4 days ago
Quebec-based Davie Shipbuilding announces plans to buy Texas shipyards
A Canadian shipbuilder is ready to attempt a major foray into the United States, despite ongoing tensions between the two countries, including around military procurement.
Davie Shipbuilding announced on Wednesday that it plans to purchase shipyards in the Texas cities of Galveston and Port Arthur from Gulf Copper and Manufacturing Corp., a U.S. company.
Davie's aim is to the use the sites to build icebreaker ships, most likely for sale to the U.S. government for use in the Arctic, in addition to its manufacturing of icebreakers for Canada's navy and coastguard at its existing shipyard in Levi, Quebec. It intends to invest up to $1-billion to expand and upgrade the Texas facilities, which are currently used primarily for ship repair.
The announcement, which was made jointly by the two companies, did not include any financial details of the proposed deal. Negotiations have not yet concluded, but Davie said that it expects the acquisition to be finalized by the end of this summer.
Paul Barrett, Davie's chief communications officer, told The Globe and Mail that they decided to announce the plans now in the interest of transparency, because the negotiations have become widely known locally around the sites.
Mr. Barrett said that broader geopolitical dynamics - which include U.S. President Donald Trump's imposition of tariffs on Canadian exports, and Canada considering shifting some of its military procurement away from the U.S. as it ramps up defence spending - did not play a role in the timing. Nor, seemingly, did a fraught G7 summit scheduled to begin this Sunday in Kananaskis, Alberta.
Nevertheless, it is unclear whether Mr. Trump's volatile views toward foreign companies, and toward Canada in particular, could affect Davie's prospects of getting U.S. contracts, or even regulatory approvals.
While Mr. Trump has said he wants to build as many as 40 new icebreakers in the U.S. - which would far exceed its existing ship-making capacity - he has also spoken disparagingly if vaguely about Canada wanting to land some of that work. That may have reflected a mistaken impression that companies were seeking to make icebreakers in Canada and then sell them to the U.S., as opposed to doing the manufacturing stateside, but there has been little clarification since.
To some extent, Davie's choice of which U.S. facilities to purchase may insulate it from that uncertainty.
Mr. Barrett said that, after considering multiple sites, the company was drawn to Galveston and Port Arthur partly by strong logistical fundamentals, ample room to expand, and a skilled local workforce.
But he also noted that Davie settled on the Gulf Copper sites partly because of the profitable ship-repair work (largely for the oil-and-gas industry) that's currently done there, and which Davie intends to maintain.
Nevertheless, the impetus for the deal is Davie's ambitions to establish itself as a major international player in the making of icebreakers - in high demand among Western countries, amid fears that larger and more modern fleets possessed by China and Russia are jeopardizing Arctic sovereignty.
Those aims predate Mr. Trump's current presidency. Last year, on the sidelines of a NATO summit, an agreement branded the Icebreaker Collaboration Effort (ICE Pact) was announced between Canada, the U.S. and Finland, the country that has produced the majority of the world's heavy icebreakers.
It subsequently became clear that the pact - billed as a way of jointly addressing an intersection of national-security, economic and climate-change circumstances, including from melting ice caps open up shipping lanes and access to critical minerals - revolved largely around Davie's acquisition of Finland's top icebreaker-maker, which was up for grabs because of sanctions against its Russian owners.
Davie is initially drawing off the Finnish know-how acquired through that deal to fill contracts it has been awarded under Canada's National Shipbuilding Strategy. That includes $3.25-billion for a polar icebreaker to be built between the company's Helsinki and Quebec facilities by 2030, as well as vessels to subsequently be built in Quebec.
However, Davie signaled from the outset that its ambitions also included drawing off those capabilities to make icebreakers in the U.S., although it was initially non-committal about when it would attempt to do so.
Both Davie and the governments that signed the ICE Pact also previously talked up a longer-term ambition to position the three countries as suppliers for partners for other allies' shipbuilding needs, competing against the likes of China and Russia.
While it's not known how Mr. Trump's impact on diplomatic relationships may affect that hope, Davie's planned acquisition from Gulf Copper is still being framed in line with the ICE Pact's objectives.
'Adding an American yard would make Davie uniquely positioned in the trilateral Icebreaker Collaboration Effort to deliver advanced icebreakers at speed, scale, and competitive cost,' Wednesday's announcement said, 'countering adversaries' heavily subsidized programs,'
