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    The Information Authority for the Workboat Offshore Inland Coastal Marine Markets

    arine

    MOCTOBER 2015

    www.marinelink.comNews

    Salvage & SpillResponse:

    Unresolved IssuesHamper Progress

    Maritime SecurityWorkboats:

    U.S. Yards Competein Global Markets

    Stack Emissions:Logical, Affordable Solutions

    Pollution Response:Innovative hulls & equipment

    http://www.marinelink.com/http://www.marinelink.com/
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    http://www.lincolnelectric.com/
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    MarineNews October 2015 Volume 26 Number 10CONTENTS

    INSIGHTS

    14 Matthew Paxton President, Shipbuilders Council of America (SCA)

    SALVAGE

    20 The International SalvageUnion Weighs In

    Current issues in marine salvage:the ISU perspective.

    By Leendert Muller

    FAST BOATS

    38 Riders on the StormDecking, seating and other equipment for fastboats are critical ingredients for personnel.

    By John Haynes

    PROPULSION

    42 Emissions Control Takes Center Stagefor Workboat Engines

    By Joseph Keefe

    PROPULSION

    45 A Thunderbolt of an Idea forInland OperatorsEasterns new inland towboat design matches allequipment including propulsion to the plat-form itself.

    By Joseph Keefe

    Features28 Maritime Security Vessels Keeps

    U.S. Builders BusyExport hulls are a key piece of the business model.

    By Susan Buchanan

    33 Maritime Security for the Municipal Sector Without sacrificing utility or features, Metal Shark and

    Moose produce multi-missioned platforms.

    By Joseph Keefe

    arine

    M

    News

    Salvage & SpillResponse:

    Unresolved IssuesHamper Progress

    Maritime SecurityWorkboats:

    U.S.Yards Competein GlobalMarkets

    Stack Emissions:Logical,Affordable Solutions

    Pollution Response:Innovative hulls& equipment

    ON THE COVER

    The chemical tankerMaritime

    Maisiein 2014 suffered a fire offthe Republic of Korea and quicklybecame the poster child for Placeof Refuge salvage conflicts, an is-sue near and dear to both ASAand the ISU.

    (Photo: ISU)

    Credit:MooseBoats

    October 20152 MN

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    http://www.clarionenvirosafety.com/
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    MarineNewsISSN#1087-3864 USPS#013-952

    Florida:215 NW 3rd St., Boynton Beach, FL 33435tel: (561) 732-4368; fax: (561) 732-6984

    New York:118 E. 25th St., New York, NY 10010tel: (212) 477-6700; fax: (212) 254-6271

    www.marinelink.com

    PUBLISHER

    John C. OMalley [email protected]

    Associate Publisher & Editorial DirectorGreg Trauthwein [email protected]

    EditorJoseph Keefe [email protected]: 704-661-8475

    Web EditorEric Haun [email protected]

    ContributingWritersSusan Buchanan Lawrence R. DeMarcay, IIIJoe Hudspeth Randy ONeill

    PRODUCTION

    Production & Graphics ManagerNicole Ventimiglia [email protected]

    Vice President, Sales & MarketingRob Howard [email protected]

    Advertising Sales Managers

    National Sales Manager

    Terry Breese [email protected]: 561-732-1185 Fax: 561-732-8414

    Lucia Annunziata [email protected]: 212-477-6700 Fax: 212-254-6271

    Frank Covella [email protected]: 561-732-1659 Fax: 561-732-8063

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    Dawn Trauthwein [email protected]: 631-472-2715 Fax: 631-868-3575

    Jean Vertucci [email protected]: 212-477-6700 Fax: 212-254-6271

    Managing Director, Intl. SalesPaul [email protected]: +44 1268 711560 Fax: +44 1268 711567Uwe Riemeyer [email protected]: +49 202 27169 0 Fax: +49 202 27169 20

    Sales & Event CoordinatorMichelle Howard [email protected]

    Classified Sales(212) 477-6700

    CORPORATE STAFF

    Manager, Public RelationsMark OMalley [email protected]

    Manager, Info Tech ServicesVladimir Bibik [email protected]

    CIRCULATION

    Circulation ManagerKathleen Hickey [email protected]

    TO SUBSCRIBE:Subscriptions to Marine News(12 issues per year)for one year are available for $60.00;Two years (24 issues) for $95.00.Send your check payable to:MarineNews, 118 E. 25th St., New York, NY 10010.For more information email Kathleen Hickey at:[email protected]

    POSTMASTERTime Value

    Expedite

    MarineNews ISSN#1087-3864 is published monthly, 12 times a year by Maritime Activity Reports, Inc., 118 East 25thStreet, New York, N. Y. 10160-1062. The publisher assumes no responsibility for any mispr ints or claims and actions taken byadvertisers. The publisher reserves the right to refuse any advertising. Contents of this publication either in whole or in partmay not be reproduced without the express permission of the publisher.

    POSTMASTER:Electronic Service Requested.MarineNewsis published monthly by Maritime Activity Reports Inc.

    6 Editors Note

    8 By the Numbers Towing Industry Safety

    18 OP/ED The Salvage & Wreck

    Removal MarketBy Todd Schauer

    22 FINANCE Learn a Lasting Lending Lesson

    By Richard J. Paine, Sr.

    24 LEGAL Reporting Marine Casualties

    By Jeanne Grasso, Blank Rome

    48 Tech File Elastecs Offshore Oil Spill

    Recovery System

    49 BOAT OF THE MONTH: The Gobbler

    51 Vessels

    52 People & Company News

    56 Products

    59 Classified Advertising

    64 Advertisers Index

    &Departments AnalysisMarineNews October 2015 Volume 26 Number

    4 MN October 2015

    http://www.marinelink.com/mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://www.marinelink.com/
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    SUBSCRIBESubscribe to the print or electronic edition of MarineNewsat www.marinelink.com/renewsubscr/Renew04/subscribe.htmlor e-mail Kathleen Hickey at [email protected]

    DAILY NEWS via E-MAILTwice every business day we provide breaking news, tailored to your specification, delivered FREE directly to your e-mail. To subscribe visit http://maritimetoday.com/login.aspx

    POST & SEARCH JOBSJob listings are updated daily and help match employers with qualified employees. Post a position or keep abreast of new employment opportunities at http://www.maritimejobs.com

    ADVERTISEMN offers a number of print and electronic advertising packages. To see our editorial calendar and advertising rates, visit www.marinelink.com/AdvRates/Rates.asp

    Online

    Resources

    EDITORS NOTE

    As the lines between salvage and spill response become increasingly blurred, there is no better

    time to examine the issues and emerging technologies that make both topics so fascinating

    to dissect. Theres no better way to do just that than having the Chief Executives of both

    the American Salvage Association (ASA) and its international counterpart, the International Salvage

    Union (ISU) weigh in on all things salvage. Each viewpoint comes with its own laundry list of con-

    cerns, sometimes diverging in approach and at other times; coming together as a common voice.This month, you wont get that anywhere else butMarineNews.

    Salvage and response firms both have a lot on their plates as the third quarter comes to a close.

    Thats because each has to deal with the financial challenges of maintaining a ready arsenal of multi-

    mission equipment and vessels, but also the need to keep current with technology advances, onerous

    liability questions and the all-important protection of the environment. But environmental issues

    span far more than just salvage and response. Thats because, heaven forbid, before you have to deal

    with a Lloyds Open Form, the need to limit your vessel emissions from the stack, on deck and

    below the waterline are also in play. That costs money, but maybe not as much as you might think;

    that is, if you go about it in just the right fashion. This month, we delve into all of it.

    Separately, and seemingly far from the worries of casualties, pollution and energy-induced finan-

    cial worries, some U.S. boat builders are bucking the trend by riding the need for maritime securityplatforms, all the way to the bank. And, while MarineNewsprides itself on covering all that is do-

    mestic brown water, all of the time, it is also true that there is brown water and maritime security

    worries on the other side of the pond. Domestic boat builders are happy enough to support those

    needs, with a raft of export hulls, while catering to an equally robust domestic appetite for the same

    multi-missioned, workboat hulls. Bringing a ray of sunshine on a partly cloudy day for boat build-

    ers, Susan Buchanans optimistic look at this sector of the industry begins on page 28.

    Without a crystal ball to tell you what comes next on the waterfront, you might take my assessments

    of the state-of-the-industry that follow with a grain of salt. Thats okay, too. The latest rumor from

    inside the Beltway at DHS is that the long-awaited subchapter M towboat rules could come as soon

    as February. No less important, also to come from inside the Department of Homeland Security, will

    be the next Offshore Patrol Cutter (OPC) cut. Both edicts will inject a much-needed dose of businessinto the boatbuilding sector. At a time when uncertainties fueled by the worst energy prices in more

    than six years have shipyards nervously eyeing their backlogs, both decisions will impact the domestic

    waterfront profoundly. That much I do know and you can take that literally straight to the bank.

