Aker Philadelphia Shipyard, in a work drought, is counting on a marine-highways system

Aker Philadelphia Shipyard faces an enormous challenge to stay afloat in an ever shrinking U.S. shipbuilding industry.

Aker is one of two U.S. shipyards that build oceangoing commercial vessels under the 90-year-old U.S. Jones Act, which requires U.S.-made and U.S.-operated vessels transport goods between U.S. ports.

Aker stands to gain substantial new vessel orders if a U.S. marine-highways system ever gets going.

Hoping that will happen, American Feeder Lines L.P., of New York, recently signed "letters of intent" with Aker and a Green Bay, Wis., yard to build five ships each, and maybe more, starting in 2012 to transport cargo in container ships between Maine and Texas.

But near-term, Aker is in a financial pickle, with no new orders.

The South Philadelphia yard is completing three product tankers, which have buyers and will be ready in August, December, and May.

Normally, construction would have begun on a fourth vessel. But because there are no buyers, there is a lull in work and, thus, revenue. This has triggered layoffs among the more than 1,000 shipyard workers.

"We think, if Aker can get over this hump, the future is very bright," said Gov. Rendell, who is asking the White House to request that the Navy free up $35 million already appropriated, but never spent, in 2004 on a Philadelphia terminal for high-speed cargo ships.

The $35 million is "sitting in an account" at the Navy and "is an easy lift because it doesn't affect the Treasury or the deficit," the governor said.

"I've tried to impress upon the White House that it is no cost to the Treasury. It will keep more than 1,000 workers in good-paying manufacturing jobs and also keep the supplier network intact."

Since World War II, commercial U.S. shipbuilding has dwindled, and most of the world's big ships today are built in Asia - Korea, China, and Japan.

It is a testament to the Philadelphia region that shipbuilding has survived at all.

"That Aker is still around and operating is the consequence of achievements in the past," said Paul Bingham, managing director for global commerce and transportation for IHS Global Insight Inc. "A lot of other cities that had shipbuilding 30 years ago have seen their shipyards go away."

The hurdle for U.S. shipbuilding is cost - not labor cost, but productivity and economies of scale. Korean shipbuilder Hyundai turns out 70 ships a year in each of its two yards, compared with three to five ships a year for the entire U.S. industry.