Further Thoughts on Requirements

The recent comments by Denis Stairs and Eric Lerhe on my initial offering on the future requirements for a new Canadian shipbuilding initiative made me realize that we were all looking for the same thing: a steady-state, government fleet replacement program. With a flash of deja vu (all over again, if you wish) I remembered a paper I had written on this subject some 15 years ago. In September 1993, I was asked to give a paper on Canadian shipbuilding requirements to the annual meeting of Society of Naval Architects and Marine Engineers in New York. One section of that paper may be worth re-publishing because is shows that the idea of a steady-state shipbuilding program is not new. Also, sadly, the paper shows how little real action has been taken in the past 15 years to deal with fleet modernization. This is what I said then:

Looking ahead, especially to the Canadian naval program presented in the most recent defence statement, the important point seems to be that the new naval policy has the potential to provide some stability in the shipbuilding industry. However, for this to happen, some long-term decisions need to be made. The minimum objectives for a new approach to managing the various government fleets should be along the following lines:

  • Replace the 3 support ships and the four Tribal-class destroyers in the 2005-10 time frame and allow that contract to form the basis of a steady-state replacement program for the navy's task groups. This would stabilize one shipyard and provide for a collocated naval design office.
  • Design and build a class of off-shore patrol vessels to meet the combined requirements of the three departments with responsibilities in those waters. By adopting a "build-to-blueprint" approach to for these ships, several other yards can be given enough work to stabilize them and allow them to compete for further contracts.
  • Embark on an icebreaker program as a start in developing a Canadian specialization in ice-strengthened vessel design and construction. This would stabilize another yard and foster a unique support industry.
  • Industry and government should also work collectively to develop a "steady-state" replacement program for the rest of the government fleet.
  • Examine the options presented by the 1991 Osbaldson Study for improving the way in which the government manages its three fleets.

From there, requirements for more specialized ships such as submarines and research vessels could be integrated into what would become the mainstream of government work. Together, these initiatives should provide a critical mass around which an efficient Canadian shipbuilding industry can survive.

The government has to be convinced that it must become a more efficient manager. It is in this respect that the shipbuilding industry can offer some logical options in the form of contract maintenance and in working towards better linkages between design and new construction. Simply, the yards should work together in making the government an offer they cannot refuse. In government today there are more problems than solutions, financial as well as policy issues, and the time has come for industry to take the initiative in proposing ways to help government. Waiting for Royal Commissions and government-sponsored task forces will only exacerbate existing problems.

One cannot discuss the future of the Canadian shipbuilding industry without looking at the worst-case situation. The option of building all Canadian government ships off-shore is often touted. Those that support this option tend to do so for the narrowest of economic reasons rather than from a clear understanding of the many factors involved.

Although this option may seem logical from a fiscal perspective, there are several reasons why it should not be adopted. First, it denies us the opportunity to be innovative and thus stimulate a number of other industries, particularly in optics, electronics, and control systems. High-tech warships provide exceptional opportunities to marry research and development with an end-product. Buying ships off-shore greatly reduces those opportunities. Second, it would not be cheaper. Canada, in fact, compares quite favourably with most other industrialized countries in the cost of producing warships. Cost estimates of the frigates were invariably distorted because they included the full cost of developing the prototype. Third, buying off-shore restricts the ability to "customize" vessels to meet our own standards and requirements. Fourth, buying an off-shore design would deny us one of the more visible symbols of nationalism. Someone else's ship does not instil the same sense of pride as your own design. The price of a little nationalism need not be that high, particularly if a better shipbuilding policy can be developed in the process.

The Canadian shipbuilding industry is still quite large and directly employs about 10,000 people. The figure may even be a little higher. In addition, an equally large number of jobs exist in the various support industries. When a big government shipbuilding contract is awarded, it provides "new" money in the economy which is then subject to the multiplier effect. Thus, active government support of the industry can be a stimulus to the economy as a whole. But to achieve the greatest benefit from that stimulus, it has to be applied fairly and rationally. This requires a sound government shipbuilding policy. The frigate program stands as an example of what can be accomplished and also of how political intervention can be counterproductive.

Any thought of trying to close down the Canadian shipbuilding industry in the interests of efficiency because it cannot compete internationally is foolish. Before such drastic action is taken, there has to be concrete proof that Canada no longer needs a shipbuilding industry. The economic stimulus given to the economy, technologically as well as financially, by the frigate program will be considerable in the long run. More importantly, Canada is a maritime state with widespread interests at sea. A shipbuilding and repair industry is an essential part of the infrastructure that supports those interests.

The saddest aspect of all this is that the Canadian shipbuilding industry has become a political football in a “game” championed by those who neither understand the maritime dimension of their country nor the economic value of a healthy shipbuilding industry.