Shipbuilding contract is no CF-18

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The Halifax Shipyard, owned by Irving Shipbuilding, won the lion’s share of work in a $33-billion package of federal shipbuilding contracts awarded Wednesday.

HALIFAX -- If there were any lingering doubts that $33 billion in federal shipbuilding contracts would be awarded on the basis of merit, not politics, Wednesday's announcement giving the lion's share of the work to Halifax's Irving Shipbuilding put them to rest.

Had the decision been left to the politicians, Quebec shipyard workers might be the ones celebrating, their Nova Scotia counterparts would be crying foul and in British Columbia -- well, that province probably would have won the smaller of the two contracts in any event.

The big prize, $25 billion to build a fleet of new frigates, destroyers and patrol ships for the navy over the next three decades, goes to Nova Scotia, which mounted an aggressive "Ships Start Here" marketing campaign in support of the Irving bid.

The consolation package goes to Seaspan Marine of Vancouver, which will undertake $8 billion worth of work constructing coast guard vessels and icebreakers.

Left out in the cold in this avalanche of federal procurement -- for a change, some might add -- was Quebec. The troubled Davie Shipyard in Lévis still has a shot at $2 billion in orders to build smaller vessels and can vie with Irving and Seaspan for $500 million a year in maintenance contracts.

The process of assessing bids and selecting the winners was left in the hands of top-level bureaucrats. Even the ministers responsible for defence and public works were kept in the dark about the outcome until shortly before Wednesday's announcement.

If politics had been played -- and Manitobans know all too well that politics can skew defence contracts, as when the Mulroney government awarded fighter jet repair work to a Quebec firm over what was considered a superior bid out of Winnipeg -- Nova Scotia would have been at the back of the line.

Having local-boy Peter MacKay as defence minister would not have made up for the province's rejection of the Harper Conservatives, who won only four of 11 seats in the province last May and three back in 2008. To make matters worse, from a purely partisan standpoint, New Democrat Premier Darrell Dexter, the son of a former Halifax shipyard worker, stands to reap political rewards for lobbying hard to land the big contract.

B.C., in contrast, has sent more than 20 Conservatives to Ottawa in the past two elections. Quebec elected only five Tories in 2011, down from 10 in 2008, and passing over the Davie yard not only makes gains unlikely in the next election, it hands the federal NDP an issue to exploit as that party works to consolidate its massive gains in Quebec.

The political backlash came quickly. The NDP's interim federal leader, Nycole Turmel, complained the decision leaves "our Quebec-area shipbuilding in a more fragile position." The provincial economic development minister, Sam Hamad, demanded details on why Davie's "very strong bid" was rejected.

The reason should be obvious. The Quebec bid was by far the weakest of the three. The idle Davie yard is indeed "fragile" and its new owner, Upper Lakes Group of St. Catharines, had to plead for a deadline extension to cobble together a proposal.

Ottawa insisted the contracts would be awarded on merit, enabling the winning yards to invest in infrastructure and expertise and breaking the boom-and-bust cycles created when contracts are awarded on a piecemeal basis, or to pander to regional interests. The Harper government is to be commended for sticking to its guns.

The review process put great weight on each bidder's existing operations, expansion plans and financial position, and Irving was the clear winner on all fronts.

The Halifax yard is part of a family-

owned East Coast industrial empire that Canadian Business magazine estimates is worth almost $8 billion.

Jim Irving, whose legendary grandfather K.C. Irving founded this regional business powerhouse, is CEO of Irving Shipbuilding. He has steered the Halifax operation through lean times since buying it in the 1990s. Irving's now-closed Saint John yard built most of the frigates being replaced under the new program, so the company combines expertise with its deep pockets and its commitment to moving Atlantic Canada forward.

The benefits will be spread around, with contractors across the country expected to supply combat systems and other components. Building the ships will more than double Irving's workforce to about 2,500. One study estimates it will mean a total of 11,500 new jobs in Nova Scotia during peak production years.

The contract will inject close to $1 billion a year into the provincial economy, an economic boost Premier Dexter has likened to hosting the Olympics every year for 30 years. And it's welcome news as the province grapples with the shutdown of a Cape Breton paper mill that employed 1,000.

Ironically, the day the shipbuilding contracts were awarded Ottawa announced that the Atlantic Canada Opportunities Agency, a development fund that supports regional enterprises, will lay off 42 of its 670 employees to meet federal budget-cutting targets.

While ACOA and other government programs have created or preserved thousands of jobs, this week's announcement proves that, sometimes, the only thing Atlantic Canada's businesses need to come out on top is a level playing field.

Dean Jobb, an associate professor of journalism at the University of King's College in Halifax, writes on politics and business in Atlantic Canada.

www.deanjobb.ca

Republished from the Winnipeg Free Press print edition October 21, 2011 A14