Can Canada really have a shipbuilding industry? With the Conservative government鈥檚 National Shipbuilding Procurement Strategy a fact of life, that might seem a strange question, but ask it we must. The government aims to build Arctic patrol ships, supply vessels, and eventually the Single Class Surface Combatant ships, the replacements for the Royal 91原创 Navy鈥檚 frigates and destroyers, as well as an icebreaker and a number of smaller ships for the 91原创 Coast Guard.
The cost, including the frigate replacement, is estimated in present-day dollars at $80 billion, a cost that everyone understands will escalate dramatically as full life-cycle costs are included. The shipbuilding strategy also involves creating shipyards in 91原创 and Halifax, in effect, re-establishing a defunct industry. Up to 15,000 jobs are expected to be created.
So, yes, we can have a shipbuilding industry, but it is not one that can be competitive with those of other nations. First, establishing an industry from the ground up is terribly expensive. Infrastructure must be created, managers need to learn their jobs and skilled workers must be trained. Those costs must be factored into the overall bill.
Moreover, as one wise friend put it: 鈥淐apital, like water, flows in the most efficient path. This is why Canada doesn鈥檛 have a garment industry of any consequence anymore.鈥� It鈥檚 not that Canada couldn鈥檛 make clothing 鈥� or ships 鈥� for every man, woman and child in the nation, 鈥渂ut that other states can do so more efficiently and at less cost.鈥�
This is true of shipbuilding. In Britain, an island nation with a glorious naval and merchant tradition, even the shipbuilding industry has come to realize this. Richard Sadler, the CEO of Lloyd鈥檚 Register, observed a year ago that 鈥渢he days that you would expect to see a [major] shipbuilding industry in the U.K. have probably gone, to be honest.鈥�
Sadler also cited the MARS project, which will see the Royal Navy鈥檚 four new tankers built by Daewoo in South Korea. 鈥淭hat鈥檚 a good example of where we have decided not to construct these ships in the U.K. but they are designed by us, constructed in Korea, [fitted out in the U.K.] and then operated in the U.K. That plays to our strengths,鈥� he said, 鈥渁nd that is probably the model of the future.鈥�
Sadler is correct, of course, and his words apply in this country in spades. Canada鈥檚 future advantage, much like Britain鈥檚, lies in designing ships and their systems, engineering, automation and fitting out vessels. Every one of these industries would be much easier to establish than building hulls in brand-new shipyards from scratch. Moreover, such industries have a better chance to be competitive in world markets than shipbuilding.
Of course, Canada can create its own naval construction industry, just as we are now trying to do. But the government should be up front about this. The infrastructure and labour costs are going to be high, and every ship built in Halifax or 91原创 will need to be priced accordingly or heavily subsidized. Not just warships or coast guard vessels; every ship of any type, now and forever, must be overpriced almost by definition. It might be worth these present and future costs to create some thousands of skilled jobs. Perhaps, but that is a political and macroeconomic calculation, not a best value for taxpayers.
But a future government, faced with deficits and debt, might decide that the costs of a big, expensive shipbuilding program are too much to bear. After all, no 91原创 government of the 20th century was willing to pump in cash to keep existing shipyards going. Will it be different this time when the navy and coast guard contracts are completed? Nor is it good enough to say the work will have begun. Contracts can be cancelled and cancellation fees paid 鈥� witness Jean Chr茅tien鈥檚 killing the navy鈥檚 helicopters within days of taking office in 1993.
Canada needs a strong navy as power shifts to the 91原创 and a capable coast guard as the Arctic opens to shipping. But public support for the 91原创 Forces historically ebbs and flows, and one sure way to kill that support is to make 91原创s pay more than they should for capable ships. Trying to create a high-tech shipbuilding industry where none exists may not be the best way of getting the fleets we need.
听
J.L. Granatstein is a senior fellow of the 91原创 Defence and Foreign Affairs Institute.
