Canada: Irving Shipbuilding Bags USD 304 Mln from N.S. Government

Irving Shipbuilding Inc. will get $304 million to prepare for construction of the Royal Canadian Navy’s next fleet of vessels, reports cbcnews. The Nova Scotia government will assist them with a forgivable loan of up to $260 million and a repayable loan of $44 million for human resources, technological and industrial development.

The CEO of Irving Shipbuilding Inc., Jim Irving does not regret accepting the taxpayers’ money: “This is an industry no different than when they developed oil off Newfoundland or when they developed the tar sands or when they put money into Bombardier in Quebec. All kinds of things happened. We’ve been here a long time and we didn’t always make money in the shipbuilding business, I can tell you that. The business was tough but we stuck with it.”

Irving Shipbuilding Inc. needed the support to win the federal $25-billion shipbuilding contract to build 21 combat vessels, which is expected to maintain a steady flow of work at the Halifax Shipyard for the next 20 to 30 years.

Kevin Lacey of the Canadian Taxpayers Federation expressed doubts about the government’s decision to give more public funding to this company. He states: “Taxpayers are already paying this company $25 billion for these boats. They don’t need another $300 million from Nova Scotia taxpayers.”

The largest investments that Nova Scotia government has ever made

The government’s characterization of the announcement as a loan was questioned as well.

Lacey said: “The company, at the end of the day, does not have to pay this back, so it’s just public relations to call it a loan“.

The $260-million loan will also finance the capital improvements to Irving Shipbuilding Inc. which will cost between $5 million and $10 million annually over the next 30 years. These improvements will include the expansion of the existing yard, and the construction of a large new facility next to where ships are now being built.

“It is one of the largest investments that the province has ever made but it is also the single largest return on investment that we have ever had,” Premier Darrell Dexter said Friday.

The shipbuilding contract is expected to result in about $2.8 billion in additional revenue to the province over the next 19 years, and will create an additional 11,500 jobs increasing Nova Scotia’s GDP by almost $900 million during peak production years.

Dexter said: “It is about the fact that we will move from having the slowest growing economy in the country to having one of the fastest growing economies in the country. This is a tremendous opportunity that we managed to help realize.”

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Shipbuilding Tribune Staff, April 2, 2012; Image: gov.ns.ca