Ottawa to unveil $30-million package for shipbuilders

The federal government is announcing a package of benefits for the shipbuilding industry, including low-interest loans for domestic and foreign buyers, access to government research and development funds, and money for job retraining, reports The Financial Post. Most of the funding will come in the form of repayable loans and depends on how many buyers will take an interset in it.But the direct cost of the financing element alone is expected to be between $25-million and $30-million a year. The shipbuilding industry, in decline for decades, fared worse at the loss of subsidies under the Progressive Conservatives in 1986. Some 3000 workers still work at Canada’s remaining shipyards, which are concentrated on the East and West Coasts but include yards in Quebec and on the Great Lakes in Ontario. Canada has a 0.4% share of the world market, which produced about 2,000 ships last year. Industry Canada will begin operating a version of the U.S. program known as Title 11, which provides federal guarantees for private-sector financing related to building or refitting vessels, (as long as the work is done in U.S. shipyards.) The money can also be used for shipyard modernization. The government guarantees allow for 25-year financing covering 87% of the cost of a ship, considerably better than the terms available in Canada. Guarantees under the program have totalled US$2.9-billion since 1993, according to the Canadian Shipbuilding Association. Among other elements of the strategy, Export Development Corp. will be “more flexible” in its approach, said a source. EDC offers loans and insurance to buyers of Canadian exports. Technology Partnerships Canada, the government’s primary funder of industrial research and development, will also have its mandate expanded to include shipbuilding. Funding has previously been limited to the aerospace, defence and environmental industries. The government’s approach is to fund buyers rather than individual shipyards, putting the onus on shipyards to come up with products they can sell. Human Resources Development Canada will free up some funds for shipyard workers to upgrade their skills, and also for retraining if not all shipyards stay open. The policy will not, however, include easing the way the government taxes ship leases, a recommendation of an industry panel that reported to Mr. Tobin earlier this year. The Department of Finance has consistently opposed any special tax treatment for the industry.Industry Canada is expected to set up a special secretariat to administer the programs and to look at policy in the shipbuilding, marine and energy industries. There will also be an advisory council made up of industry and workers. Much of Canada’s fleet is aged and in need of replacement in the coming years, and the industry is also quick to point out it is a more environmentally friendly way to move freight than either roads or airplanes, but it has not been able to drum up support in Ottawa until now.