Kevin Dougherty
Shipbuilding firm will start work on icebreaker conversion this summer
Chantier Davie Canada Inc., the country's largest shipbuilding firm, is gunning for contracts to build new icebreakers for the Canadian Coast Guard.
"Given the age of the Canadian Coast Guard fleet, the entire icebreaker fleet will need to be replaced in the near future," says Alex Vicefield, CEO of Inocea Group, which has owned Davie since 2012.
"We have every intention of submitting a world-class proposal together with global leaders in icebreaker design."
Until then, Davie, located across the river from Quebec City in Lévis, is in the home stretch of negotiations with the federal government to convert three surplus commercial icebreakers for the Canadian Coast Guard.
Under its new management, Davie has made its mark in the industry by turning surplus ships into lower-cost solutions.
The first converted icebreaker will be ready in time for the 2018-2019 ice season on the St. Lawrence and Great Lakes.
However, when it comes to building new ships, there remain doubts about Davie's ability to deliver at a competitive cost.
Canadian ships cost 'twice as much'
Marc Gagnon is director, government affairs and regulatory compliance for the Montreal-based Fednav, which operates a fleet of nearly 100 ships.
Fednav buys its ships in Japan because, Gagnon says, Canadian-built ships cost "at least twice as much."
"Davie no longer has the capacity to build an icebreaker or a frigate," Gagnon said. "To do so, they would have to re-equip their shipyard."
Vicefield said Davie is aware of the challenges ahead and has invested $60 million to upgrade its steel-cutting and IT infrastructure.
The University of British Columbia's Michael Byers, who argues that Ottawa's current shipbuilding strategy is too costly and needlessly slow, says building government ships in Canada makes sense and Davie is definitely up to the task.
"For every $100 million that is spent on building a ship in Canada, you would get several times more than that in terms of knock-on economic activity," Byers said.
"And Davie is the logical place to do it. They have a very large shipyard. They have a very capable workforce. The labour costs are relatively low and it's an active shipyard."
Asterix 'very impressive'
Last year, before Ottawa agreed to sit down with Davie to discuss the icebreaker conversions, Davie delivered the Asterix — a container ship converted into a supply ship for the Royal Canadian Navy — on time and on budget.
In 2015, when the navy's existing two supply ships were no longer seaworthy, Vicefield and his team proposed converting the Asterix to a naval supply ship for about $600 million.
"What they did with the Asterix was very impressive," Byers said. "There is no other shipyard in Canada that could have done that."
In comparison, Vancouver-based Seaspan was chosen to build two new navy supply ships for $2.6 billion. But the first new supply ship will only be ready in 2020.
"This is a cutthroat business and there is a lot of money involved and a lot of politics involved," Byers said.
"Davie has the capacity and the experience to build icebreakers, plus they have the lowest costs in terms of labour of any shipyard in the country," he said.
The Canadian Coast Guard has an aging fleet of 13 ice-breaking vessels and two hovercraft.
Ice still a hazard to navigation
Canada's oldest and largest icebreaker, the CCGS Louis S. St-Laurent, was commissioned in 1969.
It was to be replaced in 2017 by the CCGS John G. Diefenbaker.
But from the initial estimate of $720 million, the Diefenbaker is now expected to cost over $1.4 billion, with delivery in 2022.
To meet Ottawa's need for "interim icebreakers," Davie found four icebreakers built for oil and gas drilling off the coast of Alaska that were idled when oil prices fell, putting an end of Shell's Arctic venture.
Prime Minister Justin Trudeau agreed to negotiations with Davie to acquire the three smaller ice-breaking vessels, leaving aside the larger Aiviq.
With no other shipyard matching Davie's proposal, the conversion work will begin this summer.