    [email protected]

    Joseph Keefe,Editor, [email protected]

    Download our Apps

    iPhone & Android

    6 MN October 2015

    http://www.marinelink.com/renewsubscr/Renew04/subscribe.htmlhttp://www.marinelink.com/renewsubscr/Renew04/subscribe.htmlmailto:[email protected]://maritimetoday.com/login.aspxhttp://www.maritimejobs.com/http://www.marinelink.com/AdvRates/Rates.aspmailto:[email protected]:[email protected]:[email protected]:[email protected]://www.marinelink.com/AdvRates/Rates.asphttp://www.maritimejobs.com/http://maritimetoday.com/login.aspxmailto:[email protected]://www.marinelink.com/renewsubscr/Renew04/subscribe.html
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    BY THE NUMBERS

    In August, at a meeting co-chaired by the U.S. CoastGuards RDML Paul Thomas, Assistant Commandant

    for Prevention Policy, and Tom Allegretti, American Wa-terways Operators (AWO) President & CEO, the effortto reduce crew fatalities and oil spills and to prepare theindustry for the looming Subchapter M towboat rules,the USCG and AWO issued a Safety Report throughtheir National Quality Steering Committee (NQSC).The report provides key metrics on Towing IndustrySafety Statistics. For the past 15 years, the NQSC hasused three measures to track overall trends in safety andenvironmental protection. Specifically, Crew fatalitiesper 100,000 towing industry workers, Gallons of oil

    spilled from tank barges per million gallons transportedand the number of vessel casualties (overall or by incidentseverity) are outlined. Summary statistics on crew injuriesfor calendar years 2006-2014 were included.

    Crew Fatalities

    In 2014, the lowest number of fatalities (4) on recordwas reported. There were actually a total of eight deaths,and four were directly related to towing vessel operations.The other four deaths were attributed to medical con-ditions or natural causes. Three crew fatalities were theresult of crew members falling into the water. In two in-

    cidents, a crew member went missing overboard onewhile the vessel was underway and one while the ves-sel was anchored. In both incidents, the crewmen werefound some time later and their deaths were attributedto an unintentional fall overboard. While the annualnumber of fatalities for all accident types has gone downover the last five years, the number of fatalities due tofalls overboard has remained nearly constant. The crewfatality rate for 2013 was eight, and the projected crewfatality rate for 2014 is four. The crew fatality rate is cal-culated using the Mercer Model, which was developed

    with AWO funded research. This crew fatality rate canbe used in comparisons with other industries. In 2013,41% of the fatal occupational injuries were the result oftransportation incidents. The worker fatality rate for thetransportation sector was 14.4, with 59% of the trans-portation fatalities related to roadway incidents.

    Oil Spill Volumes

    According to Coast Guard records, 200,363 gallons of

    oil was spilled as a result of 85 tank barge pollution in-cidents in 2014. The largest oil spill of 168,000 gallons

    (84% of the volume spilled) was the result of a collisionbetween a freighter and a tank barge being pushed in thevicinity of Texas City, TX. Absent this event, there wouldhave been only 32,367 gallons of oil spilled, similar to2012. The second largest spill of 30,240 gallons (15%of the total volume spilled) was the result of a collisionbetween 20 dry cargo barges and two tank barges beingpushed on the Lower Mississippi River. These two spillsaccounted for 99% of the total volume of oil spilled fromtank barges for 2014.Based on the ACOE data, the oilspill rate for 2014 is projected to be approximately one

    gallon of oil spilled per 373,000 gallons transported, or2.68 gallons of oil spilled per million gallons transported.The tank barge oil spill rate is calculated using a denomi-nator from the annual U.S. Army Corps of Engineers(ACOE) publication Waterborne Commerce of theUnited States. The amount of oil transported by bargein 2013 increased by 5.7 billion gallons. This representsa 7.6% increase over 2012. While there has been an in-crease (+7.6 %) in the amount of oil transported by bargefrom 2012 to 2013 and the projected oil spill rate for2014 (2.68) is a significant increase given the last fiveyears of data, an oil spill rate of 2.68 is still very low given

    the volumes transported.

    Vessel Incidents

    Towing vessel incidents include all reportable marine ca-sualties that involved any towing vessel or barge. Each in-cident is counted only once, regardless of the number ofvessels involved. In 2014, 89% of towing vessel casualties

    were of the low severity type. Medium and high severityincidents represented 4% and 7% of all incidents, respec-tively. There was a slight decrease in all incidents, as wellas medium and high severity incidents between 2013 and

    2014. 32% of medium & high severity incidents beganwith an allision. Material failure was the first event in20% of marine casualties. According to USCG protocols,the First Event or Initiating Event is the first event ina sequence of events leading up to the casualty.

    Crew Member Injuries

    In 2005, the Coast Guard began documenting injuryseverity with each personnel casualty investigation. In

    Towing Industry Safety AWO & USCG Outline the Facts, by the numbers

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    BY THE NUMBERS

    2014, there were 133 injuries to crew members wherethe vessel class or vessel service was either towingvessel or barge, of which 67% of injuries were classi-fied as minor or moderate. In 2013, 68% of the injuries

    were classified as minor or moderate. In comparing seri-ous, severe and critical injuries, there was an increase in

    these injuries between 2013 and 2014. Injury data mayalso be grouped by type of accident. Four accident typesappear to account for most of the higher severity inju-ries, namely (1.)falling onto a surface, (2.) Line handling/caught in lines, (3.) being struck by moving object, and(4.)those crushed between objects.

    October 201510 MN

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    https://www.worldenergyreports.com/mailto:[email protected]://www.worldenergyreports.com/
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    BY THE NUMBERS

    Access the USCG/AWO report at the following link:http://www.americanwaterways.com/sites/default/files/US-CG-AWO%20Safety%20Report%202015%20rev.1.pdf

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    2015 Editorial Calendar

    ISSUE EDITORIAL BONUS DISTRIBUTIO

    JANUARY

    Ad Close: Dec 12

    Passenger Vessels & FerriesMarket: Training & Education

    Technical: Arctic / Cold Weather Operations

    Product: Winches, Ropes & Cranes

    PVA/Maritrends

    Jan. 31 - Feb 3, Long Beach, CA

    REGIONAL FOCUS: West Coast

    FEBRUARY

    Ad Close:Jan 15

    MARCH

    Ad Close:Feb 14

    APRIL

    Ad Close:March 14

    MAY

    Ad Close:April 14

    Fleet OptimizationMarket: Management Software

    Technical: SATCOM for Workboats

    Product: Water Treatment & Technology

    Shipyard Report: Construction & RepairMarket: Push Boats & BargesTechnical: Marine Coatings/Corrosion Control

    Offshore Annual

    Technical: Safety & Prevention

    Product: Oil Pollution: Prevention & Response

    Dredging & Marine ConstructionMarket: U.S. Coast Guard

    Technical: Naval Architecture

    Product: Fire & Safety Equipment

    ASNE Day

    CMA Shipping 2015

    March 23 - 25, Stamford, CT

    REGIONAL FOCUS: US East Coast

    Sea-Air-Space

    JUNE

    Ad Close:May 14

    JULY

    Ad Close:June 15

    AUGUST

    Ad Close:July 15

    SEPTEMBER

    Ad Close:Aug 15

    OCTOBER

    Ad Close:Sept 15

    NOVEMBER

    Ad Close:Oct 16

    DECEMBER

    Ad Close:Nov 15

    Combat & Patrol Craft AnnualTechnical: Shortsea Shipping / Bulk Transport

    Technical: Lubricants, Fuels & Additives

    Product: Inland Boat Builders

    Propulsion TechnologyMarket: ATBs Expanding Roles & Types

    Technical: Deck Machinery

    Product: Safety & Prevention

    MN 100 Market LeadersMarket: Workboat Boatbuilding & Repair

    Technical: Marine Operators

    Product: E-Solutions & Technology

    Salvage & Spill ResponseMarket: Maritime Security Workboats

    Technical: Emissions Control/Management

    Product: Deck Machinery/Cargo Equipment

    Inland WaterwaysMarket: Navigation, E-Solutions & Software

    Technical: Training/Regulatory Compliance

    Product: Cordage, Wire Ropes & Rigging

    Innovative Products & Boats of 2015Market: Fire, Patrol & Escort Craft

    Technical: Onboard / Wireless CommsProduct: CAD/CAM Software

    Workboat Annual

    Product: Marine Propulsion

    Inland Marine ExpoJune 15 - 17, St. Louis, MO

    MACC

    SeaworkJune 16- - 18, Southampton, UK

    REGIONAL FOCUS: Inland Rivers

    ShippingInsight

    Stamford, CT

    REGIONAL FOCUS: Great Lakes

    SNAMENov. 4 - 6, Providence, RI

    CleanGulfNov. 10 - 12, New Orleans, LA

    International Workboat Show

    Dec. 2 - 4, New Orleans, LA

    REGIONAL FOCUS: Gulf Coast

    OTC Houston

    * The publisher reserves the right to alter this calendar. All f

    are subject to change in light of industry trends and develop

    Marine News

    25thAnniversary Edition

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    Matthew Paxton is President of the ShipbuildersCouncil of America (SCA), and a partner at thelaw firm of Adams and Reese. SCA is the national

    trade association representing 41 companies that own and

    operate more than 120 shipyard facilities on all three U.S.coasts, the Great Lakes, inland waterways system, Alaskaand Hawaii. SCA also represents 97 partner members thatprovide goods and services to the shipyard industry. Pax-ton, who has been practicing law since 2001, focuses hispractice on maritime law and policy, fisheries law, naturalresources development, and environmental policy issues.In addition to the SCA presidency in which Paxton works

    with member CEOs to develop and implement the orga-nizations policy goals through legislation in Congress andadvocacy before the Executive branch, he also serves as the

    federal lobbyist for the Coastal Conservation Association,the nations largest marine conservation group dedicatedto promoting the availability of coastal resources for thebenefit of the general public. Paxton earned his J.D., in2001, from Willamette University College of Law, and hereceived his B.A., in 1997, in political science from theUniversity of Washington. Listen in as he weighs in onall things shipbuilding especially where it impacts ourdomestic, Jones Act audience.

