Page 56: of Maritime Reporter Magazine (June 1988)

CANADIAN SHIPBUILDING

REVIEW AND OUTLOOK

BY J.Y. CLARKE, PRESIDENT,

CANADIAN MARITIME INDUSTRIES ASSOCIATION

Although 1987 was by no means a banner year for our shipbuilding, ship repairing and allied industries, it did have some positive aspects that portend well for the future. The

Order Book total, i.e. vessels under construction and on order, at the end of 1987 was 63,820 GT, a 58% increase over 1986. While this ton- nage is still far lower than the years before 1986, it is encouraging to note that 32,220 GT or just over half, stemmed from commercial contracts. It is certainly hoped that is indicative of future trends.

It is also encouraging that the number of foreign built vessels reg- istered in Canada decreased slight- ly, from 9 to 7, although, in terms of gross tonnage, this represents a sig- nificant increase. Situations of this sort support the CMIA contention that, as Canada needs and wants a viable shipbuilding and repairing infrastructure, a national policy must be developed, to this end.

Such a policy should, we suggest, provide the capability for innova- tive financing arrangements to evolve, which would persuade Cana- dian fleet operators to build and refit in Canada. More about this lat- er.

The value of allied industries ma- rine revenue was down slightly from 1986, but the implications of the

June, 1987 White Paper on Defence should reverse this trend during 1988.

During 1987, Marine Industries

Limited acquired Versatile Vickers (Montreal), Versatile Davie (Lau- zon) and Versatile Systems Engi- neering Inc. The MIL Group then consolidated the three shipyards along the St. Lawrence River, with respect to operations. This action undoubtedly warmed the cockles of the hearts of those members of the

Federal bureaucracy intent on mon- itoring the rationalization of the Ca- nadian shipyard infrastructure. At the time of writing, early May '88, it is understood that Government offi- cials are involved in discussions on the West Coast but no results have yet been announced.

At the end of December, 1987 shipyard employment stood at 5,649, the lowest level in CMIA records. However reports have been received of significant hirings since the beginnings of '88.

During the first quarter of 1988, several new contracts were awarded, with a virtual 50-50 balance be- tween new construction and refit/ repair.

The outlook through '88 into the next decade appears promising, for several reasons. First, world ship- ping increased steadily over the past 20 months, with several ports, in- cluding some in Canada, reporting record operations, either in certain categories of cargo, or in total. Sec- ondly, Canadian fisheries are plac- ing more orders in Canadian yards,

SHIPBUILDING AND SHIP REPAIRING INDUSTRY

STATISTICAL HIGHLIGHTS

AS AT DECEMBER 31, 1984-1987

No 1984 No 1985 No 1986 No 1987

Change from 1986 %

ORDER BOOK—Vessels Under Construction or on Order

As at December 31, 1987

Commercial (GT) 11 92,347 6 33,850 5 1,650 10 32,220 + 1,852.7

Federal Government (GT) 21 59,330 19 56,360 9 38,700 8 31,600 -18.3

Total (GT) 32 151,677 25 90,210 14 40,350 18 63,820 + 58.2

NEW ORDERS—Received in 1987

Commercial (GT) 9 29,220 7 7,900 9 2,144 13 33,529 + 1,463.9

Federal Government (GT) 6 6,500 2 400 — — 1 500 + 500.0

Total (GT) 15 35,700 9 8,300 9 2,144 14 34,029 + 1,487.2

DELIVERIES—During 1987

Commercial (GT) 6 50,100 11 55,900 10 34,518 8 3,615 -89.5

Federal Government (GT) 2 1,700 4 4,600 10 17,760 2 7,600 -57.2

Total (GT) 8 51,800 15 60,500 20 52,278 10 11,215 -78.5

VALUE OF NEW CONSTRUCTION

Commercial ($000) — 172,541 — 160,156 — 25,609 — 125,406 + 389.7

Federal Government ($000) — 115,663 — 302,254 — 306,580 — 21,532 -93.0

Total ($000) — 288,204 — 462,410 — 332,189 — 146,758 -55.8

VALUE OF REPAIRS AND CONVERSIONS

Commercial ($000) — 163,259 — 146,606 — 136,623 — 118,010 -13.6

Federal Government ($000) — 87,426 — 83,458 — 90,931 — 61,488 -32.4

Total ($000) — 250,685 — 230,064 — 227,554 — 179,498 -21.1

TOTAL VALUE OF SHIPYARD PRODUCTION —New Construction, Repairs and Conversions

On Domestic Account ($000) — 479,638 — 667,374 — 540,356 — 303,873 -43.8

On Foreign Account ($000) — 59,251 — 25,100 — 19,387 — 22,383 + 15.5

Total ($000) — 538,889 — 692,474 — 559,743 — 326,256 -41.7

FOREIGN BUILT VESSELS REGISTERED IN CANADA (GT) 18 235,975 7 8,233 9 9,641 7 23,069 + 139.2

EMPLOYMENT

In CMIA Shipyards

New Construction — 2,849 — 4,420 — 3,435 — 3,171 -7.7

Repairs — 4,240 — 3,660 — 3,521 — 2,478 -29.6

Total — 7,089 — 8,080 — 6,956 — 5,649 -18.8

Dollar Output Per Employee ($) — 76,743 — 85,702 — 80,469 — 57,754 -28.2

J. Y. Clarke not as many as we'd like, perhaps, but enough to provide work for sev- eral medium yards. Finally, offshore drilling continues at low levels in the Beaufort, off the Newfoundland coast and in the Sable Island area.

Planning is well advanced against the day when phasing into the pro- duction stages becomes economical- ly viable, and this major move could be made in the near future.

Government contracting with re- spect to the Canadian Coast Guard and Fisheries & Oceans' fleets con- tinues, with both new construction and major refit and repair contracts being expected this year. It is pend- ing naval contracts, however, that are capturing media attention in all parts of the country. The third and fourth Tribal-Class modernizations have yet to be announced, and the industry anxiously awaits the Gov- ernment's next move on the acquisi- tion of a mine counter-measures fleet and other minor war vessels.

The nuclear-propelled submarine project, however, has gained the limelight. The "battle" between

Britain and France to win the im- pending country-of-origin decision has progressed to the final rounds, and it is believed that this decision is imminent. In total, the prospects for shipbuilding and ship repairing in Canada, together with those for the allied manufacturing and ser- vice industries, hold promise for a modest recovery from the slump of the past few years.

Finally, the question of a national shipbuilding and repairing policy for Canada has advanced to a new stage. Working with Government officials, the CMIA has developed a framework for a national policy, which has now been submitted to the Prime Minister with a formal request that such a policy be formu- lated. To use the somewhat trite expressions received from Govern- ment on this issue two years ago, the monkey is off the Association's back, and the ball is in the Govern- ment's court. 62 Maritime Reporter/Engineering News