Canada’s Shipbuilding Strategy: A Lesson for the EU

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By Marek Grzybowski

Canada’s National Shipbuilding Strategy was launched almost 15 years ago. Its aim was to help maintain the production potential and modernize shipyards and rebuild maritime industries. At that time, there was talk of creating sustainable jobs in Canada. The focus was on sovereignty and protecting the interests of the industry at home and abroad. In 2010, the Canadian government committed to creating jobs and equipping the Royal Canadian Navy and Canadian Coast Guard with much-needed ships and vessels. The strategy proved effective and it is worth transferring its most important elements to EU and Poland.

Similarly to the EU, from the mid-1990s to 2010, the Canadian shipbuilding industry slowed down significantly. There were many reasons. The basic one was a fact that affected the entire industry at that time. For many years, there were no significant new orders for shipbuilding in Canada. At the same time, shipyards in South Korea were actively marketing. Shipyards were being built in the People’s Republic of China.
– Compared to other countries, Canada’s shipyards were outdated and there was no easy access to equipment, new supplies and skilled workers – notes the Canadian government portal, which states: “The time has come for a new approach”.

In 2010, the government took decisive steps, which resulted in the decision to support the Canadian maritime industry and build ships and vessels in Canada. The new approach was called the National Shipbuilding Strategy. It focused on a sustainable, long-term shipbuilding plan that was to benefit Canadians and the Canadian shipbuilding industry. Thanks to this strategy, Canadian shipyards were revived, because contracts for the Navy and Coast Guard began to be placed in Canada.

This strategy allowed for significant investments in the Canadian maritime industry, such as developing and maintaining specialist knowledge and creating sustainable employment throughout the country. It introduced predictability of federal ship orders – emphasizes the Canadian government portal discussing the effects of the strategy. Ensuring the stable development of the shipbuilding industry was also an important issue. Thanks to the predictable ordering strategy, cycles have been eliminated in shipbuilding production, for which periods of downturn were particularly painful.

Government and business create synergy of initiatives
It is emphasized that the government did not act alone in creating the strategy. It was developed after consultations in industry groups. The emphasis was on impartial assessments, advice and assistance to ensure that the government makes informed decisions. The effect of these consultations was the development of the National Shipbuilding Strategy.
It was calculated that the total contracts implemented under the strategy implemented in the years 2012-2019 will contribute to the achievement of $13 billion in gross domestic product. As a result of the recovery of the shipbuilding industry, it was estimated that the implementation of the strategy will enable the maintenance of almost 12 thousand jobs in the Canadian economy per year from 2012 to 2022.
In promoting all aspects of the National Shipbuilding Strategy, the Canadian government has particularly highlighted the benefits for society, the economy and maintaining the technological level of the Canadian industry.
The Industrial and Regional Benefits Policy (IRB) and the Industrial and Technological Benefits Policy (ITB) ensure that Canadian industry benefits from Canadian defence and security purchases. It is emphasized that these policies play an important role in leveraging Canada’s defence and security spending to generate economic benefits for the country.

The Government of Canada emphasizes that, in accordance with these policies, shipyards and their main suppliers undertake economic activity in Canada equal to the value of the contract and provide important investments in selected areas, such as:
• work in Canada directly related to orders under the strategy,
• opportunities to receive products for shipyards from Canadian suppliers,
• technical and technological innovations developed through funding science and R&D activities in Canada,
• development of skills and new export opportunities for Canada’s maritime industries.
As a result of the state’s policy of supporting the shipbuilding industry, the average salary in Canadian shipyards is 30% higher than the average in the manufacturing sector. Generally speaking, the Canadian maritime industry is innovative and supports qualified employees. It is worth emphasizing that activity in maritime industries means that in their environment, in Canada, we are dealing with a share of employment in the area of ​​science, technology, engineering and mathematics (STEM) 2.5 times higher than in the entire manufacturing sector.
Access to professions and activities in industries is a very important issue that the Government of Canada has drawn attention to. The implementation of the Maritime Industries Development Strategy emphasizes that “provides fair opportunities in the maritime sector for businesses by underrepresented groups in the shipbuilding industry, including women, indigenous people and people with disabilities.” Leading Canadian shipyards, government and academia have been involved in the implementation of the strategy. Partnerships have been formed with 3 major shipyards, federal departments, academic institutions, research organizations and others to increase the participation of underrepresented groups in the shipbuilding sector.

Shipyards invest in people, science and technology
As part of the Value Proposition guidelines, shipyards were required to invest 0.5% of revenues from government contracts in 3 priority areas that are to provide tangible benefits to the domestic shipbuilding industry. These are: human resources development, technology investments and industry development.

To date, shipyard contracts implemented under the Value Proposition have generated over $20 million.

The Canadian government’s shipbuilding development strategy has outlined activities in 3 areas:
1. Construction of large ships (over 1,000 tons of displacement),
2. Construction of small ships (below 1,000 tons of displacement),
3. Projects involving repairs, modernization and restoration of the operational value of ships.
The construction of large ships (over 1,000 tons of displacement) has been based by the government on long-term contracts for the construction of large ships. The focus was on orders from three Canadian shipyards: Seaspan’s Vancouver Shipyards in British Columbia, Chantier Davie Canada Inc. in Lévis, Quebec, and Irving Shipbuilding Inc. in Halifax, Nova Scotia.
– A total of three shipyards are investing hundreds of millions of dollars in modernizing their facilities to meet the requirements for building ships for a modern Canadian fleet – emphasizes the Canadian government portal. In total, these shipyards have placed contracts for about 50 ships and patrol vessels for the Canadian Coast Guard.

The project of 15 Canadian Surface Combatant (CSC) ships has been allocated from $56 to $60 billion in the initial phase. The project is in the design phase, and the first ship should enter service in the early 30s. The contract will be implemented by Irving Shipbuilding Inc. The project will be implemented by the Canadian design team Lockheed Martin Canada (LMC), which was selected in a competition. The CSC design will be based on the Type 26 frigate from BAE Systems. The design team, in conjunction with Irving Shipbuilding Inc., will develop the final CSC design.

The small-scale (less than 1,000 tons) segment includes approximately 30 units for the Canadian Police, Navy and Border Patrol. For example, the Search and Rescue Rescue Boats will be built by Chantier Naval Forillon (Gaspé, Quebec) and Hike Metal Products (Wheatley, Ontario). Each yard has received orders for 10 units. The $176.4 million project began in late 2017. The project is scheduled for completion in 2024.
The ship repair and overhaul area provides access to all shipyards with the right equipment and expertise, provided they are Canadian. Under this strategy area, all Canadian shipyards can compete to repair, overhaul and maintain ships.

As can be seen from this brief overview, the Canadian government has focused on the National Shipbuilding Strategy, recognizing that the domestic shipbuilding industry is not only a carrier of innovation but also a guarantor of the country’s security, building its international position and a significant source of gross domestic product.
– The strategy allows the Canadian government and shipyards to make significant investments, such as developing and maintaining specialist knowledge and creating sustainable jobs throughout the country. It ensures the predictability of federal ship orders and aims to eliminate the business cycles in ship orders that have slowed down the Canadian shipbuilding industry in the past – notes Vincent GuerreVincent Guerre, Director for Trade and Competitiveness at SEA Europe on the social networking site.

We recommend that Polish industrial policy makers take a closer look at the Canadian strategy to maintain and stimulate the potential of the Canadian shipbuilding industry, ships and special units. Our production and repair shipyards and their partners still maintain contact with the international market and there is still a basis for building a competitive position of the Polish industry at least on the European Union market.