Back from the brink in British Columbia
Five years ago Canadian shipyard group Seaspan was on the precipice of closing at least one of its facilities. But after an ‘all-in’ bid for a major government shipbuilding programme and a C$170 million revamp, it is looking to a promising future building vessels for Canada and beyond. Gavin Lipsith reports.
In 2011 the void in Canada’s shipbuilding industry was characterised by a “massive sucking sound”, says Jonathan Whitworth, CEO of Seaspan. To say the sector was waning is an understatement: Canada’s government, owner of one of the oldest coast guard and naval fleets in the developed world, had not built new ships for 30 years. One oceanographic vessel still in service, the Hudson, is a prime example. It was delivered 54 years ago.
Starved of governmental contracts, the sector had withered to a point where even a multi-location, diversified business like Seaspan – with its logistics, ship escort/assist and bunkering divisions alongside three shipyards – was feeling the strain.
“The number of yards was decreasing, the number of vessels required to be built was decreasing and we were on the precipice of closing down one if not two of our yards,” Whitworth recalls.
Cut to the present, and Seaspan – owner of Vancouver Shipyards, Vancouver Dry Docks and Victoria Shipyards – has completed a C$170 million modernisation of its Vancouver yard and has an orderbook stretching 25-30 years into the future. The revamped facility is so busy that the company has outsourced the construction of five LNG-electric hybrid cargo ferries – the first in North America – for its Seaspan Ferries subsidiary to a Turkish counterpart.
The turning point? October 19, 2011, when the government awarded Seaspan the non-combat package of its National Shipbuilding Strategy project. The contract – a share of the estimated C$30-40 billion the government will pay out under the strategy, including to combat package winner Irving Shipyards – comprises seven specialised vessels (of four designs) for the national navy and coast guard by 2023, followed by up to five vessels each of two designs thereafter.
“That was the day that everything changed,” says Whitworth. “Vancouver Shipyards went from being a Jurassic shipyard to the most state-of-the-art shipyard in the world of its kind. We spent a lot of time and money on the bid - quite frankly it was an all-in moment, there was no Plan B – and it was an amazing day knowing that all that hard work had paid off.”
After the jubilation, the transformation began. In 2011 Vancouver Shipyards looked little different from when the business was first moved to the current site in 1965. “We needed a shipyard that could deliver,” says Brian Carter, president of Seaspan. “We hired STX specifically because they help countries that are non-competitive to Korean yards set up their facilities. We started construction on October 19 2012 and finished two years later – under budget and about two months ahead of schedule.”
The renewed yard, under its landmark 84m gantry crane, has been abuzz ever since. When The Motorship visited the site in October, the first two vessels to be built under the government contract – two 64m fishery research vessels – were halfway completed and just started respectively. The first will be delivered mid-year, and construction will begin imminently on a third.
After that Seaspan will build another research vessel, this time oceanographic, at 84m loa – an eventual replacement for the exhausted Hudson. Then will come the two largest ships in the package, a pair of joint support ships for the Canadian navy. At 174m loa, these vessels were a design criterion for the modernised yard. The pent-up demand for these ships is high – in 2014 Canada’s only oiler caught fire off Hawaii and has been out of service ever since, with the government renting vessels as needed. Seaspan has 150 employees working on final design (the basic design is based on a German navy vessel) and procurement for the ship.
A high-capability, 150m loa polar icebreaker will complete the first segment of the contract. With an installed power of around 40MW, capable of breaking through eight feet of ice at three knots, it will be one of the most powerful ice vessels in the world.
In 2013 the government announced the second leg of the contract, two series of up to five vessels for the Canadian coast guard, one set of offshore patrol vessels and one of medium-endurance multitask vessels. According to Carter, this is where the real payoff for Seaspan’s investment will come.
He explains: “Our proposal in 2011 wasn’t setting a price for 30 years’ worth of ships. It was ‘what’s our plan to rebuild the shipbuilding industry while doing this work’. And that’s the goal of the National Shipbuilding Strategy. It’s not simply Canada needs ships. The government wanted to rebuild the industry. They created the strategy to do just that - to rebuild that ecosystem that surrounds a successful shipyard so that we are competitive internationally at some point.”
After the completion of the first stage of the contract in 2023, Seaspan estimates that around half of its capacity can be converted to cater either to an export opportunity, based on one of the ships it has already built, or for the local commercial market. Perhaps even for Seaspan: As well as its ferry fleet the company is the largest operator of tugs and barges in Canada, with 38 tugs and more than 120 barges. It also operates 14 ship escort vessels, responsible for docking around 70% of the traffic to the Port of Vancouver.
Carter acknowledges that, to become an internationally competitive shipbuilder, repeatability and series production are key. “Shipyards talk about repeatability, about long runs of vessels that really make us efficient and help us achieve what we want. A series in the eyes of a shipbuilder is at least five.”
Meanwhile the company is already trying to build repeatability into its regime. The yard operates a ‘conveyor belt' process that begins with the construction of five-sided blocks – for accommodation, bow section, engine room and so on. The blocks are fitted out as much as possible and welded to other blocks to make ‘grand blocks’. These bigger sections are then welded together to form the final vessels.
“We try to find our repeatability within the blocks,” says Carter. “So we need to control of the design of the ships. The basic designs are from the coast guard and navy, then we created an engineering team of 80-100 people to make final in-house designs.”
The economic impact of Seaspan’s government project is forecast to be vast – across its Canadian supplier base the company is forecasting an annual output of C$600 million, with a contribution to Canada’s GDP of C$290 million. The employment effect is also considerable, with the project generating 2,300 jobs, including 1,000 at Vancouver Shipyards. The company is halfway towards that employment level today, and is making significant investments in guaranteeing its workforce for the future.
“Modernising the yard was one part, but shipbuilding is a people business,” explains Carter. “We’ve gone at that heavily, getting the management in place and getting the right skill mix in the shipyard.”
The company has programmes in place to work with aboriginal communities to develop apprentices, for example, and is supporting high school programmes to introduce students to welding. On the managerial side, Seaspan has funded a masters in naval architecture and an applied research chair at the University of British Columbia - the first of which is currently being filled – and is working with the university to populate its halls with bright young naval architecture students.
There is a tangible air of dynamism around the Seaspan story as told by Whitworth and Carter. If all goes to plan, Canada seems set to be jolted from its long shipbuilding slumber, and could even harbour international ambitions. Its success – and Seaspan’s - will depend heavily on its nascent domestic project.
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