    Describe the state of U.S. shipbuilding today. Give usa SITREP, if you will.

    Overall the state of U.S. shipbuilding and ship repair in-dustry is strong. Commercial markets vary, however. Yards

    building and repairing for the offshore oil and gas marketsare feeling the impacts of the declining price of oil in the

    world market. Yet other markets continue to build; largevessel construction for vessels moving oil product as well asthe recapitalization of the non-contiguous container fleets,are delivering vessels. The movement of energy in particularhas inspired investment in cutting edge, environmentallyfriendly vessels that are leading the world in innovation andtechnology. On the military side, the effects of sequestra-tion continue to be a challenge, but SCA is working dili-gently to protect the industry from potential future cuts in

    defense spending. The safety and security of our nationand those who risk their lives to protect our homeland isour upmost priority. As national security threats continueto arise globally, we need to ensure that our men and wom-en in uniform have access to the equipment they need todo their jobs safely and effectively. Sen. John McCain andCongressman Mac Thornberry co-chairman of the Sen-ate and House Armed Services Committees memorializedthis sentiment recently in the Wall Street Journal writing,

    INSIGHTS

    Matthew Paxton

    President,Shipbuilders Council of

    America (SCA)

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    Continuing to slash defense invitesgreater danger to national security

    while shamefully asking the countrysmilitary men and women to do their

    jobs with shrinking resources.

    Two organizations from one ithas been more than 15 years:The consolidation of NSA and SCAbrought together the most suc-cessful and innovative shipyards inthe U.S. under one national tradeassociation. Boysie Bollinger, atthe time said, There should be noconfusion, SCA is now the voice ofthe small and mid-sized shipyardindustry in the U.S. that servesthe commercial and governmen-tal marketplace. How do you bal-ance the concerns of both largeand small yards under one roof?

    SCA represents the entire ship-building and ship repair industry large and small shipyards, commercialand government construction, repairand new construction. In fact, manyyards are diversified, falling into sev-eral categories. SCA supports buildingmore ships and growing the shipyard

    industrial base both are paramountto our nations economic and nationalsecurity. At a time when the industryis facing attacks on the Jones Act andincreased uncertainty over the federalbudget, it is more important thanever that the industry stand together.

    Another benefit the association offersto all shipyards, regardless of productline or size, is the important regula-tory work the association performs.This includes tracking and engagingthe rulemaking process, specifically,EPA and OSHA rule promulgation,to ensure the industrys collectivevoice is heard.

    Beyond big and large the needsand concerns of dedicated shiprepair facilities diverge with thatof those yards primarily or purely

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    INSIGHTS

    involved in new build activities. And, where does SCAget involved to further the agenda of the ship repairindustry?

    While some of the trade skills are common, the processby which one maintains and modernizes a ship is com-pletely different than the process to build it. Repair requires

    taking a ship apart and putting it back together. Gettingequipment off a completed ship is often more difficultthan installing it in a module that ultimately becomes partof the ship. Just as SCA supports the shipbuilding accountsof the Navy and Coast Guard without advocating for in-dividual programs, SCA supports the ship depot mainte-nance and various modernization accounts. In addition,as mentioned earlier, several of our members are buildingand repairing vessels, either commercially and/or for themilitary, and in some instances, in all of these categories.So, ship repair is equally as important as shipbuilding for

    the SCA and we advocate for the strength and health ofboth segments of the shipyard industrial base.

    The most recent attack on the Jones Act from SenatorMcCain was particularly troubling in that it reachedthe stage of a bill rider. Industry and all sector stake-holders responded strongly. But, whats the status ofthe Jones Act today and how safe is its position, really?

    The Jones Act supports a domestic fleet of 40,000commercial vessels, nearly 500,000 American jobs, androughly $100 billion in annual revenue to the economy.In addition to the tremendous impact our industry has

    on the U.S. economy, we play a critical role in our na-tions national security. To outsource our fleet the eyesand ears of our waterfront, waterways and ports wouldbe to outsource our national security, something that ournation cannot afford to do in these trying times abroad, in

    which the threats to our country and our allies continuesto grow each and every day. Thats why the Jones Act hasbroad bipartisan support in both chambers in congress, as

    well as the backing from every modern day U.S. president.Maintaining a strong commercial shipbuilding and shiprepair base under the Jones Act, is also critical for Navyand Coast Guard shipbuilding. Without that strong com-mercial shipyard industry, there would be far less suppliercompanies, less heavy machinery capability, less Naval ar-chitects, and so on, and that would fundamentally impactthe cost of Navy and Coast Guard ships, as well as, reduceseverely the available pool of a skilled workforce that canbuild and repair the most advanced and complex Navy andCoast Guard in the world. This is why there has alwaysbeen steadfast support for the Jones Act from the Navy.

    When the commandant for the Coast Guard, Adm. PaulZukunft, warns that any changes to the Jones Act wouldput our entire U.S. fleet in jeopardy, I think its prudentfor all of us, including Sen. McCain, to listen.

    As President of the Shipbuilders Council of America

    (SCA), what is your primary advocacy today in termsof shipyard issues?

    As a shipbuilding and repair industry, we touch all 50states and 435 Congressional districts with the nearly500,000 American jobs we create. For every direct mari-time job we create, five more are generated. Its those hard-

    working men and women our industry provides jobs to,as well as the substantial investments the shipbuilding andrepair companies have made to grow our fleet to reach themarket demands of the next century, that guide the work ofSCA. To that end, its imperative that we work to maintain

    the integrity of the Jones Act, which serves as a strong back-bone for our nations economic and national security. TheJones Act provides certainty for the jobs our industry cre-ates, as well as the strength of our Navy fleet. But in orderto provide that stability, we need stable funding for govern-ment ship construction and repair. While we understandthe driving forces behind funding restrictions like thoseproposed in sequestration, we cannot and should not do iton the backs of our armed forces. Time and again, the lead-ers of all branches of the military Navy, Air Force, Army,Marine Corps and Coast Guard have advised that drasticspending cuts to our defense programs not only put lives at

    risk but also impede on their ability to execute the NationalMilitary Strategy. As our equipment provides the tools thatour military men and women need, we will continue ourfight to ensure that our military has the proper funding itneeds to keep those in harms way as safe as they can be.

    What would you tell those who may say that U.S. yardsexist only because they are also protected?

    To say that U.S. yards exist because they are protectedis completely false. In fact, quite the opposite is true. U.S.shipyards dont receive one dollar in the way of subsidies

    or preferential treatment as many other foreign shipyardsdo. This fact is in stark comparison to the way shipyardsin places like China and Korea are treated. In some cases,the entire shipbuilding industry in countries like Japan aresupported and controlled at the highest levels of govern-ment. I will share this one concrete example with you: In

    January, Chinas COSCO group received a $1.75Bn finan-cial agreement with Export-Import Bank of China (ChinaExim Bank) for its new shipbuilding program. The loan

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    will be used to fund the construction of 53 new ships atChinese shipyards, replacing over 100 ships scrapped byCOSCO within the past two years, according to the agree-ment. Since its foundation in 1994, China Exim has fund-ed 9,637 ships with a total contract value of $197.7Bn.That is what U.S. shipyards are up against.

    What one thing would propel U.S. shipbuilding to anew high, even from the heady levels and backlogsthat we have seen recently?

    Certain markets are strong right now, but you are cor-rect to think that the industry is concerned with the future.Some opportunities on the horizon include opening newareas of the Exclusive Economic Zone (EEZ) to offshoreoil and gas exploration. Congress is currently consideringopening portions of the Atlantic coast, east Gulf coast andthe Arctic. Jones Act vessels would support those activities,

    as the fruits of those activities would directly and positivelyimpact U.S. shipbuilders and repairers. Farther out on thehorizon, but definitely coming, is offshore wind. Plaguedby regulatory hurdles and complexities, we do expect thefirst farms to come online in the coming years. In addi-tion, the non-contiguous fleets will still have needs to re-capitalize long-term and we will service that market. Onthe government side, again, I would return to the themeof predictability and stability surrounding the budget andprocurement processes. Those government programs inseries production, such as the Navys Virginia-class subma-

    rine, the Coast Guards Fast Response Cutter, allow theshipyards to take advantage of economic order quantities,plan hires, train workers for the right positions, and pursueoverall efficient business practices. We need these program-matic and budgetary assurances Congress can provide tofurther future investments in our Navy and Coast Guard.

