Canadian shipyard slams B.C. Ferries' contract with Chinese shipbuilder

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3 days ago

The largest and oldest shipyard in Canada says it didn't stand a chance in bidding against a Chinese company to build four new vessels for B.C. Ferries.
It's the latest criticism levelled at the ferry operator following its decision to purchase the vessels from Chinese-state owned CMI Weihai Shipyards. That criticism and China's punishing new tariffs on Canadian agriculture products have renewed calls for the contract to be cancelled.
"Unfortunately, the procurement criteria were heavily weighted toward the lowest price, effectively favouring Chinese shipyards," James Davies, CEO of Davie shipyard, wrote in a letter this month.
The letter was sent to Bloc Québécois MP Xavier Barsalou-Duval, the vice-chair of the House of Commons transport committee, which is scrutinizing the $1-billion loan B.C. Ferries received from the Canada Infrastructure Bank to finance the purchase of the new electric-diesel ships.
Davies said the company asked B.C. Ferries to "balance the procurement criteria by requesting recognition of Canadian content and innovation," a request that was rejected.
"Due to inherent price disadvantage caused by massive state subsidies for Chinese shipyards, coupled with low wages, weak environmental standards, and minimal labour protections, no Canadian or Western shipyard could reasonably compete, leaving us with no choice but to withdraw."Neither Davie nor any other Canadian company bid on the contract. B.C. Ferries says it would have cost $1.2 billion more to go with a European shipbuilder.
B.C. Ferries CEO Nicolas Jimenez was not available for an interview.
In a statement, Jeff Groot, B.C. Ferries' executive director of communications, disputes Davie shipyard's characterization of the bidding process.
"Contrary to Davie's claims that we 'summarily rejected' their proposals, we are not aware of any concrete requests or suggestions from Davie to amend our procurement criteria," Groot says.
"Price was only a secondary factor, representing less than one-third of the score, with shipyard technical considerations making up more than half of the evaluation," the statement adds.
"The RFP also showed that Canadian content was a scored consideration and set high safety and environmental standards that every proponent had to meet, regardless of shipyard location or nationality."B.C. Ferries' decision to award the contract to the Chinese state-owned shipyard has received national attention.
Federal Transport Minister Chrystia Freeland said she was dismayed by the decision, especially in the face of China's "unjustified tariffs" on Canadian goods, including canola products, seafood and pork.
Freeland also raised concerns about potential threats to security, including cybersecurity, with B.C. Transportation Minister Mike Farnworth.
China has now imposed a new 75 per cent tariff on Canadian canola seed, which has renewed calls to cancel the ferry contract entirely.
The federal Conservative Party and B.C. Conservatives have repeated calls for the federal or provincial government to step in and force B.C. Ferries to cancel the contract."When we're in a situation where a jurisdiction like China is intentionally damaging our agriculture sector, our aquaculture sector with these new tariffs … all these things that are very damaging to us here in British Columbia and to Canada, you don't turn around and reward them with a contract for a billion dollars plus to build ferries," said B.C. Conservative Leader John Rustad.
Dan Albas, a Conservative MP for Okanagan Lake West-South Kelowna who sits on the transport committee, says Canadians have a right to be concerned about the contract, especially in the face of new tariffs from China.
He's calling for the $1 billion loan to B.C. Ferries from the Canada Infrastructure Bank to be rescinded.
"The People's Republic of China, they subsidize their steel, they subsidize their shipbuilding practices. And yet here we have the Canadian infrastructure bank is further subsidizing with a billion-dollar loan those industries," Albas told CBC News.
Eric McNeely, president of the B.C. Ferry and Marine Workers' Union, says he's not surprised by the issues raised in Davies' letter.
"I think it really highlights that domestic shipbuilding wasn't factored in as a priority and there was a preference for the lowest sticker price," he said. "I think it is a real problem that a billion dollars of federal infrastructure bank money is earmarked to go to a hostile trading partner."The union launched a campaign called Build Them Here, which urges people to contact their MP and MLA to demand ferries be built in Canada. McNeely said at a time when Canada is fighting trade wars with the United States and China, it can't afford to send nearly $1 billion in public money overseas.
B.C. Ferries has given no indication it's going to reverse course.
"Nearly 80 per cent of our operating costs are funded directly by our customers, so every procurement decision must balance technical capability, quality, environmental standards, and cost to keep fares as affordable as possible," Groot said.