Ferry gets $40-million refit
Ottawa is paying $4.2 million towards the total cost

Derrick Penner
Vancouver Sun

Thursday, January 27, 2005

BC Ferries is keeping its Queen of Oak Bay at home for a major $40-million refit thanks
in part to a federal financing program aimed at keeping companies from sending industrial
work overseas.

Industry Canada on Tuesday gave BC Ferries $4.2 million through its structured financing
facility as part of the corporation's financing package for the refit.

BC Ferries awarded the main contract, for $33 million, to Vancouver Drydocks, which will
keep about 100 shipyard workers employed for six months to complete the job.

"This [financing assistance] helped make it affordable for us," Deborah Marshall,
a BC Ferries spokeswoman said.

"I can't say it was definitive, but it was important [factor], and we were quite
pleased to get that financing so we could keep the work here in B.C."

Marshall said BC Ferries was ineligible to receive financing help under the Industry
Canada program because it had been a Crown corporation until 2003.

That meant it was unable to ask for assistance while commissioning the upgrades of
the Queen of Oak Bay's sister ships, the Queen of Coquitlam and Queen of Cowichan.

Marshall added that BC Ferries will also seek financing assistance for the upgrade
of the remaining C-class ferries in its fleet, the Queen of Surrey and Queen of Alberni.

To date, all the work has gone to Vancouver Drydocks. Marshall said that the shipyard
was awarded the work on an option from the Queen of Cowichan's upgrade,
and the Industry Canada financing made giving the company additional work more attractive.

"Certainly we were awarded [those] contracts in open competition," Steve Frasher,
CEO of the Washington Marine Group of Companies, owners of Vancouver Drydocks. "I don't
know what thinking they put into the $4.2 million, [but] for the other two [ships], structural financing wasn't available and
I do know [Vancouver Drydocks] was competitive to the Seattle area for those projects."

He added that the major upgrades for BC Ferries are important contracts because they
help keep a large number of people working in various trades.

"This allows us to hire apprentices who need that training, so it helps you to look
to the future of your business," he added.

Frasher said tradespeople -- from carpenters to electricians, plumbers, pipefitters
and welders -- will be involved in gutting the Oak Bay's accommodation areas and upgrading its wiring and installing new safety equipment.

Structural work will not be a big part of the contract, but Frasher added that workers
will test the Oak Bay's hull and replace any steel plates that are worn.

However, Frasher said the contracts for upgrading won't replace new construction projects,
such as BC Ferries' $542-million Super-C-class program, which will see
the German shipyard Flensburger Schiffbau-Gesellschaft build three ships for the corporation.

Washington Marine Group was not included in the final bidding for that program,
which is still a source of disappointment to the company, Frasher added.

Construction projects, he said, use different sets of skills than refits.
The Super C-class project would have required millions of man-hours of work to
complete, Frasher said, and allowed the company to apprentice employees in those trades.

As well, the project would have been justification for Washington Marine Group to
invest in upgrading its infrastructure, which would in turn make it more competitive
in the global market.

Frasher said Washington Marine Group is in discussions with three major shipbuilding
companies about becoming a partner in a bid for the Canadian Department of Defence's
$1.5-billion joint support ship program.

However, he expects that the competition with Eastern Canadian shipyards to take
part in the bid will be fierce.

"[The Super C-class program] would have been a great match up for the joint support
ship project, to be quiet honest," Frasher said.

Marshall said BC Ferries examined the possibility of using the Industry Canada
structured financing facility to keep the Super-C program in Canada, but even
with the maximum assistance, a local bid still would not have been competitive.

THE MID-LIFE UPGRADE:

The Queen of Oak Bay is the third of five of BC Ferries' C-class vessels to be given
a mid-life upgrade.

All contracts have gone to Vancouver Drydocks, part of the Washington Marine Group
of Companies.

Queen of Oak Bay

Built: 1981, Victoria

Size: 6,700 tons

Capacity: 362 cars, 1,500 passengers and crew

Value of Upgrade

$40 million

Total worker-years of employment provided

214

Financing assistance through Industry Canada

$4.2 million

Worker-years of employment in direct shipyard work

127

Amount to be spent on work at vancouver drydocks

$33 million

Worker-years of employment by subcontractors

87

Source: Industry Canada