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Seaspan Marine’s Vancouver Shipyards will soon be revamped to prepare for $8 billion worth of work for Ottawa (Dina Goldstein/Dina Goldstein)
Seaspan Marine’s Vancouver Shipyards will soon be revamped to prepare for $8 billion worth of work for Ottawa (Dina Goldstein/Dina Goldstein)

ROB Magazine

Shipbuilding in B.C. catches a second wind Add to ...

While some of the locals dismissed him as a party boy with little but dad’s money to recommend him, the younger Washington was working his way up the marine industry hierarchy and watching for opportunities. In 1999, he persuaded his father to start investing in the offshore container shipping business that is now Seaspan Corp. A Hong Kong-based international charter service, this arm of Seaspan buys freighters from big Asian yards and settles them quickly into long-term leases. It began, in 1999, by ordering five smallish vessels—4,250-TEU ships that they bought from Samsung Heavy Industries in South Korea. (Container ships are classified by how many containers they can carry: TEUs is short for 20-foot equivalent units.) Today, the Seaspan offshore empire claims Canada’s largest container fleet: 69 vessels, ranging from the 25,000-tonne Lima, which is rated to carry 2,500 TEUs, to the 140,000-tonne Harmony, which is rated for 13,100 TEUs.

Even as Dennis Washington approaches his ninth decade, father and son still operate as a tag team—As Kyle says, “He finds the deals and we consolidate them”—but no one doubts that the son has the wit to spot a good opportunity, to hire the right talent and then to stay out of the way while his ever-expanding team contributes to his ever-expanding fortune.

Interestingly, in the context of the federal shipbuilding contract, that fortune was a critical—perhaps a crucial—factor in Seaspan’s successful bid. It took someone with deep pockets and a long view just to patch up a B.C. shipbuilding industry that even the provincial government was deriding as a basket case. And it also took a good supply of cash on hand to prepare a credible bid for the federal ship contract—a competition that pitted B.C. against both Quebec and the Maritimes.

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To fully appreciate the first challenge, it’s best to go back to the model of the BC Ferries Fast Cat sitting on the Seaspan boardroom bureau. These vessels, high-speed catamarans that were meant to replace the hulking great ferries that connect Vancouver Island to the Mainland, were also supposed to revolutionize shipbuilding in B.C. According to the New Democrat Glen Clark, who became premier in 1996, state-of-the-art construction techniques necessary to build superlight, superswift ferries would make B.C. shipbuilders competitive in the international market.

Trouble was that when the project was launched, no single West Coast shipyard was capable of managing the work. So, recalls Doug McArthur, Clark’s deputy minister, the government decided to recruit pretty much every yard in the region—to build the ship in components—and set up a Crown agency, Catamaran Ferries International Inc., to manage construction. The advantage, says McArthur (who is now a professor at the Simon Fraser University School of Public Policy), was that this model “internalized control.” The downside was that it also “internalized risk.”

That was too bad for the New Democrats. Costs more than doubled (from $210 million to in excess of $460 million), the program fell badly behind schedule and the ferries, when completed, were a design disaster. BC Ferries passengers were well accustomed to bigger, slower boats—de facto cruise ships with spacious open decks. The Cats were cramped and enclosed—you weren’t allowed to go outside—and the lightweight aluminum furniture was slightly less comfortable than the kind of steel chairs that McDonald’s used to use to discourage people from loitering over their fries.

Worse, the fast ferries weren’t allowed to go fast. Operating at full speed in B.C.’s enclosed coastal waters, these pretty and technically efficient vessels kicked up huge waves that would burst unpredictably on the shoreline, endangering swimmers and busting up docks and seawalls. The Cats came on stream in 1999, and in less than a year BC Ferries declared the whole adventure a failure. The economic loss added significantly to the political conflagration that reduced the New Democrats to just two seats in the 2001 election.

Today, Kyle Washington still defends the quality of the workmanship. Looking at the model, he says, “The world thought they would be more popular than they were.”

In what many people interpreted as an effort to lay even greater responsibility at the feet of the New Democrats, the succeeding Liberal administration sold the three Cats in 2003 for a total of less than $20 million—that was a $440-million tax-funded loss. (Washington describes the whole affair as “politics as blood sport.”) On the bright side, though, the Liberals sold the ferries to…the Washington Marine Group (as Seaspan was then known). The Washingtons later flipped the ferries to a buyer in the United Arab Emirates, for an undisclosed sum.

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