Copyright 2002 FDCHeMedia, Inc. All Rights Reserved. Federal Document Clearing House Congressional
Testimony
July 16, 2002 Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 1853 words
COMMITTEE:HOUSE ARMED SERVICES
HEADLINE:MARITIME SECURITY PROGRAM
TESTIMONY-BY: JORDAN M. TRUCHAN, PRESIDENT AND CEO
AFFILIATION: PATRIOT HOLDINGS, AMERICAN SHIP
MANAGEMENT
BODY: STATEMENT OF JORDAN
M. TRUCHAN, PRESIDENT AND CEO PATRIOT HOLDINGS, AMERICAN SHIP MANAGEMENT
BEFORE THE HOUSE ARMED SERVICES COMMITTEE SPECIAL
OVERSIGHT PANEL ON MERCHANT MARINE
JULY 16, 2002
Mr. Chairman and Members of the Panel, my name is Jordan
Truchan. I am President and CEO of Patriot Holdings, American Ship Management
(ASM) and Patriot Contract Services (PCS), all based in Walnut Creek,
California. I appear before you today to speak about the Maritime
Security Program (MSP) and the role that United States Section 2 citizens
fulfill in that program. MSP is absolutely essential to the continuing existence
of the American Merchant Marine and therefore, the national defense and security
of our nation.
American Ship Management, LLC
American Ship Management, LLC is a United States Section 2
citizen as defined by the Merchant Marine Act of 1916. It is wholly owned by
myself and my two founding partners, all of whom are US Citizens. ASM holds nine
MSP agreements with MARAD and is a member and an active participant of Voluntary
Intermodal Sealift Agreement (VISA). Our affiliate, Patriot Contract Services,
LLC is a major contractor for the US Government, holding the contract for
operation and maintenance for eleven large medium speed RO-RO's (LMSR) employed
in the USN Military Sealift Command (MSC) surge program. Additionally, PCS holds
three contracts for the operation and maintenance of a total of six ships in the
MARAD Ready Reserve Fleet (RRF). ASM is certified by the American Bureau of
Shipping as conforming to the ISO 9002, 1994 Standard for the "The Management
and Operation of Cargo Vessels" and also is certified as being in compliance
with the International Safety Management Code for the "Operation of Other Cargo
Vessels".
ASM currently manages twenty-six US Flag
commercial and US government vessels.
ASM employs over
1500 US citizen seafarers domiciled all over the United States, covering over
500 seagoing billets. In addition we have 150 shore-based positions also filled
by the maritime unions. We also employ over 50 shore based management personnel
working in offices in the states of California, Louisiana, and Virginia.
Personally I am a graduate of California Maritime Academy and have served as
Chief Engineer aboard US flag vessels. My partner is a graduate of the New York
State Maritime College and has served as Master aboard US Flag vessels. My
partner and myself have both been employed and involved in the US merchant
marine for over thirty years each.
In 1997, ASM was
formed by the three principals, all former American President Lines (APL)
executives, to be a completely independent US Citizen entity. This entity would
operate US Flag vessels enrolled in MSP, in accordance with US law. ASM
submitted applications with MARAD for nine MSP agreements to cover the nine
containerships APL had committed to the US government for participation in MSP.
Through out a 7 month period, ASM underwent intense scrutiny by MARAD to confirm
its' independent status before finally being awarded these Agreements in
November of 1997. ASM assumed operational control of the APL US Flag fleet on
November 12, 1997 concurrent with the sale of all APL stock to Singapore based
Neptune Orient Lines. In addition, on November 12, ASM affiliate PCS purchased
the MARAD RRF contracts previously held by APL with the approval of MARAD.
ASM controls these nine US Flag vessels through a bareboat
charter agreement with Wilmington Trust Company, a US Citizen Trust and is
considered the "desponent owner" under the law. As part of our responsibilities,
ASM provides officers and crew including assignment and payroll, places all
insurances for the vessels and their cargo, outfits and provisions the vessels,
maintains the vessels in a seaworthy condition at all times, ensures regulatory
and statutory compliance for the operation of the vessels, manages all hull,
machinery, personnel & indemnity insurance claims, enforces crew discipline
and compliance with collective bargaining agreements, provides emergency
response and contingency planning for the vessels operations, performs all
purchasing functions and provides and/or contracts for husbanding (agency
services) in all US ports. ASM then time charters the nine vessels to APL for
commercial operation in the US trades with Asia. ASM assumed five of these MSP
vessels under the US flag at the time of delivery and within one month "flagged
in" to the US Flag the additional four MSP enrolled vessels at minimal cost and
without service disruption.
In 1998, ASM "flagged in"
to the US Flag three additional containerships to be used by APL in US Flag
service. This exercise again was accomplished by ASM personnel at minimal cost
and with out service interruption. Two of these vessels currently remain under
the US Flag. Although these ships are not enrolled in MSP they are enrolled in
VISA.
