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50Maritime Reporter & Engineering News Shipbuilding in Nova Scotia By Joonkoo Lee & Lukas C. Brun, Center on Globalization, Governance & Competitiveness, Duke UniversityIrving Shipbuilding?s successful C$25 billion bid for the combatantportion of the National Shipbuild- ing Procurement Strategy (NSPS) illustrates the strength of Nova Scotia shipbuilding industry. Under the pro- gram, Irving Shipbuilding, Inc. (ISI) will build six to eight Arctic/Offshore Patrol Ships and 15 Canadian Surface Combat- ants for the Department of National De-fense (DND) over the next 20-30 years. The NSPS contract is in addition to ISI?s contract to build nine mid-shore patrol vessels for the Canadian Coast Guard, valued at C$219 million, and to refit seven Halifax-class navy frigates, valued at C$549 million. This article, excerpted from a recently completed report onNova Scotia?s ocean technology sector by the Duke University Center on Global- ization, Governance and Competitive- ness, reviews Nova Scotia?s shipbuilding capabilities and emerging market oppor- tunities. SHIPBUILDING IN NOVA SCOTIA Nova Scotia?s shipbuilding industry is based on three key features: a strong shipbuilding tradition and infrastructure, an emerging ocean technology sector, and continued large-scale federal ship- building projects. Strong shipbuilding tradition and infra- structure: Nova Scotia and Halifax, in particular, have a history in shipbuilding dating to the 1880s. Irving Shipbuilding, the centerpiece of the region?s shipbuild- ing, has built 80% of Canada?s current surface combat fleet, including icebreak- ers. The company, owned by J.D. Irving, has in Nova Scotia two shipyards (Hali- fax and Woodside), one repair facility (Shelburne), and one support service af- filiate (Fleetway). With 470 full-time equivalent employees in 2009, ISI?s Hal- ifax Shipyard is a full-service shipyard, offering a range of services from fabrica- tion to machine shops. It also provides access to a large and extensive local sub- contractor community. Currently, ISI has contracts under way to build nine mid- shore patrol vessels for the Canadian Coast Guard (valued at C$219 million) and to refit seven Halifax-class navy frigates (valued at C$549 million). Be- side ISI, several smaller shipbuilders are also in operation in Nova Scotia, includ- ing A.F. Theriault and Rosborough Boats. These large and small shipbuilders and suppliers make up valuable infrastructure for shipbuilding and repair. Nova Scotia?s shipbuilding assets also include its ability to develop a skilled workforce. Higher education institutions, including the Nova Scotia Community College and Dalhousie University, are continuing to develop a workforce with the skills required in the marine con-struction and transportation industry. De- mand for a range of shipbuilding skills, from welders to software engineers, is provided by the presence of large-scale shipyards like the Halifax Shipyard. Nova Scotia has maintained a nice bal- ance in both the supply of and demandfor a skilled shipbuilding workforce. Emerging ocean technology sector: Ocean technology (OT) firms provide goods for ocean-related industries, rang-ing from marine robotics to electronicnavigation equipment. They also provide services such as enhanced engineeringand environmental and computer knowl- edge for marine industries. Nova Scotia, along with Newfoundland, represented over 80% of the OT firms in Atlantic Canada. A 2006 report estimated that the annual sales of the OT sector in Atlantic Canada were C$329.2 million based onsales figures in 2003-05. When indirect economic activities are included, the sec- tor was responsible for close to 5,298 person-years of employment, C$201.8 million of household labor income, andC$280.9 million of gross domestic prod-uct on an annual basis. These economic impacts are largely the result of small- and medium-sized enterprises (SMEs)with high rates of investment in research and development (R&D). Nova Scotia has a great number of SMEs specializing in various ocean tech- nologies, from naval architecture to soft- ware engineering. These SMEs are mainly supported by the presence of a ro-bust aerospace and defense cluster that serves the government sector, the biggest customer of the OT sector in Atlantic Canada. 45% of Canada?s military assets and a significant part of its defense R&D are present in the province. The defense cluster includes over 200 companies, 6,000 employees, and generates about C$600 million annually in Nova Scotia. Major defense multinational corporationsin the province include Lockheed Martin Canada, L-3 Communications, GeneralDynamics, MacDonald, Dettwiler & As- sociates (MDA), Raytheon Canada and Ultra Electronics Maritime Systems. The OT sector in Nova Scotia has the potential to play a key role in global ship- building. Figure 1 presents the shipbuild- ing and enabled service providers in Fig. 1: Shipbuilding & Enabled Service Providers (Source: CGGC) Table 1: Canada?s ship and boat exports by destination and province (C$ ?000) By Export Destination2007 20082009 20102011 United States562,682449,033270,037209,931290,339 Brazil7,94017,19919,71315,21025,837 Australia20,25631,19223,81724,98322,914 Belgium15,57826,33124,05819,07314,391 India21992071457,910 Russia12,40718,8378,7542,1106,500 Finland3,1614,7503,7743,2124,924 Japan8,5289,6078,6436,8134,915 Argentina 5342,1492,0042,7943,936 South Africa6,0383,6752,6922,9143,823 Rest of the World 110,39086,703107,54769,44560,513 By Province Quebec509,328523,136330,927256,159317,895 British Columbia129,35960,944100,75653,34760,917 Ontario68,14354,89229,41436,72850,946 Nova Scotia6,7405,5028,6674,25210,718 Alberta 1,4721,614455 3,3713,964 Newfoundland and Labrador28,967353 616457644 New Brunswick3,2211,876288 1,769610 Prince Edward Island156 32971366307 Manitoba8468351Saskatchewan6692244145-- Total Exports 747,535649,575471,246356,628446,002 Source: Industry Canada Trade Data Online MR June12 # 7 (50-56):MR Template 6/11/2012 1:20 PM Page 50