Davie Shipyard | More than 10 billion potential contracts

The Lévis shipyard is integrated into the shipbuilding strategy

Posted at 5:00 am

Maxim Bergeron

Maxim Bergeron
The press

Joel Denis Bellavance

Joel Denis Bellavance
The press

(Ottawa) After many delays and an intense lobbying campaign, the Trudeau administration is preparing to correct “a historic mistake” by incorporating the Davie shipyard into its shipbuilding strategy, it was told The press. Quebec is willing to guarantee part of the hundreds of millions needed to modernize the group’s facilities, which we understand is a sine qua non for any contracts to be awarded.

Federal contracts, which Davie has been demanding for years, could top $10 billion in the next few years. If the company goes through all the steps to the final green light, it will be responsible for building seven new icebreakers for the German Navy – enough to keep its employees and contractors busy for years to come. The Davie shipyard alone has more than 900 suppliers in Quebec, spread across several regions of the province.

In addition, the global geopolitical context, severely disrupted by Russia’s war in Ukraine, could force the Trudeau government to revise its order books upwards, opening the door to other lucrative deals for Davie, it said.

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

It is not in the country’s interest that the Davie shipyard, which accounts for 50% of the country’s shipbuilding capacity, continues to be excluded from the shipbuilding strategy. We will correct this historical error.

A government source who asked not to be known because she was not authorized to speak publicly about the case

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

“Seaspan in Vancouver and Irving in Halifax cannot meet shipbuilding demand. La Davie has a globally recognized workforce. It had to be included in the shipbuilding strategy,” the government source added.

Quebec vouches

The owners of the Davie Shipyard and several Quebec elected officials have been howling over the matter for years. The former Stephen Harper government 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 company after he was again close to bankruptcy.

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

The tide turned for Davie after the election of the Trudeau government. Ottawa began a new “competition process” for icebreaker construction in May 2019, and Davie was eventually “pre-qualified” to bid in December 2019.

The review process has since dragged on, due in part to the dilapidated condition of some of Davie’s facilities. In order to bring them up to standard, investments of around 400 to 500 million would be necessary, we found out.

According to our information, the government of François Legault has helped to solve this impasse. Quebec is willing to guarantee loans or lend Davie sums to carry out these mega works of around half a billion.

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

It is said that several threads still have to be tied. But in principle, Investissement Québec is willing to vouch for part of the hundreds of millions needed to help Davie secure financing from private lenders. Quebec is awaiting the official green light from Ottawa before making its announcement. A formal agreement is expected by autumn at the latest.

More in-depth studies will be needed before Quebec releases the funds, says a government source well-informed on the filing. In any case, the benefits for Davie and his suppliers will be enormous if the group actually goes through all the necessary steps after the Ottawa green light.

Why so much time?

All sorts of hypotheses are circulating to explain the long delays between Davie’s pre-qualification in December 2019 and the signing of a framework agreement two and a half years later. This process had taken about 18 months at Irving and Seaspan in the early 2010s.

Public Services and Procurement Canada (PSPC), the department that manages contracts awarded by the federal government, has taken issue in recent weeks for dragging out the accreditation process for Davie Shipyard.

“This is a complex, multi-step qualification process and it is imperative that Canada conduct this process with integrity,” said a PSPC spokesman The press. “Every effort will be made to complete this process while ensuring the best value for the Government of Canada and for all Canadians. »

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

In collaboration with William Leclerc, The press

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