Dawning of a new era for Canadian shipbuilders

Canada’s shipbuilders have agreed to a radical change in the way contracts will be doled out by the federal government. The federal government plans to spend $40 billion over the next 30 years to build as many as 50 large ships, on top of the 70 ships under 1,000 tonnes that have been earmarked for revamps.

The Canadian Government has not placed any new substantial build orders for ships since the mid-1990s. Since then, it says, “the national shipbuilding capacity, once enhanced by the construction of the Canadian patrol frigates and Maritime Coastal Defence Vessels, has substantially eroded.” Several Canadian shipyards have either closed or converted to more general industrial activity. This, combined with worldwide increases in shipbuilding costs, has “severely hindered Canada’s ability to build ships cost-effectively, resulting in delays to federal fleet renewal.”

“There is going to be enough work with 50 ships on order for every shipyard in the country to be going full steam, and that’s good news in terms of the economy,” said Defence Minister Peter Mackay. The government wanted to avoid a repeat of last year’s situation when the construction of three navy supply ships and some coastal patrol boats were shelved because of problems with meeting the specifications of the government’s budget.

So it brought together the industry’s players for two days of private meetings earlier this week to work out an agreement with constructors on a new process that theoretically will allow the government to pick and choose in a more direct way which Canadian shipyards will build which ships. The agreement is meant to end the often intense bickering that has killed some government contracts.

“Everybody’s buying in,” said Peter Cairns, the president of the Shipbuilding Association of Canada. “Some firms have a few small reservations, but, in general, this whole group is buying into a long-term strategy, because that’s really what’s needed for us,” Cairns said. The agreement itself still requires scores of questions to be answered and many details to be ironed out.

Alan Williams, the former head of procurement for the national Defence Department, called the deal historic. “I think the notion for revisiting the government’s shipbuilding policy makes good sense,” he said. However, he added that if the program is not managed properly it could become a disaster. He said the government needs to make the process transparent in order to ensure that public money is spent wisely.

The overall demand for new ships, coupled with the requirement for refit and repairs, will sustain several thousand direct shipyard jobs in Canada over the next 30 years, says the Government. When the work of material and equipment suppliers, system integrators, and designers are added, the amount of work generated goes up significantly.