    What are Shipyards excelling at in todays economy,as well as preparing for the future markets?

    U.S. shipyards are building the most complex and so-phisticated Navy and Coast Guard vessels in the world.In addition, we continue to deliver approximately 1,300commercial vessels each year, as well as innovate to become

    world leaders in building vessels powered by LNG. This isa very exciting time in that regard. Additionally, shipyardsare diversifying product lines, investing in new technolo-gies, and partnering with foreign engineering and ship-

    yard firms. All of this is evidence that the U.S. shipyardindustry is positioning itself well to weather the peaks andvalleys inherent to the business. Shipyards participating ingovernment programs are always incorporating the latestresearch into ship procurement and making generationalleaps in capabilities. The ships that enter our naval fleet areunrivaled in the world. And in todays economy, Americasshipyards keep these assets performing by repairing, over-hauling, converting, and modernizing ships and subma-rines in order to maximize their service lives and providethe greatest return on investment.

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    The global salvagebusiness continuesto be very dynamic

    with emerging trendsand significant movesmade by major salvors.

    While not as heavilyaffected by primary

    economic factors suchas the offshore markets connectivityto oil prices, the global market for sal-vage and wreck removal continues toevolve rapidly and the U.S. influenceon the market plays an important role.There are many market pressures on

    salvage companies beyond a businessmodel that are inherently risky; thesemarket forces will continue to shapethe industry with interesting results.

    The average cost and complexity ofsalvage and wreck removal cases hasincreased dramatically for a variety ofreasons: mega ships (which can be in-

    credibly challenging to salvage) are be-ing placed into service at an alarmingrate, there is ever-increasing regulatoryoversight around the globe for salvageand wreck projects, environmental cri-teria and scrutiny for performing sal-vage work continues to tighten, and the

    number of stakeholders with influenceduring salvage cases continues to grow.

    The Costa Concordia project is agood example of the many factors thatcan lead to an expensive end result. Inthe United States, a visit to a commandcenter for a large emergency salvageproject highlights the complexities and

    sheer number of stakeholders. It is actu-ally common to have more stakehold-ers (personnel) in the command centeroverseeing the project than those actu-ally out responding to the incident.

    On the emergency response side,there is a trend of decreasing LloydsOpen Form cases despite a growingnumber of ships worldwide. This factis the source of anxiety among manytraditional salvage firms. The reduc-

    tion in LOFs is especially apparent inthe U.S. Pre-contracting of salvors andthe obligation for salvors to respondhas softened the leverage of the salvorfor negotiating a traditional LOF con-tract at the time of the casualty. Own-ers and underwriters are also seekingresponse partners on a worldwide ba-sis, and as a result of this preferred re-sponder arrangement, the LOF con-tract is not always viewed as favorablyby many owners/underwriters.

    Also in the United States, the 2014implementation of the non-tank ves-sel response plan (VRP) regulationsrequired operators of all tank and non-tank vessels over 400 gross tons in U.S.

    waters to comply with the requirementsof OPA 90, including the recently en-acted Salvage and Marine Firefighting(SMFF) regulations. These SMFF reg-

    OP/ED

    The Salvage &Wreck Removal Market:Current Trends and the American PerspectiveBy Todd Schauer

    Schauer

    18 MN October 2015

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    ulations are the most prescriptive and stringent of their kindin the world and while only applicable in the United States,the regulations have reaching international implications.

    Preparation for implementation of the regulations de-manded significant investments by core providers in per-sonnel and equipment and the recurring maintenance

    costs for the required response posture are substantial. Ad-ditionally, the stakes are raised for primary providers froma responsibility standpoint; the core providers have a con-tractual obligation to respond to clients emergencies.

    Interestingly, the implementation of the SMFF regula-tions attracted global salvage players to the U.S. market thatpreviously had little to no presence. Given the significantinvestments made and the increased level of commitment,many believed that there would be substantial returns in theform of annual retainer fees charged to vessel owners. Ironi-cally, the pressure to sign up SMFF clients along with theadditional players in the game resulted in a price war that

    virtually eliminated the retainer fees. The salvors are cur-rently subsidizing the U.S. response posture! Ship ownersand taxpayers should be pleased by the unexpected result.

    The US response market is clearly important to the worldmarket and service providers recognize this. The emergingtrend is for vessel owners and operators to contract withresponse partners on a global basis, very much like the U.S.SMFF model with designated responders and pre-arrangedcontracts. In order to have competitive access to this emerg-ing global market, a provider must be active in the U.S.market where most major shipping companies operate.

    Market pressures have prompted both consolidation anddiversification among the salvors. Svitzer Salvage and TitanSalvage have merged to form Ardent. Alaska-based MagoneMarine has merged with Resolve Marine Group. Most suc-cessful salvage companies have diversified or have integrated

    with larger groups that offer other services including tow-age, spill response, training, diving, dredging, or marineconstruction. These trends are expected to continue as com-panies strive to achieve sustainable business models whilemaintaining increasingly expensive response capabilities.

    Despite the market pressures, there are bright spots. As thebar for U.S. response capability has been raised, many coreproviders have leveraged this increased capability and profileto achieve direct success internationally. For example, Amer-ican salvors are routinely securing contracts for the largestsalvage and wreck removal contracts around the world.

    The American Salvage Association (ASA) remains acommon voice for the American salvage industry. The

    ASA has gained tremendous insight throughout the entiredevelopment and implementation process of the SMFFregulations, and has also earned credibility and respect

    among all stakeholders including the U.S. Coast Guard.The ASA is in a unique position to expand its horizons andprovide guidance and insight on these processes in othercountries with developing salvage response models. Forexample, recent activities of the ASA have included jointtraining sessions with the Panama Canal Authority and the

    Canadian Coast Guard. The American Salvage Associa-tion stands ready to share their guidance and insight on aninternational level. The simplest way to access that knowl-edge is as an active member of the ASA.

    Todd Schauer is Director ofOperations, Resolve MarineGroup and President of the

    American Salvage Association.He graduated from the U.S. Coast Guard Academy with adegree in Naval Architecture. His experience in the CoastGuard included shipboard engineering, marine safety,

    advanced engineering and emergency response. He servedfor 5 years on the USCG Salvage Emergency ResponseTeam (SERT) including acting as Team Leader.

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    There have undoubtedly been greatimprovements in ship and operationalsafety in the past decades. SOLAS, theinternational Convention for the Safe-ty of Life at Sea, has been in force formore than thirty years and has playeda large part reducing the incidence ofmarine casualty. But accidents and inci-dents cannot be entirely eradicated andthe potential for marine casualty and

    pollution remains present in all territories. Indeed, every

    few years there is an iconic casualty that seems to capturethe public imagination and that of politicians.

    While there remains the possibility of casualty, there isneed for professional, experienced, well-equipped marinesalvors. It is a fact that in most jurisdictions it is only thecommercial salvors that have the wherewithal to responseto maritime emergencies. The marine salvage industry, likeall sectors, faces its special challenges and issues, some reg-ulatory, some practical and some commercial.

    SALVAGE: LOCAL& GLOBAL

    The way in which coastal states handle maritime emer-gencies varies. But one common theme has emerged inthe past two decades. It is a zero-tolerance attitude to anyenvironmental impact from shipping and shipping-relatedaccidents. In many territories today, the loss of a just a fewgallons of a potential pollutant is a serious matter. In theUnited States, the Exxon Valdez disaster in 1989 led togreat changes, the final impact of which on the operationof tank and non-tank vessels in the U.S. has only been feltin the last two years. No one connected with shipping canbe unaware of the Oil Pollution Act 1990 OPA 90 signed into law by President George Bush in the aftermath

    of the Exxon Valdez spill.Salvage is governed by the 1989 Salvage Convention

    and for more than a century, all around the world emer-gency response to a casualty was conducted most com-monly under the provisions of the Lloyds Open Form(LOF) salvage contract. A simple contract which enablesthe owner and insurers of a casualty vessel to engage sal-vors rapidly to conduct the operation without the need toagree terms up front and on the basis that the salvor will

    only be rewarded if successful. It is the so-called, no cure,no pay principle. After the job is successfully concluded,the salvor is paid based on the value of the property savedand taking account of the circumstances. If the salvor andowner cannot agree a fair reward, the contract allows for anarbitration process. 75 percent of LOF contracts are settled

    without the need for arbitration.

    LOF: PAST, PRESENT ANDFUTURE

    LOF is used less often today than in the past but theInternational Salvage Union (ISU) the global trade as-

    sociation for marine salvors firmly believes it is the bestcontract for emergency response situations.

    In the U.S., however, LOF is not used as much as inother places. It is partly because of the requirements ofOPA 90 which mean that anyone operating vessels of allclasses in US waters must have a pre-prepared Vessel Re-sponse Plan. The plan, which must be approved by theUS Coast Guard, requires the owners or their agents tonominate a Qualified Individual to coordinate response toan emergency. They must also have in place an agreement

    with a capable and properly equipped contractor able toprovide the required Salvage and Marine Firefighting Ser-vices (SMFF) in specific geographic areas if there is a needto respond to an emergency and undertake pollution re-sponse should there be an incident.

