by R.G. Allan P.Eng

The decision by the government of Canada to implement the National Shipbuilding Procurement Strategy (NSPS) is certainly welcome by most in the Canadian marine industry. This is not the first attempt by the national government, however, to stimulate or support the shipbuilding industry: within the past 50 years there have been numerous efforts, either direct industry subsidies, tax investment strategies, or “clump”-building programs to bring needed work into Canadian shipyards. The last of these major support efforts was the SCRAP program (1984-1987) which resulted in the building of a dozen vessels for the Canadian Coast Guard and for Fisheries and Oceans Canada, but which ultimately did not stop the demise of the industry and the subsequent closure of many Canadian shipyards. Many criticized that program, as it came after a period of some drought, and then injected a lot of work simultaneously into yards that were struggling and non-competitive. The result was overly expensive ships, with no plan for sustaining the industry in the longer term. Many of the vessels built under that program are now facing mid-life refits and those requirements may compete for yard space with the demands of the new NSPS program.

Today, the industry certainly has a brighter outlook, with a view to the future which has never before existed, certainly not in my forty-three years in this industry. Although many of the last generation of skilled shipyard workers in Canada have left or retired early, there is an opportunity/ need to train a new generation of shipbuilders in an era of a much more highly automated industry than when the last major vessels were built in this country.

But what is the end result? What will a revitalized shipbuilding industry mean to the country? Will the NSPS investment pay a dividend to the Canadian taxpayer? Ideally “yes”, and as an example, it is hopefully worthwhile to look at how the Canadian marine experience has provided our small company with a global advantage in some niche markets and at the benefits that have accrued.

Robert Allan Ltd. is Canada’s most experienced consulting Naval Architecture firm, and the only major Canadian company in this discipline not owned by a foreign consultant or by a major international or Canadian shipbuilding interest. As such, we have the benefit of more than eight decades of completely independent experience in virtually every aspect of shipping in this country. Our domestic design history encompasses projects on the Pacific and Atlantic coasts, in the Arctic, and on many inland lakes and rivers in almost every province and territory of this country.

Robert Allan Ltd., in a joint venture named RALion with Alion Science and Technology of Alexandria, VA and Ottawa, were awarded the contract for the design of the first vessels to be constructed under the NSPS program; the Offshore Fisheries Science Vessels (OFSV). This OFSV design credential was instrumental in the RALion design team winning a subsequent design contract with the Government of Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO), Australia’s national science agency, for a major oceanographic research vessel. This 90 metre, $120 million sophisticated ice class research vessel RV Investigator is now nearing completion at Sembawang Shipyard in Singapore. In contrast to this fast-tracked project, the OFSV project is still under development as Seaspan Shipyards prepare production drawings and deal with the significant infrastructure upgrades necessary in order to build the OFSV’s and the subsequent larger vessels of the NSPS program.

This is an excellent example of how initial Canadian experience has helped Robert Allan Ltd. build a truly international business on the strength of local expertise. This is not a unique example, however, and the spin-offs are certainly not dependent on government programs, but on a lot of hard work and business development efforts.

Experience from the 1970’s designing icebreaking supply vessels for the Beaufort Sea was key in Robert Allan Ltd. winning design contracts for icebreaking Offshore Support Vessels for oilfield exploration in the Caspian Sea. That shallow draft environment, coupled with the constraints of the canal system which enables access into the Caspian, very closely mirrored the early design constraints of the Beaufort. In 2004 we designed four 65 metre OSV’s for Lukoil of Russia, built in Singapore.

In early April of this year we were again selected as the designers of two more classes of 80 metre long icebreaking OSV’s. This contract was awarded by the Turkish-based Palmali Group of Companies, and the vessels will be built by Besiktas Shipyard of Altinova, Turkey. Upon delivery the vessels will be chartered to the Lukoil Oil Company of Astrakhan, Russia. Three vessels in total are to be built and delivered by the end of 2014.

The first design, designated as a TundRA 8000 OSV, of which two will be built, is for a shallow-draft icebreaking OSV, capable of operating in 90 cm of ice. The second design, designated as a TundRA 8000 MSRV, will be a multifunctional standby/rescue variant capable of breaking 120 cm of ice. One of the MSRV design has been ordered.

