New Canadian Shipbuilding Strategy
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Colin Parkinson
Army.ca Myth
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thanks for clarifying it was not clear if the Liberals were honouring that
MilEME09
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Honestly if we want to build an industry and get capabilities quickly, I would toss money at Davie's other proposal that they offered the government, yes its adding more to the over all project but it would increase the other all ship building capacity of the country. Heck maybe say hey Davie want to build us a Mistral?
Colin Parkinson
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That would drive up a lot of costs, but I suspect a that they be happy with a final fitting out and building the landing crafts
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One place where Davie's might come in handy is if they have Offshore Support Ships for use as Environmental Response Ships and Tugs for the Coast Guard for the East and West Coasts.
To escort tankers to and from the pipeline terminals at Prince Rupert, Kitimat, Vancouver and Saint John. Not to mention Come-by-Chance.
To escort tankers to and from the pipeline terminals at Prince Rupert, Kitimat, Vancouver and Saint John. Not to mention Come-by-Chance.
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Pipelines? In today's Canada?
https://cgai3ds.wordpress.com/?s=heartbreak
Mark
Ottawa
https://cgai3ds.wordpress.com/?s=heartbreak
Mark
Ottawa
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jmt18325 said:
I wanted to come back to this point. The more I thought about it, based on my own personal experiences, the more I believe that that is an incorrect statement.
Background: I used to work for a European company selling equipment into Canada and the US. There were three different business models in effect. The two principle models were "The Market Company" and "The Distributor Model". In the market company case we talked directly to the end user. In the distributor model we talked to intermediaries who talked to the end user. The third model, in the case of really big clients was direct sales from the parent company.
The difference in the route could be as much as a 50% cost reduction. Typically every intermediary will see something in the order of a 25% margin. Even if we only gave the distributor a 10% discount the distributor would tack a "what the market will bear" addition on to it. We did it internally as well.
A piece of equipment that we sold we would buy from the division of the company charged with the particular market segment the customer was involved in. The division would buy it from the factory. And then overhead costs would be charged internally.
The Best/Worst personal case I had came very early in my career. I was responsible for a system that had been sold to a company in the interior of BC. The location was sufficiently remote, the equipment was sufficiently complex and, as I have noted, the equipment was European so the client wanted to keep an enhanced packet of spares on hand.
One piece of equipment that was identified as critical was a valve for controlling the steam supply. The client asked for price and delivery on a spare. After waiting for a month I got an answer to relay to the client. $10,000 and 3 months.
Now the valve was critical and stainless steel but it was only a 2" valve. So I went looking for the rationale. I called up the factory in Sweden. They said they got the valve from a distributor in Sweden. That distributor got the valve from a European distributor in Brussels. The Brussels distributor got the valve from its parent in the US. The US distributor got the valve from the US parent of the company that manufactured the valve. The valve was actually manufactured in Canada. I was working in Scarborough. The valve was manufactured in Mississauga. The base valve was an off the shelf item with the standard ASME flanges replaced by DIN metric flanges. The customer eventually bought the valve from the primary vendor in Mississauga for $1100.
The $10,000 valve became a $1100 valve.
(In fairness the valve had physically been transported, and crossed borders, every step of the way which added to the markups as freight, insurance and taxes were also added).
On another front:
I once spent a year living with a client, learning his problems, learning how he wanted to solve his problems, preparing solutions, revising solutions and offering him a package of pumps and valves.
One day I was informed the project was going ahead, using my solution, but the client was going to buy the package from another supplier. I asked which of my competitors the client would be using. He informed me he would be using my pumps and valves as well as my solution. He just wouldn't be buying it from me.
Apparently, the division that sold the pumps and valves to my company in Canada also sold the same equipment to distributors in the States. One of the Stateside distributors got a deeper discount (40%) than we, a "sister" company, did. We got 25%. That Stateside distributor then sold them to a BC distributor who sold them to a distributor where I was working who sold them to the client. And they still managed to sell them to the end user cheaper than I could supply them. Now the guy that got the sale hadn't had to put in the year of leg work, and didn't have to cover my salary, and the salaries of all the other people that supported me in finding the solution, so his costs were lower. But that didn't matter to the client. He got the best solution (IMHO) at the best price. And I went on to find my next "paying" customer.
The purpose of the parables is to demonstrate that the market is a weird and wonderful place. Typically, the fewer the distributors there are between the factory and the end user then the lower the price. And I sense/believe that that typically is where Canadian defence contractors find themselves - adding their 25% to a long chain that already sees the US paying $600 for a hammer.
But, as the other story shows, you can't take anything for granted. Every deal has a life of its own and logic is not high on the programme.
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jmt18325 said:
Sounds like the model of every purchase we've ever made for the CAF, besides the C-17, M777 and Chinooks....
