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2023 year in review: National Shipbuilding Strategy

This report provides updates on National Shipbuilding Strategy (NSS) activities from January 1 to December 31, 2023.

The NSS is Canada’s long-term plan to renew the fleets of the Royal Canadian Navy (RCN) and the Canadian Coast Guard (CCG). The NSS has also been successful in rebuilding a domestic marine industry and creating sustainable jobs in Canada.

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Selection of a third National Shipbuilding Strategy shipyard

To respond to evolving federal shipbuilding requirements, the Government of Canada added an additional Canadian shipyard as a partner under the NSS in 2023. On April 4, the Government of Canada announced that Chantier Davie of Lévis, Quebec, would become 1 of 3 strategic partners.

With this addition, Canada is securing an increased capacity to deliver new vessels in a timely manner. Chantier Davie will build:

The Industrial and Technological Benefits (ITB) Policy will be applied to all of these projects, meaning that the shipyard is required to undertake business activities and make economic investments in Canada equal to the value of the awarded contracts.

Chantier Davie has already played a critical role in supporting Canada’s fleets, receiving more than $2.6 billion in contracts since 2014 for various types of construction and design work on ships for the CCG, the RCN and TC. This included:

The competitive process to select a third NSS shipyard was similar to the one used to select Seaspan’s Vancouver Shipyards and Irving Shipbuilding in 2011. In response to an invitation to qualify issued in 2019, Chantier Davie became the only prequalified supplier to proceed to the request for proposal stage.

Large vessel construction

This section provides updates on large vessel construction in 2023.

NSS large ship construction contracts awarded between 2012 and 2022 are estimated to contribute close to $12.63 billion ($1.52 billion annually) to the gross domestic product (GDP), and to create or maintain approximately 9,500 jobs annually, through the marine industry and its Canadian suppliers, as well as consumer spending by associated employees.

Projects at Irving Shipbuilding

This section provides updates on large vessel construction projects done by Irving Shipbuilding in 2023. There are currently 3 large vessels under construction at the shipyard.

Arctic and offshore patrol ships

The fourth vessel in the Arctic and offshore patrol ship (AOPS) class, His Majesty’s Canadian Ship (HMCS) William Hall, was delivered to the RCN on August 31.

Having taken delivery of HMCS William Hall, the RCN’s next steps will include sea trials, warm and cold weather trials, and other post-delivery evaluation tasks. The full commissioning ceremony for HMCS William Hall is expected to take place in 2024, after the conclusion of the trials.

Work continued on AOPS 5 and 6, and in August, construction began on AOPS 7, the first AOPS for the CCG.

AOPS 5, 6 and 7 are scheduled for delivery in 2024, 2025 and 2026, respectively. Construction of AOPS 8 for the CCG is scheduled to begin in 2024.

Canadian surface combatant

The Canadian surface combatant (CSC) project completed its preliminary design review, in which the overall vessel structure begins to be finalized, in December 2022. This led to the functional design phase, moving from what to build to how to build it. This includes design and engineering work to construct the vessel according to Canadian requirements. This design work is progressing to support the start of construction activities in 2024, with full-rate construction beginning in 2025.

Contract negotiations for the implementation contract began in 2023 with initial discussions and preliminary drafting work. It is anticipated that the contract will be awarded in late 2024 or early 2025.

Infrastructure investment

On August 8, 2023, Canada announced an investment of $463 million (including taxes) in the CSC project’s infrastructure enhancements at Irving Shipbuilding to improve schedule certainty and project costs. Furthermore, this investment will accelerate delivery of CSC vessels in time to meet the needs of the RCN. It will also create or maintain over 800 jobs annually across various industries in Canada while delivering the best value for Canadians.

The infrastructure enhancements will expand and modify the site and facilities at the Halifax Shipyard and supporting facilities in Dartmouth, Nova Scotia, including at Woodside Industries and Marine Fabricators, to enhance capacity and accommodate the requirements of the CSC’s complex ship design.

