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Overseas ferry construction: Does it make financial sense?

Shipyards and unions are eyeing ways to win valuable contracts, as B.C. Ferries looks toward major investment in its fleet in coming years. B.C.

Shipyards and unions are eyeing ways to win valuable contracts, as B.C. Ferries looks toward major investment in its fleet in coming years.

B.C. Ferries president Mark Collins said the Queen of New Westminster and five C-class ferries will reach the end of their lives by about 2025.

As well as replacing those six vessels, another might be needed because of anticipated long-term growth.

“It’s probably seven major ships that we have to build. That’s a big shipbuilding program,” Collins said.

When B.C. Ferries seeks builders for its vessels, the competition is worldwide.

“What we look out for is the interests of the ferry user, so we invite a complete open process. Canadian shipyards most always participate,” Collins said.

> More on B.C. Ferries

B.C. Ferries is working with a $3.1-billion capital program to replace ships, infrastructure and information technology.

Its contract with the province states that it will be independent from government and will operate on a commercial basis.

Regular refits, upgrading and repairs of ferries are typically, but not always, carried out in this province. The two Spirit-class ferries are being converted to a dual-fuel system in Poland.

B.C. Ferries said its ship construction breakdown, representing fiscal years 2008 to 2017, is:

• New builds in B.C./Canada: $221 million

• New builds elsewhere: $631 million

• Repairs and upgrades in B.C./Canada: $830 million

• Total investment in the fleet in those years: $1.682 billion.

• As well, the project cost for two minor-class ferries being built by Damen Shipyards of the Netherlands is $86.5 million, the Northern Sea Wolf was bought for $12.6 million in Greece and $20 million is being spent to upgrade it in Esquimalt, and $140 million is budgeted for the Spirit-class ships.

Chuck Ko, who heads Allied Shipbuilders Ltd. of North Vancouver, said when it comes to new construction, international bidders have a dual advantage because of their lower labour costs, coupled with the federal government’s decision to waive import duties on passenger vessels built overseas.

“I can’t compete.”

Allied was one of three B.C. yards that built the Spirit-class ferries, launched in the early 1990s.

“If a new B.C. ferry contract was open to the international market, I probably wouldn’t bid,” Ko said.

His solution: “Make it so that they have to be built in Canada.”

It takes political will to ensure ferries are constructed in B.C., he said.

Premier John Horgan said in a July 2017 mandate letter that Transportation Minister Claire Trevena was to: “Ensure that B.C. Ferries procurement practices for new ferries provide for a fair and competitive bidding process that is open to B.C. shipyards.”

Ko said construction in B.C. boosts the economy by providing jobs, preserving skills, delivering tax money to government and supporting local suppliers.

“There’s a spinoff effect — it is huge.”

Give a contract to an offshore company, and those benefits stay in another country, he said.

James McFadden, president of Meridian Marine Industries Inc. of Richmond, said another challenge in the sector is a dire shortage of experienced tradespeople.

He favours working with other yards to bid together, possibly for smaller ferries.

McFadden was in Victoria last week as a subcontractor to Esquimalt Drydock, which won contracts totalling $20 million to upgrade the Northern Sea Wolf.

Meridian has struck an agreement with Remontowa Shipbuilding S.A. in Poland to take responsibility for warranty work for B.C. Ferries’ three new Salish-class vessels. The Salish vessels came with a two-year warranty.

That arrangement mimics the agreement that Point Hope Maritime of Victoria has for the minor-class ferries.

George MacPherson, president of the Shipyard General Workers’ Federation representing union trades, said: “It appears that there is a fair bit of work that is going to come up in new construction for B.C. Ferries. We think that the industry right now is poised to become a large part of that.

“We have a couple of facilities that are looking for work for new construction and ready to go. We’ve got other smaller operators out there that would like to join in a joint venture.”

Richard MacIntosh, international representative for the International Brotherhood of Boilermakers, points to the Spirit-class work in Poland.

Victoria Shipyards won a contract last year to convert two 839-foot-long American-owned roll-on, roll-off cargo ships to a dual-fuel system.

“Meanwhile, B.C. Ferries are having the same thing done in Europe. It doesn’t make sense,” MacIntosh said.

Phil Venoit, Island Metal Trades Council president, said when work goes offshore, “our marine shipyard workers and apprentices are sitting at home waiting for the next federal contract or the next private cruise ship or ocean freighter to come into port.”

The number of B.C. shipyards has shrunk over a decade, but some are planning to modernize and expand.

After Seaspan won the right to negotiate contracts to build non-combat ships for the federal government, it said it spent $170 million to modernize its Vancouver Shipyards. New training programs have been added in B.C. to turn out workers.

Seaspan said in a statement that it is interested in finding out B.C. Ferries’ needs and time lines. Any role it might have in that future work would depend on the capacity of the company through its Vancouver and Victoria shipyards.

Point Hope is aiming to build a $50-million graving dock to serve larger vessels and more customers. The company predicts that investment would translate into 200 new jobs for trades workers and bring new apprenticeships.

Daniel Russell, co-owner of Canadian Maritime Engineering, with operations in Esquimalt, Nanaimo and Port Alberni, said they are looking at tens of millions of dollars in investment. The company is working with the Port Alberni Port Authority in the hopes of developing a large marine building-repair and construction yard.

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