New Canadian Shipbuilding Strategy

[Edward Campbell]

Understood, Privateer, but according to its own website, "J.D. Irving, Limited is a diverse family owned company with operations in Canada and the United States." Now, I understand that the shareholders are family members but that doesn't mean one family member cannot sue the other in US courts, like Delaware, where fiduciary duty is taken seriously.

 

[Privateer]

Understood, Privateer, but according to its own website, "J.D. Irving, Limited is a diverse family owned company with operations in Canada and the United States." Now, I understand that the shareholders are family members but that doesn't mean one family member cannot sue the other in US courts, like Delaware, where fiduciary duty is taken seriously.

That would depend on where the particular J.D. Irving corporation and the particular shareholder are resident.  It looks like there are multiple related corporations.

I can assure you that the courts here do take fiduciary duty very seriously, where such duties exist under Canadian law. 

 

[Edward Campbell]

The CBC's James Cudmore (who is a member here) takes a look at the shipbuilding strategy in a report headlined: "Shipbuilding strategy needs work to get ballooning costs under control, ministers told."

Mr Cudmore says that "The government's massive $39-billion national shipbuilding procurement strategy (NSPS) is in need of repair, with costs for some projects soaring by as much as 181 per cent and others on the cusp of being cancelled, according to briefing materials prepared for some Liberal ministers."

The crux of the report is that the money, $30-40 Billion, is, very simply, insufficient to do the two things required:

    1. Rebuild a Canadian specialist shipbuilding capability that the Government (of the day) of Canada "crashed it in the 1980s" ~ a specific reference to the end of the CPF project and the eventual (2003) decision to close the Saint John Shipbuilding enterprise; and

    2. Build new warships and specialist Coast Guard vessels.

In my opinion there is enough money for 2 (actually building ships) but not for 1 and 2, together.

The issue is, now, further complicated by the entry of Davie (Levis, QC) into the fray with its proposal to modify a container ship into an AORish vessel and lease it to the Government of Canada which has caused concerns within the competitive ranks of the Canadian shipbuilding industry.

 

[jollyjacktar]

You can also add to the mix, IIRC there will be penalties payable to Davies this week in the amount of $89 million if the contract is not signed.  Thanks, Irving, once again for your outstanding assistance to the Canadian taxpayer. 

 

[NavyShooter]

But.....Irving always does first rate work, their quality is top-notch!  I saw it first-hand with MON when we got her back.

 

[Oldgateboatdriver]

ERC, I don't think that the entry of Davie "complicates" the matter.

I know that many reporters like to point out that Davie was not selected or lost out in the selection process of the NCSS. But that simply is not true. At the time of the selection competition, Davie did not apply. It was under bankruptcy protection.

After the yard was acquired by European interests, it tried a last minute effort to be considered for the non-combatants work only, but its participation was denied as too late.

That was now three or four years ago. Did you see davie "bitchin", making threats to the government on a political level, sending letters or stating it would resort to the courts? No. They did not qualify and for them that was the end of it.

Now, three years later, with the program for non-combatants suffering delays and the decrepitude of the Navy's AOR's forcing their retirement, Davie makes a proposal for an interim solution to the government. This solution is completely outside of the NCSS.

So who comes in complaining? Irving. Already the biggest winner of the NCSS, and complaining about work that belongs to Seaspan anyway - who is not itself complaining. And what is their complaint? I re-read very carefully their letter to the ministers: They are not complaining that they could not put forth a proposal. They did put one out there. It was rejected after analysis. What they are complaining about is that the reason(s) for their project not being accepted was not explained to them. That is their sole beef, and they are now trying to use that excuse to get the new government to completely re-open the matter and give them a second crack at getting that work. Talk about whinny brats.

Personally, if that is the way Irving wants to play and I was Davie, I would take the opportunity of any "review" of the NCSS to go out, get an existing modern and up to date design for a destroyer/frigate, make a good costing of it and go to the government and lobby to say: "Look, Irving is screwing you on the costs side. I can do this for about 2/3 of their price". But that's just me, I have been known to hold a grudge.

 

[jollyjacktar]

ERC, I don't think that the entry of Davie "complicates" the matter.