    In some US response arrangements elements of the LOFcontract might be used as a component of the contractingstructure. But a time and materials basis is most com-mon.

    ISU suggests that in all locations even in the OPA-90environment LOF is still the most appropriate contractfor emergency response. It is well suited to high risk, highvalue jobs and use of its SCOPIC clause means that it is

    also suitable for low value cases. SCOPIC is the SpecialCompensation P&I Club Clause. It was introduced to en-sure that salvors were still prepared to intervene in cases

    where the values might otherwise be too low to temptthem or the chance of a successful outcome is uncertain.SCOPIC does not provide a traditional salvage award butcompensates the contractor for their efforts according to aschedule of prices for use of their personnel and equipment

    which is agreed regularly with the insurance industry.

    SALVAGECOLUMN

    The International Salvage Union Weighs InCurrent issues in marine salvage: the ISU perspective.By Leendert Muller

    Muller

    October 201520 MN

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    ACROSSTHEPOND

    Internationally, there is much variance of approach to thecommand and control of shipping emergencies. Salvors, for

    their part, want clarity of accountability and decision makingwith a spirit of cooperation between all parties and no politi-cal interference in operational decisions. A model supportedby the ISU is that of the UK under which the Secretary ofState for Transport nominates a representative to make deci-sions about marine casualty interventions and wreck remov-al requirements without political influence. The so-calledSOSREP is powerful and in practice the system has worked

    well in handling numerous high-profile casualties.In the U.S., the role of the U.S. Coast Guard Captain

    of the Port, linked to the requirements of OPA 90, alsoworks well. That is not the case in many coastal states. It isa problem exemplified by the very current issue of Placesof Refuge. A casualty vessel will often need to be broughtto a Place of Refuge where its condition can be stabilizedby, for example, carrying out emergency repairs or lighten-ing her cargo. However, with all casualties there is the pos-sibility of a spill of a pollutant and many coastal states areunwilling to allow a casualty to come to a Place of Refugeon their coast for fear of environmental damage if the ves-sels condition deteriorates.

    It is a narrow view because to keep the vessel at sea willnot improve the casualtys condition and therefore creates

    the risk of any subsequent pollution spreading over a largerarea possibly along the coast of more than one country.There have been several recent, high profile cases wheredistressed vessels have struggled to find a Place of Refuge.In 2014, a chemical tanker, the Maritime Maisie, suffereda fire off the Republic of Korea. Japanese salvors attendedthe vessel to fight the fire and sought a Place of Refuge.Numerous applications to ports in RoK and Japan wereturned down and it was only after the damaged vessel had

    been held at sea in poor conditions for more than threemonths that she was allowed into a port.

    The ISU feels strongly that many coastal states are not

    meeting their obligations under existing international regula-tions and guidelines on the matter of Places of Refuge. Therehas been some recent progress in the European Union butnevertheless it remains a matter of concern and it is a concernshared equally by the ISU, the International Chamber ofShipping and the International Union of Marine Insurance.

    Commercial marine salvors stand ready to intervene tosave life; protect the environment and save property. Theyprovide valuable services which protect the insurance in-dustry from significant loss and in many cases they are theonly ones with the equipment and capability to do so. Butthey need to be supported by sensible regulatory regimesand operational control arrangements that enable them todo the best they can in what are often difficult and danger-ous circumstances.

    Leendert Mulleris President ofthe International Salvage Unionand joint managing director ofMultraship Towage and Salvagebased at Terneuzen on the riverScheldt in the Netherlands. Mr.

    Muller started his career at sea and became a captain oftugboats rising to be Principal Salvage Master and he hasbeen involved in many well-known salvage and emergencyresponse operations. He is an Executive Committeemember of the European Tug Owners Association (ETA)and a board member of the Royal Dutch Shipowners

    Association (KVNR). The International Salvage Unionis the global trade association for marine salvors.

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    Unless you are involved with yourcompanys borrowing and credit issues,you may not be well versed in the twoprincipal types of commercial lending.

    Asset based Lending (ABL) and CashFlow Lending (CFL) the corner-stones of commercial credit are also,in most respects, as different as nightand day. Typically, company finance of-

    ficers must decide between the two, and, as it turns out,some companies are more suited to one or the other. For

    companies with the luxury of choice, the pros and cons ofeach option should be weighed carefully.

    CREDIT101

    Credit is a key element in growth. It is also a means toremain in business in challenging times. ABL, for example,is a specialized loan product that provides a borrower theability to fully collateralize a short term loan with the eq-uity available from the companys asset pool. This pool cancontain hard assets, like tugs and barges, be secured by ac-counts receivable, or be collateralized by intellectual prop-erty. It is a flexible source of funding that can be utilized byboth healthy companies and those not so healthy.

    To the former, it reflects the ability to monetize assetswithout violating other restrictive covenants. To the latter,it may function as a lifeline to turnaround, recapitalize oradd enterprise value to a company in bankruptcy (debtor-in-possession or DIP) as an ongoing business entity has

    more value to creditors than does a closed firm whose as-sets have been liquidated.

    For those companies operating on a seasonal basis, in par-ticular the many dinner, excursion, freight and passengervessels that ply Northern waters, revenues are often incon-sistent and are dictated by weather, but balance sheets canbe hefty. For companies with low margins, disturbed cashflow and large balance sheets, ABL provides the ability totap into those large balance sheets as ABL lenders determinethe amount of credit to be extended based on the liquida-tion value of the assets in the business asset pool, not on

    future earnings. Since lenders are relying on a known collat-eral value, there is inherently less risk on the lenders behalf.Consequently, an ABL loan may carry a lower rate and bemore forgiving of the financial condition of the borrower.

    However, an ABL lender observes the borrowers finan-cial condition with more scrutiny, carefully monitoringreceivables, inventory, asset condition and valuation. Re-porting requirements by the borrower will be more fre-quent and detailed than in a CFL facility. The maturity isusually short term allowing the lender to adjust the termsof the loans amount, advance rate, reporting requirements,interest rates, etc. However, the increased reporting maybe offset inasmuch as ABL loans do not normally includefinancial covenants whereas a CFL loan probably will.

    An ABL loan usually takes the form of a revolving lineof credit (RLOC) which is based on a fixed amount thatis replenished when exhausted or by time (days, months,etc.). Two types of RLOCs are available: cumulative and

    FINANCECOLUMN

    Learn a Lasting Lending LessonTwo key lending practices and todays workboat market conditions collideon the waterfront. Which course you choose depends on where you sit.By Richard J. Paine, Sr., National Marine Sales Manager at Signature Financial LLC

    Paine

    22 MN October 2015

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    non- cumulative. In the first, the unutilized sum is carriedover to the next period, in the second type, it is not.

    CASHFLOWLOANS

    A cash flow loan suits a different borrower profile. It isbased on future revenue and the ability to service the debt

    from those future sums. Limits are set by the CFL loan aremore suitable to higher margin companies whose balancesheets are considerably more leveraged or have fewer hardassets to back up the loan request. In considering a loan re-quest the amount may be limited by the lender to the bor-rowers enterprise value, or the value of the entire company(tangible net worth). A CFL loan may contain financialcovenants that borrowers must comply with. Covenants

    will typically include three or four covenants including: Fixed Charge Covenant:this covenant measures the

    borrowers ability to service the companys fixedfinancing expenses such as loans and leases.

    Debt to Net Worth (Leverage):this covenant measuresthe borrowers total liabilities divided by its totalshareholder value.

    Capital Expenditure Covenant:Limits the borrowersability to spend for capital expenditures (money spent tobuy or add value to fixed assets extending the useful life

    past the taxable year.)

    In the past failure to meet a covenant meant asking yourlender for a waiver which was usually granted. Today, bankregulators are pressuring lenders to discontinue this prac-

    tice. Compliance is critical as failure to meet a covenantsrequirement can result in default and the lender calling theloan. Where these metric meet is in the importance of thecollateral in the transaction. Certainly the ability to repaythe debt is important, but without collateral, making a casefor financing is nearly impossible. Although signature orpersonal loans exist, they are usually provided by a lenderat a much higher rate than those secured by conventionalassets. That said; the five Cs of Credit still apply:

    The Character of the borrower; The Capacity of the borrower to repay the debt; The Capital the borrower puts toward the purchase

    of the Collateral; The Collateral that secures the loan; and The Conditions, such as interest rate, term and

    advance that convince the lender to lend to you.

    If opportunity comes knocking and you need to visityour commercial marine banker, you now know your

    ABLs from your CFLs. Use this knowledge to your con-siderable advantage.

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    LEGAL

    In July 2015, the U.S. Coast Guardreleased Navigation and Vessel Inspec-tion Circular 01-15 (NVIC), titledMarine Casualty Reporting ProceduresGuide with Associated Standard Inter-pretations. The purpose of the NVICis to assist vessel owners and operatorsin understanding the marine casualtyreporting requirements, which many inthe industry think are about as clear as

    mud. Confusion as to what constitutes a marine casualtyand what incidents need to be reported has persisted in themarine industry for years. And, unfortunately, little officialguidance had been published by Coast Guard Headquar-ters regarding its policy interpretation of the reporting re-quirements. This problem was historically exacerbated bydiffering interpretations within the various Coast Guardfield commands and attendant inconsistent enforcementactions.