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Chris Thatcher Canada will struggle to retain its position as a leading player in the global aerospace market without a government-backed industrial policy. That was the stark message form a trio of industry executives to the Canadian Aerospace Summit in mid-November as the sector embarks on Vision 2025, an exercise involving industry, federal and provincial governments, and other stakeholders to develop recommendations the Aerospace Industries Association of Canada (AIAC) hopes will lead to a long-term, fully-funded sector strategy. “I think it is important we have a sound industrial policy in Canada,” said David Gossen, president of Halifax-based IMP Aerospace and Defence. “It's clear every nation [that has an indigenous capability] is doing all they can to protect that industry. I think we need to follow that same principle.” As an engineering and in-service support (ISS) provider to the Royal Canadian Air Force (RCAF), Gossen has seen the business model transform in recent years as OEMs have transitioned from long-term partners to fierce competitors for maintenance, repair and overhaul (MRO) work. He's watched emerging markets start to create their own domestic support capabilities–in some cases after requesting IMP know-how. And he's seen established aerospace nations erect barriers to protect their own ISS providers. He's also watched the boom and bust cycle of Canada's shipbuilding industry on the East Coast and drawn lessons he fears aerospace is in danger of repeating. “We don't [want to] spend 10 years trying to figure out how we rebuild [our] industry,” he cautioned. Many of Gossen's concerns were echoed by fellow panellists Dan Goldberg, president and chief executive officer of Ottawa-based Telesat, and Amandeep Kaler, chief executive officer of aerostructure manufacturer Avcorp Group. Goldberg said the 50-year-old satellite communication services provider is being buffeted by similar dynamics as traditional players seek greater protection at home and emerging markets strive to gain entry. “Our industry is changing dramatically,” he said. For manufacturers like Avcorp, a component and repair services supplier to international OEMs and airlines for over 16 years, “our business is being reshaped,” said Kaler, noting the growth of build-to-print suppliers in government-support markets. “The race for best price is not going to slow down anytime soon,” he said. “You can let it happen or you can take the steps . . . to be the leading-edge of that by bringing your own capabilities and leveraging other technologies that are available to us in Canada.” To survive, all three executives pointed to the need for expertise and intellectual property in niche capabilities. But they acknowledged government planning and support will be necessary if aerospace is going to capitalize on new technologies. While Telesat, for example, would prefer its satellites to be manufactured and integrated by Canadian suppliers, many of which have the technical ability, “at the end of the day we are a for-profit company . . . and we are going to procure satellites from the group of companies that can give us the best overall value proposition,” said Goldberg. If Canadian suppliers are to compete in the company's project for a new constellation of low orbit satellites, they will have to make “meaningful investments,” which will require provincial and federal assistance, he acknowledged. “I can say their competitors outside of Canada are receiving that kind of support,” he said. Goldberg flagged niche capabilities such as digital processing in space, phased array antenna technologies, and optical communications which several Canadian companies already provide. “They need to evolve their technologies to deliver what we need, and that is going to be a big investment on their part,” he said. Kaler and Gossen highlighted niche areas like robotics, automation, business aircraft, artificial intelligence as well as simulation and training systems and ISS, both of which were identified in a 2013 report by Tom Jenkins of Open Text, Canada First: Leveraging Defence Procurement Through Key Industrial Capabilities. Though government departments have refined the list of key industrial capabilities since the report was published, the strategy to leverage them is still pending. “Every segment will say we need to be supported. The reality is we can't be everything; we need to pick those we're good at and ensure we have good policies to support them,” said Gossen. “We need a healthy debate within government and industry to identify what those capabilities are,” he added, alluding to the promise of Vision 2025, an exercise now underway and led by Jean Charest, a former Québec premier and federal cabinet minister. “If I were a government policymaker, I'd start with what are we good at today and where these global markets are going, and then try and connect the dots between the two. And then I would start making some bets,” said Goldberg. “If the government doesn't start leaning in on some of these policies, all of these capabilities will completely atrophy.” In a controlled market such as defence, where governments often protect domestic manufacturers and build new capabilities, Gossen also argued for a similar approach to level the play field. Canadian suppliers need government help understanding where they can sell, he said, noting “a lot of markets are just closed to us.” Playing the sovereignty card, he said Canadian companies “should have the ability to service Canada's military equipment,” and suggested an industrial strategy could ensure “homefield is always protected.” https://www.skiesmag.com/news/aerospace-execs-call-for-government-strategy-to-support-key-industrial-capabilities