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Sorry for continuing the hijack, but a third parable came to mind.
I was project manager for a plant on a job that had a 20 MCAD budget. We identified the process requirements. We sourced vendors. We identified infrastructure requirements and sourced those vendors. We generated a refined budget and started negotiating final deals, where we adjusted our needs/wants to fit the available budget.
As the project progressed contracts were signed and more and more of the budget was committed. Ultimately I was left with a diminished budget, but still a healthy one.
In the interim the plant identified an urgent need (a UOR in your terms I guess) for a piece of kit. That kit was purchased for $250,000, installed and made operational. And the project continued.
As the project continued, and equipment was sized it became apparent that the traffic flow wouldn't work without a second piece of kit, just like the one we had just bought for $250,000.
Now I was bundling process equipment so as to create large packages attractive to vendors. When you are negotiating large numbers then percentage points take on a whole different meaning. Vendors will regularly leave a negotiation cushion, along with a contingency, along with their highest possible margin, in their original offer. Depending on the size of the project the sum of all those component can result in a lot of flexibility. Particularly if the vendors are in a meaningful competition.
My plan was to tell the vendors that I had a budget of 6 MCAD for a package of systems and spares. This included the stuff that I had to have and the stuff that I would like to have. I wasn't particularly fussed about the exact nature of the solution. The budget solution was just that, a budget solution. I was willing to hear alternate solutions that would achieve the same things. The job would go to the vendor that gave me a plant with the most capabilities within my budget.
One of the pieces of equipment in my 6 MCAD package was another $250,000 piece just like the one we had just bought. One of the vendors came up with a similar piece from an equally reputable source, with a long track record, at a list price of $60,000. Not $250,000 but $60,000. We agreed to accept that solution.
The next issue was negotiating the final price of the contract. The $60,000 piece of kit, supplied within the 6 MCAD job represented 1% of the total budget. The negotiation resulted in the price being driven down by more than 1%. In essence we got that capability, which had just cost us $250,000 as a stand-alone UOR, for free when buried within the context of a larger project.
Pricing jobs is a fraught experience.
I was project manager for a plant on a job that had a 20 MCAD budget. We identified the process requirements. We sourced vendors. We identified infrastructure requirements and sourced those vendors. We generated a refined budget and started negotiating final deals, where we adjusted our needs/wants to fit the available budget.
As the project progressed contracts were signed and more and more of the budget was committed. Ultimately I was left with a diminished budget, but still a healthy one.
In the interim the plant identified an urgent need (a UOR in your terms I guess) for a piece of kit. That kit was purchased for $250,000, installed and made operational. And the project continued.
As the project continued, and equipment was sized it became apparent that the traffic flow wouldn't work without a second piece of kit, just like the one we had just bought for $250,000.
Now I was bundling process equipment so as to create large packages attractive to vendors. When you are negotiating large numbers then percentage points take on a whole different meaning. Vendors will regularly leave a negotiation cushion, along with a contingency, along with their highest possible margin, in their original offer. Depending on the size of the project the sum of all those component can result in a lot of flexibility. Particularly if the vendors are in a meaningful competition.
My plan was to tell the vendors that I had a budget of 6 MCAD for a package of systems and spares. This included the stuff that I had to have and the stuff that I would like to have. I wasn't particularly fussed about the exact nature of the solution. The budget solution was just that, a budget solution. I was willing to hear alternate solutions that would achieve the same things. The job would go to the vendor that gave me a plant with the most capabilities within my budget.
One of the pieces of equipment in my 6 MCAD package was another $250,000 piece just like the one we had just bought. One of the vendors came up with a similar piece from an equally reputable source, with a long track record, at a list price of $60,000. Not $250,000 but $60,000. We agreed to accept that solution.
The next issue was negotiating the final price of the contract. The $60,000 piece of kit, supplied within the 6 MCAD job represented 1% of the total budget. The negotiation resulted in the price being driven down by more than 1%. In essence we got that capability, which had just cost us $250,000 as a stand-alone UOR, for free when buried within the context of a larger project.
Pricing jobs is a fraught experience.
Colin Parkinson
Army.ca Myth
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jmt18325 said:
pray tell what is our needs?
1950's We don't need a large combat force, oh hello Korea
1950's We don't need interceptors, missiles will rule
1990's- You don't need any heavy weapons in Bosnia
mid 90's- Tanks are dead, ASW is dead
year 2000-We won't be in Combat anytime soon, certainly not Central Asia
2012- COIN is the way of the future, other than places like Ukraine, Syria
2016- peacekeeping/peace making/piracy, etc etc
The lesson is that we really are not good at predicting the future, the UK, Australia, Egypt, several European countries all consider Amphibs important. We border 3 oceans and have significant coastline. I can see lot's of arguments for them.
