Canadian Defence Review
September 13, 2013
Title: Halifax Shipyard upgrade gets in gear
Subtitle: Irving Shipbuilding’s planned $300 million investment to build one of the continent’s top naval production facilities will fire new life into Atlantic Canada’s defence sector.
It’s hard to imagine what Kevin McCoy, a former United States Navy vice-admiral, must have been thinking when he became president of Irving Shipbuilding Inc. After overseeing 60,000 employees and a $30 billion budget at US Naval Sea System Command (NAVSEA), one of his last mandates, you’d be forgiven for assuming that he’s regard Canada as the minor leagues.
Nothing could be further from the truth. “This is a fantastic opportunity,” said McCoy, during a recent interview at his new Halifax Shipyard offices. There he is overseeing major demolition and construction on a $300 million upgrade, to prepare the facility to build the Royal Canadian Navy’s new fleet of combat vessels. These are expected to include between six and eight Arctic Offshore Patrol Ships (AOPS) and up to 15 Canadian Surface Combatants (CSC). “Few people get a chance to be involved in the end-to-end rebuilding of a country’s naval combat fleet.”
McCoy, who in early August wrapped up 36 years in the US Armed Forces, to take on his new role, is particularly impressed with the Harper Government’s National Shipbuilding Procurement Strategy which formally identified the need for AOPS and CSC. “At a time when much of the world is focused on day-to-day budget pressures (including the US which is implementing sequestration defence cuts), Canada is thinking strategically and long-term,” says McCoy. “Municipal and provincial officials here in Nova Scotia, who quickly recognized how important this initiative is, are also doing their part.”
Halifax Shipyard: soon to be North America’s best?
McCoy’s has big ambitions for Irving Shipbuilding’s Halifax facilities. “We want to make Nova Scotia home to North America’s most modern shipyard,” he says. “That means building a state-of-the art facility, almost from the ground up, installing new equipment and setting up lean, efficient processes.” If plans go according to schedule, the company’s 1,200 member workforce, which may take a temporary hit during the rebuilding phase, will grow over the 25 to 30 year life of the NSPS contracts.
Work to be done at Halifax Shipyard includes construction of a new assembly hall, paint area and ultra hall, as well as a new submersible launch barge. This will require the demolition of many of the existing facilities. It’s a tricky job because space is so tight at the site. As a result innovative solutions are being implemented such as construction of a multi-level parking facility, which should help temper a big existing headache.
Another important step will be the shifting of key capabilities offsite, notably steel fabricating, which will be done at a facility operated by Irving, located in Dartmouth. The plant will be staffed by 20 employees at peak production times, who will take on steel marking, cutting, burning, fabrication, bending and forming. Another key player in the process will be UK-based First Marine International, which is tasked with reviewing the designs and ensuring that they are benchmarked against international best practices and NSPS guidelines.
Complicating matters is the fact that upgrade work must be done while Halifax Shipyards takes care of ongoing civilian and defence projects. These include the FELEX mid-life extension of seven Halifax-class frigates, two of which are complete, and two of which are underway, an initiative that should run until 2017. Construction at the yard is also proceeding on nine Hero-class Canadian Coast Guard mid-shore patrol vessels, of which four have been delivered and five remain, a project that should be completed by 2014.
Moving ahead with AOPS and CSC
However core defence production during coming years will be focused on NSPS work, which will move along as the Department of National Defence and Public Works and Government Services Canada unlock funds. This process began in spades earlier this year after Irving Shipbuilding was awarded a $288 million definition contract related to the first three AOPS ships.
Irving officials point out that the mandate, while large, includes funding for a variety of initiatives which extend far beyond mere design. These include: “engineering, three-dimensional modelling services and down-payments on major equipment items such as radar and engines that must be ordered well in advance and advanced construction of a large section of the first ship.” If all goes well construction on the first AOPS vessel is set to start in 2015. Visible progress on the Canadian Surface Combatant initiative is harder to identify, though publicly available scheduling slates construction to start in the 2020-2022 horizon.
Building a local supplier base
Key to Irving Shipbuilding’s strategy going forward is leveraging a local potential supply base. This will help to both build efficiencies in the program, by easing transport costs and to increase local public support, to help weather any challenges that could emerge as the project moves forward.
So far results look encouraging. Irving Shipbuilding held an AOPS supplier development session earlier this year, which was attending by more than 500 of the close to 700 Nova Scotia companies that were invited. The event included presentations by several Tier 1 suppliers, coupled with face-to-face meetings with more than 90 companies. This process continued at DEFSEC Atlantic 2013, this fall, where the company was a prominent presence, with McCoy delivering a luncheon keynote address.
Interim results in building a local supplier base have been good. According to data supplied by the company, $127.7 million in contracts have been awarded as part of the Halifax Shipyard Modernization Program, as the upgrade is formally known. Of this, 53 percent of the dollar value, has gone to companies owned or operating in Nova Scotia. A further 38 percent of contract dollars have been awarded to companies in the rest of Canada.
How developments unfold during the coming years is unclear at this point. Effective leadership at the top, which Irving Shipbuilding seems to have found in McCoy, provides a good start. Pretty much all of Canada’s defence sector will be watching how that initial success plays out.
Photo caption #1: These photos depict (left) how Halifax Shipyard looks today and how it will look after the upgrade is complete.
Photo caption #2: Kevin McCoy, president of Irving Shipbuilding Inc. is taking on one of the most important defence sector jobs in Canada.
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Peter Diekmeyer Communications Inc.