davie shipyard |  More than 10 billion potential contracts

davie shipyard | More than 10 billion potential contracts

The Lévis shipyard will be integrated into the shipbuilding strategy

Posted at 5:00 am

Maxime Bergeron

Maxime Bergeron
Press

Joel-Denis Bellavance

Joel-Denis Bellavance
Press

(Ottawa) After many delays and an intense lobbying campaign, the Trudeau government is preparing to correct “an historic mistake” by integrating the Davie shipyard into its shipbuilding strategy, it has learned Press. Quebec is ready to guarantee part of the hundreds of millions needed to modernize the group’s facilities, a condition sine qua non for the award of contracts, according to our information.

The federal contracts, demanded for years by Davie, could exceed $10 billion in the next few years. If the company goes through all the steps to the final green light, he will be responsible for building seven new icebreakers for the federal navy, enough to employ his employees and contractors for many years. The Davie shipyard alone has more than 900 suppliers in Quebec, spread across various regions of the province.

In addition, the global geopolitical context, which has been heavily affected by Russia’s war in Ukraine, could force the Trudeau government to revise its order book upwards, opening the door to other lucrative contracts for Davie, it was said.

The Trudeau government is due to confirm on Thursday that it has reached an agreement in principle with Davie, according to our information.

The country did not care that the Davie shipyard, which represents 50% of the country’s shipbuilding capacity, remained excluded from the shipbuilding strategy. We will correct this historical error.

A government source who requested anonymity because they are not authorized to speak publicly about the case

Federal Minister of Health Jean-Yves Duclos, who represents the Quebec City region at the Cabinet table, and Justin Trudeau’s political lieutenant in Quebec, Pablo Rodriguez, also Minister of Canadian Heritage, played prominent roles in the ministerial ranks to end the exclusion of the Davies from the shipbuilding strategy.

“Seaspan in Vancouver and Irving in Halifax are failing to meet shipbuilding demand. La Davie has a staff recognized throughout the world. It had to be included in the shipbuilding strategy,” the government source added.

Quebec Vouchers

The owners of the Davie shipyard and various Quebec elected officials have been denouncing this issue for years. The previous government of Stephen Harper excluded the Lévis shipyard when it announced its National Shipbuilding Strategy more than 10 years ago, awarding all contracts to Seaspan in Vancouver and Irving in Halifax. At the time, Chantier Davie had just been taken over by a Monegasque group, after once again being on the verge of bankruptcy.

“Mistrust had developed between officials and Davie following his exclusion from the shipbuilding strategy. He took work to rebuild the relationship. It’s basically like dropping a vase on the floor and picking up the pieces,” a source said.

The tide turned for Davie after the election of the Trudeau government. Ottawa launched a new “competitive process” to build icebreakers in May 2019, and Davie was finally “pre-qualified” in December 2019 to be able to bid.

Since then, the evaluation process has dragged on, in part due to the dilapidated state of some of the Davie facilities. We learned that investments of around 400 to 500 million would be required to bring them up to standard.

According to our information, the François Legault government has helped resolve this impasse. Quebec is willing to guarantee loans, or to lend to Davie, to carry out these mega-projects of approximately half a billion.

Such an approach would not be unique. In Vancouver, Seaspan had to invest $188 million to modernize its facilities, while in Halifax, Irving Shipbuilding secured a $260 million grant from the Nova Scotia government to renovate its facilities.

There are several threads left to tie, it is indicated. But basically, Investissement Québec is willing to vouch for part of the hundreds of millions needed to help Davie obtain financing from private lenders. Quebec is waiting for the official green light from Ottawa before making its announcement. A formal agreement is expected to be reached no later than the fall.

More in-depth studies will be necessary before Quebec releases the funds, stresses a government source familiar with the dossier. In any case, the benefits will be enormous for Davie and its suppliers, if the group follows all the steps required after the green light from Ottawa.

Why so long?

All kinds of hypotheses are circulating to explain the long delays between Davie’s prequalification in December 2019 and the signing of a framework agreement two and a half years later. This process took about 18 months with Irving and Seaspan, in the early 2010s.

Public Services and Procurement Canada (PSPC), the department that manages the contracts awarded by the federal government, has defended itself in recent weeks for having delayed the accreditation process for the Davie shipyard.

“This is a complex, multi-step qualification process, and it is imperative that Canada conduct this process with integrity,” a PSPC spokesperson said. Press. “Every effort is being made to finalize this process, while ensuring the best value for the Government of Canada and all Canadians. »

Despite his initial exclusion from Canadian naval strategy, Davie has secured more than $2.2 billion in contracts of various types from the federal government since 2014.

With the collaboration of William Leclerc, Press


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