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Shipbuilders will finally learn fate of $35-billion federal contracts

After months of speculation, the federal government will announce the winners and losers of massive shipbuilding contracts


October 19, 2011
by The Canadian Press

OTTAWA—Shipbuilders in three provinces will find find out today which of them will sail off with the biggest share of a $35-billion bounty of federal shipbuilding contracts.

The three hopefuls are Nova Scotia’s Halifax Shipyard, B.C.’s Seaspan Marine Corp. and the Davie shipyard of Levis, Que.

The main contract is worth $25 billion in ship projects over the next 20 years. A secondary contract pegs another $8 billion for civilian ship work, which includes coast guard cutters. The third is worth a paltry $2 billion in smaller contracts.

Public Works Minister Rona Ambrose says the decision will be devoid of political influence.

To ensure that, the government turned to outside consultants on three occasions to not only make the decision, but also design the National Shipbuilding Strategy.

Defence Minister Peter MacKay says the decisions “will be made in a way Canadians can be sure it was based on merit and not on political interference.”

Regardless, someone’s sure to be disappointed, which may explain why a senior bureaucrat, not a politician, will make the announcement.

It will be ironic if Irving-owned Halifax Shipyard comes out on top, who took the feds to court after losing a $1.5-billion submarine service contract to a Victoria-based yard.

Should Irving win the largest contract, which Nova Scotia considers a potential saviour because of its struggling natural gas industry, the province anticipates an annual 2.6-per-cent bump in economic growth and up to 11,495 jobs.

The troubled Davie Shipyard, which was in bankruptcy protection but is now aligned with SNC Lavalin and Daewoo of South Korea, presents the largest political thorn for the Conservatives.

In B.C., there is a similar anticipation of thousands of jobs and hundreds of millions of dollars in spin-off benefits.

In the last two decades, the shipyard industry has suffered from a boom and bust cycle that has sunk some yards. But it has also turned others into fierce competitors.

The government’s inability to plan and deliver ships on a regular basis has left both the navy and coast guard in dire straits, with most of their hulls in need of replacement by 2025.

The backlog of naval projects includes the construction of joint supply ships to replace 40-year-old replenishment vessels, new command-and-control destroyers and Arctic patrol ships.