Projects at Seaspan’s Vancouver Shipyards

This section provides updates on large vessel construction projects done by Seaspan’s Vancouver Shipyards in 2023. There are currently 3 large vessels under construction at Vancouver Shipyards.

Offshore oceanographic science vessel

Construction work continued on the offshore oceanographic science vessel (OOSV), and a major milestone was celebrated with the ship consolidation in November. The OOSV is expected to be launched in mid-2024 and delivered to the CCG in 2025.

Multi-purpose vessels

Design work continued on the CCG’s multi-purpose vessels. The Government of Canada is continuing to work toward awarding a construction engineering contract and a long lead item contract to Seaspan’s Vancouver Shipyards to initiate the next stages of procurement for the vessels. These contracts will include work for the design, engineering and other preparations (including purchasing the majority of the materials required) to ensure readiness to proceed with construction.

Joint support ships

Work progressed on the construction of the 2 joint support ships (JSS) for the RCN. JSS 1, the future HMCS Protecteur, was consolidated (all major structural steel components in place) in October 2023. It is expected to be launched in late 2024 and delivered to the RCN in late 2025.

Construction of JSS 2, the future HMCS Preserver, continued, with almost half of the ship’s structural components under construction or completed.

The keel-laying ceremony for JSS 2 was held on October 27. The keel-laying is a significant milestone in a ship’s construction, where a newly minted coin is placed near the keel, which traditionally runs along the length of the ship. Construction on the vessel continues, with anticipated completion in 2027. The experience gained through building JSS 1 has led to efficiencies in design, supply chain logistics and pre-assembly outfitting for JSS 2 construction.

Polar icebreaker

The polar icebreaker preliminary design was completed in early 2023. The Government of Canada awarded contracts to Seaspan’s Vancouver Shipyards for construction engineering and long lead item procurement at the end of 2022, and work under those contracts progressed throughout 2023.

In May, Vancouver Shipyards cut steel on the Prototype Block, marking a critical step in the shipyard’s Polar Icebreaker Program. A request for proposal to build the polar icebreaker was issued to the shipyard in December.

Outfitting pier

In June, Canada agreed to contribute up to $140 million toward the construction of a new outfitting pier at Seaspan’s Vancouver Shipyards. Canada will provide this funding once the pier is completed and operational through its annually negotiated overhead rates.

This pier will allow the shipyard to improve cost, schedule and risk performance for the JSS, the polar icebreaker and the multi-purpose vessels. Previously, vessels constructed at Vancouver Shipyards would be moved to Victoria Shipyards for final outfitting.

The new pier will provide Canada with more certainty in construction schedules, prevent conflicts with other ship repair projects and build future capacity for shipbuilding projects in Canada.

Projects at Chantier Davie

This section provides updates on large vessel construction projects done by Chantier Davie in 2023.

Polar icebreaker

Contract negotiations to support the construction of the other polar icebreaker will begin in 2024. The exact build schedule and cost will be negotiated and finalized during the individual contract negotiations.

Program icebreakers

Negotiations on the contract to initiate design and project management work in preparation for the construction of the CCG’s 6 program icebreakers are nearing completion. The exact build schedule and cost will be negotiated and finalized during the individual contract negotiations.

Transport Canada ferries

As part of TC’s ferries replacement program, work continued on completing the designs for the 2 new ferries to replace the MV Holiday Island and MV Madeleine.

Small vessel construction

This section provides updates on small vessel construction in 2023.

NSS small ship construction contracts awarded between 2012 and 2022 are estimated to contribute close to $389.4 million ($32.4 million annually) to the GDP. Money flowing from these contracts, as well as consumer spending linked to this investment, will help create or maintain almost 300 jobs annually throughout the marine industry and its Canadian suppliers.

National Defence

Naval large tugs

This project will deliver 4 large tugs for the RCN. Construction is underway with Ocean Industries Inc. from L’Isle-aux-Coudres, Quebec, with naval large tug (NLT) 1 provisional acceptance carried out in January 2024. Provisional acceptance of NLT 2 is planned for April 2024.

