FAQ: Halifax shipbuilding bid
Posted: Oct 14, 2011 8:22 PM AT
Last Updated: Oct 15, 2011 2:05 PM AT
The Irving-owned Halifax Shipyard is hoping to land a major shipbuilding contract that would refloat the Nova Scotia economy.
The federal government plans to revitalize Canada's moribund shipbuilding industry and provide new vessels to the navy and coast guard over 30 years.
Only two shipyards can win the lion's share of the $35-billion procurement strategy – the largest shipbuilding program in Canadian history.
What are the projects?
The biggest one – a contract worth an estimated $25 billion – is to build new combat vessels for the navy. These are offshore and Arctic patrol ships, as well as destroyers and frigates to replace the current fleet.
The second contract, worth $8 billion, is to build non-combat ships. These include support ships for the navy, science vessels for the coast guard and a new icebreaker.
A shipyard cannot win both projects. The two winners are banned from applying for contracts worth $2 billion to build smaller boats.
What's at stake?
Irving Shipbuilding owns the Halifax Shipyard, where there are currently 1,000 full-time workers. The yard has a contract for $194 million to build nine coast guard patrol vessels. A $549 million-contract to refit seven navy frigates is set to run out in 2018.
Those contracts pale in comparison to the new shipbuilding contracts.
The direct and indirect spinoffs from the shipbuilding program are said to be worth $800 million a year to the Nova Scotia economy. In fact, Premier Darrell Dexter calls it the biggest economic opportunity for Nova Scotia since Confederation.
A study commissioned by the Greater Halifax Partnership says if Halifax wins the big contract, it would mean 11,500 jobs – both direct and indirect – in the province during the program's peak years. As an average, that's about 8,500 jobs per year for 30 years.
The rest of the country would benefit from 4,500 jobs.
If Halifax wins the smaller $8-billion contract, it would mean 10,000 jobs during the peak years, but an average of 3,700 jobs a year, according to the Conference Board of Canada study.
Either way, the workforce at the Halifax Shipyard would more than double in size to peak at 2,500 workers.
Another part of the study breaks down the yearly spinoffs in Nova Scotia during peak construction years:
- 420 new homes
- 750 new car sales
- $38.5 million in groceries
- $11 million in restaurant meals
Hundreds of suppliers stand to benefit. Irving confirms that its shipyards in Shelburne, N.S., and Georgetown, P.E.I., would also gain from shipbuilding work if it wins a big contract.
Who are the competitors?
Seaspan Marine Corp. in B.C. and the Davie shipyard of Lévis, Que. are both in the running.
The Seapan-owned Vancouver Shipyards makes barges and ferries and retrofits navy frigates and submarines. The B.C. government has been lobbying hard on its behalf. In July, it promised $35 million in labour training and tax credits if the company won one of the federal contracts.
The Davie shipyard is on the St. Lawrence River near Quebec City. It made its last major deliver in 1979. The yard was idle and in financial straits until it was bought by Ontario shipbuilder Upper Lakes Group in a joint venture with SNC-Lavalin and Daewoo of South Korea. That last-minute deal allowed Davie to enter the race for the shipbuilding contracts.
The Quebec government promised to give Davie two ferry contracts if it was sold. It also lent Davie more than $6 million to cover yard costs and prepare for the bid.
What is N.S. doing to win the bid?Signs like this have sprouted up around Halifax. (CBC)
Like B.C., the Nova Scotia government has thrown its support behind the local bid. Dexter travelled to Ottawa to meet with federal officials and won the backing of the other premiers in the Maritimes.
The Dexter government has spent at least $100,000 on the Ships Start Here ad campaign, ranging from a website to lawn signs. The premier's office says the province is splitting the bill with Irving Shipbuilding and the full cost won't be known until after the contracts are awarded.
In 2010, before the shipbuilding program was announced, the province gave the Halifax Shipyard a repayable loan of $20 million to help it expand.
The government is also putting $190,000 into a new metal fabrication program at Nova Scotia Community College.
Who picks the winners?
The bids are evaluated by a committee of deputy ministers from four departments: Public Works, Defence, Fisheries and Oceans, and Industry Canada. The committee recommends the winners.
Cabinet ministers say the process is designed to keep political considerations at bay. They say the bureaucrats decide the winners based on a strict list of criteria, and they're really kept at arm's-length.
Once the winners are announced, negotiations will begin to seal the deals. It could take up to two years to conclude the entire procurement process.
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