Sink or Swim for Canadian Shipbuilders
 
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Sink or Swim for Canadian Shipbuilders

      11/7/2000

Hard facts about why the Canadian shipbuilding industry is continuing to sink were spelled out by Ron Schnoor, the president of the offshore division of Friede Goldman Halter (USA) at the shipbuilders' forum in St. John's on October 20. The delegates listening to him were Canadian shipyard managers, union officials, politicians and community leaders, all scrambling to find waysto pump new life into the Canadian shipbuilding industry.

Schnoor showed the results of a study done by the U.S. Maritime Administration, which surveyed the global shipbuilding industry to find out how measures ranging from outright grants to tax programs were being used in one of the world's most cut-throat businesses. "They identified 10 types of aid being provided in 31 different countries," says Schnoor. "It's notable to say that Canada is not among the 31 countries." It's also notable to say the U.S. -- that bastion of free trade, Canada's largest trading partner and, like Canada, a country desperately trying to maintain its own stake in global shipbuilding -- employs some of the strongest government measures to protect its industry.

They include the Title XI loan guarantee program far stronger than any such measure in Canada, and the Jones Act, which requires any shipment between two American ports be carried on a ship owned, registered and crewed in the U.S. That's just the start of state interventions around the world, with many of them far more detailed and complex than simple grants and taxpayer-supplied guarantees.

Schnoor's message: Canada has been only too good in playing by international trade rules. It's an ironic situation: an executive of U.S. shipbuilding giant is telling Canadians why their very industry is slipping away from them, in part because Canada doesn't want to offend its trading partners. But with a stake in the Canadian marketplace, Friede Goldman Halter itself is worried about Canada's future in shipbuilding, Schnorr says.

"If we do not collectively develop the framework that impedes, stops and turns that around, this industry will ultimately die. It's that serious," Schnoor says. "It's something we can and should do everything we can to stop." It's a business that has been through the wringer. In the early 1990s, it employed about 12,000 people, and now provides employment to less than 3,500, and many of those jobs are in non-traditional yard jobs, such as niche manufacturing and export.

While the tone of the meeting became optimistic by its end, a sense of desperation hung over the air. Canada has come increasingly sensitive to charges of unfair trade practices -- regardless of what its competitors are doing -- and taxpayers have become wary of public interventions. At the same time, people in the industry are clearly frustrated by the fierce competition around the world, ranging from more overt aid like construction grants and restructuring programs to softer supports, like research and development assistance and industrial training.

“There are no free-market forces in this industry," says Peter Cairns, president of the Shipbuilding Association of Canada, and a retired vice-admiral in the Canadian Navy. "We are the most beleaguered (shipbuilding nation) in the world. We should be leading the world," says Cairns. Instead, Canada -- bordered by three of the world's oceans -- now accounts for less than half of one per cent of the world's shipbuilding effort. Not only that, but Canada has become good at buying its new ships abroad, often from companies that use state-sanctioned mechanisms considered too risky at home.

From: Sympatico NewsExpress, News Feature, 27th October 2000


 


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