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Irving Shipbuilding Update

Kevin McCoy, President

In a technical briefing with media in Ottawa this morning, representatives from Public Works Government Services Canada, the Canadian Navy and Irving Shipbuilding provided an overview of the Arctic Offshore Patrol ship program including the ship’s design and capability, the number of ships to be built and the construction schedule.

We look forward to celebrating this important milestone – the awarding of a build contract - with our employees, our community and Canada in the coming weeks at the Halifax Shipyard.

Since June of 2012 we have been maturing the design with the Canadian Navy to make sure it provides the capability required by those who bravely serve. Around the world, the best performing shipbuilding programs are those where the design of the ship is complete before construction begins. The rigorous approach laid out by Canada to fully design the ship before cutting first steel maximizes production efficiency and reduces overall program risk.

Our contract with Canada is for six ships. The build contract is valued at $2.3 billion. Should costs increase due to unforeseen factors, the contract will guarantee the delivery of five ships within the same ceiling price ($2.3 billion).

To our customer, our employees and our community – we are clearly focused on delivering six ships to the men and women of Canada’s Navy.

Construction of the first sections of the vessels – known as initial blocks or production test modules – will begin in June. The shipyard will test its new infrastructure, environment and production processes, with these initial blocks. Cutting of steel for the first AOPS ship is on target for September 2015.

The contract is innovative, well thought out, appropriate and balanced. It ensures an effective partnership and collaboration between the Government of Canada and Irving Shipbuilding.

It will also create jobs. We estimate that over 1000 jobs will be sustained at the yard at the peak of AOPS construction. We will also be generating work across Canada.

To date, even before we start construction on the AOPS, Irving Shipbuilding has issued contracts worth $331 million, to suppliers across Canada. These contracts have generated 3000 full-time equivalent jobs (direct and indirect) from coast, to coast, to coast. And, there is more to come as procurement for AOPs increases.

We look forward to sharing a more detailed update about recalling our valued employees, new jobs and the impact on supply chain within the next 2 weeks.

Timeline and overview of the ship’s design