"RUNNING WITH THE WOLVES"
REINVENTING THE IDENTITY AND RESTRUCTURING THE CANADIAN MARINE INDUSTRY TO PROSPER ON THE GLOBAL SCENE

Even though I am in the marine industry, I'm not sure how the navy works. However, I am a strong supporter of the Canadian marine industry as a whole. My objective is to make the Canadian public aware of the marine industry in general, and hopefully, in so doing, they will become aware of the importance of ships and the role they play in the economy. As Navy people, I believe the next challenge for you might be to make the public aware of the role you play in protecting not only our waters, but also our people as a whole.

Before I present my views on the state of the marine industry and the shipyards as far as the merchant marine is concerned, I would like to give you a brief history of our company.

Verrault Navigation, the first subsidiary of the Verrault marine company, was created forty years ago. At that time, the company was a dredging enterprise; a task we still perform today. Over the years, the enterprise has undertaken dredging contracts in all of Eastern Canada, from the head of the Great Lakes to the Maritimes. My father developed his expertise in this area. He was the first and the only man to produce and use self-propelled barges for the transportation and disposal of dredged materials. This system makes dredging much more efficient. And we are still the only company to use these barges instead of the tugboat system.

To repair his equipment my father built a shipyard. To make his shipyard feasible he began to do all sorts of building. For years he constructed tugboats, ferries, and fishing boats. Yet, he had a dream to construct a dry dock at Deschaines. Then, in 1958, the year I was born, he told the local media that he would build a dry dock at Deschaines. In October of 1982, his dream materialized when the dry dock received a Canadian Coast Guard Ship for repairs. My father died one month later.

At that time, I was twenty-four years old. Coming out of university with my degree as a grade school teacher and with no work experience other than the time I had spent on the dredges doing the dishes as a summer job. I used to tell my father that he was starting me awfully low in the organization. He used to respond that I had to learn from the bottom up. We used to have great arguments about that because I thought that the ladder was quite long, if you had to start where he was starting me. But at the same time we would talk about the business as a whole and he used to take me on business trips with him to Europe and elsewhere. Their purpose was to show me the world, but I learned an awful lot not even knowing I was actually in training. This started when I was about thirteen years old.

At the time of his death in 1982, my father left the enterprise to my mother in his will. There was a dredging contract to be completed, and we were all still in shock. Although My sister and I decided to help my mother and began to work in the organization. My sister and I had no experience, we had enormous faith in the organization. We divided the work as follows: I would take care of the shipyard, my sister would take care of dredging, and my mother would act as the president. During the first year following my father's death several buyers approached us, but we always refused to sell.

In 1987 my mother retired from the organization. My sister and I took over her share of the enterprise. In 1989, I bought my sister's shares and three years later we purchased two dredgers. Last year we gained control of an enterprise that owns and operates five oil tankers. We are presently completing the acquisition of this enterprise's stocks. My husband and I own and manage the companies assets as well as its subsidiaries. We operate in three different fields: ship repair, dredging, and marine transportation of liquids.

I am going to speak to you today about an unfashionable subject. Unfashionable is probably the adjective that best captures the current problem facing marine transportation in Canada. When I was approached to speak to you about marine shipyards, I thought I would need a crystal ball, to be able to shed any light on this situation. My assessment was both true and false. It was true because I don't know what the future of shipyards will be. Yet, false because a crystal ball cannot give us the answer. Only we, the people of the marine industry, can collectively answer this question. The marine industry, considered as a whole, is only as good as what we make it.

We are the crystal ball, because we hold the key to the economic development of the Saint Lawrence River. We aware of the enormous potential of the Saint Lawrence and perhaps that is one of our problems. We seem to be keeping the secret to ourselves. We often take for granted that everyone will see and understand what we see and understand. We can only find strength in acknowledging that this is not true.

The general public's perception of marine transportation is not favourable. It sometimes appears to me that we are perceived as dinosaurs. Yet, without marine transportation there would be no shipyards. Marine transportation is not popular, it is not high-tech, it is not flashy, and it is not chrome-plated. It is not very visible and when it is, it is never entertaining.

Very few people know that marine transportation is the most economical means of transportation, the most environ-mentally friendly, and that it is a safe and efficient mode of transportation. The ships on the Saint Lawrence are considered by most to be enormous steel monsters that pollute the limpid water of our beautiful river. I'm not exaggerating. And because the ships are not popular with the public, the government leaves the marine industry behind like a dunce, because it knows voters will not hold what they do not do against them. An example is the embarrassing agreement that our negotiators made during the Free Trade negotiations. I will not say any more about this. You know precisely to what I am referring.

