The Canadian Minister of Industry, Brian Tobin, is preparing to announce significant financial support for the country's shipbuilders, despite warnings the industry is unsalvageable. A review panel - composed entirely of supporters of the Canadian shipbuilding industry - is about to forward recommendations to Mr. Tobin that would make more government financing available and ease tax rules covering the industry. Government officials who have examined such measures in the past warn they could cost at least $150-million and run afoul of international rules against subsidies.
Mr. Tobin announced a reversal of the government's policy of quietly letting the industry wither. "Given the largest marine boundary in the world ... why would we say we're not interested, somebody else can do it, we're not smart enough, we're not efficient enough," he said in a recent interview. "I can't start with that argument."
Opponents of the funding say the reason is simple - the Chinese and South Korean governments in particular have pumped so much money into their industries it is impossible to compete. Chinese subsidies cut by as much as half the cost of building a ship there, a Canadian government expert estimated last year.
The breaks the shipbuilding panel recommends include even more favourable depreciation terms, bigger and longer-term loans from the government's export financing arm, and easier access to research funding. Proponents of the shipbuilding industry say Canada can compete in niche areas such as offshore oil rig platforms, tugboats and Great Lakes freighters, but the domestic market is not big enough and better financing is necessary to attract foreign buyers.The shipbuilding industry employs about 3,500 people today. Canada has an infinitesimal 0.4% of the world market, which produced about 2,000 ships last year.