The B.C. government showed its hand Monday in the fierce competition for the federal $35-billion shipbuilding contract, announcing a package of measures worth $40-million over 30 years to bolster the bid of the Vancouver Shipyards Co.
B.C.’s support comes after Nova Scotia offered a $20-million loan to bidder Irving Shipbuilding Inc. of Halifax to upgrade the Halifax dry dock, and Quebec indicated that contracts to build twin ferries could be awarded to a Quebec shipbuilder without tenders.
The involvement of provincial governments in supporting local bids reflects the competition’s high stakes. The decision will make a fundamental difference in the shape of Canada’s shipbuilding industry.
Those that receive a contract will survive and those who do not will likely cease to exist, David Zimmerman, a military historian at the University of Victoria, said Monday in an interview.
Robert Huebert, of the Centre for Military and Strategic Studies at the University of Calgary, said all the provinces are assuming that whoever receives the nod will be controlling shipbuilding for a long period. “This is why the provinces are now starting to really step up to supporting their shipyards,” he said in an e-mail response to questions.
The deadline closed last week on bids for the shipbuilding contracts. The federal government has said two contracts will be awarded: one for combat ships worth about $28.5-million and a second for Coast Guard and other vessels.
Vancouver Shipyards Co. is competing against Irving Shipbuilding Inc. and a consortium made up of SNC-Lavalin Group Inc., of Quebec, Upper Lakes Group of Ontario and Daewoo of South Korea.
B.C. Jobs Minister Pat Bell said in an interview that B.C. had lost its capacity for shipbuilding in recent decades. The federal contracts create an opportunity to bring new life to the industry.
“This is an industry we think has a strong future in B.C. and we want to make sure we give Seaspan [the parent company of bidder Vancouver Shipyards Co.] the best possible opportunity they could have to win the bid,” Mr. Bell said.
The Vancouver shipyard, which employs 287 people, could provide as many as 3,433 jobs at the peak of the 30-year construction program if the company is awarded the larger contract to build warships, according to a consultants report. An affiliated shipyard in Victoria, which currently employs 772 people, would provide twice as many jobs at the peak of the contract, the report said.
Mr. Bell said the Vancouver Shipyards Co. bid was backed up with the promise of tax credits for apprenticeship and training programs that would be worth $35-million over 30 years if the company wins the bigger contract for combat ships.
The government is also contributing $5-million to a fund for long-term projects, such as research-and-development, recruitment and building a school for training. BC Ferries is contributing $20-million to the fund while the shipbuilding company is putting in around $50-million.
The government’s support for the shipbuilding sector is significantly less than a tax-credit program in B.C. for the film and video-game industry. The film industry receives tax credits worth $200-million annually, while tax credits for the video-game industry are around $35-million a year.
However, the shipbuilding industry has considerably fewer jobs. About 20,000 people are employed in the film production industry in B.C., and around 5,000 in video games. Shipbuilding in B.C. currently employs around 1,000 people.
Prof. Zimmerman anticipates politics will play a role in picking the winners, even though the federal government has said the decision will be made by a panel of independent experts.
“If these contracts are decided simply on their merits, they will probably be the first time in Canadian history that such a thing occurred,” he said. “I don’t think there has ever been a contract that has not had a fair share of political interference.”