Alex Binkley: An object political lesson

'…sticking to your message and making a solid case … pays off eventually.'
By Alex Binkley
True North Perspective

It went generally unnoticed by the media when Finance Minister Jim Flaherty announced Oct. 1 the elimination of a 25% duty on foreign built freighters even though the move could revitalize shipping in Canada and reduce green house gas emissions and other environmental problems.

The issue is simple enough. Many Canadian-registered ships are antiques; a lot of the Great Lake fleet was built before Pierre Trudeau became prime minister.

They’ve worked hard over the decades hauling grain, iron ore, salt, stone and other commodities. There’s not a lot of money to be made in this line of work so the owners couldn’t afford to have new ones built in Canada.

But their pleas for relief from the duty, designed to protect shipbuilding jobs in Canada, fell on deaf ears in Ottawa because companies that own ships are all rich, right, so we don’t need to help them even if the duty adds about $10 million to the cost of a new vessel.

But they kept at it and have finally got their reward. It should be a good object lesson for organizations seeking a change in government policy.

The industry, through the Canadian Shipowners Association with the help of the influential Chamber of Maritime Commerce, honed its pitch on the need for new ships over the years and kept pressing it, slowly wearing down the objections. Do nothing and shipping on the Lakes would slowly fade away as the vessels aged beyond repair or rebuilding. It was no longer a matter of protecting Canadian ship-building jobs.

With Paul Martin’s connection to Canada Steamship Lines, the industry didn’t get any favours, not even crumbs, from the Chretien government. The Tories, being more focused on business and economic matters, proved more receptive, especially Flaherty. Coming from Oshawa, he’s a rare Ontario politician who understands the environmental benefits and cost savings of water transportation.

Of course the challenge for government was the optics of exporting manufacturing jobs from Canada. For decades, Canadian shipyards have had to contend with lower-cost competitors in Asia and Germany, which had the funds and government backing to improve their ship design and construction techniques. The Canadian yards got repair work and the occasional Navy or Coast Guard contract from Ottawa although they’ve been few and far between during the Chretien and Harper eras.

The Mulroney government financed the rationalizing of the shipbuilding industry while the Chretien government developed financing programs that have helped specialized builders of tugs and offshore energy supply ships. But nothing that benefited Canadian shipping companies.

When the recession hit in 2008, many foreign shipyards quickly ran out of contracts. The Canadian owners saw an opportunity to get new vessels at good prices without having to endure long waits for delivery.

The first overt sign of progress came last December when the Finance Department announced consultations on removing the duty. Since then, the companies have quietly kept the pressure on the government. Once Ottawa announced this summer it would proceed with selecting East Coast and West Coast builders for new Navy and Coast Guard vessels, the way was clear for announcing the duty’s demise.

Flaherty’s announcement “will go a very long way toward making fleet renewal a reality for Algoma Central Corporation and other Canadian vessel owners and operators,” says Greg Wight, the company’s president and CEO.

“We hope in the next few months to be able to announce … a sizable new vessel order of next generation Canadian-flag bulk carriers,” he added. “Fleet renewal will bring increased operating efficiency and improved environmental performance which not only better serves our customers but also better serves the needs of all who rely upon our shared waterways.”

The bottom line is that sticking to your message and making a solid case with the politicians and senior officials pays off eventually.