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Build a platform. Stick stuff on it. Adjust stuff to suit the occasion. And then if you have time and money and the need is obvious then you can make a specialized unit for the next generation.
That is the history of virtually every weapons system we have out there.
The early men of war were converted merchant ships, whether it was cogs or east indiamen.
The early fighters were canvas bags of sticks and string that carried men with pistols and mortar bombs.
The corvettes were civilian pattern whaling boats with stuff stuck on them, just like the civilian yachts pressed into service.
And the Apache, like the Viper, evolved from the Cobra which started out life as the Huey Gunship.
Other examples would be Dakotas and Hercs and Chinooks and Sea Kings, or even Lockheed Electras, DeHavilland Comets and Boeing 737s.
That is the history of virtually every weapons system we have out there.
The early men of war were converted merchant ships, whether it was cogs or east indiamen.
The early fighters were canvas bags of sticks and string that carried men with pistols and mortar bombs.
The corvettes were civilian pattern whaling boats with stuff stuck on them, just like the civilian yachts pressed into service.
And the Apache, like the Viper, evolved from the Cobra which started out life as the Huey Gunship.
Other examples would be Dakotas and Hercs and Chinooks and Sea Kings, or even Lockheed Electras, DeHavilland Comets and Boeing 737s.
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I agree we have a plan.
We have a plan to build 15 hulls with stuff in them for 20 billion dollars.
Nobody has said that we have a plan to put all the stuff we want into those hulls for 20 billion dollars. Nor has anybody put forward a plan for how we would employ those stuffed hulls once we got them.
We have a plan to build 15 hulls with stuff in them for 20 billion dollars.
Nobody has said that we have a plan to put all the stuff we want into those hulls for 20 billion dollars. Nor has anybody put forward a plan for how we would employ those stuffed hulls once we got them.
As I understand, the hulls are a direct replacement for those we have (not counting the AOPS). We'll employ them the same way, I'd think.
The jobs created by the industry are worth as much as the ships themselves when it comes to the interest of the country.
The jobs created by the industry are worth as much as the ships themselves when it comes to the interest of the country.
Colin Parkinson
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Frankly I don't care or hold my breath for any white paper or plan, the reality is that for most of our history, we have been sending expeditionary forces overseas. The C-17's, C-130J and even the Chinooks all support that reality. For the navy only the JSS truly supports that history, the rest of the navy is there to ensure the army, it's equipment and supplies get there safely (and they have done that well). Before we could specialize on ASW because of the US doing the other tasks.
It is quite plausible that the US may retract it's global role either with a protectionist POTUS or to manage it's debt or a combo of both. I will argue that the RCN needs to readjust to more expanded role with a robust ASW, decent AAD and some Amphib ability. Canada may very well find itself in a conflict supporting other nations other than the US. A perfect example would be a Falkland type conflict, armed intervention into a Sri Lankan conflict, supporting a Aceh type disaster. One things Amphibs will do is give us an ability to gain international brownie points with our allies by transporting their troops, say taking Brits or Italians to Libya. Even if Canada is not in a combat role, our C-17's and amphibs would allows us to be significant contributors to a wide range of missions, including the ones we have yet to realize.
It is quite plausible that the US may retract it's global role either with a protectionist POTUS or to manage it's debt or a combo of both. I will argue that the RCN needs to readjust to more expanded role with a robust ASW, decent AAD and some Amphib ability. Canada may very well find itself in a conflict supporting other nations other than the US. A perfect example would be a Falkland type conflict, armed intervention into a Sri Lankan conflict, supporting a Aceh type disaster. One things Amphibs will do is give us an ability to gain international brownie points with our allies by transporting their troops, say taking Brits or Italians to Libya. Even if Canada is not in a combat role, our C-17's and amphibs would allows us to be significant contributors to a wide range of missions, including the ones we have yet to realize.
More on Davie's unsolicited proposal. They're working the media now, and no matter what the facts are these optics certainly don't look good for our current strategy. Is Davie's proposal really out to lunch?
Interesting to read about the cost-plus percentage approach. I respond to government RFPs quite often, and they're nearly always a mess (most RFPs are) but I agree with Alex Vicefield, it makes absolutely no sense to make it attractive to a contractor for a project to cost more.
http://www.cbc.ca/news/politics/davie-shipyard-boss-canada-shipbuilding-plan-bizarre-1.3494460
Interesting to read about the cost-plus percentage approach. I respond to government RFPs quite often, and they're nearly always a mess (most RFPs are) but I agree with Alex Vicefield, it makes absolutely no sense to make it attractive to a contractor for a project to cost more.
http://www.cbc.ca/news/politics/davie-shipyard-boss-canada-shipbuilding-plan-bizarre-1.3494460
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