Strategy for Canadian Shipbuilding Industry
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Strategy for Canadian Shipbuilding Industry


On 5th August in St-John's, Newfoundland key shipbuilding industry executives and union leaders came together for the first time in thirty years to release a joint strategy paper to revitalize the shipbuilding industry in Canada.
The paper highlights the crisis in a highly skilled industry which has witnessed the loss of thousands of jobs over the last decade. The authors of the paper issued a call for the Canadian government to convene a summit of the stakeholders to address the problems in this industry.

The paper called for levelling "the playing field'' with other shipbuilding nations. "Virtually all shipbuilding nations, with the exception of Canada, provide some direct subsidization to shipbuilders'', states the paper. In the Asia Pacific region and India the subsidies can exceed 30% while in Europe subsidies range from 4.5% to 9%. In Australia, the subsidies are 5%. "The days when a shipowner financed a new ship from internal resources are long passed.''

The paper emphasizes the variety of programs that other nations use to keep their shipbuilding industry viable, such as export assistance, trade support, research and development, and scrap and build assistance. While the US, Canada's most important market, eliminated tariffs under NAFTA, in fact the US provides for government credit guarantees to promote the growth and modernization of the US merchant marine and US shipyards for US or foreign flags vessels. The Title XI credit program provides for Federal government guarantees of private sector financing - totalling some $ 2.9 billion since 1993.

The Canadian shipbuilding industry itself has done much to make it more competitive with a high quality product such as the patrol frigate. The workforce is highly skilled and the industry has the research and development capabilities for many specialized areas. Labour costs are lower in Canada than in US, Germany and Japan.

The paper calls for:
a) Provision of an improved export financing and loan guarantee program similar to the Title XI program in the U.S.A.
b) Exclusion of new construction ships built in Canadian Shipyards from the present Revenue Canada Leasing regulations
c) Provision of a refundable Tax Credit to Canadian shipbuilders who contract to build a ship, or contract for conversion with change of mission, mid-life refit or major refit in a Canadian shipyard
d) Eliminate the one-sided aspects of NAFTA which allows the U.S. to sell new or used ships duty free in Canada, yet absolutely prohibits Canadian access to the United States market
e) Develop an international social clause governing labour standards in shipbuilding
f) Develop a coordinate plan amongst government, natural resource sectors (such as oil and gas), and the shipbuilding industry
g) Develop coastal infrastructure.

The paper's recommendations complement the programs already in place and together if action is taken immediately the decline which the industry has experienced over the last decade can be reversed.

More information: Peter Cairns, president of the Shipbuilding Association of Canada


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