Minister concerned over B.C. Ferries' construction deal with Chinese shipyard

CBC

4 days ago

British Columbia's transport minister has raised concerns with B.C. Ferries about its decision to have a Chinese shipyard build four new ferries for its passenger fleet, amid an ongoing trade conflict between Canada and China.
The winning bidder on the contract announced Tuesday is Chinese state-owned China Merchants Industry Weihai Shipyards.
Mike Farnworth said in a statement he was worried about procuring services from "any country that is actively harming Canada's economy" with tariffs and protectionism.
"B.C. Ferries is an independent company responsible for its own operational decisions," Farnworth said.
"While B.C. Ferries has made its decision to purchase new vessels offshore, I am disappointed more involvement from Canadian shipyards was not part of the contract."
Farnworth's remarks came hours after the announcement by B.C. Ferries CEO Nicolas Jimenez that the Chinese shipyard had been chosen to build its vessels, with the first expected to come into service in 2029 and the others following in six-month intervals.
Jimenez said he wasn't worried about geopolitical tensions between Canada and China, adding his primary focus was getting the province a good deal.
"Customers expect us to go source the best possible deal, [the] highest quality, a yard that provides safety, a yard that provides the highest in standards when it comes to oversight [and] labour, and to get the best cost," he said at a news conference Tuesday.
"When it comes to things like trade policy, industrial policy, geopolitics, I think we would really defer that to the federal and provincial governments and expect them to manage and work those issues."
He said in a news release that the shipyard was "the clear choice based on the overall strength of its bid."
It said Weihai Shipyards has built vessels for Canada's Marine Atlantic ferry company and other operators such as Corsica Linea and Brittany Ferries of France.
Canada and China are engaged in a trade dispute, with Beijing imposing retaliatory tariffs on Canadian canola oil and meal, peas and seafood after Ottawa slapped levies on Chinese-made electric vehicles, steel and aluminum.
Jimenez said Tuesday that there are currently no tariffs associated with the import of vessels of this type into Canada and tariff disputes didn't factor into the decision.
B.C. Ferries is not releasing the value of the contract other than Jimenez saying it fits within the budget approved by the B.C. Ferries Commissioner earlier this year.
He said releasing details of the deal before the project is complete could put future procurements at risk.
"To protect B.C. Ferries and our customers, we've structured the contract in a way that reduces our risk while increasing shipyard accountability. Most of the payment is tied to delivery, and that means the shipyard doesn't get fully paid until the vessels are delivered and meet the rigorous standards that we've laid out in the contract," he said.
"There are also measures like refund guarantees and fixed price terms that will further protect B.C. Ferries and our customers."
B.C. Ferries' head of fleet renewal, Ed Hooper, said no Canadian companies bid on the ships that will carry about 52 per cent more passengers and 24 per cent more vehicles than the ferries they are replacing.
WATCH | 4 new ferries coming to B.C.:
B.C. Ferries to build 4 new vessels to replace aging ships in fleet
2 months ago
Duration 9:51
B.C. Ferries is about to get four new vessels to replace its aging fleet, set to start sailing in 2029. The decision represents the single largest capital expenditure in B.C. Ferries' history. CEO Nicolas Jimenez and B.C. Ferry and Marine Workers Union president Eric McNeely share what this means for the future of ferry travel in B.C.
Jimenez said 60 per cent of the world's ships are built in China, and B.C. Ferries did due diligence to make sure it understood the "technical and delivery and country risks associated with making this decision."
B.C. Ferries said it will have its own team of experts on-site at the shipyard throughout construction to provide oversight and quality assurance.
In a statement, the Opposition B.C. Conservatives accused Premier David Eby of "abandoning Canadian workers" by awarding a "multibillion-dollar" contract to a Chinese state-owned enterprise.
The oldest ferry being replaced is the Queen of New Westminster, built in 1964, while the Queen of Cowichan, Queen of Alberni and Queen of Coquitlam all turn 50 next year.
B.C. Ferries had hoped to buy five new vessels and bring its fleet size from 10 to 11 but earlier this year the provincial regulator rejected the pitch, saying a fifth ferry "is not in the public interest" as it is "not essential for safe and reliable service and is not fiscally prudent."
The parent company of China Merchants Industry Weihai Shipyards is China Merchants Industry Holdings.
The conglomerate's website describes it as a "centrally administrated state-owned" enterprise with more than a 100 years of history, making it one of the oldest "Chinese-funded enterprises" in existence.