‘It can’t just be a competition on price’: Why Seaspan didn’t bid on BC Ferries contract

British Columbia’s biggest shipyard says building the next wave of ferries in the province is absolutely a possibility, but will require political will on the part of decision makers.

It comes as BC Ferries faces public pressure over its recent decision to award a multi-billion-dollar contract to build four new major vessels to a Chinese shipyard.

No Canadian company bid on the contract, and while the decision will save the company $1.2 billion over going with a European yard, it has hit the choppy waters of growing nationalism and a global trade war.

B.C. shipyard Seaspan did not bid on the deal.

Senior vice-president of strategy, business development and communications Dave Hargreaves told Global News that’s in part because while it has the capability,  it doesn’t currently have the capacity.

The company is essentially fully booked through the end of the decade, building Coast Guard and Canadian Navy ships.

But the company said the BC Ferries procurement process — which was heavily tilted towards price — would have essentially ruled it out anyway.

“The fact of the matter is that their labour costs in their shipyards is probably seven to eight times cheaper than ours, so not like 10 per cent cheaper,” Hargreaves said.

“That labour cost differential is big. And so it’s hard to see that we would ever get to cost-competitive with China, or for that matter like Korea, or some Eastern European countries, or places like that.”

Hargreaves compared the BC Ferries contract to its deals for major vessels with the federal government, which he said have a 100 per cent overall Canadian content requirement.

It’s a political calculation, he said, that acknowledges a higher up-front cost, but comes with downstream benefits.

Those high-paying jobs return income taxes to the provincial and federal government and have indirect economic effects through consumer spending, he said.

Expanding the shipbuilding sector drives innovation, grows the skilled workforce and expands the wider marine ecosystem, he added.

“Some of our subcontractors are already exporting things,” he said. “You don’t get any of that if you go and build the ferries in China.”

And there is the strategic benefit of domestic control of shipbuilding capacity.

“Having a sovereign capability to do shipbuilding in Canada, I mean, we still are one of the world’s longest coastline countries with huge maritime areas,” he said.

“So the ability to build ships kind of seems important.”

While Premier David Eby has said he wants to see vessels built in B.C., the province won’t force BC Ferries to drop the China contract — citing the urgent need to get the vessels into service, and the desire to keep ferry fares down.

On Thursday, Deputy Premier Niki Sharma toured the Seaspan shipyard.

“This multi-billion-dollar success story is possible thanks to the key role Ottawa plays in supporting the national shipbuilding strategy,” she said of the Navy and Coast Guard work underway.

“We are determined to continue this work with the federal government to support Seaspan to do the same for civilian ships. Expanding B.C.’s capacity and getting B.C. shipyards ready to successfully bid on more Canadian ship contracts will create more good jobs in this community and the communities that supply them.”

That’s the kind of talk Hargreaves said will be necessary if future ferries are to be built in B.C., adding the provincial government will need to be fully on board.

“That does have to include some much stronger preferences for B.C./Canadian content. It can’t just be a competition on price, it has to take into account all the other benefits that accrue from building here … has to be seen as an investment for B.C.,” he said.

“BC Ferries doesn’t really have that flexibility to make that decision by themselves, right? It has to be the province that comes to the table there.”

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