ASM is based in Walnut Creek, California. Much of
the original shore side staff of approximately 35 were ex-APL employees made
redundant by the sale of APL to Singapore based NOL as their jobs were focused
on US Flag ship management for APL. ASM would now provide these management and
operational functions for APL through their own experienced US employees. Over
the last five years, the number of APL veterans has significantly diminished
through attrition and retirement. These positions have been filled and expanded
by qualified US citizens as the Company has grown. Today ASM and its affiliate
PCS employ over 50 highly qualified and motivated shore based staff trained in
the unique discipline of US Flag ship management. We are headquartered in Walnut
Creek, Ca, with additional branch offices in New Orleans, La and Newport News,
Va.
ASM maintains collective bargaining agreements with
six maritime unions with which it has strong, close and lasting collective
bargaining relationships. ASM is represented on all its contracted unions
Taft-Hartley Benefit Plans, actively providing leadership and oversight to these
key collective bargaining compensation components. ASM has worked aggressively
with its contracted labor unions to expand job opportunities for American
seafarers, pursuing successfully the LMSR operating contract with the Military
Sealift Command and the successor MARAD RRF contract, effectively doubling ASM
seafarer employment opportunities from November 1997 levels over a five year
period. In addition, ASM has been a driving force in developing advanced
training for American seafarers working with its contracted Unions in
implementing Standards for Training, Certification and Watch-keeping (STCW)
training to meet international regulatory requirements and US Government
Operations training to meet the requirements of the US Government ship
management contracts it has been awarded and the others ASM continues to
pursue.
As a concerned US citizen Company, ASM has
worked diligently to develop opportunities for American seafarers and recruit
new seafarers to augment and replace the aging and diminishing American seafarer
workforce. ASM participates in various industry forums and initiatives such as
the MARAD sponsored Ship Operations Cooperative Program (SOCP) and the Mariner
Recruitment and Retention initiative to address this critical issue. ASM is
especially proud of our involvement as a Founding Trustee of the Maritime
Technologies Training Program at Mar Vista High School in San Diego, California.
This innovative pilot program trains high school students as apprentice
seafarers who will be qualified to serve in skilled positions aboard US flag
vessels upon graduation. The program has been enthusiastically received by l,
the community, industry, the government and the student participants. There are
plans to expand the program to other California high schools in the near
future.
American Ship Management, MSP Present and
Future
ASM's business model is the prototype for the
current MSP Section 2 citizen operator to operate US Flag ships on behalf of
non-US citizen carriers in the US Flag trade. This business arrangement provides
the carrier with the ability to carry US Government impelled cargoes while
providing strategic sealift capacity to the US government and jobs for US
seafarers and shore based workers. It was ASM who developed and implemented the
initial model and who has expanded upon this model successfully to the benefit
of the US maritime industry, maritime labor and the US Government. ASM is
committed to its ongoing participation in the current MSP and ASM is equally
committed to working with all parties to accomplish reauthorization and
expansion of MSP. We believe that our participation in the current program and
our steady growth over the last five years provides an excellent opportunity for
us to participate in the reauthorized program providing Section 2 citizen ship
management and operation effectively and efficiently. For this new program, it
has become apparent to us over the last five years, that there is an urgent need
to attract additional and alternative vessels to the US flag in order to meet
commercial, government and military sealift requirements. ASM strongly believes
that to accomplish these goals, a reauthorized long-term program with enhanced
payment with an escalator linked to the CPI is needed and warranted.
In anticipation of an expanded and enhanced MSP post 2005,
ASM is developing business plans for additional non-US citizen owners to enter
the US Flag with alternative militarily useful vessel tonnage, such as roll on
roll off (RO-RO), float on float off (FLO FLO), multipurpose and break bulk
vessels. US citizen Section 2 ship manager/operators are ideally suited to bring
alternative and innovative US Flag business solutions from a varied clientele
under the auspices of an expanded and enhanced MSP.
As
an active VISA participant and US Government contractor ASM enjoys close working
relationships with US Transportation Command (TRANSCOM), MARAD and MSC. ASM has
participated in numerous Joint Planning Advisory Group (JPAG) exercises and all
VISA CEO meetings. Through our proactive management of our US government
contracts we are a trusted partner in our contractual relationships with the US
Government. ASM affiliate PCS performance on the LMSR contract has been rated as
"exceptional" by MSC.
Closing
Thank you for the opportunity to provide testimony before this panel on
the subject of MSP. ASM is a wholly US citizen owned Section 2 citizen company
formed for the purpose of providing US flag sealift capacity to the US
government. In this effort ASM creates jobs for American seafarers and office
workers with incremental tax revenues for the US Government. We bring new trade
opportunities to the United States and create alternative sourcing for US
Government contracting. ASM provides an industrial base for ship operation and
management in the United States. And last but most important, ASM as a United
States Section 2 Citizen Company is committed to the security and prosperity of
the United States of America and its loyal citizens.