. Compare that with cargo transport via truck with one truck driver per container. No matter what the unions do with respect to the handful of crew member jobs on a modern cargo ship, if the number of ships available to carry cargo between American ports goes up, that will drive cargo transport costs down. (The real issue with respect to labor is going to be a shortage of American sailors. That's where self-driving tech would come in.)
1
@DianeMerriam In June, the Libra Group, a multinational company originally incorporated in London but now with its headquarters in NYC acquired an American shipyard through American subsidiaries to build Jones Act compliant ferries and equipment-carrying vessels for building wind turbines off the US coast. The owners of the Libra Group are a Greek family, some (all?) of whom now have British citizenship. Seems like the use of subsidiaries for getting around the Jones Act is a viable strategy….
1