The general public could not care less about ships. So in turn our government does not care about what happens to the marine business. Our politicians simply do not believe in it any more. A while ago, a federal minister told me that Canada cannot and should not do anything about the marine business because, he claimed, we've already missed the boat. Would he say the same thing, if he knew and understood the marine business and its importance in the economy and to the development of the country? Probably not. Hopefully not. But his reaction is no surprise. I believe that we get what we deserve. Have we shown the government the importance of our business? Have we explained all the businesses related to the marine industry, and what they would gain by giving the marine industry the place it deserves? Not really. We react to policies. We cry. We bitch and complain. On top of everything else, we argue amongst ourselves and look at our next door neighbour jealously because it may be moving ahead faster than we are.

I recently read, in a government publication put out by the Department of Foreign Affairs, an article pushing Canadian companies to sell materials and equipment to Finnish yards. Our Embassy in Finland had made a study and came up with a complete picture of the Finnish shipbuilding industry and its latest trends. It is ironic that we have trouble promoting our own ship building industry but the government can carry out and produce an extensive study on the Finnish ship building industry. That is known as having your government support you!

The marine industry in Denmark is the second biggest industry in that country. It is a highly developed country with a population of only 5.5 million with a fleet of over 700 vessels. Last year, the turnover of the Danish shipping industry was about six billion American dollars. That is a lot more in Canadian dollars. According to the Danish Ship Owners Association, these people build their own vessels, put Danish equipment on board, and operate and manage vessels from Denmark. Because of all this, the industry has a huge importance in the economy of that countryþfrom all the associated indus-tries created by the marine business to the foreign currency that is brought back.

It is hard to believe that Canada was once one of the biggest shipping nations in the world. I strongly believe that we need to change the perception and thinking of the Canadian public towards our industry. People have to understand that shipping is part of their everyday life, and that shipping contributes to a clean environment because it is more efficient than any other mode of transportation. It is also the most econo-mical way to carry goods and thus affects the price of what they buy. It is a mode of transportation that benefits everybody. As a result, having fewer ships and a poor marine industry is costly for the population in general, quite the opposite of today's perception. If only we could get this message across to these people and have them understand the spin offs from the industry: all the things that are obvious to the Danish shipbuilders, ship operators and crews, to stevedoring, terminals, ship suppliers, oil companies, agents and on and on and on. And then there are all the government employees required to enforce the huge number of regulations we have to comply with throughout the industry.

For example, how many people know how far a ton of merchandise can be transported by using five litres of fuel? The answer is five hundred kilometres by sea, 333 kilometres by train, 100 kilometres by road, and 6 kilometres by plane. 25 tons of grain, for example, can be transported by one ship, by 500 freight cars of 50 tones each, or by 833 transport trucks. Everyone knows the role trucks, trains, and airplanes play in their lives, but this is not so for marine transportation.

Let's use the transportation of oil as an example. If I were to ask you to give me the name of a ship, I am certain that I would hear Exxon Valdez and all the connotations of that name. This is how Canadians think of marine transportation. Oil companies even attempt to hide the fact that they must transport oil by water for fear of the public's reaction. Yet, it is well known that thousands of litres of petroleum are transported on our roads each year without anyone worrying about it.

A prime example, Limmender-Murdockville is supplied with petroleum products that are transported by 25 transport trucks that leave Montreal each week, 52 weeks of the year. For those who have done the calculation, that represents 1300 trucks per year. One must realize that each truck damages the roads the same amount as 33 thousand automobiles. 1300 trucks are the equivalent of 42,900,000 cars travelling from Montreal to Murdockville annually.

Similarly, the products of oil companies that were previously transported by ship on the St. Lawrence River, are now transported by truck. An article that appeared in the newspaper Le Soleil on the fourteenth of March 1995 started like this:

The transportation of petroleum by trucks ... pollutes the air, damages the road and distresses motorists. Yet, it is the most economical means of transportation and Quebec will not intervene to favour shipping by train or by ship.

Despite the sensationalism that surrounds the rare accidents in the marine industry, the industry's environmental record is enviable. Unfortunately, environmental studies have the shortcoming of limiting their analysis to the negative effects of a mode of transportation, rather than evaluating the comparative impacts of the different modes of transportation.

In 1991 the Minnesota Department of Transportation carried out an important study that dealt with the costs of not using marine transportation. They determined the impact of abandoning marine transportation for the sake of trucking and rail. The areas addressed were the transportation of coal, paper, and wood on the Mississippi and on Lake Superior, but the study only dealt with 50% of marine traffic. Here is what they found: the abandonment of marine transportation in favour trucking increased fuel consumption by 926%, increased toxic emissions by 1920%, increased the probability of accidents by 610% and created many other side-effects that would take eons to mention.

