Economic benefits for Canadians: Canada’s National Shipbuilding Strategy—2019 annual report

Navigation for Canada’s National Shipbuilding Strategy: 2019 annual report

The National Shipbuilding Strategy (NSS) is revitalizing the domestic shipbuilding and greater marine industry, creating jobs, and generating socio-economic benefits and prosperity in communities across Canada. In 2019, the NSS made significant headway on this commitment.

During 2019, the Government of Canada (GC) awarded approximately $3.3 billion in new contracts to Canadian companies under the NSS. Of that amount, approximately $186.7 million went to small and medium-sized businesses (SMBs) with fewer than 250 full-time employees.

In addition, Seaspan’s Vancouver Shipyards (VSY) and Irving Shipbuilding Inc. (ISI) continue to provide supplier development opportunities to companies across Canada to meet commitments under the Industrial and Technological Benefits Policy. Since the launch of the NSS, ISI and VSY have supported Canadian SMBs by investing close to $735 million between 2012 and 2018. They also made additional commitments of over $26 million to SMBs in 2019.

NSS contracts awarded between January and December 2019 are estimated to contribute more than $4.1 billion ($1.0 billion annually) to Canada’s gross domestic product and will result in approximately 10,365 jobs annually during the period covering 2019 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 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 NSS is supporting the creation of a sustainable domestic supply chain.

Since the inception of the NSS, both ISI and VSY have been engaging Canadian firms through sub-contracting activities. As reported by the shipyards, to date more than $2.27 billion in supplier development opportunities have been provided to 988 Canadian companies. SMBs have been awarded approximately 53.7% ($1.22 billion) of the value of these opportunities, with that amount being shared among 782 firms. During 2019 alone, the value of supplier development opportunities to Canadian firms increased by $313 million, and further, 124 new Canadian firms were engaged as suppliers to ISI and VSY.

The NSS 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 the participation of under-represented groups in the sector.

For example, in order to diversify the workforce available to build ships in eastern Canada, ISI has worked in collaboration with the Nova Scotia Community College and other community partners to establish the Irving Shipbuilding Centre of Excellence. The centre currently offers bursaries for under-represented groups in shipbuilding, and the marine sector overall, through the students’ program, Pathways to Shipbuilding for African Nova Scotians, as well as Mi’kmaw and Indigenous Canadians and also has a partnership with Women Unlimited, a well-established program in Nova Scotia that seeks to optimize opportunities for women to work in the marine industry.

In order to ensure increased opportunities for traditionally under-represented groups to participate in the trades in western Canada, VSY supports job training, apprenticeship programs and the promotion of employment opportunities for Indigenous Peoples and women through funding initiatives, mentorship programs and partnerships with educational institutions that focus on shipbuilding educational initiatives. VSY also has a long-term partnership with 3 Indigenous training and employment organizations, named the Coastal Aboriginal Shipbuilding Alliance, which seeks to deliver quality training and employment programs to people of First Nation or Indigenous descent living in Vancouver and Vancouver Island.

Industrial and Technological Benefits Policy and National Shipbuilding Strategy value proposition

Shipyards are meeting and exceeding their required commitments under the Industrial and Technological Benefits (ITB) Policy as the National Shipbuilding Strategy value proposition (NSS VP).

Canada’s ITB Policy is playing an important role in leveraging Canada’s defence and security spending to generate economic benefits for the country. Under the ITB policy, 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:

Through the policy, hundreds of Canadian businesses are securing work through contracts with the selected large vessels shipyards, and in turn are investing in innovation and securing exports.

ISI has an Industrial and Regional Benefit (IRB) obligation of nearly $4.3 billion, of which $2.6 billion has been completed to date and another $396.3 million is underway for the Arctic and offshore patrol ships project, modernizations to the Halifax-class frigates, and the Canadian Surface Combatant definition contract.

On the West Coast, VSY is making progress on its IRB obligations for the vessels under the NSS’s non-combat package, including the OFSV, the offshore oceanographic science vessel and the JSS. To date, VSY has completed $1.0 billion in IRBs, with $251 million in activities underway as part of its total IRB obligation of $1.7 billion across these 3 projectsfootnote 1.

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 NSS awarded contracts into the Canadian marine industry to support human resources development, technology investment and industrial development.

As of December 31, 2019, of the $19.8 million in obligations under the NSS VP, more than 100%, or $21 million have either been completed or are in progress or planned.

Navigation for Canada’s National Shipbuilding Strategy: 2019 annual report

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