Economic benefits for Canadians: Canada’s National Shipbuilding Strategy—2020 annual report

Navigation for Canada’s National Shipbuilding Strategy: 2020 annual report

The National Shipbuilding Strategy (NSS) continues to revitalize Canada’s marine sector, creating jobs, and generating socio-economic benefits and prosperity in communities across the country.

In 2020 alone, the Government of Canada awarded approximately $3.5 billion in new contracts to Canadian companies under the NSS, including approximately $132.1 million that went to small and medium-sized businesses (SMBs) with fewer than 250 full-time employees.

NSS contracts awarded between January and December 2020 are estimated to contribute more than $2.7 billion ($904 million annually) to Canada’s gross domestic product and will result in approximately 8,400 jobs Footnote 1 annually during the period covering 2020 to 2022.

While the average salary in Canadian shipyards is 30% higher than the manufacturing average, the Canadian marine industry overall 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.

As hundreds of Canadian businesses are securing work through contracts, this in turn helps support innovation and skills development. Furthermore, the NSS is supporting the creation of a sustainable domestic supply chain.

Since the inception of the NSS, both Irving Shipbuilding Inc. (ISI) and Seaspan’s Vancouver Shipyards (VSY) have been engaging Canadian firms through sub-contracting activities. As reported by the shipyards, to date more than $2.9 billion in supplier development opportunities have been provided to 1,066 Canadian companies. SMBs have been awarded approximately 52% ($1.5 billion) of the value of these opportunities, with that amount being shared among 854 firms. During 2020 alone, the value of supplier development opportunities to Canadian firms increased by $523 million, and further, 54 new Canadian firms were engaged as suppliers to ISI and VSY.

The NSS continues to offer opportunities in the marine sector to under-represented groups in the shipbuilding industry. 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 (NSCC) and other community partners to establish the Irving Shipbuilding Centre of Excellence. The centre was established to provide pathways and equitable access to opportunities, programs and training for people, with a focus on under-represented communities, to effectively work in the shipbuilding industry. ISI invests annually in the centre to support a variety of programs for under-represented groups in shipbuilding, and the marine sector overall, through student programs, including the Pathways to Shipbuilding Welding Program for African Nova Scotians and the Pathway to Shipbuilding Metal Trades Program for Indigenous students. The centre 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 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: the Aboriginal Marine Training to Employment Partnership (AMTEP), the Aboriginal Community Career Employment Services Society (ACCESS), and the Coast Salish Employment and Training Society (CSETS). These organizations are part of 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.

Both NSS shipyards are also making significant investments in educating and inspiring youth about careers in Canada’s marine and shipbuilding industry. In December 2020, VSY announced a $300,000 investment in Let’s Talk Science, a charitable organization that engages Canadian youth and educators with (STEM) programs. This 3-year commitment will support the roll-out of new programs from kindergarten to Grade 12 across Canada, which will be focused on educating youth about STEM careers in marine and shipbuilding industries. These programs are expected to launch in April 2021. On the East Coast, ISI is supporting SuperNOVA, a non-profit initiative based at Dalhousie University that provides youth with experiences and camps in STEM-related activities. In addition, ISI’s 2017 investment of $4.5 million in the Centre for Ocean Ventures and Entrepreneurship (COVE) continues to enable post-secondary institutions and ocean science research, start-ups, and industry to work together to create a cluster of marine innovation and commercialization.

Industrial and Technological Benefits Policy and National Shipbuilding Strategy value proposition

Industrial and Technological Benefits Policy

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 their contracts, and are providing important investments into targeted areas, such as:

Through these policies, hundreds of Canadian businesses are securing work through contracts with the selected large-vessel shipyards, and in turn are investing in innovation and securing exports.

ISI has an IRB obligation of over $4.1 billion, of which close to $2.6 billion has been completed to date for the arctic and offshore patrol ships (AOPS) project and modernizations to the Halifax-class frigates. On the Canadian surface combatant (CSC) Definition contract, ISI has ITB activities of $203 million to be identified. Its major subcontractor Lockheed Martin Canada has ITB activities of $194 million to be identified.

On the West Coast, VSY is making progress on its IRB obligations, including the offshore fisheries science vessels, the offshore oceanographic science vessel and the joint support ships. To date, VSY has completed approximately $1.0 billion in IRBs, with over $251 million in activities currently underway as part of its total IRB obligation of close to $1.8 billion across these 3 projects.footnote 2

National Shipbuilding Strategy value proposition

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 an amount equal to 0.5% of the value of the large-vessel NSS contracts they are awarded in the Canadian marine industry to support human resources development, technology investment and industrial development.

Both shipyards have made investments in all 3 priority areas, and have placed particular focus on skills development and advancing the participation of under-represented groups in Canada’s marine industry. Investments have supported collaborative approaches to applied innovation in the ocean technology sector, the acquisition of equipment to complement marine-specific education programs, and post-secondary curriculum development to ensure a pipeline of qualified personnel for the industry.

As of December 31, 2020, NSS shipyards had accrued over $26.7 million in NSS VP obligations. The value of approved investments at the end of 2020, including completed investment activities and approved future activities, exceeded $29.4 million.

Statistics Canada survey on Canada’s marine industry

Investments made under the NSS have supported the growth of the broader marine industry in Canada. This industry is made up of firms in key industrial capabilities areas of strength, including:

The results from the most recent Statistics Canada survey on Canada’s marine industry, which was completed in 2020, illustrate the positive momentum being realized under the NSS prior to the onset of COVID-19.

Statistics Canada data released in 2020 indicates that in 2018 Canada’s broader marine industry contributed close to 30,000 jobs, with Canada’s marine sector growing across every region of Canada, with activity distributed as follows:

Based on that same data, marine sector employment increased by 11% between 2016 and 2018, while sales increased by 16% to $4.1 billion in 2018—both employment and sales also experienced similar percentage growth in the 2014 to 2016 iteration of the Statistics Canada survey. Notably, it is the domestic marine supply chain, which is primarily small and medium-sized businesses (SMBs) that captured 55% of this sales growth.

Between 2016 and 2018, the Canadian marine supply chain also experienced significant export growth of 33%, with export revenues increasing to a value of $1.1 billion in 2018. Canadian companies are having demonstrable success in the global market, with over 80% of Canadian-developed naval systems present on global fleets. Canadian firms indicate that having the ability to participate in domestic projects, by way of the NSS, has provided them with an opportunity to leverage this experience in order to pursue work with other allied nations and international commercial customers. For example:

The Canadian marine sector is also seeing an increase in innovation as investments in research and development increased by 40% to $64 million between 2016 and 2018, reflective of the industry’s efforts to further develop and commercialize products and services to meet market demand.

The growth of innovation in the marine sector will continue to enable Canadian firms to bring new products and services to market that align with Canada’s unique marine requirements, generate international interest and create new export opportunities, and contribute to continued growth of the domestic marine industrial base.

Economic impacts of the National Shipbuilding Strategy since 2012 footnote 1

Navigation for Canada’s National Shipbuilding Strategy: 2020 annual report

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