A New Policy Framework for the Canadian Shipbuilding and Industrial Marine Industry

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A New Policy Framework for the Canadian Shipbuilding and Industrial Marine Industry A New Policy Framework for the Canadian Shipbuilding and Industrial Marine Industry Focusing on Opportunities 2001 This publication is also available electronically on the World Wide Web at the following address: http://strategis.ic.gc.ca/shipbuilding This publication can be made available in alternative formats for persons with disabilities upon request. For additional copies of this publication, please contact: Information Distribution Centre Communications Branch Industry Canada Room 268D, West Tower 235 Queen Street Ottawa ON K1A 0H5 Tel.: (613) 947-7466 Fax: (613) 954-6436 E-mail: [email protected] © Her Majesty the Queen in Right of Canada (Industry Canada), 2001 Cat. No. C2-587/2001 ISBN 0-662-65920-1 53515B 15% recycled material Focusing on Opportunities Minister’s Message n October 2000, at the Second, I wanted proposals that I National Shipbuilding Forum in would be reasonable and workable. I St. John’s, Newfoundland, the ship- was explicit with the co-Chairs, from building community clearly express- the beginning and throughout the ed a desire for actions to address the process, that I was not interested in problems of the industry. Problems production subsidies or in increasing stemming from a lack of investment protection for the industry. Our focus and innovation, business practices had to be on innovation, investment that hurt productivity, lack of financ- and opportunity. ing support, and the limits of the federal procurement budget. This places the premium on working within existing policies and programs They identified a second and very of the government. It includes our substantial set of problems, born of current policy support for shipbuilding, the unique and difficult international to see if its measures are effective. It competitive environment. In global includes the need for all stakeholders — and domestic markets, Canada’s not just the federal government — to shipbuilders systematically encounter come to the table. It has to include competitors benefiting from produc- measures by the industry itself — the tion subsidies, generous financing, owners and the workers — to address market protection, state ownership their own competitive forces and and, in Canada’s largest potential become more focused on market market, the United States, the Jones opportunities. Act excludes them from large parts of the commercial market. Those were my expectations for the Partnership Project. What came These business factors are difficult for back — after several public round- a country with a proud shipbuilding tables, discussions with dozens of inter- tradition. That is why I launched a ested parties, as well as written and new process, the National Ship- oral submissions — were thirty-six rec- building and Industrial Marine ommendations that were presented Partnership Project. I mandated the to the government on April 5, 2001. four co-Chairs to take an independ- ent, fresh look at the opportunities I said at the time that we would give and the challenges. serious consideration to each and every recommendation. Our test I asked them to do two things: first, to would be whether the proposals conduct a national, comprehensive were reasonable, workable and consultation that was supported, affordable. I said we would accept but not directed, by government. what we could; modify them if iii Focusing on Opportunities appropriate, add other measures if This new policy comprises some two warranted, and reject some if neces- dozen measures focused on the sary and give the reasons why. commercial market, falling into five categories: capturing domestic In this report, the government is unveil- opportunities, looking globally, inno- ing a new shipbuilding and industrial vation as key to competitiveness, marine policy framework. This policy financing and stronger partnerships. focuses on opportunity, growth and These measures are outlined in more innovation in niche markets where detail in this report. It also includes a Canada can compete. It recognizes response to each of the Partnership’s the value of marine transportation as recommendations. an important industrial infrastructure, with environmental as well as economic This is the policy framework that the benefits. And it focuses on partner- government is putting in place. We ships, as it is only by working together expect it to be effective, and we will that we can succeed. reassess it in five years. We will work aggressively to implement it quickly. It We have worked hard to develop a will give the industry, and our part- policy that is positive and that bal- ners, a viable set of federal policies ances the interests of all the parties: that are positive, forward-looking and shipbuilders and their workers, ship balanced. operators and their customers, policies that apply to other industrial I want to take this opportunity to sectors and, of course, financial con- thank the many individuals and siderations. While the need for bal- organizations who have voluntarily ance might not fully please some contributed to this work. Particularly, I interests, the result is a future-oriented want to express the gratitude of the policy providing new opportunity to government for the work of the the industry. With this policy, we are Partnership co-Chairs: Les Holloway, raising the shipbuilding and industrial Peter Woodward, Peter Cairns and marine industry to a new level within Philippe Tremblay, who gave im- government. It is realistic, it is market- mensely and voluntarily of their own oriented, and it is fair. time. They have literally gone coast- to-coast to reach out to industry The starting point is the current ship- stakeholders. It is through these col- building policy, which includes a lective efforts that we were pre- 25 percent tariff for several classes of sented a tool kit for developing a new vessels, accelerated tax write-offs for policy in a relatively short time. It is owner–operators; and a Buy Canada now up to all stakeholders to make policy for competitive federal procure- it work. ments. On this last point, we have not concluded our deliberations; we will study the task force recommenda- tions and federal procurement plans in more detail before concluding. Brian Tobin Minister of Industry iv Focusing on Opportunities Contents Industry Overview 1 The Partnership Project 3 The Challenges and the Opportunities 5 A New Shipbuilding and Industrial Marine Policy Framework 13 Annex A: Federal Responses to Partnership Recommendations 15 Annex B: Industry Snapshot 29 v Focusing on Opportunities Industry Overview he Canadian shipbuilding and As the shipbuilding and industrial A diversified industry with T industrial marine industry is marine industry moves toward higher diversified in its product and market value and more sophisticated seg- facilities in many parts focus. It includes firms with specialized ments of the market, the quality of capabilities in manufacturing and the equipment that goes into a new of Canada repairing ships, building oil and gas vessel is increasingly important. Off- rigs, and supplying related equipment, shore oil platforms require tremendous technologies and services. technological resources and expert- ise for their conceptual design, con- The Canadian shipbuilding and repair struction and operation. They are part industry consists of shipyards located of complex, high-tech and high- in several parts of Canada, capable value-added projects involving all of building a wide range of vessels of segments of the industry. As a result, up to 85 000 deadweight tons (DWT). the shipbuilding and industrial marine The shipbuilding and repair industry is industry generates a considerable in a strategic position to capture demand for electronic navigational upcoming opportunities. Canadian devices, communication equipment, Canadian shipyards develop shipyards have built ferries, fishing radar and sonar, marine robotics, vessels, offshore supply vessels, lakers, sub-sea vehicles, imaging equipment value-added goods and cargo ships and offshore drilling and marine applications program- platforms. They have designed and ming. The equipment manufacturers services, including for produced sophisticated naval ships are an integral and essential part of and icebreakers. They are successfully the industrial marine sector and the offshore building luxury yachts for the world ensure its competitiveness. market and have carved out a niche in ship repair and overhaul. To do so, Annex B provides a statistical over- they have had to innovate, invest in view of the shipbuilding and repair modern technology and manufactur- industry. ing processes and now produce high- quality products for sophisticated buyers, competitively and on time. 1 Focusing on Opportunities The Partnership Project n October 20, 2000, the future. It highlighted the growing The National Partnership Project O Minister of Industry established opportunities from the projected an industry-led National Shipbuilding growth in the offshore oil and gas committee consulted stakeholders and Industrial Marine Partnership fields. These are projects that also Project. An industry–labour Project draw on the facilities and skills of across Canada Committee, consisting of four industry– the shipbuilding industry. The report labour co-Chairs, was tasked with included 36 recommendations for consulting widely with industry stake- consideration by all stakeholders: holders across Canada to develop the federal government, provincial reasonable and workable measures governments, business and labour. to improve the
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