I know that many reporters like to point out that Davie was not selected or lost out in the selection process of the NCSS. But that simply is not true. At the time of the selection competition, Davie did not apply. It was under bankruptcy protection.

After the yard was acquired by European interests, it tried a last minute effort to be considered for the non-combatants work only, but its participation was denied as too late.

That was now three or four years ago. Did you see davie "bitchin", making threats to the government on a political level, sending letters or stating it would resort to the courts? No. They did not qualify and for them that was the end of it.

Now, three years later, with the program for non-combatants suffering delays and the decrepitude of the Navy's AOR's forcing their retirement, Davie makes a proposal for an interim solution to the government. This solution is completely outside of the NCSS.

So who comes in complaining? Irving. Already the biggest winner of the NCSS, and complaining about work that belongs to Seaspan anyway - who is not itself complaining. And what is their complaint? I re-read very carefully their letter to the ministers: They are not complaining that they could not put forth a proposal. They did put one out there. It was rejected after analysis. What they are complaining about is that the reason(s) for their project not being accepted was not explained to them. That is their sole beef, and they are now trying to use that excuse to get the new government to completely re-open the matter and give them a second crack at getting that work. Talk about whinny brats.

Personally, if that is the way Irving wants to play and I was Davie, I would take the opportunity of any "review" of the NCSS to go out, get an existing modern and up to date design for a destroyer/frigate, make a good costing of it and go to the government and lobby to say: "Look, Irving is screwing you on the costs side. I can do this for about 2/3 of their price". But that's just me, I have been known to hold a grudge.

Despite my son working at Irving, sigh..., I would so love to see them get their teeth kicked down their throats for a change.  That's a good suggestion you've made, OGBD.

 

[Edward Campbell]

I stick by "complicates." This is a political process; it's an industrial subsidy programme that only, peripherally, involves the RCN and CCG because that (using "national security") is how one gets around WTO rules (and potential sanctions) about illegal industrial subsidies. The final programme will, of necessity reflect political/industrial/economic realities ~ warships are an afterthought and an excuse, not the object of the exercise.

I half understood why Davie was excluded from the NSPS, but I still believe that governments will want to direct work to a major Quebec yard ~ I think it makes good industrial policy sense.

I don't know how anyone plans to square the circle of keeping three shipbuilding centres "busy" enough over the next 50 years ~ which is one of the things a "strategy" ought to consider. It means, of course, extended programmes building in "batches" while, I guess, further extending the life of the existing (already life extended) fleet.

 

[Oldgateboatdriver]

But the political process is all done: The NCSS yards have been selected and the work is being apportioned to them under the Strategy.

Davie is not trying to butt-in to the NCSS work, they just happened top make a side proposal for a small interim aspect not touched by the NCSS resulting from delays in acquisitions.

Davie did not make waves to get government work at all costs. Since it has been acquired by European interests, it has made a good living from work on one-off highly specialized ships (that are not the cookie-cuter ones you have built in Asia), which they can build at 60% of the cost of building same in Europe, and by building for the US Navy (they build modules for the landing ship docks, the supply ships and aircraft carriers).

So they don't complicate things because they are not actively seeking to change the NCSS. Irving on the other hand ...

 

[Kirkhill]

I continue to believe that Irving should not have been given the AOPS.  It should have been left on the West Coast as a Civilian Vessel where the design teams had done the preliminary work and were familiar both with patrol vessels and arctic vessels.

Check the lineage of the AOPS, the Svalbard and Double Acting Icebreaking Tankers - STX, Aker, Kvaerner Masa, West Coast Manly.

I also continue to believe that Seaspan/Washington Marine, left to its own devices, and based on its commercial background, is equally capable of supplying cost effective logistic solutions to the Navy. 

http://www.seaspancorp.com/fleet-summary/managed-fleet/

 

[jmt18325]

The problem there is that Seaspan already has more pressing work than Irving.  We have the Halifax and the Kingston.  They're at least capable of doing the job.

We have no AOR, we're in danger of culling heavy icebreakers, and we're in real danger of the CCG being reduced to a shadow of what it is even today.  Adding the AOPS to that just wouldn't work.

 

[Kirkhill]

Fair enough - should the AORs be bumped up ahead of the OFSVs for the Coast Guard then?

