by Mark Cardwell
Alex Vicefield says a light went on in his head when he heard that HMCS Protecteur was to be prematurely decommissioned following a serious engine fire in early 2014. The blaze left the Royal Canadian Navy without a seaworthy supply ship, since electrical problems had also scuppered Protecteur’s sistership HMCS Preserver, which was decommissioned recently.
Canada is now forced to rely on NATO partners and other countries to provide at-sea replenishment services for RCN warships, since the two support ships to be built by Vancouver’s Seaspan under the National Shipbuilding Procurement Strategy won’t be operational until the end of 2021 at the earliest. “It was an opportunity for us,” said Vicefield, CEO of Inocea Group, a London- and Monaco-based business that specializes in the management and/or conversion of distressed and credit-intensive marine assets. The company’s biggest and best-known asset is the Davie shipyard in Lévis, Quebec.
According to Vicefield, he and his two fellow British partners – Alan Bowen and James Davie – brainstormed over how they could provide a quick-fix solution for the RCN’s urgent need for a supply ship. “A navy supply ship needs to go at least 20 knots to stay in the shield of force,” said Vicefield. “Right away we realized that a container ship would do the job, because they are faster than bulkers and tankers and can go 20 knots, and they are designed to carry a heavy payload. We’re conversion experts, so that’s what we proposed.”
Signed last fall by the former Conservative government and approved by the new Liberal government in January, the so-called Resolve project revolves around Davie’s conversion of a fuel tanker it bought in Europe for $20 million into a $450-million sea oiler replenishment ship for the RCN. If and when the ship is delivered on schedule by the end of 2017, Davie and OMERS-owned project partner V.Ships, the world’s largest ship management company with an office in downtown Montreal, will also provide a 40-man crew to operate the non-combat vessel. In return, the federal government will pay Davie $70 million a year for five years, with an option to buy the ship at the end of the contract for a price that Vicefield said still needs to be determined.
“This agreement is revolutionary for us and for the government,” said the 37-year-old.
A marine industry expert and former world-class fencer who like his partners learned the capital-intensive shipbuilding business working for sector-connected companies based in London, the world’s maritime capital, Vicefield called the agreement with Ottawa a hybrid commercial and defense deal. “We took a standard international marine commercial shipping contract and tailored it meet the RCN’s needs,” he said.
Vicefield said about 1,000 workers are currently involved with the conversion project, which is being carried out in the biggest of the Davie yard’s two massive dry docks.
“We’re 45 per cent through and 7 per cent ahead of schedule,” he said. “The project is being driven more by speed of delivery than cost.”
Financed by a Canadian fund he refused to identify, saying only that it specializes in infrastructure and asset lending, Vicefield said the Resolve project is helping Davie pump millions of dollars into the Quebec economy through jobs and purchases from nearly 600 suppliers, 113 of them in Montreal. Vicefield called the deal a private-public partnership, or 3P. He said some members of the U.S. Congress are currently proposing a similar solution to meet the vessel needs of the United States Coast Guard.
However a spokesperson for Public Services and Procurement Canada, which is responsible for federal ship purchases, refuted that. “The (Resolve) contract is a provision of services contract and not a 3P,” Pierre-Alain Bujold said from Ottawa.
Semantics aside, Vicefield is banking on Davie landing more federal shipbuilding and conversion work in the months and years ahead. Earlier this year, the company notably proposed the conversion of a 2012 polar-class ice breaker that is owned by Royal Dutch Shell and was earmarked for a now-iced offshore drilling project in the American Arctic into a replacement vessel for the 50-year-old CCGS Louis S. St. Laurent, which is due for decommissioning next year. The plan was similar to a pitch Davie made in 2013, when it said it could build a Polar Class 3 icebreaker and deliver it within 18 months.The latest bid ups that to also include three smaller so-called River-class icebreakers and two multi-purpose ships, which could be used for scientific research, border patrol or search and rescue. The latter ships would ostensibly include the two unfinished vessels in the Davie yard that were ordered by now-bankrupt Cecon ASA for use in the North Sea oil fields. Other needed vessels, Vicefield said, “could be bought on the international market at very affordable prices.”
Vicefield acknowledged that Davie’s proposal rocks the NSPS boat, which notably names Seaspan to design the new polar icebreaker for Canada. “Canada faces a potential 10-year gap in polar icebreaker capability,” said Vicefield, who has publicly and repeatedly questioned Seaspan’s ability to build and deliver the $8-billion worth of NSPS vessels it landed in 2011. “We can deliver a ship within 18 months for a third of the estimated cost of building a new one.”
Ottawa has downplayed the offer, saying it doesn’t accept unsolicited proposals. But Vicefield said he’s heard through the Resolve-project grapevine that Ottawa may be considering the Davie icebreaker proposal. “We’re in the tent now,” said Vicefield.
He said Halifax-based rival Irving’s unsolicited bid to Ottawa in May to build a supply ship for humanitarian missions is proof that Davie’s hard-charging approach is shaking up the traditionally staid Canadian shipbuilding industry. “In this business you have to have the know-how, resources and energy to be successful,” said Vicefield. “We have all of those things. In fact, in my opinion, we are the best shipyard in Canada.”
In response to questions by Canadian Sailings, a spokesperson for Public Services and Procurement Canada responded by saying that “Any potential interim requirements [in addition to the Polar icebreaker to be constructed under NSPS] will be addressed through industry engagement and will follow the Government’s regulations and practices, including fair, open, and transparent procurement processes,” which appears to leave the door open for procurement of additional icebreakers outside the NSPS process. However, the spokesperson also indicated that construction of the Polar icebreaker will not commence until the two Joint Support Ships on order have been delivered. The first of these is expected to be delivered in 2019 if no further delays are encountered. If current plans remain on track, CCGS Louis St. Laurent will have to spend a lot of time undergoing repairs and upgrades at great expense to the taxpayers to remain in service for possibly another ten years. Launched in 1966, and commissioned in 1969, Louis St. Laurent is already one of the oldest operational icebreakers in the world.
Davie’s imaginative and energetic proposals for quick-fix solutions to Canada’s shipbuilding needs come at an opportune time. As many as 100 new ships are reportedly required for the federal fleet, including several CCG icebreakers for use in coastal and inland waterways. “Our organization has been advocating for a renewal of CCG’s ice breaking fleet for ten years,” said Michael Broad, President of Montreal-based Shipping Federation of Canada, which represents the owners, operators and agents of ocean-going ships that carry Canadian exports and imports to market. According to Broad, CCG’s icebreakers on the East Coast and in the St. Lawrence are old and in constant need of maintenance and repair. “The Coast Guard has done an excellent job with the assets they have, but time is running out,” said Broad. “Canada needs at least six new icebreakers for Eastern Canada and the Arctic to allow commercial shipping and ferry services to operate year round for the foreseeable future.
“It’s not our role to comment on the Canadian shipbuilding industry,” he added. “However, we encourage the Canadian government to look at all the various options when it comes to building new ships.”