By Alex Binkley
Davie Inc. has rebounded from a low point in 2012 to a promising future that should include a role in Canadian commercial and government shipbuilding programs, says John Schmidt, the company’s Vice-President, Commercial. “Davie is perfectly positioned to meet the requirements of government and commercial shipowners,” he told the joint conference of the Canadian Shipowners Association and the Lake Carriers Association. “We are focused on the unallocated portions of National Ship Procurement Strategy and the after build in-service support work. However we could support existing programs by at least building parts or hulls of ships.”
In 2012, employment at Davie had dropped to 25 and the future looked bleak with Ottawa’s decision to not include the Levis facility near Quebec City in plans for ordering new Navy and Coast Guard ships. Since then, Davie, which bills itself as Canada’s largest shipyard, has delivered the Cecon Pride, a multipurpose construction and offshore vessel, to Norwegian owners. Davie will construct two more of the towering ships, which Schmidt noted are among the most complex vessels ever assembled in Canada. “The project shows Canadian companies can build state-of-the-art ships.”
It has begun work on the first of two LNG fueled ferries ordered by the Quebec government and has a federal contract for the life extension refit of the Canadian Coast Guard ship Earl Grey. The program primarily consists of replacements and upgrades to engines, machinery, equipment and electrical systems.
It’s Davie’s third refit project for the CCG in the past two years and has enabled the company to use its smaller Lorne drydock for the first time since the frigate construction program for the Royal Canadian Navy during the1990s. “Davie is back in town,” Schmidt added. “We could bring down the cost of new ships, which would mean more of them could be built.”
Davie’s turnaround hasn’t gone unnoticed. It was voted North American Shipyard of the Year in the Lloyd’s List North American Maritime Awards for 2015. The award evaluated shipyards on their ability to deliver quality vessels on time, to meet the needs of all stakeholders and to showcase innovative designs while adhering to high environmental standards. Davie CEO Alan Bowen said that significant investments in new manufacturing systems and equipment have “sealed its place in the global specialized shipbuilding, ship repair and ship upgrade markets.”
Not only does Davie want to become a player in any upcoming unallocated NSPS plans, which are now split between Irving Shipyards in Halifax and Seaspan in Vancouver, it would also like to be eligible for a manpower training program similar to one that Ottawa and British Columbia have made available to Seaspan, which would provide the company with more than $582,000 in Canada Job Grant funds to train 260 workers in shipbuilding skills such machining, metal fabrication, steel forming, painting and rigging. Schmidt said the Quebec government could consider similar aid for Quebec shipyards. The company is working with the Shipbuilding Association of Canada to gain access to the full domestic market.
While company executives have been pushing in the traditional ways for NSPS related work, some of its employees have mounted demonstrations in support of the company in front of the local office of Public Safety Minister Steven Blaney, the area’s MP, with a similar message. One step Ottawa could take is to hire Davie to convert two large commercial vessels into resupply ships for the navy which has had to retire its antique vessels, the demonstrators said. The government should give due consideration to a Davie proposal for such a solution to the Navy’s needs. The federal government has promised to build two new supply ships to replace HMCS Protecteur and Preserver with 2012 as the first proposed delivery, but no order was ever placed. The latest projected date is 2019 but as no contract has been settled on, that might be an overly optimistic timeline. In the meantime, interim replacements have been raised such as: leasing vessels from other countries, buying tankers or second hand freighters that could be converted. Davie could handle this kind of work as it was the builder of the first naval supply ship, HMCS Provider. On June 23, Defence Minister Jason Kenney announced that “the Government of Canada will enter into preliminary discussions with Chantier Davie Canada to pursue an interim supply ship capability.”
In addition to government contracts, Davie also wants domestic shipowners to “give us a chance to show what we can do.” Davie’s labour rates are about half those of European and Scandinavian shipyards. “About 40 per cent of the cost of a ship is the labour required to build the ship and 60 per cent is material,” Schmidt said. Where Davie has to catch up is in the productivity of its operations, he noted. It has specialized software “to monitor the daily progress of the yard, so we know if we’re falling behind and need to improve.”
In the future, Davie would like to focus on building ice class and LNG fueled ships, Schmidt said. “We think LNG will be the fuel of the future. It should be on the St. Lawrence Seaway and the Great Lakes. It will reduce operating costs by 50 per cent and CO2 emissions by 90 per cent.” All that is required is a string of LNG refueling stations. That should be part of the process of turning the Great Lakes-Seaway system into a blue highway that will reduce road congestion in the region and demonstrate an environmentally safe way to meet upcoming strict emission regulations. The Ontario government has shown interest in participating in the project and the Quebec government has included the Seaway-Great Lakes as a transportation hub in its maritime strategy, he noted.
A Quebec proposal to create a tax free reserve for companies that place orders with Quebec shipyards along with capital finance assistance is an idea other domestic governments should look at, he added. “They could use that fund to pay for ship repairs and fund their future commercial acquisitions.”