    The NVIC was an attempt to resolve some of these is-sues it clarifies terminology and phrases within the regu-

    latory context, draws attention to helpful regulatory cita-tions, and provides policy interpretations to assist vesselowners/operators with the casualty reporting process. But,theres still a long way to go to make the marine casualtyreporting process efficient and meaningful, and those nec-essary fixes may require a regulatory project, so relief is stillon the distant horizon.

    BACKTOTHEBASICS

    To put things in context, marine casualty or accident in-cludes any casualty or accident involving vessels, with few

    exceptions, that: (1) occurs on the navigable waters of theUnited States, its territories or possessions (generally out to12 nautical miles from the coastline); (2) occurs on a tankvessel in the Exclusive Economic Zone (EEZ) if there ismaterial damage affecting the seaworthiness or efficiencyof the vessel; or involves significant harm to the environ-ment as a result of a discharge, or probable discharge, re-sulting from damage to the vessel or its equipment; or (3)occurs outside the navigable waters of the United States

    in a certain geographic area and involves a U.S. citizenon a vessel that (i) embarks/disembarks passengers in theUnited States or (ii) transports passengers traveling underany form of an air and sea ticket package marketed in theUnited States.

    Not all marine casualties, however, are reportable. Thereporting requirements, described below, are differentbased on whether the casualty or accident occurs insideor outside the navigable waters (i.e., 12 nautical miles),

    whether it involves significant harm to the environment,or whether it occurs on a tanker in the EEZ. For U.S.-flagoperators, however, these reporting requirements applyanywhere in the world.

    A reportable marine casualty means: an unintended grounding or an allision with a

    bridge; an intended grounding or strike of a bridge that

    creates a hazard to navigation, the environment,or the safety of a vessel;

    a loss of main propulsion, primary steering, orany associated component or control system thatreduces the maneuverability of the vessel;

    an occurrence materially and adversely affectingthe vessels seaworthiness or fitness for service orroute, including but not limited to fire, flooding,or failure of or damage to fixed firefightingsystems, lifesaving equipment, auxiliary powergenerating equipment, or bilge pumping systems;

    loss of life; an injury that requires professional medical

    treatment (treatment beyond first aid) and if theperson is engaged onboard a vessel in commercialservice (i.e., a crew member or contractor), thatrenders the individual unfit to perform his or her

    routine duties or stand their normal watch; an occurrence causing property damage in excessof $25,000 (including labor and material torestore the property to its pre-damaged condition,but not including the cost of salvage, cleaning,gas-freeing, drydocking, or demurrage); and

    significant harm to the environment (includinga discharge of oil, i.e., a sheen, or other hazardoussubstance in a reportable quantity into navigablewaters and EEZ).

    Reporting Marine Casualties:U.S. Coast Guard Guidance Helps to Bring some Clarity to the Debate.By Jeanne Grasso, Blank Rome

    Grasso

    October 201524 MN

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    Importantly, a certain type of marine casualty, calleda serious marine incident, also requires drug and alcoholtesting for:

    any reportable marine casualty which results inone or more deaths;

    an injury to a crewmember, passenger, or otherperson which requires professional medicaltreatment beyond first aid and, if the injuredparty is a crewmember, renders the individualunfit to perform his or her routine vessel dutiesor stand their normal watch;

    damage to property in excess of $100,000 USD; actual or constructive total loss of any vesselsubject to inspection; actual or constructive total loss of any

    self-propelled vessel, not subject to inspection,of 100 gross tons or more;

    a discharge of oil of 10,000 gallons or more into

    navigable waters whether or not resulting froma marine casualty; or

    a discharge of a reportable quantity of ahazardous substance into the navigable waters,or a release of a reportable quantity of ahazardous substance into the EEZ, whether ornot resulting from a marine casualty.

    At the time of occurrence of a marine casualty,a company must make a timely, good faithdetermination as to whether the incident is, oris likely to become, a serious marine incident.If so, each individual engaged or employed onboard the vessel who is directly involved must

    be drug and alcohol tested. Alcohol testing mustbe completed within 2 hours and drug testingwithin 32 hours, unless precluded by safetyconcerns directly related to the incident. Anindividual directly involved means anindividual whose order, action, or failure to actis determined to be, or cannot be ruled out as,a causative factor in the incident.

    All reportable marine casualties must beimmediately reported to the nearest U.S. CoastGuard Sector Office, Marine Inspection Office,or Coast Guard Group Office after addressing theresultant safety concerns, with one exception. Ifthe marine casualty involves significant harmto the environment, it must be reported to theNational Response Center (NRC), not the Sector.A written report on a Form CG-2692 must followwithin 5 days, along with drug and alcohol testingresults, if required, on Form CG-2692B.

    NVIC 01-15

    In an effort to make compliance with the marine casualtyreporting requirements more attainable and enforcement

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    LEGAL

    more consistent, in January 2014 the Coast Guard pub-lished a draft NVIC seeking industry feedback on how themarine casualty reporting requirements can be clarified. Ac-cording to the Coast Guard, the majority of the commentsreceived from multiple industry segments and organiza-

    tions made it clear that more detail was needed for specifictypes of marine casualties that had led to uncertainty in thepast in terms of what needed to be reported (or not). Asa result, several new definitions, interpretations, and com-mon casualty scenarios were included in the NVIC.

    The Coast Guard clearly sets forth its guiding principlein the NVIC when Rear Admiral Paul Thomas states, [i]

    f there is any doubt whether an occurrence is a reportable ma-rine casualty, the Coast Guard strongly encourages responsibleindustry parties to contact the nearest Officer in Charge ofMarine Inspectionto determine an appropriate response.The NVIC goes on to indicate that when a report is made,the Investigating Officer will make a determination if theincident is reportable or not. If not, it is recommendedthat you document such a determination in writing. If so,a Form CG-2692 is required within 5 days of the incident.

    The Coast Guard also issued industry specific inter-

    pretations for different types of commercial maritimeoperations. For example, the NVIC addresses incidentsinvolving tankers at length. The Coast Guard also issuesinterpretations and policy statements related to reportingin the contexts of commercial diving, shipyards, and har-

    bor workers. Further, the NVIC lists a variety of incidentand occurrence scenarios and provides interpretations ofregulations that have proven to be problematic for years.The NVIC also provides for interpretations of key terms

    which caused much consternation in the past, such as: a loss of main propulsion, primary steering, or any

    associated component or control system that reducesthe maneuverability of the vessel;

    an occurrence materially and adversely affectingthe vessels seaworthiness or fitness for service or route;and

    an injury that requires professional medical

    treatment (treatment beyond first aid).

    Here, the Coast Guard adopts the Occupational Safetyand Health Administration (OSHA) definition, which is

    widely understood.Bottom line, though, the marine casualty reporting

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    regime still needs reform. As somestakeholders have noted, the CoastGuard should adopt a two tier report-ing system, similar to OSHAs; for re-portables and recordables. This would

    allow minor incidents to be differen-tiated from major incidents, lessen-ing the burden on both industry andthe Coast Guard. As such, the CoastGuard would get an immediate oralreport followed by a Form CG 2692for major incidents where a responsemay be needed, but would not burdenits limited resources with minor inci-dents, which could be reviewed on alog during inspections. In addition,enforcement should be streamlinedand should more consistently takeinto consideration a companys effortsat compliance considering the size ofthe companys fleet, past history, andsignificance of the incident, ratherthan issuing what sometimes seem tobe arbitrary penalties.

    As the DHS Office of InspectorGeneral Report Marine Accident Re-porting, Investigations, and Enforce-ment in the USCG, dated May 23,

    2013, noted:The purpose of the investigations

    program in the Coast Guard (USCG)is to ensure the safety of mariners andvessel passengers by preventing ma-rine accidents, protecting the environ-ment from oil spills, minimizing theproperty loss and disruptions to com-merce. The USCG is responsible foridentifying, investigating, and enforc-ing reporting requirements related to

    marine accidents involving commer-cial vessels.The USCG does not have adequate

    processes to investigate, take cor-rective actions, and enforce Federalregulations related to the reporting ofmarine accidents. These conditionsexist because the USCG has not de-

    veloped and retained sufficient per-sonnel, established a complete process

    with dedicated resources to addresscorrective actions, and provided ad-equate training to personnel on en-

    forcement of marine accident report-ing. As a result, the USCG may bedelayed in identifying the causes ofaccidents; initiating corrective ac-tions; and providing the findings andlessons learned to mariners, the pub-lic, and other government entities.These conditions may also delay thedevelopment of new standards, whichcould prevent future accidents.

    With its limited resources, the CoastGuard should focus on which inci-dents should be reportable and which

    warrant investigations. This way theCoast Guard could direct its efforts atascertaining trends to further marinesafety and help companies reduce their

    risks, rather than collecting data whichoften is not timely evaluated for pur-poses of ascertaining lessons learned.

    All marine casualties are not equal andshould not be treated that way.

