Can a strategically focused technology game plan keep B.C.’s shipbuilding resurgence afloat?
If you were to ask North Vancouver-based Seaspan Shipyards, the answer would be yes.
But analysts weighing international market realities might be less optimistic. After all, global shipbuilding capacity set sail for Asia long ago. China dominates the market. It accounts for close to 40 per cent of global shipbuilding production; South Korea and Japan round out the top three with a combined share of 30 per cent. That does not leave much for the rest of the top 10, let alone countries like Canada hoping to get back in the game.
Asia’s shipbuilding dominance is anchored in formidable infrastructure and manufacturing capacity and low-cost fundamentals shored up by government subsidies. Canada’s labour costs alone disqualify it from engaging in any meaningful shipbuilding competition with Asia.
So, Seaspan, where can a former shipbuilding hub like B.C. hope to get the wind back in its sails in the global market?
Technology.
That’s where the B.C. shipyard is placing a good portion of its bets as it rides atop the current wave of multibillion-dollar contracts from Canada’s National Shipbuilding Strategy (NSS).
Those bets could deliver significant payoffs for the North Vancouver-based company; they could also help in the revival of a shipbuilding industry that was once one of B.C.’s largest employers but ran aground in the 1980s and was all but sunk in 1990 when Brian Mulroney’s Progressive Conservative government torpedoed the federal government’s $500 million Polar Class 8 icebreaker contract, which had been awarded to North Vancouver’s Versatile Pacific Shipyards in 1987.
B.C. lost more than the contract. It lost much of its top end talent pool of naval architects and design expertise to competing shipbuilding hubs.
But the National Shipbuilding Procurement Strategy, launched in 2010, was the first step in slowing that exodus.
Since then, billions of dollars in contracts to renew the Royal Canadian Navy and the Canadian Coast Guard have buoyed the fortunes of shipyards on the country’s east and west coasts.
Seaspan’s original potential slice of the estimated $50 billion pie was just over $20 billion.
As of late March, it had awarded more than $2 billion in contracts to Canadian companies for the design and construction of new navy and coast guard non-combat ships.
The federal government contracts are at the core of revitalizing the shipbuilding and design industry in B.C. and elsewhere across Canada but rebuilding that industry’s capabilities and competitiveness beyond the domestic marketplace will require it to develop expertise that can compete internationally.
That brings us back to technology.
For example, Seaspan’s corporate parent Seaspan ULC and its HaiSea partnership with the Haisla Nation will be launching the world’s first fleet of electric harbour tugs later this year to service LNG Canada’s Kitimat LNG export terminal.
Vancouver’s Robert Allan Ltd. (RAL) designed the vessels.
SAAM Towage, a subsidiary of Chilean multinational port terminals, towage and logistics company SAAM, will also use the naval architecture firm’s technology and design for two electric tugs that are scheduled to start servicing Neptune Terminals on the Port of Vancouver’s North Shore later this year.
But Canada represents only between 10 and 20 per cent of RAL’s business. The employee-owned company is a prime example of marketing B.C. marine technology in the wider world.
It is the top player in global tugboat design.
Michael Fitzpatrick, RAL’s president and CEO, estimated that one-third of all tugboats built in the international market “are based on our design, and when you get up to the bigger, more complex boats, it is probably more than 50 per cent. We currently have vessels of our design under construction in a total of 34 shipyards in 19 different countries.”
He added that between 60 and 100 RAL-designed vessels are delivered every year.
“So, every week, there’s at least one of our boats going into service.”
RAL’s international clientele ranges from Australia’s BHP Billiton Minerals (NYSE:BHP) and Turkey’s Directorate General of Coastal Safety to the U.S. Navy and Finland’s massive Wärtsila Finland OY (HEL:WRT1V).
Meanwhile, Seaspan’s marine technology game plan includes more than tugboat electrification.
In March, it launched HoloShip. The virtual reality platform is aimed at improving ship design efficiency through virtual reality headsets and 3D ship design modelling.
HoloShip also provides another marketplace niche that B.C. expertise can cultivate in Canada, but more importantly in markets further afield.
As Jennifer Busler pointed out, “We’re in a renewal phase. We are redefining what it is to be a modern shipbuilder, what a modern ship is capable of [and] how we’re going to use modern techniques to repair and track performance of that vessel as it goes through its lifecycle.”
Seaspan’s manager of innovation added that the use of HoloShip’s digital twinning and 3D visualization technology is new in shipbuilding and design, even though similar technology has been used in other industries. Its focus, she said, is to improve the quality and clarity of design decisions early in the lengthy shipbuilding process.
As part of the HoloShip launch, Seaspan has awarded three contracts totalling $2.6 million to four Canadian marine industry companies aimed at advancing digitalization and fleet maintenance in a global shipping industry that continues to struggle with incorporating digital technologies in its complex operations.
Three of the companies involved in the Seaspan contracts are in Eastern Canada. B.C.’s 3GA Marine is the fourth company. The Burnaby-based marine engineering firm will be collaborating with New Brunswick’s Kognitiv Spark to develop mixed reality technologies to allow ship crews to visualize and control a vessel’s systems from anywhere.
The development and application of the HoloShip platform, Robert Allan’s tugboat designs and other technologies focused on electrifying, digitizing, decarbonizing and streamlining maritime industry operations also provide B.C. and the rest of the country with expertise that has international marketplace application.
And that is crucial to refloating a shipbuilding industry that was down and all but out in the 20th century’s second half.
“Canada has a strong information-based economy, as well as strong understanding of some of those digital technologies,” Busler said. “So, it’s really a way of leveraging strengths that are already within Canada in software development and analytics and bringing those into the shipbuilding industry.”
Fitzpatrick agreed that B.C. companies can compete internationally in shipbuilding’s professional services and technology arenas.
But he said programs like the NSS program are critical to developing the expertise for that competition.
“I really support the idea that B.C. is building ships here because it is what has helped push many of the companies in B.C. to a place where they can then contribute to the international market. Getting those first opportunities locally is really a big thing in our industry. The growth that we’ve had internationally is because of opportunities we’ve gotten in Canada.”
@timothyrenshaw
