When the Harper government embarked on the National Shipbuilding Procurement Strategy, which included 15 surface combatants, support ships and arctic patrol ships, they chose, like so many Canadian and foreign governments before them, to use the procurement for political capital by giving the jobs to Canadian shipyards- the combat ships to Irving Shipbuilding and the non-combat ships to Seaspan Marine.
Canada, like many countries, has a long tradition of using defence procurement programs for pork-barrel politics. Where this involves developing indigenous construction capacity, it can even sound patriotic- on top of job creation, there is an old idea that the ability of a country to make the arms with which it fights is a key element of national security. The only problem is that for a country like Canada, this is an unsustainable and uneconomical aspiration.
What Military Shipbuilding Industries Need
Above anything else, a military shipyard needs a steady, predictable stream of orders. Without this assurance of employment, the shipyard will not be able to train new talent or retain experienced workers. It will not remain current in naval design and construction techniques or the state of naval technology more generally. If a country is in the habit of ordering a block of 12-15 ships every two decades, as is the case with Canada, the yard will need foreign orders to sustain itself in the interim. Without that, it will find itself having to completely regenerate its lost expertise every time a new class is ordered. Let’s look at a recent case.
Both the United States and the United Kingdom are in the midst of procuring new classes of nuclear-powered attack submarines, but the contrast between the programs could not be greater. While the US Virginia class suffered some initial setbacks, including problems with the program used to design the boat, it has for some time been moving along in a fiscally admirable fashion. The first Block II boat came in months early and $54 million under budget due to new construction techniques and cost-saving measures. But then, Electric Boat, which designed the Virginias, had no chance to lose people- it knew that submarine production would continue after the cancellation of the Seawolf class.
The Astute’s story is very different. Design work ran into major problems and was completed only with the help of Electric Boat. Severe problems, both budgetary and construction-related, have dogged the class. The combination of a reactor intended for the slow and stealthy Vanguard class missile boats and a drive shaft from the old Trafalgar class has left the boat unable to reach its announced 30-knot speed, a severe handicap in certain key roles such as carrier escort. HMS Astute has experienced flooding due to insufficient quality control, worn and unsafely-installed circuitry, and most worryingly, some of its reactor monitoring equipment is itself unsafe due to the use of poor-quality lead.
But all of this is understandable. The United Kingdom had not built a nuclear-powered attack submarine since 1986, and the last Vanguard-class missile sub finished up in 1998.
A Workable Model
The key to a workable procurement model capable of sustaining a national shipbuilding industry is to avoid batch orders. This doesn’t mean that a very high volume of orders is needed, just that the government in question resolve to keep a constant and predictable tempo of orders rather than ordering in batches every fifteen to twenty years. Ideally for a force the size of the RCN, this would mean one surface combatant or one support vessel every 1-2 years.
While this may seem a financially burdensome commitment, there are definite compensating factors. First of all, there is always a platform on the go with a complete complement of technologies. Upgrades, redesigns and even new classes are therefore not starting from scratch, reducing development costs. The yard will be current in design tools, construction methods and safety features. With increased numbers, unit cost will go down as well. The cost of keeping old vessels in service while new units undergo prolonged testing would no longer be an issue, and the cost of fixing design and production problems discovered after launch will go down.
The Royal Navy used just such a procurement practice with their line of postwar frigates. From the Whitby class which began construction in 1951 through to the tremendously adaptable Leander class which concluded production in 1969, there was both regular construction and a clear trajectory of design improvement. Construction was relatively cheap and capabilities were consistently improved throughout the program.
As a more current example, Japan, which owns the finest conventional submarine force in the Pacific, has had a very consistent submarine construction schedule for decades. The design lineage of Japanese submarines goes back to the US Barbel class conventional submarines of the 1950s, but slow and steady improvement on that outline has generated quite impressive platforms. Most recently, the Soryu class is a fully modern Air-Independent Propulsion (AIP) submarine. While the 20-year replacement cycle of Japanese subs may be a trifle brisk, it is also a sign of efficiency.
Canadian governments and military planners have not demonstrated anything like the foresight such an approach would require. Canadian governments prefer the one big order which allows them to parcel out substantial contracts to the provinces and talk about their commitment to defence when they are ordering, and then talk about how much they’re saving between orders.
This being the case, what happens to our newly rebuilt shipbuilding industry once it finishes the current orders? It would have to sustain itself on foreign orders for around two decades, or else simply evaporate. The trouble is, the surface combatant and support ship markets are both crowded. Europe alone can offer at least seven different multirole frigate designs that have already seen service with European navies, with others tailored specifically for export.
And Canada’s product will likely have nothing to distinguish it from at least three of these, if we don’t use a European design outright. The Canadian frigate will likely use APAR and Smart-L radars as well as Harpoon, Standard SM-2/6 and Enhanced Sea Sparrow missiles, just like the German, Dutch and Danish ships.
The Problem with Importing Production
The simplest approach to generating a national shipbuilding industry is to buy a design from abroad and have the designing company help you create the capability to build it. Unfortunately, this approach has a very mixed record.
Australia partnered with Sweden to create the Collins class submarine, which, while very effective when it works, has a long history of being plagued by technical problems. To illustrate that the failure lies with the do-it-yourself approach, the Collins’ Swedish-built predecessors the Vastergotland (20 years old) and Sjoorman (40 years old) classes are still serving with very few problems in the Swedish and Singaporean navies.
The counterexample is South Korea, which has generated world-class shipyards using imported designs. However, this was a multistep, sustained process, which built capabilities slowly from less advanced designs through to more advanced, and continues to sustain low-rate warship production.
As for Canada, the cracks are already starting to show. Canada has already paid $288 million to Irving for design work on an Arctic Patrol Ship- based on a Norwegian design that already exists, and which cost $5 million for Canada to buy and just $100 million for the Norwegians to design and produce. To top it off, the final blueprints will in any case be subcontracted to a Danish company. The tortured and long-running Joint Support Ship program’s problems are also well-known.
According to figures in the Canadian-American Strategic Review, the most economical European frigates, the modular Iver Huitfeld class from Denmark, cost $333 million apiece. The high end of the European market is the German Sachsen class, at $1.12 billion. The Canadian Surface Combatant was initially allotted a $26 billion budget- divided by 15 vessels, that’s already 1.73 billion per copy, and very few naval shipbuilding programs come in under budget.
It is a perfectly reasonable expectation that defence procurement should benefit the national economy. There are, however, alternatives to doing it all ourselves. Canadian companies would certainly contribute to any ships we chose to order, and Canadian expertise in military electronics is of particular value. It is even possible to have some sections of a ship built in Canada and taken abroad for final assembly, or vice-versa. Industrial offset agreements, recouping the cost of procurement through contracts for Canadian companies are also useful, and could even be targeted to the shipbuilding industry.
A targeted rejuvenation of the Canadian shipbuilding industry is actually a very good idea- but this is not what the NSPS is. Canada has significant potential in commercial shipbuilding- but the skills and technologies are only compatible with military shipbuilding to a certain extent.
A future post will examine the alternative designs available, but suffice it to say that purchasing from a foreign yard would almost certainly represent substantial savings to the taxpayer, which could perhaps be invested in more sustainable economic activity. Equally important, it would provide a precedent that says that Canada does not need to recreate its military shipbuilding capacity whenever it wants a new class of vessels.