February 19th 2015 – Ottawa, Ontario: The Shipbuilding Association of Canada congratulates Davie on having been awarded the ‘North American Shipyard of the Year 2015’ title at the prestigious Lloyds List North American Maritime Awards yesterday.
Vice-Adiral (ret.) Peter Cairns, Chairman of the Shipbuilding Association of Canada commented ‘For a Canadian shipbuilder to win such a prestigious international award, beating the largest of the US naval shipbuilders in the final, is absolutely fantastic. The accomplishments of Davie over the past few years have been tremendous. The quality, pricing and timing of their shipbuilding programs is on a par with the world’s leading shipyards so it is no surprise that they have been voted North America’s number one shipbuilder. Bravo Zulu to the men and women of Davie.’
Bridging the AOR gap
In November, the government announced that a delay in the construction of the Queenston Class Joint Support Ships would leave the navy without supply ships until at least 2021 or 2022 at the earliest. The government announced that over the past few months that they have been looking into ways to fill the gap which the early decommissioning of our two Auxiliary Oiler Replenishment ships has created. The CBC has been reporting that the government is looking at two alternatives. Firstly, a proposal from Davie shipyard in Quebec to convert a commercial vessel which would then be leased to the navy and secondly, the lease of one of the United States Navy’s old supply ships.
A vital role in our naval task force
To understand the impact of the gap, one must first look at why having a naval supply ship is so important. The role which Canada’s Auxiliary Oiler Replenishment (AOR) ships played include:
- Refueling our surface combatant fleet (frigates and destroyers): Our surface combatant fleet has acceptable straight line range but in operational scenarios where speeds in excess of economical speed are required they must be refueled regularly.
- Replenishment: Replenishing our surface combatant fleet with stores, spares, food and ammunition.
- Medical and dentistry facilities: With very limited onboard medical facilities, the surface combatant fleet depends on the AOR’s to provide medical and dentistry care for our sailors while they are at sea.
- Humanitarian Relief: The AORs are a key strategic asset for providing humanitarian relief. With accommodation for around 300 people and hospital facilities, they provide food, medical care and supplies in times of crisis.
- Helicopters: An AOR can embark three Seaking helicopters to supplement the task group’s resources and can support an additional level of helicopter maintenance.
To put it very simply, without an AOR the navy’s operations are restricted and their endurance is severely reduced. That effectively turns the Royal Canadian Navy into a coastal defence force. While we can rely to some extent on our allies and their fleet auxiliary vessels to refuel our surface combatant fleet, we can only do that for so long and it still doesn’t help our sailors receive medical care at sea or allow us to independently operate a task force or perform humanitarian relief operations.
There is no question – without an AOR capability, we have a crisis on our hands.
And let’s not forget we have just spent $4bn on a full modernization program of our frigates under the FELEX program. If we now can’t create a task force or independently deploy those vessels, we are not getting the return on our investment that we must have. The Royal Canadian Navy costs taxpayers roughly $2.5bn per annum. Let’s assume the cost of leasing an AOR gap filler is around $100m per year, that’s a small price to pay to make our $2.5bn a useful investment.
Two options but only one real solution
What the CBC reported would seem to make sense. Davie is the only shipyard in Canada today that is fully operational and has the availability, capacity, labour and facilities to perform such a conversion in the time frame required. Those who follow the shipbuilding industry will have seen Davie’s recent delivery of the Cecon Pride, a highly complex oilfield services vessel for export to Norway. The other two shipyards that could potentially take on such a task, in Vancouver and Halifax, have their orderbooks full for the next 15 years at least and they are still in the process of actually modernizing their shipyards. Converting a commercial vessel into a naval auxiliary vessel is also tried and tested. Among those who have already done it are the Royal Navy, Royal Australian Navy and the United States Navy.
The second option presented in the article is in line with what we already know. The United States Navy is looking to do anything they can with their two laid-up supply ships, the USNS Bridge and USNS Rainier. These behemoths are nearly the size of an aircraft carrier and their four gas turbine engines are so complicated and fuel-consuming that even the US Navy can’t afford to operate them. The US Navy may also have a couple of 30 year old tankers which have been decommissioned and transferred to the US Maritime Administration for scrapping. Both of these options are non-starters for the Royal Canadian Navy.
