Monday, November 13, 2017

Quebec Wants More Federal Shipbuilding Contracts

By: ANDREA GUNN, The Chronical Herald

Quebec is formally calling on the federal government to rejig its massive shipbuilding strategy in order to give the province a bigger share of the multibillion-dollar pie.

Members of the Quebec National Assembly unanimously passed a motion Wednesday requesting that the federal government adjust Canada’s national shipbuilding strategy so Quebec gets what it believes is its fair share of federal contracts. The motion also asked Ottawa to “grant Quebec the contracts necessary” for the replacement of coast guard and Royal Canadian Navy ships, including the acquisition of a second Resolve-class tanker.

Responding to the motion, the province’s major shipbuilder, Chantier Davie Canada Inc., issued a news release commending the Quebec government.

“The federal government is going to invest almost $100 billion over the next 20 to 30 years on its fleet renewal,” Alex Vicefield, chairman of Davie Shipyard, said in the release. “Quebec represents 50 per cent of Canada’s shipbuilding capacity and 23 per cent of Canada’s tax base, yet it is receiving less than one per cent of federal spending on shipbuilding.

“Today, Quebec is at risk of losing a significant number of middle-class jobs due to bureaucratic intransigence and road-blocks within a broken procurement system, despite the clear and obvious need for Canada to urgently renew the entirety of its fleet.”

Bloc Québécois MP Michel Boudrias sought to put forward a similar motion in the House of Commons on Wednesday but was denied the unanimous consent required for the point of order.


Retired navy commander and defence analyst Ken Hansen said, looking at the historical context it’s easy to see why Quebec is miffed: Previously all shipbuilding for the government was done on a regional apportionment basis. But, he said, that was inefficient and contributed to the “boom and bust” cycle the government was trying to avoid by developing the national strategy.

“The strategy was designed to provide continuous work so that they wouldn’t go through these startup and shutdown cycles which cost money and cause chaos in the workforce,” he said.

After initial analysis, Hansen said, Ottawa concluded there wasn’t enough money or work to sustain long-term employment at more than two shipyards, so the national strategy approach was born, and Davie did not make the cut.

In 2011, Irving Shipbuilding in Halifax was named prime contractor for the combat portion of this strategy and is building six Arctic and offshore patrol vessels, the first to be delivered in 2018, and up to 15 Canadian surface combatants to be built in the 2020s.

The contract is expected to cost around $60 billion and create hundreds of long-term, well-paying jobs in Halifax

Seaspan on the West Coast was awarded the non-combat portion of the shipbuilding strategy and is building a number of science vessels for the Canadian Coast Guard as well as two joint support ships, the first to be delivered in 2020.


Though Davie was in bankruptcy when the national shipbuilding strategy contracts were awarded to the other two yards, the company is now solvent and is in the process of converting a commercial container ship into an interim auxiliary naval replenishment for the Canadian navy.

The MV Asterix has been hailed as a success and is expected to be delivered before the end of the year.

Known as Project Resolve, Davie pitched the idea to the previous Conservative government as a way to bridge the gap in tanker capabilities from the loss of the Protecteur class while Seaspan completes its support ships. The Tories accepted the bid and the Liberals considered reviewing it when they took power in 2015, but ultimately the contract remained in place. The vessel will be leased to the federal government for five years at a cost of about $700 million, with an option to renew for an additional five years.

On Wednesday, the federal Conservatives issued a release urging the government to accept Davie’s proposal to build a second Resolve-class interim vessel.

Davie has also pitched a series of other unsolicited bids to the Liberal government — in 2016 the company offered to deliver icebreakers and support ships, claiming they could do so faster and cheaper than what is already planned, but those bids were rejected by the government.

As for whether Quebec has a leg to stand on with new demands to Ottawa, Hansen said it depends on political pressure.

“The big concern is the Liberal caucus from Quebec and how much pressure they can bring to bear on the prime minister and cabinet about this issue, so we’ll have to wait and see.”

Central Nova Liberal MP Sean Fraser told The ChronicleHerald he cannot see a realistic scenario where the government changes the shipbuilding strategy to favour Quebec because of political pressure from a provincial legislature.
“We’ve got 32 Atlantic Canadian MPs who are great advocates for their region, and we have the expertise and technology capacity to win any merit-based competition,” he said.

In an emailed statement, Christine Michaud, spokeswoman for federal procurement minister Carla Qualtrough, said the Liberal government remains committed to the shipbuilding strategy.
“As set out in the National Shipbuilding Strategy, $2 billion in small ship construction is set aside for competitive procurement amongst Canadian shipyards other than the yards selected to build large vessels. Chantier Davie is eligible to compete for small ship construction projects (under 1,000 tonnes), as well as ship repair, refit and maintenance requirements,” she said. “Our government is committed to consulting the marine industry on other requirements that may arise following an open and competitive procurement process.”
Irving Shipbuilding declined comment on the Quebec motion or the statement by Davie, but a spokesperson provided some information about economic benefits the strategy is already leveraging across Canada via major suppliers, including more than $250 million in Quebec.

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