PETER CAIRNS, President, Shipbuilding Association of Canada

In the last several years, much has happened in the shipbuilding industry and as 2014 comes to an end, it is appropriate to take stock and see where the dust has settled.

On 26 November the Shipbuilding Association (SAC) co-sponsored its first annual shipbuilding technical forum in Ottawa. This one-day forum was intended to raise awareness among shipbuilders, suppliers, government officials, the Navy and Coast Guard of available and emerging technologies that have the potential to change how we presently construct and outfit ships.

Presentations covered a wide range of technical issues including liquid natural gas propulsion (LNG), component power integration, ship design improvement and shipyard costing, to name a few of the subjects. A highlight of the day was the stimulating luncheon address given by the Honourable Diane Finley, Minister of Public Works and Government Services Canada. A detailed list of the subjects and presenters can be found on the SAC website

The forum was sold out and our initial feedback is that it was very well received by the attendees. It is the Association’s intention to continue yearly forums on subjects of interest to shipbuilders and suppliers.

The National Shipbuilding Procurement Strategy (NSPS) is still the dominating issue in the industry. It is the major shipbuilding investment for the government and has become the whipping boy for the “it is too expensive and takes too long to build in Canada crowd”. However, if you sit back and look at the sequence of events to date, you can draw another conclusion. Since the NSPS program was announced in 2010, the two shipbuilders have been selected, their shipyards have virtually been rebuilt from the ground up, some ships have been designed, the first test blocks are being constructed for the first Coast Guard vessel and the Arctic Offshore Patrol Ship will begin construction next year. Those accomplishments are very significant when you take into account the first year and one-half was filled solely selecting the two shipyards.

That said, there are concerns. The Parliamentary Budget Officer has twice drawn attention to what he considers the underfunding of the shipbuilding programs. This was openly talked about on the street for some time before the PBO made his analyses. Lack of funding portends few options. If the PBO’s analysis is correct, the government will need to reduce its requirement, procure fewer ships or augment the funding.

Since NSPS, the shipbuilding industry, in my view, has been unintentionally divided into two groups. Those that are involved in NSPS, and those that are not. My concern is for the latter. Those that have gained access to the NSPS program are looking at a solid future. The future for those that have not is less rosy.

The original intent of SAC’s submission that became the NSPS was to have three shipyards to take advantage of the country’s geographic realities. These shipyards would, in return, attempt to involve the smaller regional shipyards in the program. Due to a series of events, this did not happen and NSPS evolved as it is today.

Chantier Davie Canada Inc has now emerged on the scene with a world view, new ideas, significant shipyard investment and an aggressive marketing strategy. The management is openly willing to get smaller yards involved in projects. It has completed the ‘Cecon Pride’, a multi-purpose offshore construction vessel, is working on a second ship, and is commencing construction of two dual-fueled ferries. Despite Davie having a history that the management is finding difficult to shake, its future does look promising.

The Navy finds itself in difficult straits having had to retire its two Operational Support Ships (AOR’s) leaving no ability to support the fleet during long deployments. Since 1990, the Government has sent the Navy to patrol the waters of the Middle East, the Indian Ocean and to counteract piracy off the Horn of Africa. AOR’s are essential if such operations are to continue. It is understood that the Navy is considering leasing and converting commercial tankers to do this duty until the Joint Support Ships (JSS) come on line. There are few, if any, other options. Speed is the essence of this decision if naval operations are not to be severely affected.

Ships and ferries that should be constructed in Canada continue to be built offshore for Canadian operators. Seaspan Ferries has engaged a Turkish shipyard to build two dual-fueled ferries. BC Ferries has contracted a shipyard in Poland to build three dual-fueled ferries. Other provincial governments and commercial operators are also building vessels offshore. The standard argument for building offshore is that the operator has to pay a premium to build in Canada. What it really equates to is the loss of salary and economic benefits to Canadians.

On a more positive note, I understand that the Arctic Offshore Patrol Vessel Project has appeared before Treasury Board and been awarded some supplementary funding that will remove the concern that there was insufficient funding to build six vessels.

On behalf of myself and the members of the Shipbuilding Association of Canada, I wish you all a very Merry Christmas and a Prosperous New Year.