The Canadian Shipbuilding and Industrial Marine Industry

April 2002 - Innovation Profile

The Industry

• The Canadian shipbuilding and industrial marine industry consists of firms with specialized capabilities in manufacturing and repairing ships, building offshore oil and gas structures, and supplying shipyard-related services.
  
  
• A survey of 32 shipyards nation-wide estimated employment at 4,707 in May 2001, equal to about 1.8% of those employed in all transportation equipment manufacturing.

• The industry had real value-added of $264 million in 2000, representing 1.0% of the contribution of all transportation equipment manufacturing to gross domestic product.
  
  
• Total manufacturing production of the Canadian shipbuilding and industrial marine industry was about $357 million in 2001. Of this amount, $203 million worth of products were exported. Imports amounted to about $648 million.
  
  
• The top exporting market in 2001 was the United States, which purchased 91% of Canadian shipbuilding and industrial marine industry exports.
  
  
• Key industry drivers include the following activities:
  
  
  • offshore oil and gas exploration, development and production
  • marine transportation
  • defence and security
  • tourism and recreation
  • aquaculture and fisheries.
  
  
• While output and employment levels have fallen over the past 10 years, labour productivity and investment intensity have increased.
  
  
• Between 1990 and 1998, real output per hour worked expanded at an average annual rate of 3.9% in shipbuilding.
  
  
• The industry moved toward higher value-added products, and exports rose significantly between 1990 and 2001. Shipbuilding exports grew at an average annual rate of 15% a year from $42 million in 1990 to $203 million in 2001. The United States is the dominant destination for Canadian shipbuilding exports.

Innovation

• The number of Canadian shipbuilding employees engaged in research and development (R&D) aspects of the industry has declined since 1998.
  
  
• In 1999, shipbuilding R&D expenditures per person-year engaged in R&D amounted to $61,167. In comparison, in the same year, all manufacturing spent $173,697 per person-year employed.
  
  
• Small and medium-sized shipyards are better able to adapt to new markets, whereas larger and traditional yards are facing the international trend of overcapacity and are more affected by current international market conditions.
  
  
• The public sector has undertaken the following initiatives:
  
  
  • Structured financing facility for new Canadian-built vessels consists of two elements: financial support of up to 15%, and credit loan/lease insurance. Total funding available amounts to $150 million over five years.
  • Technology Partnerships Canada has modified its criteria to enable the shipbuilding industry to qualify. Total funding available is $20 million.
  • Scientific Research and Economic Development tax credits are available through the Canadian Customs and Revenue Agency.
  • Technology Road Maps are a tool to forecast technological developments needed to meet future market demand.
  • The National Research Council of Canada’s Industrial Research Assistance Program stimulates technological innovation in Canadian small and medium-sized enterprises.
  • A study has been conducted on innovation sectoral human resources in the industry.
  
  
• The following institutes conduct research:
  
  
  • The National Research Council/Institute for Marine Dynamics in Newfoundland is investigating extraction techniques and safety for offshore oil and gas, as well as studies in the areas of marine transportation, maritime defence and ship design construction. Its annual budget is approximately $9 million.
  • The Defence Research Establishment Atlantic in Nova Scotia is studying undersea warfare and naval platform technology.
  
  
• Significant growth opportunities exist in niche markets and in the Canadian offshore that have a significant high technology content.

Innovative Initiatives Taken by the Industry

• Some yards took innovative approaches by capturing business opportunities in specialized product areas such as:
  
  
  • economic procedure for double-hulling of tankers
  • use of aluminium instead of steel in the composition of the hull
  • development of self-unloading technology for bulk-carriers
  • tugboats
  • modules for offshore exploration, etc.
  
  
• Major organizations:
  
  
  • Shipbuilding Association of Canada
  • Canadian Shipowners Association
  • Labour organizations, such as the Canadian Auto Workers Union and the Confédération des syndicats nationaux
  • The Chamber of Maritime Commerce, whose membership includes major Canadian and U.S. corporations.
  
  
• Major companies:
  
  
  • Washington Marine Group
  • Irving Shipbuilding Inc.
  • Canadian Shipbuilding and Engineering Ltd.
  • Davie Marine Inc.

Contacts:
Emile Rochon
(613) 954-3468
rochon.emile@ic.gc.ca

John Appleby
(613) 941-6797
appleby.john@ic.gc.ca