Peter Haydon has provided strong arguments for shipbuilding to be a large part of the government’s infrastructure package. President Roosevelt’s 1932 shipbuilding initiative indeed provided jobs, stimulated the economy, and addressed a strategic need for American warships. Peter very nicely underlines how the same needs exist in Canada today. As a result, I have but one additional comment to make and that centres on the requirement for any shipbuilding-as-economic-stimulus to start quickly and then transition smoothly into a long-range twenty-year shipbuilding plan. Presumably, once the economy is stimulated back to life, the last thing our navy and coast guard needs is the shipbuilding effort to be cut back along with the other components of the stimulus effort, like enhanced employment insurance benefits.
This is not my own thought (thank you Denis Stairs). I will, however, extend it. The government has already announced some $19.5 Billion worth of various naval and coastguard shipbuilding progressive activity. Further, they have been working on a national shipbuilding strategy and will be discussing it with industry this month. What they need to do, however, is some sharp work on costs; as evidence, we have suggested that their first projects were seriously under-funded. While no doubt they will be assisted today by falling steel prices, these officials still need to rapidly reassign credible funding levels to the Joint Support Ship contract and, potentially, the Arctic Offshore Patrol Vessel. Over the longer term, the Canada First Defence Strategy will have to recognize you can do little with regard to ship, aircraft, or armoured vehicle building if you assign only 12 percent of the defence budget to capital replacement (not including infrastructure) and 51 percent to personnel. Every academic review of defence procurement has suggested a minimum of 23 percent must be assigned to equipment recapitalization.
The shipbuilding industry has its own work to do. For a start, they can look at the Canadian aviation industry that recently ran a multi-page section in the Globe and Mail that outlined their modern capabilities, their future R&D thrusts, and, most critically, the central part they play in Canada’s economy by providing high tech employment. I have seen nothing comparable from the shipbuilders. They must also meet and discuss some of the less helpful antics of a few. On losing a defence contract, resorting to a legal challenge and local political furies supports a popular image of a troublesome industry that cannot get by without pork. Yet on these pages, Peter Cairns makes it clear that Canadian shipbuilders are successfully completing for complex, international and domestic orders in the most demanding commercial shipbuilding sectors. Thus, a legal truce is needed in the sure knowledge that the government’s plans provide more than enough work for all. In addition, the “one rule” of Canadian defence procurement is that Cabinet will insist on dividing up any large project to meet regional needs. Shipbuilding will not turn into a “winner takes all” regime. A more logical industrial response, therefore, would be for regional industries to form groups that would share the work, reduce the intra-regional infighting, and gain regional political support. Nowhere is this more needed than in the Atlantic provinces, where a series of well-thought-out integrated bids from industries across the Maritimes would enjoy the combined support of the regions MP’s and four premiers.
