Halifax shipbuilding
The most complex and expensive procurement in Canada’s history
OTTAWA — The National Shipbuilding Strategy is not a short-term project.
Spanning decades, and billions of dollars, the ambitious plan – the most complex and expensive procurement in the country’s history – aims not only to outfit the navy and coast guard with a new fleet of vessels, but also rebuild an industry that had been at the mercy of the boom and bust cycle that plagued shipbuilding over the years.
But for something as slow-moving as military procurement, 2018 had many milestones that positioned the program for even more progress over the next year.
Speaking with The Chronicle Herald, Irving Shipbuilding president Kevin McCoy said workers in Halifax have been busy building the first of six Arctic Offshore Patrol Ships. The first vessel, the future HMCS Harry DeWolf, was officially launched and named in the fall, and is set to be formally accepted in the navy following sea trials and tests early next year. The launch was quite an involved process that took place over hours.
Work continues to lower the Harry DeWolf, an Arctic Ocean Patrol Ship, for its float test in the Bedford Basin in this September 2018 file photo. - Eric Wynne
“(That) was a tremendous moment of pride for the shipyard. Everything that it took to get the ship assembled and tested and everything to get the ship to the point where we could put it in the water safely and have that whole launch evolution go just like clockwork ... was a huge vote of confidence for us,” McCoy said.
McCoy said the shipyard is also beginning to see efficiencies in the construction of the second and third AOPS as workers become more familiar with the build – something he believes contributed to the federal government’s confidence in the project and its decision to award a contract last month for a sixth icebreaker.
The addition of a sixth AOPS, combined with confirmation from Ottawa in November that Irving is one of three shipyards, along with Seaspan’s Victoria Shipyard and Chantier Davie Inc. in Levis, Que., that will receive a slice of a $7 billion package of maintenance work on the existing Halifax-class frigates, means the previously forecasted 36-month production gap has been reduced.
Concern about the possibility of layoffs due to the gap prompted a “Ships Stay Here” campaign in the fall by the shipyard union, Unifor Marine Workers Federation Local 1, calling on the federal government to ensure Halifax-class maintenance work, which had historically been completed at Irving, stayed there. McCoy said while receiving the full package of Halifax class work would have eliminated even more of that gap, Irving is satisfied with Ottawa’s commitment to ongoing work.
“The gap is not fully solved, we still have about an 18-month gap to address, but (there’s) a good commitment from the government to continue to work with us on that in the new year, ”McCoy said.
To eliminate the gap and avoid layoffs entirely, McCoy said, the shipyard would need a contract for eight AOPS and continuous Halifax-class work. That’s one of the reasons that over the past year, Irving officials have been travelling abroad to look for both commercial and international naval opportunities, including marketing the AOPS to other countries. McCoy said that will continue in 2019.
On the labour side of things, over the summer Irving and the shipyard union reached a new, four-year collective agreement, following months of challenging negotiations, narrowly avoiding a strike.
Also in 2018, McCoy said, the shipyard hired more than 450 new staff, bringing the total workforce at the yard to approximately 2,000. Twelve of those were Indigenous Canadians hired under the Pathways to Shipbuilding program, a collaboration with NSCC aimed at recruiting underrepresented groups. A class of 20 African Nova Scotian students is expected to graduate from the same program in 2020.
“2018 was a very good year for us and we’re looking forward to an even better year in 2019,” McCoy said.
BEYOND HALIFAX
It wasn’t just Irving, the prime contractor of the combat portion of the National Shipbuilding Strategy (NSS), that saw some big milestones this year.
Andre Fillion, Canada’s assistant deputy minister of defence and military procurement, pointed out it was also a big year for Seaspan in B.C., which is building the non-combat portion.
“One ... offshore fishery science vessel had been launched and two are in construction, and we started the work on building a Joint Supply Ship,” Fillion said.
In Quebec, Davie was also awarded a $610-million contract to convert three icebreakers for the Canadian Coast Guard over the summer, and earlier in the year, delivered an interim replenishment vessel that was converted from a commercial container ship, MV Asterix, to the navy.
Unclear messaging from Ottawa about a possible “refresh” of the NSS prompted some concerns at Irving over the summer that some of the already awarded work would be divided up to other yards, like Davie, which has been outspoken about its desire to be included in the lucrative strategy. No such major refresh took place, and Ottawa has since reassured Irving its combat package work isn’t going anywhere.
“I would say we are constantly refreshing ... whether it comes under a big major refresh or (smaller announcements) I think that’s something people can debate,” Fillion said. “Every day...we look at the program and how it’s going, and how we can improve it.”
As 2018 comes to a close, perhaps one of the biggest milestones of the NSS is still on the horizon. Following several delays in the Request for Proposals process, Ottawa announced in October that after a lengthy and sensitive competition, Lockheed Martin Canada was selected as the preferred bidder to design replacements for the navy’s frigate and destroyer fleets. Lockheed beat out compliant bids from Alion Canada and Navantia/SAAB with a design based on BAE System’s Type 26 Global Combat Ship that is also currently under construction for the British and Australian navies.
Despite a Federal Court challenge and a Canadian International Trade Tribunal complaint from Alion suggesting Lockheed’s bid did not meet key requirements on speed and the number of berths outlined in the RFP, Fillion said he expects a definition contract to be signed with Lockheed in early 2019.
“We’re working preferred bidder and if that doesn’t work, if that doesn’t land successfully we’ll go to the second one,” Fillion said. He would not say which firm offered the second-best package.
LOOKING AHEAD
Retired naval commander and defence analyst Ken Hansen said the upcoming warship contract award will have implications for the navy, and shipbuilding, for the next 25 years.
“I’m very concerned right now about the economic indicators and the potential for a major economic slowdown. So the program is liable to extensive political risk at the moment. I think the astronomical cost is going to put this program in serious jeopardy if the economy slows down,” he said.
“That’s the biggest question going forward is how to, how (do) the Liberals balance (that) with the necessity for a front line, ultra-modern worship.”
With a federal election on the horizon next fall, how the Liberals handling of the shipbuilding file will play out in their election messaging, or the messaging of their opponents, remains to be seen.
“It depends a lot on the economy and what are the high priority calls on the federal treasury,” he said. “The price tag on this shipbuilding is very high and the political risk for the program is huge.”
This article was originally published Dec. 25, 2018.