Thank you very much.
The topic under discussion is manufacturing and competitiveness in Canada. It's maybe a bit odd for a service company such as Secunda Marine, which owns and operates vessels, to be here talking about manufacturing, but we use ships that are built, and they're manufactured, and therefore the policies that are implemented with respect to vessels have an impact on our business. Actually the regime that has been in place has dictated and created a set of circumstances such that our company has actually had to become a manufacturer of ships in order to be competitive.
To give you a little bit of background on our company, we own and operate a fleet of 16 vessels that work worldwide. We're based in Dartmouth, Nova Scotia. We're a one hundred percent Nova Scotia Canadian-owned company based here in Halifax and Dartmouth. We work in the domestic market as well as in the international market. In terms of competitiveness with the Norwegians, we work in the Gulf of Mexico, we work in the North Sea, we work in west Africa, and we work here. We know about competition, and we know how well suited and well positioned the Norwegians are as far as our sector is concerned.
In Canada we have one policy with respect to shipping and shipbuilding, and that's a high-tariff policy. I will try to explain how in Norway they have a whole range of policies and initiatives in place that support their very vibrant and strong shipping and offshore sector. In what's being proposed in the EFTA situation--this negotiation with the powerhouses of Switzerland, Liechtenstein, Iceland, and Norway--our main concern is with Norway. The fact of the matter is that if you were to choose the strongest competitor in our sector, and open the door to them, and let them come in and walk over us, that competitor would be Norway. So it just isn't logical.
I have a whole list of questions here, which I've been posing to everybody in the government for about three months. Madam Denise Verreault, who runs Verreault Navigation in Quebec, summed it up in one sentence: What's in it for Canada? What's in it for us? Nobody can answer that question. They say we're falling behind the United States in the number of free trade agreements we've negotiated, or that we need to get access to the European market. In response to that I ask, how do you get access to the European market with a rump that is not part of the EEC? The reason they're not part of the EEC, particularly in the case of Norway, is that they want to perpetuate their protectionist policies and do not want to comply with the open trade policies that are in place with the EEC.
I get a sense that somebody in the bowels of the Lester B. Pearson Building has decided free trade agreements is what they do. This is what is exciting for a new minister, so let's float this trial balloon and see where it goes. So something that we thought had a stake in the heart four years ago is rising from the dead like Lazarus. We're faced once again with having to mobilize people to explain things to a new group of trade negotiators who really don't know anything about our industry. The new lead trade negotiator just got his job about three weeks ago, and he's off to Norway to negotiate our industry away.
In any event, let me just address a few of the issues that Paul has touched upon.
In terms of the size of our company and the offshore, the offshore is extremely important for Nova Scotia. Our company has been a success in terms of exporting homegrown technology and expertise worldwide. We have an asset value of over $300 million. We had revenues last year of $95 million. We employ upwards of 450 employees based here in Halifax, and also in all of the small communities in rural Atlantic Canada. It's not just Halifax that's benefiting; it's all of the places like Sheet Harbour and Mabou, and Shelburne, and little towns in Prince Edward Island and New Brunswick and so on. The economic benefit from this industry is not localized in one area, but spreads throughout the region, so the impact is tremendous.
In the past fifteen years we have spent over $160 million in terms of major retrofits and conversions on ships. We retrofit and convert vessels because of the high tariff policy. We bring in a vessel at a low value, pay low duty on a low value, and then do upgrades--sweat equity--to improve the value of a ship here in Canada so that we don't have to pay the high duty.
A picture is worth a thousand words, and since it's in neither French nor English, I think it would be acceptable to everybody for me to pass around a couple of pictures to demonstrate what we do. This has a direct bearing on the question of rules of origin.
The top picture is of a Russian hull that we purchased and brought back to Canada. We had two of these vessels. At the dock on the Dartmouth side of the harbour, in a span of nine months, we converted the two vessels into the vessel that's shown below. The ship has been working at Petro-Canada on the Terra Nova project for six or seven years now.
That's an example of how our company has worked within the existing framework of the high duty to bring value to Canada and do the work here, because we have to live with the fact that we pay 25% on the importation of a vessel that's built outside of Canada. If we were to build a vessel in Norway or in Singapore or wherever, we'd bring it in, pay 25% duty on it, and off we'd go. Of course it's difficult to finance that; it adds costs to the project and so on.
So we've built our company around the existing policy. What's odd is that under the rules of origin that will be implemented in the EFTA agreement, which Paul alluded to, a Norwegian shipyard could import a hull from, say, Romania, outfit it in Norway with Norwegian kit, using Norwegian employees, and it could have maybe.... They haven't decided what the threshold is going to be, but we've heard a couple of numbers. They could have between 35% and 65% non-Norwegian content in that vessel, yet to bring it into Canada, under EFTA, it would be treated as a Norwegian ship, and therefore brought in duty-free.
Again, that's 35% to 60% non-Norwegian content in a Norwegian ship, imported to Canada on the same status as a Canadian-built ship. If we were to build a ship like this, where we bring in a hull and put, say, 95% Canadian content value added to it, we would still have to pay the duty on the hull we bring in. It's ridiculous.
I guess that's an example of the fact that our negotiators and our people who are looking at industry policy don't really understand the policy, and are out negotiating and making decisions with respect to our industry without really appreciating the consequences.
I go back to Madam Verreault's question: What's in it for us? Nobody can tell us. If you had winners and losers, you could understand. You could understand that one sector benefits, another sector loses. But no sector seems to win as a result of this EFTA agreement. Why are we doing it? I get a sense that there's a momentum to do free trade agreements regardless of the consequences. But if you're in business or if you're a country, whatever you are and whatever you do, just to do something for the sake of doing it is not a good reason. And I get the sense that's what's happening right now.
Mr. Irving's organization and our company met with the Minister of Industry a couple of weeks ago to discuss what's going to transpire in terms of the future policy of shipyards and the marine industrial sector. At that time we put forward a number of proposals. Before I address those very briefly, let me give you a sense of Norway.
Norway has built vessels for the past fifteen, twenty, thirty years on subsidies. They have a protective procurement policy. They have a regulatory process that protects the sector for Norwegian operators. They have fiscal policies akin to limited partnerships that allow investment in vessel-owning companies, which attracts investors. Here in Canada, for capital-intensive business we don't have a similar regime. A whole host of policy initiatives need to be reviewed, considered, and studied before they eliminate the one policy for shipyards and ship operators, the high tariff.
The Norwegians will have all of those other policy initiatives in place to prop up and support their sector, whereas the one policy that is in place for Canada will be eliminated, and we will be at the mercy of a very strong, very vibrant international competitor.