Economic benefits for Canadians: Canada’s National Shipbuilding Strategy—2021 annual report

Navigation for Canada’s National Shipbuilding Strategy: 2021 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.

Canada’s marine industry outperformed the broader manufacturing sector between 2018 and 2020. Between 2014 and 2020, Canada’s marine industry recorded 57% growth in sales and 46% growth in employment. This growth is not limited solely to the NSS shipyards contracts awarded by the Government of Canada. 90% of the Canadian marine industry’s firms are small- and medium-sized businesses (SMBs), capturing close to 40% of the industry’s employment and sales.

Performance of key variables, the Canadian marine industry vs. the broader manufacturing sector, percentage change: 2018 to 2020 footnote 1

Graphic comparing the Canadian marine and broader manufacturing sectors from 2018 and 2020 using 4 key variables. Long description below
Image description

A bar chart compares the Canadian marine industry and broader manufacturing sector between 2018 and 2020 using the performance 4 key variables.

Table 1: Performance of key variables, the Canadian marine industry vs. the broader manufacturing sector, percentage change: 2018 to 2020
Variable Marine Manufacturing
Revenues 19% -11%
Employment 14% -6%
Research and development (R&D) -11% -14%
Exports 7% -11%
Table 2: Change in civil vs. defence marine sales: 2018 to 2020
Defence marine 41%
Civil marinetable note 1 -5%

Table 1 note

Table 1 Note 1

Civil activities can range from those relating to marine sciences/ocean technologies, to goods and services for public sector clients and vessels like coast guard ships, as well as commercial ships for private sector operators, and related systems, etc.

Return to table 1 note 1 referrer

Source: Statistics Canada’s “Canadian Defence, Aerospace, Marine and Cybersecurity Industries Survey” (2018, 2020), 2020 survey released in 2022; Statistics Canada export data accessed through “Trade Data Online”; and Statistics Canada’s online tables: 27-10-0333-01, 14-10-0202-01, and 16-10-0047-01

Shipbuilding employment

This increased employment in the sector has created high-quality manufacturing jobs, with the average salary in Canadian shipyards being 30% higher than the manufacturing average. Additionally, 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.

In 2021 alone, the Government of Canada awarded approximately $2.86 billion in new contracts to Canadian companies under the NSS, including approximately $106 million that went to SMBs with fewer than 250 full-time employees. All contracts awarded in 2021 are estimated to contribute more than $1.987 billion annually to Canada’s Gross Domestic Product (GDP) and will result in approximately 9,284 jobs annually during the period covering 2021 to 2022.footnote 2

The NSS continues to offer opportunities in the marine sector to groups that are underrepresented 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.

Industrial and technological benefits policy and National Shipbuilding Strategy value proposition

Shipyards are meeting and exceeding their commitments required under the industrial and technological benefits (ITB) policy, formerly the industrial and regional benefits (IRB) policy, as well as the National Shipbuilding Strategy value proposition (NSS VP).

Industrial and technological benefits policy

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 this policy, shipyards and their major suppliers are undertaking business activities in Canada equal to the value of their contracts. In addition, the policy creates and requires companies to focus on targeted priority areas:

While the ITB policy strives to maximize benefits to Canadian industry, 1 of the core principles of this policy is that business transactions are market driven. As such, the shipyards that are awarded contracts under the NSS are responsible for the sourcing and selection of materials for their respective shipbuilding contracts. Through these policies, hundreds of Canadian businesses are securing work through contracts with the selected NSS large-vessel shipyards, and, in turn, are investing in innovation and securing exports.

Irving Shipbuilding Inc. (ISI) has an obligation of over $4.5 billion for the Arctic and offshore patrol ship (AOPS) project and modernization and support services to the Halifax-class frigates, of which close to $3.4 billion has been completed to date. On the Canadian surface combatant definition contract, ISI has an ITB obligation of $278 million thus far, of which $217 million has been identified as ITB activities underway. Its major subcontractor Lockheed Martin Canada has identified ITB activities of $209 million underway as part of its ITB obligation of $251 million.

On the West Coast, Seaspan’s Vancouver shipyards (VSY) are making progress on its obligations, including in relation to the offshore fisheries science vessels, the offshore oceanographic science vessel, and the joint support ships. To date, VSY has completed over $1.4 billion in ITBs/IRBs, with approximately $928 million in activities currently underway as part of its total obligation of just over $4.8 billion across these 3 projects. Additionally, VSY has an ITB/IRB obligation of close to $1.3 billion on modernizations and support services to the Halifax-class frigates, of which close to $633 million has been completed to date.

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 qualified personnel are being trained for the industry.

As of December 31, 2021, NSS shipyards had accrued over $31.2 million in NSS VP obligations. The value of approved investments at the end of 2021, including completed investment activities and approved future activities, exceeded $36.9 million.

Workers of tomorrow

As the NSS continues to revitalize Canada’s shipbuilding industry, both partner shipyards under the strategy, Irving Shipbuilding and Seaspan’s Vancouver Shipyards, are actively supporting the next generation of shipbuilders to work on the projects that will be part of Canada’s efforts to renew its federal fleets of combat and non-combat vessels.

Irving support for apprentices

Irving Shipbuilding Inc. (ISI) supports a variety of learning opportunities and professional designations for their team members. The shipyard offers specific support to their apprentices, including wages, mentors, and a dedicated apprenticeship team to support those joining the industry.

Irving Red Seal Trade program

In 2021, ISI welcomed 458 new employees, and saw a record 48 graduates receive Red Seal Trades certification. Red Seal certifications are a nationally recognized endorsement that a tradesperson is qualified to do their job, and has demonstrated the knowledge required for the national standard in that specific trade.

Red Seal Trade program

Seaspan training programs

Seaspan’s Vancouver Shipyards provide a wide range of learning and skills development opportunities to develop the next generation of shipbuilders. In 2021, the shipyard welcomed approximately 400 new employees, including both professionals and highly-skilled tradespeople. Its comprehensive apprenticeship program supported more than 80 apprentices in 2021 and saw 11 apprentices graduate with their Red Seal certification. In 2022, the shipyard anticipates doubling the number of Red Seal graduates, while continuing to increase the total number of apprentices in the program.

Seaspan also established a new training facility, the Welding Centre of Excellence, which includes 24 welding booths for training new welders and conducting recertifications, as well as a metallurgy lab and analysis room for developing new welding technologies and processes.

Through 2021, Seaspan continued to invest in education, learning, research, and skills development initiatives to bring a broad range of new talent into the industry and the trades. For example, the shipyard announced a 3-year, $1.35 million investment in the Aboriginal Community Career Employment Services Society (ACCESS).

The company also announced a collaboration with BC Tech to support the Digital Lift Internship Program, which aims to help Indigenous people, women, rural youth, and mid-career transitioning workers gain real-world experience across multiple sectors, including the marine industry.

Navigation for Canada’s National Shipbuilding Strategy: 2021 annual report

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