Economic benefits for Canadians—Canada’s National Shipbuilding Strategy: 2018 annual report

Navigation for Canada’s National Shipbuilding Strategy: 2018 annual report

The National Shipbuilding Strategy is revitalizing the domestic shipbuilding and greater marine industry, creating jobs, and generating socio-economic benefits and prosperity in communities across Canada. In 2018, the strategy made significant headway on this commitment.

During 2018, the Government of Canada awarded approximately $1.8 billion in new contracts to Canadian companies under the strategy. Of that amount, more than $173.6 million went to small businesses with fewer than 250 full-time employees.

National Shipbuilding Strategy contracts awarded between January and December 2018 are estimated to contribute close to $1.5 billion ($296 million annually) to Canada’s gross domestic product and will result in approximately 2,987 jobs annually during the period covering 2018 to 2022.

The average salary in Canadian shipyards is 30% higher than the manufacturing average. Overall, the Canadian marine industry is innovative, and supports skilled workers, with a 2.5-times higher share of employment in science, technology, engineering and mathematics (STEM) fields (such as engineers, scientists and researchers) than total manufacturing.

Hundreds of Canadian businesses are securing work through contracts with the selected large vessel shipyards, which in turn supports innovation and skills development. Furthermore, the Strategy is supporting the creation of a sustainable domestic supply chain. Through Irving Shipbuilding Inc. and Seaspan’s Vancouver Shipyards, more than $1.9 billion in supplier development opportunities have been provided to over 825 Canadian companies since 2012. A total of 79% of these are small and medium sized enterprises, which account for 50% of the overall value. In 2018, more than $309 million in supplier development opportunities were provided to 108 Canadian suppliers, which is critical for supporting the Canadian Coast Guard and Royal Canadian Navy fleets, now and into the future.

The strategy continues to provide fair opportunities in the marine sector to businesses led by under-represented groups in the shipbuilding industry, including women, Indigenous Peoples and persons with disabilities. Partnerships are being forged with the 2 large vessel shipyards, federal departments, academic institutions, research organizations and other joint-ventures to increase participation of under-represented groups in the sector.

Industrial and Regional Benefits Policy, Industrial and Technological Benefits Policy and National Shipbuilding Strategy value proposition

Shipyards are meeting and exceeding their required commitments under both the Industrial and Regional Benefits (IRB) Policy and the Industrial and Technological Benefits (ITB) Policy as well as the National Shipbuilding Strategy Value Proposition (NSS VP).

Canada’s IRB Policy and ITB Policy are playing an important role in leveraging Canada’s defence and security spending to generate economic benefits for the country. Under these policies, shipyards and their major suppliers are undertaking business activities in Canada equal to the value of the contract, and providing important investments into targeted areas, such as:

Irving Shipbuilding Inc. has an IRB obligation of nearly $4 billion, of which $2 billion has been completed to date and another $403 million is underway for the Arctic and offshore patrol ships project and modernizations to the Halifax-class frigates.

On the West Coast, Seaspan’s Vancouver Shipyards (VSY) is making progress on its IRB obligations for the vessels under the National Shipbuilding Strategy’s non-combat package, including the offshore fisheries science vessel, the offshore oceanographic science vessel and the joint support ship. To date, VSY has completed $777 million in IRBs, with $225 million in activities underway as part of its total IRB obligation of $1.1 billion across these 3 projects.

Current obligations are based on the value of contracts awarded as of January 2019 for design and engineering, equipment and systems integration, and ship construction. These values will increase in future reports as work progresses on existing projects under the strategy and new activities begin in 2019 for the Canadian Surface Combatant as well as planned future maintenance support services for Halifax class frigates.

The NSS VP is designed to benefit the greater Canadian marine industry and help ensure its long-term sustainability. Under the NSS VP, shipyards are required to invest 0.5% of the value of strategy-awarded contracts into the Canadian marine industry to support human resources development, technology investment and industrial development.

To date, of the $20.4 million in obligations under the NSS VP, more than 87%, or $17.8 million, have either been completed or are in progress or planned.

Navigation for Canada’s National Shipbuilding Strategy: 2018 annual report

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