    Until such time as there is whole-sale reform of the marine casualtyreporting system, however, the in-dustry should become familiar withthe guidance provided in the NVIC,

    which is in essence the Coast Guardsplaybook for how it will respond tocasualty reports or failures to report.Industry stakeholders should ensurethat crew and shoreside personnel arefamiliar with the Coast Guards guid-ance, and heed the recommendationto contact the Coast Guard when-ever in doubt to avoid Coast Guardenforcement action for a failure toreport a marine casualty, as penaltiescan range up to $35,000.

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    Even as the crash in energy prices feeds the oversup-ply of offshore support vessels a key staple of U.S.boatbuilding diets and the dwindling backlogs of

    some so-called second tier yards, a number of U.S. boatbuilders are still seeing robust demand for security vessels.Separately, tightening federal, state, municipal and over-seas budgets are being trumped by the increased need forsecurity craft that can perform more than one function.

    And, a big part of that metric turns out to be export hulls.As maritime defenses are bolstered in several regions, partic-

    ularly the Middle East, U.S. Foreign Military Sales (FMS) as-

    sistance helps builders do business overseas. Some companieshave expanded their order books through that channel, whilestill others have made direct sales to foreign governments.

    On this side of the pond, counties and local munici-palities are using their taut funds, along with grants andmatched grants, to pay for security vessels. Last month,MarineNews spoke with six representative U.S. builders

    who have delivered security boats in this calendar year.It turns out that U.S. boat builders are alive and well inan increasingly difficult market. In the fourth quarter of2015, maritime security also means job security.

    BOATBUILDING

    Demand forMaritime Security VesselsDemand forMaritime Security Vessels

    Keeps U.S. Builders BusyExport hulls through the FMS Program, as well as Direct Sales

    are a key piece of the business model.By Susan Buchanan

    Kvichak

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    BOATBUILDING

    Tampa Yacht:Interceptors for Kuwait

    Tampa Yacht Manufacturing in Florida is building a seriesof 29 fast, coastal interceptor-class vessels, 44 feet long, or-dered by the Kuwait. The contract started in March of thisyear, and construction began almost immediately, Tampa

    Yachts CEO Robert Stevens said last month. The first ves-sel was launched, sea-trialed, thoroughly tested by the cus-tomer and accepted in August. We built it in 18 weeks, andeach succeeding boat will be completed five weeks apart.

    Seven more vessels are in various stages of completion,with the first four of them scheduled to head to Kuwaitin November, Stevens said. Notably, the contract is withthe Kuwaiti government and is not under U.S. ForeignMilitary Sales. Stevens estimated that its total value might

    exceed $60 million.Designed for a crew of four to six, the companys car-

    bon-fiber-reinforced, all-composite-construction intercep-tors for Kuwait contain the latest electronics and a rangeof weaponry. They have Arneson ASD11 surface drivesand Rolla propellers. Dual MAN R6-800 turbochargedengines, developing total power of 1,600 hp, give theseinterceptors a speed exceeding 55 knots at full load. Thesurface-piercing design of the Arneson Surface Drives cuts

    appendage drag by 50 percent, versus conventional sub-merged systems, Stevens said.

    With its matched, five-blade, high-efficiency nibral Rollapropellers, the interceptors for Kuwait accelerate quicklyand have a good payload-to-power ratio. Fast operationstability is enhanced with trim tabs from Twin Disc Arne-

    Gladding Hearn

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    BOATBUILDING

    son Surface Drives. They ef-ficiently transfer a maximumamount of thrust from the en-gine to the water, Stevens said.High-quality materials, along

    with robust drive construction,

    keep maintenance costs low.These interceptors give

    the crew control over tacticaloperations, including board-ing. They employ Twin DiscsMGX-5114 A QuickShift ma-rine transmissions, matchedEC300 Power Commanderelectronic control and a bowthruster. The boats also offerprecision, low-speed maneu-

    verability when next to an-other vessel in a range of seaconditions, Stevens said.

    Swiftships:Catering to Egypt and the Dominican Republic

    In Morgan City, La., Swiftships has orders to buildten 28-meter Coastal Patrol Craft for the Egyptian CoastGuard and two 35-meter patrol boats, along with two 32-foot, high-speed interceptors for the Dominican RepublicCoast Guard-Navy.

    All are under contract, witha scheduled delivery of 2018,Swiftships CEO Shehraze Shahsaid. These contracts weresigned with the nations minis-tries of defense, and are funded

    as follows: four of the 28 me-ters are through U.S ForeignMilitary Financing via the For-eign Military Sales program;six of the 28 meters are viaMiddle Eastern-sourced funds,and two of the 35-meter patrolboats are via DomRep Security

    Assistance funds.Shah said two primary av-

    enues for overseas business are

    Foreign Military Sales, withthe U.S. Department of De-fense as negotiator, and DirectCommercial Sales. DCS is ar-

    ranged directly between a vendor and a customer, with anexport license issued by the U.S. State Department. Of-ficials at Swiftships, asked about backlogs, replied, In ad-dition to the already-mentioned contracts, Swiftships hasa $180 million backlog of in-builds for multi-purpose,maritime-marine vessels for the Middle East North Africaregion, Shah said. He declined to name those countries.

    It is also true that smaller patrolvessels in the Gulf at least partlyreduce the need for cruisers anddestroyers in that region. Assmaller, more agile assets becomethe preferred vehicle for smarterresponse to coastal, littoral confl icts,these craft are rapidly replacingthe legacy 600 foot warship in thistheatre. For foreign governmentsand the Pentagon, that frees up

    larger assets for other uses and intheory reins in spending.

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    BOATBUILDING

    Gladding-Hearn:delivering at home, and in Colombia, as well

    Somerset, MA-based Gladding-Hearn Shipbuilding hasalso been busy. We just finished two significant projects five patrol boats for New York City and seven patrol boatsfor the Colombian Navy, Peter Duclos, president and di-

    rector of business development, said. The vessels for Co-lombia were direct sale.

    This April and June, Gladding-Hearn delivered two 70-foot, aluminum tactical-response vessels to the New YorkCity Police Department for its Harbor Patrol Unit. Lastyear, Gladding delivered its third 61-foot patrol-rescueboat to the NYPD.

    The 70-foot, high-speed NYPD vessels have deep-Vhull and squared-off bows, with fendering and knees in-stalled above the main deck for bow landings. They weredesigned by C. Raymond Hunt and Associates in Massa-

    chusetts to respond to the terrorism threat on New Yorksvast waterways system. Inside the flush-mounted wheel-house, ballistic-resistant windows in the front, side and aftprovide 360-degree visibility. The boats fly bridges offerviews, too. A remote-control water cannon is mounted onpilothouse roofs. A command center includes video moni-tors, decontamination showers and seating for five crewmembers. The boats have two berths, storage lockers anda small galley.

    The NYPD vessels are powered by twin 12-cylinderMTU-12V2000M94 diesel engines, each producing1,920 bhp at 2,450 rpm and allowing a top speed of over41 knots. The engines turn a pair of Hamilton HM571

    waterjets through ZF3050 gearboxes. A 30 kW NorthernLights/Alaska Diesel generator provides service power.Twin Humphree interceptor units adjust each vessels run-ning trim and list at various speeds and load conditions.

    The Colombia Class vessels, 60-foot, deep-V hulledboats also designed by C. Raymond Hunt are of all alu-minum construction. Production began in March 2013,and the first-in-class ARC Gorgonilla was delivered thatyear. A rotating davit, located above the water-level, re-cessed platform in the stern, is used for rescue operations.

    The boat has Furuno radar and is equipped with a FLIRcamera that can detect someone in the water at 500 to 800meters. The vessel has sleeping accommodations for a crewof six.

    Powered by twin 800 bhp MAN R6-800CRM diesel en-gines, driving Ultra Jet UJ-452 water jets through ZF 360gearboxes, the Colombia Class boat reaches a top speed of27 knots. Cruising speed is 18 knots.

    KvichakBuilds for NYPD, U.S. Coast Guard and Oman

    The recent acquisition of Kvichak Marine Industries byVigor Industrial gives the Pacific West Coast giant not onlya new line of business, but also a significant income stream,courtesy of the maritime security market, both here and

    abroad. There isnt much Vigor doesnt do anymore, andSeattle-based Kvichak is a big part of that puzzle. Werecurrently building our fourth, Response BoatMedium forthe New York Police Department, with delivery scheduledfor spring 2016, the companys marketing manager CarolReid said. We just completed delivery of seven Transport-able Port Security Boats to the U.S. Coast Guard. Withthat, our deliveries to the Coast Guard total 59 vesselssince 2011.

    Beyond their significant domestic federal and municipalmarkets, however, Kvichak is also building two 19-meter,

    all-weather pilot boats for the Port of Duqm CompanySAOC in the Sultanate of Oman. They will function assearch-and-rescue and oil-spill-recovery vessels, in addi-

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    BOATBUILDING

    tion to pilot boats, and are scheduled for delivery in spring2016, Reid said, adding, They are a direct buy and notthrough a U.S. government program.

    Brunswicks

    Cutting Edge Sentry Aluminum Model on GuardIn late July, Brunswick Commercial and Government

    Products delivered the first-of-its-kind, 30-foot Sentry alu-minum boat to the Florida Fish and Wildlife Commission.This new model in the companys aluminum-vessel linecomplements its 32-, 36-, 40- and 45-feet variants. Designed

    with port security and extended patrol missions in mind, the30-foot cabin boat contains lockable storage for weapons, aforward cuddy cabin and a computer workstation.

