If you want to create lasting economic stimulus, build a ship! On first sight, the Governor of Kentucky appears to agree with that statement. The New York Times reported on December 6 that the Governor has promised generous tax incentives in support of plans to construct a full-size replica of Noah’s ark, complete with animals (“small, young giraffes”) and actors, and make it the centerpiece of a Bible-based tourist attraction called Ark Encounter.The theme park in Grant County, Kentucky, is expected to employ 900 people when it opens in 2014, or approximately 6004 years since creation, by the count of those inclined to find all answers to scientific questions in the Book of “Genesis”.Taking a creationist’s approach to job creation is a somewhat questionable concept, to say the least. Just to be clear: The Kentucky Ark is not envisaged to ever sail from its yard in the park, even with the best of hope for another deluge as a result of global warming or a seriously upset Maker.More importantly, tax subsidies for projects involving maritime assets have hardly ever been a suitable stimulus for a truly sustainable economic future. As they say in the shipping world: It won’t float!The evolution of the maritime business does, however, confirm that a ship is a first rate economic multiplier and benefit sprinkler system for a wide circle of individuals, companies and organisations on a truly planetary scale. Seafarers are among the main beneficiaries of this stimulus as the warm rain of wages, fringe benefits, and knowledge transfer sprinkles upon them.Over the lifetime of the fictional 1985-built product tanker “Global Stimulus” we are using as a model here, wages for all ranks employed onboard have risen moderately at first and then, especially over the last decade, quite dynamically. Today, total crew expenses account for approximately half of the tanker’s operating expense (before dry-docking cost).The crew cost curve became even steeper as the MT Global Stimulus aged leading to an increase in the size of the crew complement required to operate her. From an initial 22 crew members at the time of her delivery the complement has grown to 26 now that the ship has come to the end of her life cycle.The age of globalisation was getting into full swing around the time the MT Global Stimulus was delivered from her Japanese shipyard in the mid 80s. Since then developments in the maritime recruitment market have followed the patterns of globalisation, helped along by the growth of open shipping registers.Accordingly, after a few years of operating MT Global Stimulus” her owners and managers started to switch from employing officers and ratings of their own nations to recruiting seafarers from India, the Philippines, Indonesia and then, after the fall of the Berlin Wall, also those from Eastern Europe and countries of the former Soviet Union.So, how much does the economic stimulus of maritime employment onboard our tanker amount to? Our calculation (also based on a number of important assumptions listed in the footnotes to this article) resulted in an estimated total crew cost of $25 million expensed by the owners and managers over the life time of the vessel. Of that, $19 million had been paid in net wages to the seafarers employed onboard the MT Global Stimulus.The remaining $6 million are ancillary crew expenses including a multitude of line items of which I shall just name a few: Victualling, marine airfares and other travel-related expenses, funds for onboard and onshore training personnel and materials, crew communications, crew P&I premiums, medical examinations and treatments as well as an allowance for personal injury claims, union dues, port agency and crew agency fees.Did you notice that in just one short paragraph I have added thousands of people around the globe who in some shape or form contributed directly to and benefited directly from the presence of the crew onboard MT Global Stimulus over her 25 years on the deep seas and in hundreds of ports around the world? These people include to name a few employees of airlines, travel agents, ship chandlers, port agencies, registries, port authorities, immigration & customs officials, crewing agents and managers and their employees in personnel, training and quality control departments, career counselors, a wide range of teachers and other educators, actuaries, insurance claim handlers, lawyers, doctors and nurses, ambulance chasers, members of the clergy, bank clerks, hoteliers and their staff, tailors, taxi and minibus drivers. What an economic benefit sprinkler system this is, indeed!When we consider the absolute number of wage payments of $19 million we must of course also recognise that this amount was paid out over 25 years during which inflation was obviously always a factor. The comparative purchasing power is an even more important aspect: $19 million paid out in wages have created a lot more bang for the buck than the mere dollar number can ever express.I would estimate that a 2010 wage-dollar remitted to, say, the Philippines, created economic value equivalent to what $15 would have created in the US and Western Europe. In purchasing power terms wage payments made to seafarers from developing nations alone probably exceeded $200 million over the life time of the MT Global Stimulus. Arguably, the level of economic benefit international maritime employment creates in the home countries of the crew members is only matched or exceeded by one other global industry: tourism.We are already quite impressed by the powerful economic stimulus the maritime employment sector provides even before we have considered what is probably the most significant “invisible factor”. What happens when the seafarer goes home and takes up shore employment or realises the dream of being an entrepreneur?The extent to which the maritime industry spreads managerial, technical, other vocational and scientific knowledge across members of all strata of global society (and that definitely includes the less privileged strata) is unsurpassed by any other industry. The value such training, education and knowledge transfer creates in the economies of maritime recruitment countries is enormous: While it is hard to put a number on this, the value of maritime knowledge transfer probably exceeds the combined investment in education and training made by domestic non-governmental bodies in all other sectors of industry.And that in a nutshell explains why we should build a ship (and one that floats) if we want lasting economic stimulus.FootnotesWe arrived at the total crew cost and wage amounts by making a number of important assumptions about the MT Global Stimulus:1. The vessel was built as a clean product tanker of 35,000 deadweight tons and delivered from a Japanese shipyard in 1985 and was sold for demolition prior to her fifth Special Survey in 2010.2. She always traded in clean products on a world-wide basis.3. The ship did not undergo any conversions, did not get laid-up, was not kept idle or off-hire for any significant periods and did also not suffer any serious technical or design failures which would have caused her to be withdrawn from service.4. Total crew strength: Average of 24 officers and ratings over the life time of the vessel.5. Crew wages for those employed onboard increased by an average of three percent per year between her delivery 1985 and 1999 and then by an average of seven percent since 2000.6. Between 1985 and 1990 the vessel’s officers were recruited from Western European and Scandinavian countries. In the following years the officer complement was increasingly recruited from Eastern Europe, countries of the Former Soviet Union, India and the Philippines (depending on the preferences of the different owners of the vessel). Ratings are assumed to have been recruited from the Philippines during the entire life cycle of the vessel.7. A rate of exchange adjustment has been factored into our calculations. While seafaring wages are still predominantly paid out in US dollars, the number of officers receiving their remuneration in other currencies, specifically the euro, has grown over the years. Furthermore, the share of ancillary/non-wage expenditure not paid in US dollars, but in euros or other local currencies used along the trade routes of the Global Stimulus has also increased.8. Wages paid to workers participating in the demolition of the vessel have not been considered in my calculation, but should certainly be taken into account as a factor in the calculation for the total economic benefit created by the ship over its life time.(This article was first published in the January 2011 issue of Marine Money magazine.)Jens Alers is the managing director of Bernard Schulte Shpmanagement (Bermuda) and the honorary consul for Germany on the island.