A parliamentary budget report questioning both the capacity and skills of a North Vancouver shipyard has the company shocked and disappointed.
Seaspan, which was awarded the estimated $8 billion federal contract to build at least seven non-combat vessels in 2011, was put under scrutiny in a report by Parliamentary Budget Officer Kevin Page, released Thursday.
In the report, Page raised concerns the government may have significantly underestimated the cost of awarding the shipbuilding contract to a company that hasn't built large navy ships before, pointing to delays and extra expenses as possible fallout.
"We find the report a bit strange and baffling," said Jonathan Whitworth, chief executive officer for Seaspan. "It was only 12 months ago that we signed the umbrella agreement, only four months ago we broke ground on all of the new construction and new buildings that we're doing in our facility, and it was only a week ago that we actually signed a contract on the design for the first ships. So we're on track."
The federal government originally priced the construction of two navy supply ships on the West Coast at $2.6 billion, but Page's report puts it at $4.1 billion, with even more room to grow in the coming years.
"Seaspan's experience has been in the field of barges, ferries, smaller commercial ships," Page's report states. "The company has very little experience in the class of ships that will be produced."
Page noted it was recognized early on that one of the biggest challenges for the winning shipyards would be to "assemble and train a workforce."
He also pointed to naval ship construction as being significantly more technology intensive than the commercial ships Seaspan is used to working on.
Whitworth acknowledged the federal contract is a larger project than the North Vancouver shipyard has undertaken, but took offense to the notion that Seaspan isn't skilled enough to produce the ships.
Whitworth said the company has recruited workers from shipyards around the world to work on the project.
Whitworth pointed to Seaspan's latest round of hires - 41 engineers, managers and specialists - as proof the company is ready to work. Those hired have experience building destroyers and aircraft carriers in the U.K., said Whitworth.
"They've done exactly what we're going to be building," Whitworth said. "I do not feel we have a skill gap here at all."
Seaspan is involved in training programs with universities and BCIT for marine specific engineering programs, he added. "This is for the future, as this contract runs for more than 20 years."
Whitworth said Page's report was premature and done without the company's input.
"I would have thought for a government agency to write a report or have opinions, that they would have interviewed and talked to us," he said.
"I would love to know where they come up with their math," Whitworth said. "This is a 20-30 year contract. We're a long way away from costing those ships yet and I think it's very premature. We're in the equivalent of day one."
Seaspan is anticipating signing a ship construction contract "early next year" according to a recent press release, and expects to begin ship construction in the first quarter of 2014.
Four months ago the shipyard started working on their estimated $200-million upgrade to their infrastructure to prepare for the new project.
Due to the contract, Whitworth said they expect the North Vancouver shipyard to grow from 200 employees to nearly 400 by as early as next year, and reach up to roughly 1,000 by the time the major ships get underway in 2015 or 2016.
"There's certainly challenges out there with doing a project of this scale and this size," he said. "But we've been working very, very hard to come up with plans to turn those challenges into opportunities."