Canadian Coast Guard

In May, Canada announced a fleet investment valued at $2.5 billion to fund the completion of the renewal of the CCG small vessels fleet. In all, the investment will provide for up to 61 small vessels. The small vessel pillar of the NSS has successfully provided 26 ships to the CCG to help ensure it delivers on its mandate.

Near-shore fishery research vessel

Among these small vessels is the new near-shore fishery research vessel (NSFRV), the CCG’s first-ever diesel-electric hybrid vessel with a battery energy storage system. In October, the Government of Canada announced a $55.5-million contract award to Chantier Naval Forillon in Gaspé, Quebec, for the construction of the NSFRV. The NSFRV will be a specialized vessel for fisheries, oceanographic and hydrographic science, and it is expected to join the CCG fleet as early as 2027.

Air cushion vehicles

The small vessel funding will also address the CCG’s fleet of 4 air cushion vehicles, also known as hovercraft. In September, Public Services and Procurement Canada published an advance contract award notice for Griffon Hoverwork Limited to support feasibility studies and design updates for the CCG’s next generation of air cushion vehicles. The contract was signed in January 2024. These vessels mainly serve as search and rescue (SAR) vehicles, but they also assist in icebreaking, marine navigation, law enforcement and emergency response.

Search and rescue lifeboats

The CCG announced the delivery and acceptance of SAR lifeboats 15 and 16 in the fall. SAR 15, the CCGS Barrington Bay (produced by Hike Metal Products in Wheatley, Ontario), was delivered to St. John’s, Newfoundland and Labrador, on October 3. The ship arrived at its final destination of Burin, Newfoundland and Labrador, on November 22. SAR 16, the CCGS Baie des Chaleurs (produced by Chantier Naval Forillon in Gaspé, Quebec), was delivered to Halifax, Nova Scotia, on October 30 and is now stationed in the Grand Passage area of Nova Scotia.

Refit, repair and maintenance projects

This section provides updates on refit, repair and maintenance projects in 2023.

Vessel life extension projects

In February, Pennecon Marine (Bay Bulls, Newfoundland and Labrador) was awarded a $1.8-million contract to carry out alongside work on the CCGS Louis S. St-Laurent. The work period lasted from April to June. This was the second work period related to this project, with the first being completed in June 2022.

In April, the CCG announced a $31.5-million vessel life extension (VLE) contract award for the CCGS Martha Black. Verreault Navigation Inc. from Les Méchins, Quebec, was awarded the contract for the light icebreaker. VLE work began in spring 2023 and is anticipated to be completed by summer 2024.

At the same time, the CCG also announced a $29.7-million VLE contract award for the CCGS Leonard J. Cowley. Newdock from St. John’s, Newfoundland and Labrador, will carry out the necessary work on this offshore patrol vessel. VLE work began in spring 2023 and is anticipated to be completed by fall 2024.

In early July, Chantier Davie was awarded an initial contract valued at $1.6 million for long lead items as part of the third work period for the CCGS Louis S. St-Laurent (from April to July 2024).

VLE work began on the CCGS George R. Pearkes light icebreaker in July 2022 at Ontario Shipyards, formerly known as Heddle Shipyards (Hamilton, Ontario). The VLE work will last until fall 2024.

In October 2022, work also started at Ontario Shipyards on the largest single project in the CCG’s VLE program: the $135.5-million contract for the CCGS Terry Fox. The vessel work period will begin in April 2024, with the heavy icebreaker scheduled to be delivered back to the CCG in fall 2025.

Halifax-class frigates

Work continued on the RCN’s Halifax-class frigates, which is taking place across the country at Irving Shipbuilding, Chantier Davie and Seaspan’s Victoria Shipyards.

Work on HMCS Regina was completed at Victoria Shipyards in May, and work on HMCS Ville de Quebec was completed at Irving Shipbuilding in June. Both of these repair projects required more than 900,000 person hours of work.

