The Marystown shipyard used to be a busy place. Until the early ‘90s, it was constantly humming with workers in hard hats driving forklifts, towering cranes lifting and stacking huge containers, and massive ships being lifted high out of the water. This is what life used to look like at the shipyard. Today, though, workers are forced to live on their employment insurance, look for work in Alberta or scrounge for scrap projects just to pay the bills.
The 46-year-old shipyard — one of the largest in Newfoundland — has a proud history on the Burin Peninsula servicing the commercial fishery abd oil industry, as well as retrofits for maritime companies located in Eastern and mainland Canada. But work has been scarcer recently, and with the announcement in early December by seafood giant Ocean Choice International that its Marystown processing plant — awash in red ink and facing lower shrimp quotas — would be closed for good, Marystown’s hope to survive may rest once again in the shipyard.
Shipbuilding can be a cyclical industry, but the last five years have been particularly discouraging, says Marystown Mayor Sam Synard, who thinks back fondly on the excitement of the boom times. “We are obviously very disappointed in where we have gone,” says Synard.
In April of last year, the Kiewit Corporation (the Nebraska-based company that owns the shipyard) withdrew its bid from a $35-billion contract to build navy vessels and Canadian Coast Guard ships. If successful, the contract would have provided 25 to 30 years’ work for the town. Kiewit’s excuse was that it couldn’t put a successful bid together in time. At the time, Premier Kathy Dunderdale said in the House of Assembly it’s wonderful that a company is “so overwhelmed with work” it can afford not to pursue such a long-term contract. But a couple of months later, the company laid off 150 tradespeople shortly after the construction of two provincial ferries, suggesting that if the company has a problem, being overwhelmed with work isn’t it.
Right now, the provincial government is in negotiations with Kiewit to build a third ferry, but there are no guarantees. Kiewit claims it lost a lot in cost overruns, leaving talks between the company and province at a stalemate, says Wayne Butler, president of the Canadian Autoworkers Union.
“We had meetings with minister of Transportation and Works, Tom Hedderson, recently and he basically said they have no information on the overruns yet, but he did say this has gone on long enough,” says Butler. “He said if they (Kiewit) are not interested in doing these vessels then they (the government) would have to look at other options. It might go to arbitration.”
Synard also agrees action needs to be taken.
“If the province wants to build these vessels for our coastal communities, it will have to be our shipyard. It is the right time to build because interest rates are low. I don’t know why bureaucracy is taking so long to solve these issues,” he says.
In May in the House of Assembly, following Kiewit’s bid withdrawal, opposition parties accused the Kathy Dunderdale government of a lack of communication with the company, pointing to Kiewit’s admission that it didn’t have enough people to put together a proper proposal.
When challenged in the house by NDP Leader Lorraine Michaels, Dunderdale was quick to defend her government, saying they were prepared to offer millions of dollars in resources to help the company secure the contract. “We were involved with Kiewit over a number of years as they tried to advance their bid for that contract,” said Dunderdale. “We were in negotiation — not over a million dollars, or a couple of million dollars, but tens of millions of dollars of support to that shipyard so that they could win that contract. They never, ever, indicated to us that they had a problem with capacity in terms of working on that bid. We heard it when everybody else heard it.”
Infrastructure is an issue that doesn’t go away when you discuss the Marystown shipyard. Synard says the biggest infrastructure piece needed is lifting capacity. Without it, he says, the shipyard will never be able to serve the oil and gas industry when oil tankers and carriers need to be serviced. He adds there have been ongoing discussions involving all levels of government about the need for a graving dock or floating dry dock — but talk is as far as it goes.
It also isn’t the first time the province has lost out on lucrative contracts, says Synard. In the past 10 years it has happened repeatedly, he says, including three years ago, when Marystown lost a contract to a European shipyard for a midlife refit of the Terra Nova oil rig. At the time, says the mayor, the contract was expected to be worth about $150 million, but it eventually came in at $250 million. “And of course, almost all of that money was spent in Rotterdam,” he says, pointing out that it’s not just the shipyard that loses out, but the provincial and federal governments, which miss out on millions in tax revenues.
