Evidence of meeting #34 for National Defence in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was ships.
A recording is available from Parliament.
Conservative
James Bezan Conservative Selkirk—Interlake—Eastman, MB
Does Davie have the opportunity to bid on the maintenance and life-cycle programs that are required on the upcoming surface combatants as well as the current one that's out with the Arctic offshore patrol vessels?
Chairman, Chantier Davie Canada Inc.
Yes, they do, for every naval and Coast Guard ship repair and maintenance contract. Those are excluded from the NSPS and will be competed amongst all Canadian shipyards.
Conservative
James Bezan Conservative Selkirk—Interlake—Eastman, MB
Good. I'm glad to know that.
In some of the testimony we've had at committee, looking at the future needs of the Royal Canadian Navy, there are concerns about the current state of the Victoria class submarines, and where we go with new submarines, whether we build them offshore or whether we can build them here. On the surface combatants, are we looking at some sort of hybrid destroyer-frigate ship, or are we actually just going to build beefier frigates? Does that still address the aerial threats that our navy's going to be taking at sea?
Right now in the national shipbuilding strategy there isn't anything for destroyers. Is there that possibility, or have you guys, both your companies, looked at whether or not there are other capacity and capability questions surrounding the Royal Canadian Navy that Davie could address?
Chairman, Chantier Davie Canada Inc.
Davie built all of Canada's existing destroyers. The frigates were built half by Davie and half by Saint John shipyard. Of course Davie could build destroyers. It's what's it's been doing for the past 190 years.
In terms of the submarines, I'm sure we could have a debate about this all day, but I would honestly say that I don't think they should be built in Canada. It doesn't make any sense. You could build any ship in Canada. Could you build submarines here? You could, but it would take some expertise. If you look at what the Australians are doing, it's quite interesting, I think.
Conservative
Chairman, Chantier Davie Canada Inc.
They're building sections in France, I think.
Chief Executive Officer, Federal Fleet Services Inc.
I'll give you my personal view on submarines—this is way outside of FFS, but you've asked the question—and if Canada were to embark. Twenty years ago there was a program called CASAP, the Canada-Australia submarine acquisition program. We were going to share the build in what was going to be a 20-year program.
That's possible, but as Mr. Vicefield has pointed out, the complexity of submarines is such that you need a long 30-year.... The Australians, I believe, have now closed the door because they've gone with the French solution and have decided to go it alone with the French.
Chairman, Chantier Davie Canada Inc.
I think you have to keep it very simple. That goes for, as you said, the design of warships. That was one of the key findings from the U.K. national shipbuilding strategy. Build the simplest designs, like the French do, and you'll be able to export them. If you try to, as you would do in Canada, Canadianize everything, you'll build this unique design that you'll never be able to actually export.
Chief Executive Officer, Federal Fleet Services Inc.
I have just one follow-on comment that speaks to the earlier question. The key thing to remind everyone about Project Resolve, the Resolve class AOR, which I keep coming back to, is that it's a non-developmental system. Typically in a warship today, 40% is for cutting steel and 60% is weapons and sensors. I think that's generally what's happening worldwide.
For a lot of those systems, there are weapons system costs and developmental costs. In the case of Resolve, you can actually cut a purchase order for a replenishment-at-sea system and there is no development. Our focus is mostly on that non-combat part, but we could do combat ships as well.
January 31st, 2017 / 4:45 p.m.
Liberal
Sven Spengemann Liberal Mississauga—Lakeshore, ON
Thank you very much, Mr. Chair.
Thank you to all three of you for being here.
I want to roll up some of the comments in the discussion that took place earlier and put them through the lens of the economics of shipbuilding. I think it was Mr. Schmidt who mentioned that in the evaluation of contracts, there's a 10% rubric assigned to the value proposition for economic development.
I just want to zoom in on that. This government is all about investment. It's not spending but actually investment that creates value. It's also about creating jobs for the middle class, sustainable, well-paying jobs in the skilled trades. Let's look at the Canadian marketplace but also the global marketplace. How many shipyards the size of Davie exist around the world, approximately? It doesn't have to be precise. Just give a thumbnail sketch.
Chairman, Chantier Davie Canada Inc.
It's very hard for me to put a number on that. I couldn't put a number on that.
I would say that each country in the world has at least one shipyard similar in size to Davie, except for maybe some of the ones that we're bidding to, as Spencer said, export ships to, like some of the countries in southern Europe.
Liberal
Sven Spengemann Liberal Mississauga—Lakeshore, ON
If we take as the crucial components of international competitiveness the presence of a large yard, the presence of a labour force, and the presence of a government policy that sustainably backs shipbuilding, where would you rank Canada in terms of international competitiveness in shipbuilding?
Chairman, Chantier Davie Canada Inc.
I've actually looked at this in detail. If you look at the European Union, it publishes reports for shipbuilding costs. As Spencer said, shipbuilding costs are split roughly fifty-fifty between labour and materials around that point. So really, material costs are the same wherever you go in the world. These are international manufacturers and suppliers.
What creates your competitive edge is the labour cost. In terms of Quebec, we are on par with or less than the majority of European shipbuilders who export ships. Is it feasible to have an export market here for specialized ships? Absolutely it is. I can't speak to other parts of the country and what the labour costs are there. I'm sure they are different from what they are in Quebec.
Liberal
Sven Spengemann Liberal Mississauga—Lakeshore, ON
You gave us a snapshot of the labour force. You said you have 1,200 people who are ready to go who are in the skilled trades. Are you in a position to comment on the national labour market?
Chairman, Chantier Davie Canada Inc.
As I said before, as far as I know Davie is the only shipyard that exists today that has actually built large-scale warships. I think all the other shipyards, if I'm right, no longer exist.
Chairman, Chantier Davie Canada Inc.
Actually having that capability or that experience is something that's....
Liberal
Sven Spengemann Liberal Mississauga—Lakeshore, ON
Are you in a position to comment on the multiplier effect? In other words, one skilled shipbuilding job creates x number of ancillary feeder-industry jobs in the surrounding areas.
Chief Executive Officer, Federal Fleet Services Inc.
Part of the frustration I had in my last company was that I was exporting into 15 countries, and I often found that the most difficult place to sell was in my home market. Running a small business high-tech company through which you're winning contracts throughout the world in the hardest markets and then having a challenge in Canada, you get pretty knowledgeable about where you are at.
My sense is that your question about whether we can compete.... I think Davie shipyards won a prestigious Lloyd's award in 2015 for having exported what they claim was the most sophisticated—
Alex, you have more detail on that.
Chairman, Chantier Davie Canada Inc.
It was the most complex commercial vessel ever to be built in North America. It was so complex because it had triple redundancy on every system throughout the ship for use in oil fields to do subsea intervention.
Chief Executive Officer, Federal Fleet Services Inc.
These are big ships. Two of them have now been produced. They are 10,500 tonnes. A frigate is about 4,000 tonnes. That gives you a feeling for the size and complexity.
Liberal
Sven Spengemann Liberal Mississauga—Lakeshore, ON
How transposable a skill set in general terms is shipbuilding? Could people transition from other sectors that are underemployed into shipbuilding?
Chairman, Chantier Davie Canada Inc.
From my experience, no, not generally. There are, of course, a lot of skills that can be transitioned across, but if you look at how you shape metal for ships when you build a bulbous bow, that is an art form and not a science.
Spencer and I walk around the shipyard quite often, and we see this. You speak to people, and they have 40 years of experience in doing that. That's really important to build ships, specifically on time and on budget.
