Thank you very much, Mr. Chairman.
I must say at the outset that I am vice-chairman, retired, from Irving Shipbuilding, but I still do some work for them. But I'm chairman of the Shipbuilding Association of Canada, so today I will present the position of the Shipbuilding Association of Canada. Unfortunately, I have no written notes. I was quite happily playing golf in Florida when you called and asked whether I could be here, and it's so cold I'm going back tonight.
I welcome the opportunity to come and talk to you. I think we've been talking about EFTA for seven years, at least, that I can remember. I dug out some correspondence, and we sent letters as the association to the government, dated January 2002. We're now in March 2009 and nothing much has happened.
The position of the association has never wavered from day one until today. I got a call that quite amazed me—I think it was from Mr. Julian's assistant, and if I am wrong, I apologize—saying the position of the association was that EFTA as it stands is okay. I say that is not correct. The position of the association from day one is that shipbuilding should be carved out from EFTA. We have been told categorically time and again by the government that we do not carve industries out. We raise the question of the Jones Act in the U.S., which was carved out from NAFTA. We are not allowed to build or repair for the Americans. The Americans have free access to our market. So industries do get carved out. I'm sure there are numerous other examples.
The association therefore said, “Well, if you're telling us categorically that you will not and cannot carve it out, we don't understand why, but let's make the best of a bad situation.” We started discussing a situation where I think it has ended up that shipbuilding is not carved out under the present proposal, but there's a 25% import duty on vessels coming into the country from the EFTA countries, and that would be phased out over a long period of time. I'm going from memory. I think it was agreed it would be 15 years, and it may be longer for some different types of vessels. We said that's the minimum we can do it with. It would give the industry time to reorganize, hopefully, and do different things. We said to be effective and to give industry a chance, things had to change.
I'd like to go back a bit in history to the mid-1980s. I think it was about 1986 that the government of the day started a rationalization program. There was recognition by industry and the government that there were too many shipyards in Canada to have a sustainable, ongoing, viable industry. The government therefore started a rationalization program. Shipyards were closed out west. Shipyards were closed in the Great Lakes. Shipyards were closed in Quebec. Not much happened in the Canadian Maritimes because at the time Saint John Shipbuilding was building the Canadian patrol frigate program and obviously was not a category to be closed, and the Halifax industry was quite busy, so there was no rationalization on the east coast. But the industry downsized to a size that could survive.
The problem is, to this day nothing much has happened. The whole concept of saying under EFTA that we need 15 years of the subsidy being gradually reduced over that period of time was to give the industry a chance to rationalize, reorganize. The industry today is basically down to the Washington Marine Group on the west coast; there's major shipbuilding out there. You have Halifax Shipyard, a division of Irving, in New Brunswick. You have Davies in Quebec, which is now the biggest yard in the country since Saint John Shipbuilding closed a few years ago. You have a small yard in P.E.I., which is also owned by my company, and a small yard in Newfoundland, in Marystown.
The industry has really progressed. If there are many more closures, the industry is virtually going to disappear.
What we continue to say to the government, carrying on with the thought on EFTA, is that given the 15 years to get the industry to a sustainable size, we today have the perfect opportunity to do that. Many programs are coming up. You have the arctic offshore patrol vessels, the midshore patrol vessels, the joint support ships--many billions of dollars to be spent.
The rationalization program that started in the mid-1980s should now be completed. There are three centres of excellence. You have the Washington Marine Group on the west coast, and just by chance it falls into place. It wants to do the smaller types of ships, the midshore patrol vessels, for example. You have Halifax that will do mid-size, which are the arctic offshore patrol vessels. Davies will do the bigger vessels, the joint support ships.
If the government would recognize and create three centres of excellence, people would say it's allocation. That's correct, it's allocation. Many countries in the world have gone to allocation. The U.S., the Brits, the French, the Germans, and the Australians have done it, and today, to have an ongoing viable industry, that is the correct way to go. You then have centres of excellence that can become very competitive. The industry has said we will have total open books, fuel audit, profit limitations. You tell us what you need and you will find you have an ongoing viable industry. The government has said it wants to create jobs quickly. There is no easier way than to follow the proposal we have sent to the Prime Minister from the Shipbuilding Association of Canada to proceed with centres of excellence.
That may seem to be far away from EFTA, but it's tied to the point that the association said we need 15 years to get a viable ongoing industry. The import duty gets diminished. The industry can then stand on its own two feet, and if you do that and follow it, you could process the contracts much faster.
I was at a meeting yesterday for the arctic offshore patrol vessels. They're talking about the bid coming out in October. Six months to bid it, contract negotiations, and then contract probably awarded August 2010. You then have a minimum of a year's engineering and various things, so you might start in August of 2011. If you went the way the association is proposing, you could probably sign a contract for a-ops by August and start cutting steel the following year. So if you want to create jobs, and you want to do it quickly, follow on what started with EFTA, give the industry a chance to rationalize, create centres of excellence, and we could be off and running, and you would have an ongoing, sustainable, viable industry that the country needs.
We have the longest shoreline in the world. We're a small maritime nation, however, and to think shipbuilding would disappear in this country is untenable. We need an industry. We talked to the navy. Our Halifax shipyard is right next door to the navy. We talked to the admiral and asked what they are going to do if we close. I don't know. We have the fleet maintenance facility on both coasts; they're strapped. They cannot do all the work if we disappear. You cannot sustain industry on ship repair. You need new shipbuilding technology. That's where the technology is. That's what attracts the people, and you need that to sustain the repair industry. The navy accepts that. They're worried as hell if we disappear. What are we going to do to repair our ships? So you have to do something. You have to do it quickly. It all started with EFTA seven or eight years ago. We've talked this way ever since. It's by coincidence with yards closing that we've arrived at this situation I described today whereby it's logical to have three centres of excellence.
Other shipyards will say they're left out. That, in part, is true, but all the major shipyards have said we would agree to spread the wealth around. If we get the work, we will subcontract work to the other shipyards.
Thank you very much, Mr. Chairman.