That really only leaves the Davie option. Let’s hope the powers that be can react quickly enough to capture this opportunity and bridge the AOR gap, ensuring our national security, the welfare of our sailors and our navy’s ability to remain ready aye ready.
Vadm Peter Cairns (Ret’d)
President, Shipbuilding Association of Canada
The times Colonist of Victoria BC has reported that mid-life upgrades are being considered for two BC Ferries Spirit-Class vessels. These vessels are the largest in the BC Ferries fleet. The plan is that the work on these vessels would take place in 2016 and 2017 and include replacing the present diesel engines with a duel-fuel system using both diesel and LNG.
This is work that can be done domestically and the unions are optimistic that this work will be done in BC. It remains to be seen whether the capacity issue that BC Ferries used as the reason to go offshore to build three intermediate ferries will allow this upgrade work to be done in BC. There are other yards in Canada that can be utilized if Capacity is not available in BC. Canadian engineering know-how is innovative yet undervalued especially by Canadians who should know better. These are projects that must be done in Canada.
BC Ferries has awarded a $165 million contract for three new intermediate class ferries to Remontowa Shipbuilding SA of Gdansk, Poland.
These ferries will be dual-fuel diesel and LNG for propulsion and power generation. The contract includes guarantees for completion dates and vessel performance. Warranties are above industry standard with penalties for late delivery. There is no mention of any incentives provided to the shipbuilder.
The Shipbuilding Association is disappointed in BC Ferries going offshore to build these ferries. In one sense this is an example of the National Shipbuilding Procurement Strategy (NSPS) having an unintended negative effect on the commercial side of shipbuilding in Canada. One of the short-listed yards withdrew because of NSPS related capacity issues. The one other Canadian yard that entered the competition was found to be unsuitable and not short-listed. This situation is analogous to that of Atlantic Towing who could not find capacity in Halifax NS and subsequently went offshore to have ships built.
While going offshore may seem to make business sense to companies like BC Ferries it can be argued that it does not make good economic sense for Canada. Historically in domestic ferry construction Canadian content typically exceeds 80% of the ship’s value. In the order of 50% of the construction value is spent to acquire marine equipment from domestic suppliers. This economic benefit is lost to Canadians when ships are built offshore. Additionally a significant portion of the 30-year life cycle cost of spares and overhaul of fitted equipment will accrue to the country of build.
The new Quebec maritime policy offers considerable assistance to the marine industry and shipbuilders in Quebec. The policy initiatives include:
- A tax deduction for funds Quebec shipowners reserve for for the modernization and repair of their fleet or for the construction of vessels in Quebec shipyards.
- The development of major intermodel and logistic hubs along the St. Lawrence River to stimulate international marine traffic.
- The introduction of new vessels to reduce the carriage of goods by road throughout the province along with a pilot cabotage project.
- Increased funding for ferry services.
- Improved maritime tourism in the province.
- Improvement in all aspects of maritime skills training.
- Encouraging the use of LNG as fuel.
This is a significant policy initiative that will assist the development of the shipbuilding and maritime industries in Quebec and should be studied by other provinces.
To view the Maritime Policy Document Go to:
Atlantic Towing Limited (an Irving Company) recently announced that it has secured a new ten-year firm contract, plus a total of 15-years of options at the Charterers’ discretion, with ExxonMobil Canada Properties and Hibernia Management and Development Company Ltd. (HMDC) for four new state-of-the art Platform Supply Vessels operating out of St John’s, NL. The first ships will be delivered in 2016 and will join Atlantic Towing’s current fleet of eight offshore support vessels.
In a break with past practice these ships will not be built in Canada but will be designed and built offshore by Damen Shipyards Group of the Netherlands. They will have a Clean Design designation with a diesel electric power plant, the latest environmental control equipment, wave piercing bow design, and enhanced crew comfort.