 

[jmt18325]

Fair enough - should the AORs be bumped up ahead of the OFSVs for the Coast Guard then?

Maybe, but then the Hudson is even older than the AORs were.  Apparently it's only miracles keeping her around.  The Same is true of the Louis S St Laurent. 

The CCGS Terry Fox (the 'new' heavy icebreaker) was originally scheduled to be decommissioned in 2020.  She was built in 1983.  The Louis S St Laurent is 14 years older than her.  There are two other icebreakers older than the Terry Fox (or is it 3?).  To add to that, the large multi task vessels (light icebreakers) aren't even in the que yet and have to wait for the OOSV, the JSS, the Diefenbaker,  5 medium multi task vessels, and 5 offshore patrol vessels.  There will also, at some point, need to be a replacement for another batch of mid shore patrol ships and for the other OOSV.

There are, all told (including what is building) 30 - 35 vessels that need to be built for the CCG in the next 20 years.  Some of them are very sophisticated and expensive.

 

[Kirkhill]

So the Davie solution manages a problem that was evident when the NSPS was put in place but has become exacerbated by the loss of the AORs - and would allow the Diefenbaker to be moved forward (and whisper it) maybe a sister to be built.

And let Irving focus on getting out the 6 AOPS and 15 CSC hulls.  As to how many dollars of gucci kit, the navy wants PWGSC to buy to put in the hulls, and which hulls should get what kit, and how many sailors they are willing to trade for the dollars to buy that kit.....

Other interesting questions.

 

[jmt18325]

So the Davie solution manages a problem that was evident when the NSPS was put in place but has become exacerbated by the loss of the AORs - and would allow the Diefenbaker to be moved forward (and whisper it) maybe a sister to be built.

I would imagine, given the conciliatory tone of Coillard at the First Minister's meeting, that it will probably proceed.

 

[Colin Parkinson]

The sniveling and whining on CBC is sickening, did the CPC do a great job, perhaps not but looking at the history of ship building contracts in Canada, they really did set out to fix a systemic problem in regards to the ship building industry and I not sure anyone could have done a better job handling the political considerations.

 

[jmt18325]

The sniveling and whining on CBC is sickening, did the CPC do a great job, perhaps not but looking at the history of ship building contracts in Canada, they really did set out to fix a systemic problem in regards to the ship building industry and I not sure anyone could have done a better job handling the political considerations.

The problem is that it took too long.  If they would have started in 2006 rather than 2009 - 2010, we'd be in possession of 1 AOPS, all 3 OFSVs and most of the way towards another AOPS and the OOSV.

 

[Colin Parkinson]

No argument there, but I don't think the politicians had wrapped their heads around the immensity of the problem at that time.

 

[jmt18325]

No argument there, but I don't think the politicians had wrapped their heads around the immensity of the problem at that time.

That's the real problem.  Really this is all about 10 years too late.  That means that from now until 2030 - 2035, it's going to be a job just to keep the capability we have, especially on the non combat side.  We've already lost everything that we're going to on the Combat side.  Arguably, the retirement of the 280s and the reallocation of parts of their crew has left the combat side of the navy stronger than it has been in years, especially as the last of the Halifax class make their way through their upgrade program. 

I fully expect that the last 280 will be retired in early 2017, as the last 330 reaches IOC after its update.

 

[Kirkhill]

http://www.casr.ca/ft-adv-sidebar2.htm

Canadian Defence Procurement  –  sidebar  –  February 2004

Streamlining Defence Procurement:  Can  NDHQ  deliver ?

Recommendations to former Minister of National Defence, John McCallum,
by his Select Advisory Group (on Administrative Efficiencies)

Sidebar 2  —  ALSC:  an Example of Inappropriate Procurement Projects.
No relation to CF needs, a lack of strategic focus, and simply unaffordable.

Update: Another successful rebranding exercise by DND planners. ALSC became the Joint Support Ship Project. The $2.6B JSS project became a cornerstone of the Harper government's National Shipbuilding Procurement Strategy in July of  2010.

Joint Support Ships/ALSC  –  the 'Afloat Logistics Sealift Capability' program

Size comparison - Joint Support Ship/ALSC (behind) looms over Protecteur The ALSC project dates back to 1992.