Synard paints a stark contrast between Kiewit’s bid for the navy and coast guard contracts and the bid from Irving Shipbuilding, which won the contract in October. Synard says while three levels of government were unified with Irving in its bid for the work, Kiewit’s bid was the complete opposite.
“We did fight hard for the contract, but the Halifax team made it a provincial quest. They were all on the same page, the municipal government, province and Irving, which owns the shipyard,” he says. “It was almost like a general election campaign. Our campaign wasn’t as organized. Basically we were doing our part, the province was doing something — we don’t know what it was at this point in time — and Kiewit was doing something, but we never co-ordinated it in such a fashion.”
The big question is this: If Kiewit is willing to throw away such large and long-lasting contracts, are better projects on the horizon?
No one knows for sure, and Kiewit isn’t saying. As for the provincial government, neither Jerome Kennedy, minister of Natural Resources, nor Tom Hedderson, minister of Transportation and Works, could be reached before the magazine’s deadline to shed any light on what’s in store for the shipyard, such as other substantial contracts. Nor were they available to explain why the Glomar Grand Banks oil rig — damaged in a collision with a supply ship in November in the White Rose oilfield, 350 kilometres east of St. John’s — was being repaired in Halifax instead of Marystown.
“I don’t know the answer to that, but people are asking that question a lot in Marystown,” says Synard. “We have such a great facility, such great workers and it is such a great harbour. Why are we losing an opportunity like that going to Halifax instead of being done here in Newfoundland? I can only assume that the company that owns the rig went there based on cost or bidding.”
If there’s any hope for the shipyard, there may be promise in the Hebron project, an oil field with an estimated 400 million to 700 million barrels of oil about 350 kilometres southeast of St. John’s.
In 2009, Keith Ashfield, the federal minister responsible for the Atlantic Canada Opportunities Agency, announced a contribution of $1.15 million to develop a marine industrial facility to service the oil and gas industry in Marystown.
But even with Hebron, doubts are being raised about Kiewit’s capacity, as well as its commitment. After Geoff Parker, Hebron project manager, revealed in November that one of two modules slated to be built in Marystown would have to be constructed elsewhere, Natural Resources Minister Jerome Kennedy publicly aired the government’s concerns about the shipyard.
“There’s a lot of work in this province right now in shipbuilding,” he told St. John’s reporters late January. “We were concerned that maybe Kiewit weren’t as interested in the work, as opposed to trying to straighten up issues within their own shipyard and to improve quality and productivity.”
While Kiewit’s Marystown facility was on deck to construct a drilling support module and a smaller drilling equipment module, the company, according to Parker, concluded late last year it wasn’t possible to build both modules at the same site. And with Bull Arm, the province’s other major industrial fabrication site, already tied up building a third module for Hebron, that means the drilling equipment module — valued at between $60 million and $100 million, according to Kennedy — will have to be done elsewhere.
The government’s concerns led to a meeting with Kiewit CEO Bruce Grewcock in which Dunderdale, according to Kennedy, who was also in the meeting, asked him directly: Are you committed to running the Marystown shipyard? Kennedy said Grewcock assured them Kiewit is committed to the long term in Marystown, but just couldn’t handle two large modules at the same time.
Kiewit declined to respond at the time, apart from issuing a statement that said, “As we have consistently stated, we are actively pursuing work for the Marystown yard. Any questions specific to Hebron need to be directed to ExxonMobil.”
“Consistently” is correct. When Atlantic Business Magazine contacted Kiewit to inquire about future projects, it received an email reply from Thomas C. Janssen, director of external affairs for the company, that echoed that response. “We do not publicly discuss prospective projects, but we are actively pursuing other work for the Marystown yard,” he wrote.
Meanwhile, Marystown waits for better news, and hopes that the one Hebron module will be the beginning of much more work to come.
“Every job you get creates a larger job and a better legacy, and that legacy leads to great infrastructure when the project is finished,” says Synard.