Preserving capacity, General Tom Lawson, Chief of the Defence Staff, Keys to Canadian SAR
Issue link: http://vanguardcanada.uberflip.com/i/439940
E ExEcuTivE INTERVIEw 32 DECEMBER 2014/JANUARY 2015 www.vanguardcanada.com support the DPS and Industrial Techno- logical Benefits because it is culturally im- portant to us. Most innovation comes from small shops with a just a few guys who have to be innovative to stay in business. Obvi- ously, the best technology can come from anywhere in the world, but for us the ques- tion is then, if we find that technology in China or Japan or the U.S., how can we bring it into Canadian industry, to our sup- ply partners? How can we adopt that tech- nology so "home-grown" means applied and perfected for our Canadian needs? Q Shipbuilding has always been about partnerships, but does the recent ar- rangement with Babcock open new doors for you? One of the things you realize in this in- dustry is that commercial projects demand prompt action. You can plan for a tender, but things happen so quickly and the in- dustry is so competitive that the only way you can be successful in a commercial mar- ket is to leverage the experience of multiple partners. With the teaming agreement we have with Babcock, which is for commer- cial programs with the Coast Guard, we are looking at leveraging their capabilities in terms of project management, planning cycle, and their experience in the U.K. on managing government contracts and pro- grams. We bring the raw human resources, world class facility and the shipyard process capability, they bring the experience in government project management skill sets. Where our experience has been primarily commercial, managing government pro- grams and ship repair is a little bit different and more bureaucratic. Q You mentioned LNG. One of the big areas of innovation is green technol- ogy. What are you introducing and how does it relate to the notion of a "Blue Highway" on the St. Lawrence to replace truck traffic? We are well on our way to having ISO en- vironmental certification next year, which concerns the materials we use, our pro- cesses, the amount of electricity and oil we consume and our commitment to green operations. But our larger marketing effort is promoting the use of LNG as a ship pro- pulsion fuel. Our ship owners are all look- ing for ways to reduce emissions as new low emissions standards come in. There are re- ally only three ways to do it: increase the efficiency of your engine, and most engine manufacturers will tell you we are at the top of that curve; add scrubber technol- ogy, which can be capital intensive and has a high maintenance price tag; or – the easi- est and leanest solution – use LNG. At the front end, it does have high capital costs to convert tanks and change engines to burn the leaner fuel, but we are working with some engine manufacturers on conversion packages so that they can sell that technol- ogy and increase operational efficiency. And that brings us to the Blue Highway. It is the Quebec government's initiative to get truck cargo off the road and onto the water. It would require smaller cargo carrying container vessels doing short haul between Montreal and Trois-Rivières or Toronto. They would be LNG propelled or perhaps even diesel-electric or LNG- electric or even the three. There is a lot of innovation happening with Canadian sup- pliers, who have taken some leadership in conversion technology and the implemen- tation of electrical propulsion systems. We also think there is an opportunity here for the federal fleet operators to see what we are doing as they consider future ships. Q What's the export opportunity here? Does the DPS offer any help? We are like the DPS in reverse – we are sell- ing ships internationally but we don't have any federal work to help make our export proposals more competitive. To keep the costs of shipbuilding under control and to keep the company competitive, you need a balance of government and commercial. We are reliant on commercial work at the mo- ment, but in order to maintain that com- petitive edge, we need government work to maintain or enhance that capability. Our strategy is to capture more work in the domestic market, particularly in ship repair for some of our former custom- ers. But for a yard of our size, it can't be the only thing, so that's why the ship construction divi- sion is our main focus as we have plenty of capacity to offer. Q Does the non-allocated portion of the NSPS offer a way in? I'm not sure what falls into that realm. There is $2 billion allocated for the small ship programs – under the 1,000 tonne displacement – over 30 years, so that is a fair number of vessels. But for a large yard like ours to compete, they would need to be multi-ship programs. There will also be Coast Guard conversions, what they are calling vessel life extensions or VLEs. And there is the in-service support contracts for the navy's new fleets. Those are still a few years down the road but significant for us as we rebuild the ship repair capability. Q Longer term then, does Davie need military work? Well, we're not sure what is out there. If there are opportunities that the navy iden- tifies and it's open for us to offer a propos- al, certainly we will look at it. With any job, it comes down to capacity and the ability to do it competitively. You don't want to over commit on what you can do for the customer. Q In the near term, the navy has a dire need for support ship capability. Are you able to offer an interim solution? We've looked at some things that could help the government, but it is up to them to tell us what they are interested in doing. We have a lot of ideas. In terms of conversions, for example, the owners of Inocea converted a large supply ship called the Sampson, which at the time was one of the largest conversions of its kind in the world, in short order at a European shipyard that had been inopera- tive. They resurrected the shipyard for that project and it is operating quite successfully today. Talk about innovation. We would definitely be prepared to look at that as it is a proven and low risk solution that will give the navy a renewed blue water capability for little risk.