Work continues on HMCS Halifax at Irving Shipbuilding, HMCS Toronto at Chantier Davie and HMCS Calgary at Victoria Shipyards. Each of these repair projects is expected to significantly exceed 1 million person hours of work.

Victoria-class in-service support

Work continued on the RCN’s Victoria-class submarines at Seaspan’s Victoria Shipyards under the Victoria in-service support contract, a long-term contract with Canadian industry to perform maintenance and upgrades on the vessels to meet operational requirements.

In April, HMCS Corner Brook completed its extended docking work period. This project required approximately 1.7 million person hours of work.

In May, HMCS Victoria entered an extended docking work period. It is expected to significantly exceed 1 million person hours of work.

Minor warships and auxiliary vessels

In July, Prime Minister Trudeau announced that the Government of Canada had awarded a $450-million contract to Thales Canada Inc., in a joint venture with Thales Australia Limited, to provide in-service support for the Canadian Armed Forces (CAF) minor warships and auxiliary vessels (MWAV) fleet for 5 years, with options to extend the contract for up to 19 years. The CAF MWAV fleet comprises approximately 100 vessels from 24 different classes, including the Kingston-class maritime coastal defence vessels, Orca-class training vessels, tugs, dive tenders, research vessels, range vessels, and auxiliary support barges and vessels.

Challenges

The NSS has successfully delivered a number of large and small vessels while also providing economic benefits to Canadians. However, similar to other industries worldwide, the Canadian shipbuilding industry has experienced delays as a result of the global pandemic and supply chain disruptions, as well as workforce shortages, increased costs (partially due to inflationary and supply chain pressures), commodity pricing and geopolitical tensions.

The Government of Canada is actively engaged with NSS shipyards and other defence and marine industry stakeholders to address these issues and find solutions.

In 2023, the Government of Canada took action by:

Shipbuilding is complex and challenging work, and Canada will continue to work closely with our shipbuilding partners to seek opportunities to improve the NSS to meet our evolving needs.

Economic benefits for Canada in 2023

The NSS continues to revitalize Canada’s marine sector, creating jobs and generating economic benefits and prosperity in communities across the country.

National Shipbuilding Strategy Value Proposition

The objective of the NSS Value Proposition (VP) is to benefit the broader marine industry to ensure its long-term sustainability. Under the NSS VP, large vessel shipyards are required to invest an amount equal to 0.5% of the value of their contracts in 3 priority areas: human resources development, technology investment and industrial development.

Irving Shipbuilding, Seaspan’s Vancouver Shipyards and Chantier Davie continue to make investments in all 3 priority areas, with a particular focus on skills development and increased participation of underrepresented groups in Canada’s marine industry. Among other initiatives, their investments have gone toward:

As of December 31, 2023, NSS shipyards had accrued over $49.2 million in NSS VP obligations. The value of approved investments at the end of 2023, including completed investment activities and approved future activities, exceeded $46.2 million.

Canada’s industrial and technological benefits

Canada’s Industrial and Technological Benefits Policy is playing an important role in leveraging Canada’s defence and security spending to generate economic benefits for the country. Large vessel NSS shipyards are undertaking business activities in Canada equal to the value of their contracts, thereby:

While the ITB Policy strives to incentivize benefits to Canadian industry, one of the core principles of this policy is that business transactions are market sensitive. As such, shipyards that are awarded contracts under the NSS are responsible for the sourcing and selection of materials for their respective shipbuilding contracts. Through this policy, hundreds of Canadian businesses are securing work through contracts with the selected large vessel NSS shipyards. In turn, they are investing in innovation and securing exports.

Benefits under the shipbuilding strategy

The shipyards are on track to meet their economic benefits obligation under the NSS. A detailed report outlining the economic benefits to Canadians from January 1 to December 31, 2023 is available in the 2024 Industrial and Technological Benefits Policy Annual report. A report on contractor progress is also available in the Breakdown of current obligations by contractor.

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