The Justin Trudeau government will add a second large polar icebreaker to its National Shipbuilding Strategy.
Federal ministers announced Thursday that the federal government will finally move ahead with the construction of a new heavy polar icebreaker for the Canadian Coast Guard and will be adding a second one to the order.
The announcement is bigger news for Quebec than it is for Vancouver, which was where the original icebreaker was to be built. And questions were raised in a press conference Thursday about the political calculus involved in splitting the contracts between two shipyards, rather than having just one build both.
Vancouver-based Seaspan Shipyards will build one of the new icebreakers; the other will be built in Quebec by Davie Shipbuilding, which was originally left out of the lucrative National Shipbuilding Strategy by the Stephen Harper government in 2008.
Asked how much it will cost taxpayers to build the two icebreakers, government officials couldn’t or wouldn't say.
Federal Fisheries and Oceans Minister Bernadette Jordan said the final cost of the two vessels won't be known until the contracts are negotiated with Seaspan and Davie, raising an intriguing question: What if one shipyard comes in with a cost that is much lower than the other's?
“If there’s a significant disparity between what one says they can do it for and what another one (can build it for), it would raise all kinds of questions from our side, in terms of the higher number," Jonathan Wilkinson, minister of Environment and MP for North Vancouver, told BIV News in an interview following today's announcement.
"And that’s the purpose of the negotiation -- is to ensure you’re getting value for what you’re paying for.”
The last estimated cost for one icebreaker, in 2013, was $1.3 billion, which was roughly double the original cost estimate in 2008. The government says each vessel will support 300 direct jobs. The Trudeau government is aiming to have at least one of the new polar icebreakers built by 2030, with the second one to follow soon after.
“As the member of Parliament for North Vancouver, I think it’s a good day for North Vancouver," Wilkinson said. "It’s the largest employer on the North Shore. But it’s also a good day for the Lower Mainland. There are lots of suppliers that supply Seaspan.”
Splitting the contract to build two new polar icebreakers between two shipyards raises concerns about adding costs. Afer all, there may be economies of scale to be had from one shipbuilder building two ships back to back, whether it is Seaspan or Davie.
Wilkinson said one of the current icebreakers, the Louis S. St-Laurent, will be 62 years old in 2030 and must come out of service. And because two icebreakers are needed -- in the event one of them needs rescue -- both ships need to be built around the same time, something that can't be done by a single shipyard.
"Building them sequentially does not work," Wilkinson said.
"It's critical that we have two vessels," Jordan added. "It's critical that we have them by 2030, and this is the way forward to make sure that we have those vessels."
But Canada would actually still have two icebreakers after the new one is built and the older one decommissioned in 2030. The other existing one, the CCGS Terry Fox, is less than 40 years old. Presumably it could last until a second cebreaker is built.
A new polar icebreaker was just one of many new ships to be built in Canada for the Canadian Navy and Coast Guard as part of the Harper’s $35 billion National Shipbuilding Strategy.
In 2011, Seaspan Shipyards was approved to bid on $8 billion worth of non-combat ships for the Canadian Coast Guard and Fisheries and Oceans Canada. Irving Shipbuilding in Halifax was approved for $26 billion worth of contracts to build up to 15 new combat vessels for the Royal Canadian Navy.
Wilikinson confirmed that the value of the contracts to Seaspan would have increased since then.
“The numbers around these ships have changed quite a bit," he said. "That original number has been superceded by a bunch of others.”
Seaspan won the contract to build up to 17 non-combat ships for the Canadian Coast Guard and Department of Fisheries and Oceans, as well as non-combat support vessels for the navy.
Davie was originally excluded from the shipbuilding strategy, as the Harper government did not feel it needed three shipyards to do the work. Davie has lobbied the government hard to be included in the national shipbuilding strategy.
Canada’s registry of lobbyists show 165 communications since 2013 between Davie Canada Yard and federal ministries of Government Procurement, Economic Development, International Trade, Regional Development, Defence, and Fisheries.
The contract to build the John G. Diefenbaker, a heavy polar icebreaker, was awarded originally to Seaspan. It was supposed to be under construction in 2013, but was delayed by the Harper government.
There wasn’t enough shipbuilding capacity at the two Canadian shipyards to get all the ships Canada wanted built in the queue. The Harper government prioritized some navy ships over the Coast Guard icebreaker.
In 1990, the federal Conservative government abruptly pulled the plug on plans to build Canada's $500 million Polar 8 icebreaker in B.C. That decision dealt a serious blow to the province's once-booming shipbuilding sector.
In 2019, the Trudeau government announced that it was putting the contract for the new icebreaker up for bidding, and that Davie Shipbuilding would be among those allowed to bid. Seaspan was not happy with that decision.
“Seaspan believes that a third shipyard building large vessels in Canada will return us to the boom and bust cycles that defined previous federal shipbuilding programs, and undermines the founding principles of the NSS that identified two shipyards as Canada’s strategic partners and centres of excellence for federal shipbuilding," the company wrote in a news release.
The Trudeau government disagrees. It says a third shipyard is needed to build all the vessels it needs in the coming decades for Canada's Navy, Coast Guard and Fisheries and Oceans.
“The Coast Guard also needed six intermediate icebreakers that are separate from these polars, and there’s no way that Seaspan could do all of that within the timeframe that the Coast Guard actually needs the ships," Wilkinson said. "So the decision back in 2019 was to add a third yard.”
This story has been updated and expanded with additional comments from North Vancouver. MP Jonathan Wilkinson.
