Canadian shipbuilding debate continues

Davie's Alex Vicefield Davie's Alex Vicefield

MAY 25, 2016 — Canada's Department of National Defence (DND) has launched public consultations in the development of a new defense policy for Canada and Irving Shipbuilding has reportedly taken this as an opportunity to pitch the Liberal government on a plan to provide a ship specifically designed to aid in a humanitarian crisis.

It would see the Halifax Shipyard take a commercial roll-on/roll off vessel and convert it to carry a hospital, medical supplies and emergency equipment to respond to a variety of missions, ranging from earthquake relief to providing aid to refugees.

That sounds reminiscent of Project Resolve under which Davie Shipbuilding in Quebec is converting a containership into a fleet oiler that will be leased to the Royal Canadian Navy. Building on the success of Project Resolve, back in March Davie submitted an unsolicited proposal to convert idled ice class offshore industry tonnage into icebreakers for the Canadian Coast Guard.

That proposal was greeted with hostility by the two shipbuilders getting large ship construction "work packages" under Canada's National Shipbuilding Procurement strategy: Irving which got the combat vessel work package, and Seaspan's Vancouver Shipyards, selected to build the non-combat vessel work package, which includes the Polar Icebreaker.

Even though Irving was not directly affected by Davie's icebreaker pitch, its President, Kevin McCoy said at the time, "What Davie is now proposing on an unsolicited, sole-sourced basis is fundamentally inconsistent with the open, fair and robust competition which they lost."

Today, in contrast, Davie appeared to be all sweetness and light in commenting on the latest Irving pitch, saying it "commends Irving Shipbuilding on taking a positive and innovative approach to solving some of the major capability gaps facing the Royal Canadian Navy and Canadian Coast Guard with regards to the current federal shipbuilding programs.

"Last week," continued the Davie statement, "Irving Shipbuilding provided an unsolicited proposal to the Government of Canada for the provision of a converted ship for humanitarian relief operations.

"Over the past months it has become widely acknowledged that Canada faces significant and long-term capability gaps in its fleet capability, particularly as a result of delays in the delivery of Canada's much-needed non-combat vessels."Realizing this, East coast shipyards in Canada's key shipbuilding hubs in Nova Scotia and Quebec have pro-actively provided alternative, cost-efficient and innovative ways to convert existing commercial vessels to fill gaps in Canada's non-combat fleet. In particular, for Humanitarian Relief, Icebreaker and Multirole Support vessels."

Speaking at the CANSEC defense event in Ottawa, Alex Vicefield, Davie's Chairman, said, "Irving Shipbuilding is confirming what has been universally recognized over the past months, including by the Government of Canada in the Canada Transportation Act review. That there are several classes of ship which Canada urgently needs and the current shipbuilding program is not capable of delivering. This is a great initiative from Irving Shipbuilding - these kind of unsolicited proposals where industry takes what it has learnt in how to provide fast-track, cost-efficient solutions to address critical operational gaps, is exactly what is needed right now."

Mr. Vicefield added "We must pursue these kind of interim and supplementary programs to ensure that we can close the capability gaps which either currently exist, or shortly will, in Canada's federal fleet. Of course this can't be done without bringing in the capacity of Canada's largest and highest capacity shipbuilder. We must look back to the origins and the original recommendations that industry made to the previous government and reconsider how the full capacity of Canada's shipbuilding industry can optimize fleet renewal and ensure a continuous work flow."

In a later press conference at CANSEC, Irving's  McCoy apparently took exception to Davie's characterization of the Irving offer as an "unsolicited proposal."

"This is not an unsolicited proposal. I could say that probably five times,” Mr. McCoy said.

According to Canada's iPolitics online site, Mr. McCoy said that the ship proposed by Irving would be a five-year-old commercial ship outfitted to allow Canadian peacekeepers and humanitarian crew to expand their offerings in emergencies and natural disasters.

The cost per ship would be $300 million, including crew and life cycle costs, and it could be delivered in under a year, iPolitics reports Mr McCoy as saying, adding that he believes the government should have several.

“Personally, I think you need three,” he said.

Want more? Subscribe now!

News from NASDAQ