Models of Polar icebreakers are seen at the Davie Shipbuilding booth at the CANSEC trade show, billed as North America’s largest multi-service defence event, in Ottawa, on May 31, 2023.Justin Tang/The Canadian Press
A trilateral agreement between Canada, the United States and Finland to build polar icebreakers is taking shape, with a Quebec-based shipbuilding company at its centre.
Motivated by mounting concerns that Arctic sovereignty is being jeopardized by the failure of Western countries to keep up with the naval capacity of Russia and China, the partnership was first announced during a North Atlantic Treaty Organization summit in July.
Branded the Icebreaker Collaboration Effort (ICE Pact), it was billed as a way to jointly address an intersection of national-security, economic and climate-change imperatives, as melting ice caps open up shipping lanes and access to critical minerals.
The statement announcing the agreement was light on details about commercial arrangements or plans. Speaking at a naval conference in Quebec in September, federal Procurement Minister Jean-Yves Duclos said the three countries are working on an implementation plan to be released by year’s end.
But what does appear clear, for now, is that the deal revolves largely around the recent acquisition of a Helsinki shipyard by Davie Shipbuilding – a resurgent Canadian legacy company headquartered in Lévis, Que.
And in an interview with The Globe and Mail, Davie chief executive officer James Davies shed some light on how it all came together – including why his company initially made its move into Finland, and how the ICE Pact could help advance both its interests and those of the three national governments.
Much of it boils down to Finland having what both Canada and the United States lack: a robust shipbuilding industry, which has produced approximately 60 per cent of the world’s heavy icebreakers.
Davie is supposed to domestically build seven such vessels (along with two ferries) under an $8.5-billion contract that’s part of Canada’s National Shipbuilding Strategy, which it joined in 2023, placing it alongside Halifax’s Irving Shipbuilding and Vancouver’s Seaspan Shipyards.
However, Davie is still working to restore its capacity after its Quebec shipyard had fallen into disuse by the time Mr. Davies’s group purchased it in 2012.
That imperative contributed to Davie pouncing on an unusual situation, in which Finland’s top maker of icebreakers – Helsinki Shipyard Oy – was up for sale because its Russian owners were unable to do business in the wake of sanctions imposed after Russia’s invasion of Ukraine.
“The history of shipbuilding has a number of companies that have underestimated the difficulty of coming back to a product type they haven’t built for a long time, or changing product types,” Mr. Davies said. So “when we had the opportunity to look at the acquisition of Helsinki, we took it, because Helsinki Shipyard is the world’s only expert in building these hard-to-build assets.”
The CEO described Davie’s purchase of that site, with significant financial backing from Quebec’s government, as “not for the faint of heart,” considering uncertainties around a long regulatory approval process because of the Russian involvement. He credited high regard for Canada in Finland, as well as his company’s risk tolerance and the fact that it is not a publicly traded company, among the factors that allowed it to go forward.
The transaction, completed in late 2023, has enabled the Helsinki yard to take orders again, and Mr. Davies said a lot of pent-up demand already means “a number of procurements moving along.”
But a big part of his company’s aim – and what the trilateral deal is seemingly supposed to help achieve – is drawing off Finland to build capability on this side of the Atlantic.
From Mr. Davies’s perspective, the Ice Pact essentially has three components.
One, he said, is access to Finland’s know-how and intellectual property. “If that’s going to be exchanged, it has to be something of fair recompense for Finland,” he said.
A second, somewhat related component is an exchange of skills, which could seemingly involve both importation of some talent, and training of North American workers. “Our biggest issue is that we lack the people, because we haven’t had a lot of shipbuilding going on,” he said.
The third, perhaps a little further down the road, is joint diplomacy in which the three governments compete with more hostile powers in trying to attract other countries as customers.
That last ambition was emphasized by a representative of the Finnish government. “One of the ideas is really to invite not only these three countries to concentrate their shipbuilding capabilities … but really to invite the other allied and partner countries to consider those capabilities that we are now advancing,” said Petri Peltonen, an undersecretary of state in the Ministry of Economic Affairs and Employment.
There is somewhat more ambiguity around the governments’ role in pursuing the first two objectives. Mr. Peltonen responded to a question about compensation for Finland’s skills and knowledge by saying that would be up to Davie, which is now fully registered to operate in his country, to work out.
“The ownership of the property they have acquired is fully at their disposal,” Mr. Peltonen said.
It’s also unclear when exactly the deal could lead to new opportunities for Davie within the United States, which like Canada wants to purchase icebreakers that are domestically produced.
A White House statement about several plans for shipbuilding supply chain investments that was issued this summer, shortly after the announcement of the trilateral pact, indicated that Davie is expected to make “a major investment in a U.S. shipyard.”
However, Mr. Davies said in the interview that it would be “a little premature” for him to discuss the company’s U.S. plans. He said that’s partly because further details of the ICE Pact need to be hammered out, and also because Davie needs to focus on its Canadian obligations and does not want to overcommit.
But he was not shy about talking up the potential long-term geopolitical and economic implications of the new arrangement, while also touting the countries collectively working toward shifting toward more climate-friendly vessels that are less reliant on diesel fuel.
“This has got huge carry,” Mr. Davies said. “There is a possibility we can see a rebalancing of commercial shipbuilding, which comes from an understanding that we can’t continue to enjoy what is not a free lunch, if we’re buying the cheapest possible from China.
“And then we’re talking about the technological transitions necessary to support weaning ourselves off the incredibly heady and addictive brew that is hydrocarbon fuel. It’s all there. It’s just in reach.
“All we need to do together is not return to the age-old parochial, internal competitive fight, but work together – companies, industry, countries – to solve the problem.”