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Thursday, May 3, 2018

RCN and Irving Look to Sell AOPS Internationally to Fill Construction Gap

By: David Pugliese, National Post

The gap between the building of new ships for the navy could be as much as 18 months, opening the possibility of east coast shipyard employees to be laid off.

But the Defence department’s top equipment official says changes to the shipbuilding procurement process will reduce some, but not all, of that gap. Workers that could be affected would be blue-collar shipyard employees at Irving Shipbuilding.

The 18-month gap between finishing construction of the fleet of Arctic Offshore Patrol Ships or AOPS and starting the new Canadian Surface Combatant vessels at Irving shipyards in Halifax is outlined in documents obtained by Postmedia through the Access to Information law.

Image result for AOPS

“We are still concerned about a gap,” Pat Finn, assistant deputy minister for materiel at the Department of National Defence, acknowledged in a recent interview.

The engineering workforce in the Irving yard is about to ramp up dramatically, he added, so there are no concerns there. “The issue is on what we call the blue‑collar workforce, and particularly (in) the early stages of construction,” Finn explained. “Those are the people that, once you’ve finished cutting steel in the last AOPS, ideally the next day you start cutting steel on the first surface combatant. Well, right now we’re not lined up to do that.”

Construction of the first surface combatants isn’t scheduled to begin until the early 2020s.

The first AOPS will be in the water in the summer and the other vessels are expected to follow fairly quickly.

“The gap is still a few years away, but clearly if we’re going to make sure there’s continuous flow of work, we’ve got to be dealing with that now,” Finn said.

He said the Royal Canadian Navy is lending its support to help promote the AOPS to international customers in the hopes of drumming up more work to shrink the size of the construction gap.

Procurement Minister Carla Qualtrough has also said she is open to the idea of additional AOPS being purchased for Canada.

Irving spokesman Sean Lewis said Wednesday that the company, the federal government and a third-party expert continue to look at the issue. “The construction of additional AOPS for Canada or international export opportunities is being considered and various options pursued,” he explained. “At this time it is premature to comment further.”

It’s way too early to talk about layoffs

In November federal government and Irving officials acknowledged their worry that highly skilled employees and their expertise could be lost in any potential gap between construction of AOPS and the surface combatants. “It’s way too early to talk about layoffs,” Irving Shipbuilding president Kevin McCoy said at the time.

The same problem has emerged in the federal shipbuilding program on the west coast and unions there warn that layoffs are coming. Seaspan Shipyards in Vancouver acknowledges there will be a gap between the construction of coast guard vessels, a situation it is trying to deal with by drumming up more work from the federal government or from the commercial marketplace.

Such gaps were supposed to be prevented by the federal government’s national shipbuilding strategy, which called for the continuous build of vessels, ensuring steady employment for a skilled labour force.

The Canadian Surface Combatant program will cost between $55 billion and $60 billion. Fifteen ships will be eventually built. Three consortiums have bid on the program.

Image result for Type 26 Canadian Surface Combatant proposal
Artits Rendering of the BAE Type-26 Global Combat Ship; which many believe is the frontrunner in the CSC Fleet Proposal.
Finn said a contract is expected to be awarded by the end of the year.

About half of the cost of the surface combatants is for systems and equipment that will go on the 15 ships, according to federal documents obtained by Postmedia through the Access the Information law. “Approximately one-half of the CSC build cost is comprised of labour in the (Irving’s) Halifax yard and materials,” the documents added.

Last year, Jean-Denis Fr├ęchette, the Parliamentary Budget Officer, estimated the CSC program would cost $61.82 billion. He also warned that every year the awarding of the contract is delayed beyond 2018, taxpayers will spend an extra $3 billion because of inflation.