    This new platform was designed to accommodatemany requirements in the maritime security industry,BCGPs sales director Jeremy Davis said, alluding to thegrowing appetite of budget-conscious municipalities for

    so-called multi-mission hulls. Today, local governmentsare looking to leverage many missions on the back of onehull. The Sentry, according to Brunswick, is just the ticket.Whether the mission is port security, game conservationor the safety of recreational boaters, this vessel can be cus-tomized to the needs of law-enforcement agencies world-

    wide. The companys Sentry line stems from a MasterSupply Agreement between Brunswick Commercial andGovernment Products and boat builder MetalCraft Ma-rine Inc. in Ontario.

    MetalCraft Marine

    Supplies the U.S. Navy and Coast GuardNot to be outdone, Kingston, Ontario-based MetalCraft

    is also busy, feeding on a steady diet of maritime securityand military mission-specific hulls. MetalCraft sales andcustomer-relations representative Emily Roantree toldMarineNewsin September, Were building several 30-foot,boom-handling boats for the U.S. Navys Supervisor of Sal-vage and Diving, or SUPSALV, with a total of 30 ordered,said. Nine have been delivered so far. Were also building

    ten, 35-foot cutter long-range interceptor boats for theU.S. Coast Guard, and four of those have been delivered.

    Outlook: Terror Threat and Domestic Crime feedmaritime security needs

    Because of threats from ISIS and tensions in Syria andthe Persian Gulf, Middle Eastern demand for maritime se-

    curity vessels will remain steady, Swiftships CEO ShehrazeShah told MarineNews. It is also true that smaller patrolvessels in the Gulf at least partly reduce the need for cruis-ers and destroyers in that region. As smaller, more agileassets become the preferred vehicle for smarter responseto coastal, littoral conflicts, these craft are rapidly replac-ing the legacy 600 foot warship in this theatre. For foreigngovernments and the Pentagon, that frees up larger assetsfor other uses and in theory reins in spending.

    For its part, the U.S. Navy will likely continue to spreadfinancing between boat builders as demand for maritime

    security vessels is met over the next several years, Shah said.Separately, federal, state, county and local officials willcontinue beefing up waterway protection against foreignand domestic terror threats, drug dealers, other criminalsand fires. That demand isnt relegated to just local markets;foreign export hulls also constitute a big slice of the pie.

    U.S. yards in particular have demonstrated that through direct sales agreements they can build in series,

    with economy and better quality than foreign counterparts.This, coupled with surprisingly persistent local domesticdemand is a welcome infusion of life in a boat building cli-mate that might otherwise be showing the beginnings of a

    slowdown. Maritime Security, as it turns out, is one marketthat appears to be immune to market pressures elsewhere.

    Susan Buchananis a New Orleans-based business writer,specializing in energy, maritime matters, agriculture, theenvironment and construction. She holds a masters degree

    from Cornell University in agricultural economics and anundergraduate degree from the University of Pennsylvania.

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    Maritime Security

    for the Municipal Sector

    MARITIME SECURITY

    Without sacrifi cing utility or features, the Metal Shark 75 Enduranceand the Moose M3 models both provide multi-missioned platforms for

    the cash-strapped municipal sector.By Joseph Keefe

    Metal Shark

    Moose Boats

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    Acrowded field for todays domestic boatbuilders anda highly competitive marketplace finds builders try-

    ing to position their output and designs to a placethat separates them from the pack. One place to do justthat is in the market for maritime security workboats, par-ticularly when it comes to local, state and municipal buyers.

    Municipal and state buyers want a great deal for theirdeclining budget dollars. In response, builders are sharpen-ing their pencils and putting together vessels that offer notonly bang for the buck, but also multi-missioned vehiclesdesigned to leverage a single hull into one that can performthe duties of three. Two builders, Louisiana-based MetalShark and California-based Moose Boats, go about the task

    in a slightly different manner, but with similar, impressiveresults. Either way, cashed strapped public sector law en-forcement and security stakeholders may have just found a

    way to get the job done, without sacrificing performance.

    The Metal Shark 75 Endurance Catamaran

    Billed as a dual-purpose custom fireboat, Command &Control and Multiuse Port Security Boat, the Metal Shark75 recently built for the port of South Louisiana is pow-ered by twin Caterpillar C-18 diesel inboards with a con-ventional straight shaft drive system. The 75 Endurancecan also be equipped with straight shaft inboards, water

    jets, or pod propulsion systems. Incorporating the latesttechnology to support fire rescue missions, command andcontrol (C2) operations, and around-the-clock port secu-rity efforts, the vessel can be custom-configured to suit a

    wide range of mission profiles including dive support, firerescue, port operations, law enforcement, and defense.

    For firefighting, twin dedicated drive engines channel upto 6,000 total gallons per minute through an oversized wa-ter main where electronic valves divert water to three RF-controlled monitors. Four additional 2.5 hydrant connec-tions and a 400-gallon foam reservoir provide maximumflexibility across the full spectrum of firefighting needs.

    And, with a roomy pilothouse featuring 360-visibility, andbunking capacity for multiple crew, the 75 Endurance isideal for multi-agency coordination. The latest version isequipped with a positive-pressure Chemical, Biological,Radiological, Nuclear, and high-yield Explosive (CBRNE)

    ventilation system for crew protection.As currently outfitted, the vessel can do double duty as amulti-purpose municipal vessel. Josh Stickles, Metal SharksDirector of Marketing, explains, Our 75 Endurance wasdesigned as a multi-use platform that may be custom con-figured to support a wide range of missions, with a focuson firefighting capability. This particular boat is a multi-purpose port security and response vessel set up for FireRescue, Law Enforcement, and Port Security missions.

    According to Stickles, there is robust demand for alumi-num catamaran designs across this sector. He told Marine-Newsin September, Weve seen demand for this type of

    vessel across numerous markets where stability and maxi-mum deck workspace are key considerations. Due to its

    wide beam, a catamaran hull surpasses a monohull vesselof comparable length in both of these areas. On this par-

    MARITIME SECURITY

    Length, Boat Only: 75 Engines: Twin Cat C-18 diesel inboards Beam: 24'

    Foam Storage: 400 gallons Firefighting Stream: 6,000 gpm Hull Draft: 50

    Fuel: Dual 600 Gallon Tanks Draft (shaft propulsion): 50 Range: 500 miles

    Endurance 75 at a Glance

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    ticular vessel, the customer was look-ing for enhanced stability at slow and

    fast speeds, a hull shape that mitigateswake size as much as possible, maxi-mum working space on deck, andample crew quarters below.

    Also according to Stickles, the boats6,000 total gpm pumping capacity isimpressive, but it was also matchedto their customers requirements. Headded, We can easily offer higher orlower capacity solutions dependingon what the customer wants. Beyond

    that, the boat can continue to pumpwater and maintain steerage if it dropsan engine because the fire pump en-gines are independent of the propul-sion engines. Not every fireboat canboast that metric.

    With a hull draft of just 50 inches,the vessel is specifically designed forriverine and shallow draft operations.

    And Stickles insists, It has a shallow-er draft than most vessels of this sizeand weight. For customers requiring

    something even shallower, the vesselmay be equipped with water jets. Ac-cording to Stickles, the type selected

    will depend on the needs and wants ofeach customer.

    Stickles had a hard time distillingthe merits of his newbuild offeringdown to a single innovation. We askedhim to do so, nevertheless. He replied,

    Youll see evolutionary enhance-ments throughout, from our 360-de-

    gree pilothouse glass that greatly im-proves visibility, to many designed-in,as opposed to bolted-on, missionspecific features. Probably the biggesttakeaway expressed by customers whohave been aboard is that this is a verycrew friendly design that manages toincorporate multiple complex systems

    in a way that makes them easy to use.Already a key supplier to the U.S.

    Coast Guard, Metal Shark also offersarmor as an option. Stickles says thatthe Command and Control aspectadds another level of capability andmakes perfect sense for municipali-ties looking to get the most use outof their vessel. Or, in other words, bigbang for the buck.

    MARITIME SECURITY

    Youll see evolutionary enhancements throughout,from our 360-degree pilothouse glass that greatlyimproves visibility, to many designed-in, as opposed

    to bolted-on, mission specific features. Probably thebiggest takeaway expressed by customers who have

    been aboard is that this is a very crew friendly designthat manages to incorporate multiple complex systems

    in a way that makes them easy to use.

    Josh Stickles, Metal Sharks Director of Marketing

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    MARITIME SECURITY

    Moose Boats M3-30 Monohull

    When Moose Boats first built its M3 (34-4 LOA) mono-hull demonstrator in 2011, the move may have surprisedsome stakeholders. After all, Moose is widely consideredone of industrys most prominent catamaran builders. No

    one should have been surprised when the Moose monohullprovided so much value in such a compact hull. Heres why:

    According to Mark Stott, Sales Engineer for MooseBoats, the intent was to offer all the design features, ergo-nomics and quality of Moose Boats ca