In similar vein, our northern Canadian experience, gained initially in the early 1970’s designing very shallow draft tug-barge systems for the Mackenzie River and its tributaries, has been instrumental in winning contracts for major pusher tugs and barge fleets for mega-project developments using the Rio Parana/Rio Paraguay waterway of South America.

Currently under construction at Uzmar Shipyard in Turkey are eight 5000 kW, triple-screw Z-drive pusher tugs with 2.5 m maximum draft, and at ZPMC shipyard in Shanghai, China, a flotilla of 148 hopper barges is being built, each with a cargo capacity of 3000 tonnes of iron ore at 3.96 m draft. Those hopper barges are just starting to be delivered to the Rio Plate estuary.

Finally, and by no means least important, we are forever indebted to the C.H. Cates & Sons Company of North Vancouver, (now part of the Washington Marine Group) for selecting Robert Allan Ltd. in the late 1960’s as its consulting Naval Architects. Working closely with the Cates organization for almost 40 years provided us with an opportunity to develop and refine some extremely unique ship-handling tug designs. That experience laid the foundation for the emergence of Robert Allan Ltd. as the leading tug designer internationally, accounting for 35-40 per cent of published worldwide tug deliveries in the world today. Currently there is on average one tug delivered every week somewhere in the world to a design from our company.

Robert Allan Ltd. is a 100 per cent Canadian company, which after three generations and 83 years of family ownership is now owned entirely by a group of its senior employees. The company has experienced exceptional growth over the past twenty years, capitalizing on turning local design experience and expertise into a highly successful global business. In those twenty years, our turnover has increased about 15-fold. Employment has increased from about 15-20 persons to more than 75. Since 2000, more than $5 billion worth of new working vessels have been built worldwide to innovative designs from this Vancouver-based consulting company!

It would be incorrect to state that this growth was the direct result of any government program in Canada, but the examples cited come entirely from the Canadian experience, and from projects where there was some Government involvement (e.g. Crown Corporations or support in the form of accelerated depreciation plans etc.). All those vessels were also built in this country at a time when the local shipbuilding industry was thriving, and there was lots of domestic work, creating a very competitive environment. We also acknowledge the valuable contribution of the Scientific Research and Development (SRED) tax credit scheme that enabled us to conduct some much-needed research into the fledgling escort towing industry. The wider industry strength at the time, however, was the result primarily of resource development aided by some incentive financing, so it is hard to say that there was not an indirect influence of one or more government programs on these projects. But the common theme of all of these Canadian projects is unique, specialized vessels, designed to operate in the remote areas and harsh environment of Canada’s outlying regions, often far from support services. Those same traits in a design are much sought after in many areas of the world today, and the company that can demonstrate an understanding of those challenges will benefit.

So, what ultimate benefits will Canadian industries and the Canadian taxpayer see from NSPS? Ideally, the result will be a revitalized and strengthened shipbuilding industry capable of dealing efficiently with all domestic shipbuilding requirements. We cannot realistically hope to compete with large volume, low cost builders in China, Korea and Japan. The strength of the Canadian Shipbuilding industry has always been in the smaller, unique specialized working craft that support the coastal communities and industries of this country, but efficiencies will only be achieved with a consistent volume of work. The OFSV vessels designed by RALion, to be constructed at Seaspan Shipyards, are of this ilk, but these are also typical of vessel types currently being built in many lower-cost shipyards worldwide. We can thus expect perhaps some very modest export success, but primarily we should be hoping for cost-effective and efficient domestic production so that there is no excuse to build ferries or similar service craft outside of Canada. In the support sectors of this industry, a healthy local shipbuilding sector will provide opportunities for a few select businesses, which can use the opportunity created by NSPS to develop or refine their high-quality products and develop international sales as a result.

The same can certainly be said for Canadian Naval Architects; both locally-trained and skilled immigrants. Involvement in NSPS and the attendant industry revitalization provides invaluable experience. The specialty ship design experience is, as our own business has shown, an eminently exportable (if largely invisible!) commodity.

R.G. Allan is Executive Chairman of Robert Allan Ltd.