Davie, rivals square off over future of multibillion-dollar shipbuilding plan

OTTAWA — The president of Davie Shipbuilding says he is confident the Quebec-based shipyard will be tapped to build two new ferries included in this week's federal budget.

But James Davies says it is time the federal government stop rewarding other shipyards for failing to deliver new vessels to the navy and coast guard, and officially admit his company into the multibillion-dollar national shipbuilding plan.

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The comment came late Wednesday as top officials from Davie and its two bitter rivals, Vancouver-based Seaspan Shipyards and Halifax-based Irving Shipbuilding, appeared one after the other before the Senate finance committee.

Seaspan and Irving were selected through the shipbuilding strategy in 2011 as the two shipyards responsible for building what at the time was estimated to be $35 billion worth of new vessels for the navy and coast guard.

Davie also competed but was passed over and has since been forced to fight for scraps outside the plan.

That includes the provision of an interim resupply vessel for the navy and three second-hand icebreakers for the coast guard.

Davies also told the committee he did not think any other shipyard could provide the two new ferries included in the budget. They will replace two existing ferries, one of which operates between Quebec and Prince Edward Island and the other between Nova Scotia and P.E.I. The budget does not provide any further details, including cost or when they will be built.

Despite his sunny view of his company's capability, Davies was clearly focused on getting his shipyard admitted into the national shipbuilding plan. He noted that, seven years after it was launched, both Seaspan and Irving are continuing to get work despite not having delivered a ship, and the plan's overall costs have doubled.

"A deal with no consequence of failure is toothless," Davies said. "Consequence means that in the light of such failure, the government needs the ability to choose an alternative supplier for future contracts."

That includes potentially breaking up the work that, under the current arrangement, is almost entirely the purview of the other two yards, he said, and contracts not yet awarded.

Davies specifically mentioned 10 large coast guard vessels that were promised to Seaspan in 2013 at an estimated cost of $3.3 billion, but construction of which won't realistically start until sometime in the mid- to late-2020s.

During his own appearance, Irving Shipbuilding president Kevin McCoy defended his shipyard's work to date, telling the committee that the first of 21 vessels Irving has been tasked to build, an Arctic patrol ship for the navy, will be delivered this summer.

Progress is also being made on five others, McCoy said, as well as the navy's new, $60-billion warship fleet, which will be built in the coming decade.

The original cost of those warships was estimated at $26.2 billion, while the first Arctic ship was initially expected in 2015, but McCoy nonetheless said there has been a lot of false information and rhetoric about the state of the plan — and of Irving.

Seaspan chief executive officer Mark Lamarre similarly said a short time later that work is advancing on the West Coast as three fisheries science vessels for the coast guard are near completion after several delays, some of which were caused by faulty welding.

Steel has also started to be cut on the first of two long-overdue resupply vessels for the navy, he said.

Lamarre admitted Seaspan has faced challenges, but he said difficulties were inevitable given that it had been a generation since the government and shipbuilding industry launched such a massive project.

Both sides have learned some hard lessons over the years that are now being applied, he added.

While they didn't mention Davie, the Seaspan and Irving officials also both pushed back against any suggestions of opening up or otherwise changing the national shipbuilding strategy, saying a fair competition was held in 2011.

James Irving, co-chief executive officer of J.D. Irving Ltd., which owns the Halifax yard, said his company invested $450 million of its own money with the "good faith" understanding the strategy would not be changed.

— Follow @leeberthiaume on Twitter.

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