The comparison was also made with the railway, but I will spare you the pain of hearing the results. The media parades marine accidents involving oil freighters and the publicists present them as environmental disasters. They make great headlines. Yet, when do we hear of the environmental impact of the millions of kilometres we put on our roads? What happens to all of the petroleum-based products that penetrate our soil each time it rains, not to mention the many other affects I have not mentioned.

The facts concerning marine transportation and all it affects must be dissected to be understood. I could not talk to you about the marine industry without talking about dredging. We all know that dredging is important for safe and efficient marine transportation. Yet it is becoming more and more difficult to dredge in this country because the government maintains that its pockets are empty and that there is nothing left in the transportation kitty. It is not surprising that there is no money left after they have renovated the airports, repaired the roads, and subsidized the railroad. The pressure environ-mentalists put on them has also made it more and more difficult to get the necessary environmental permits required before dredging, because certain pressure groups or persons have been able to spread the belief that dredging pollutes the environment. How strange that in Europe dredging is considered to be a solution for the environment. In Canada it is considered to be a problem. I think we have to ask ourselves just who benefits from this sad state of affairs.

It is time for us to step out of the shade and be seen, to become visible, and to make ourselves known. It is time to make marine transportation fashionable. And, yes, to make marine transportation sexy and glamorous. But how can we make shipping glamorous? It sounds funny, but it is time to launch a huge campaign to change peoples' perceptions; to inform and revive the pride of the population towards shipping. It is time to remind people that they want and need ships, good ships, new ships. We know that to survive Canadian shipowners will have to renew their fleets, but how can that be done if the demand is going down and nobody wants ships any more?

I strongly believe in the ability of the Canadian shipyards to compete at an international level, if they want to. It seems to me that we often give up in this industry. The Canadian marine shipyards are well equipped, own modern equipment, and have well-experienced workers. Yet, what is missing?

I will not attempt to give a simple diagnosis, but I believe that asking the question is the first step to an answer. Canadian shipyards have their place on the domestic and international scenes within the framework of a healthy and strong national marine industry. We can and must make all Canadians proud of our shipyards. By supporting our industry we will inevitably gather the fruit, like a farmer gathers the fruit of his labours, but to do that we must first labour and sow.

We also know that to renew the fleets we need good shipyards and a comprehensive fiscal policy that will stimulate the industry. The Quebec provincial government adopted such a policy in its 1996 budget. I am sure that the actions of the provincial government will trigger the series of parallel measures from other provincial governments and, hopefully, from the federal government.

The four measures contained in the provincial budget are:

• a tax credit for shipbuilders;
• a marine construction financial guarantee program;
• a reduction of tax on capital for the acquisition of ships, and
• a tax holiday for Quebec sailors employed on international freighters.

Here is an example that is close to home. The United States has several important shipyards that, like ours, have only constructed warships over the last few years. Because the American government is no longer ordering warships from these shipyards it created a program of conversion for these yards so that they will be able to adapt themselves to commercial production. This demonstrates the American government's willingness to keep these yards alive while reshaping their role in the shipbuilding industry. The shipyards, shipowners, and other contributors will receive help, but it will be restricted to conditions and to a time period. In other words, they will be deprived of their assistance in mid-course, and they know this. Therefore, after they have benefitted from the program, they will be solely responsible for their own survival.

The program has five main objectives:

• to ensure fair international competition;
• to improve competitiveness;
• to eliminate useless governmental regulations;
• to finance ships by guaranteeing loans covering up to 87.5 per cent of the cost of the ships over 25 years; and
• to assist marketing to the international market.

This program is intended for ship owners, foreigners, American financial institutions, professionals of the marine industry, and all other industries related to the marine industry. This year alone, seventy-nine merchant ships of all kinds will be delivered by American shipyards for a value of $1.14 billion. Ninety-seven others are presently on order for a total value of $3.6 billion, excluding naval orders.

It sometimes seems that we live in an underground, or should I say underwater, world. We do our little things, cry on each other's shoulders and hope things get better. We are responsible for what is happening and this is probably the best news I have for you today, because it also means that we have the power to change it. Now, our complaint is that other countries are heavily subsidized, but this is gradually being phased out. The modern efficient shipbuilder, that has hard-working people who are proud of their accomplishments, will come out ahead.

As the saying goes, we have to "Run with the wolves". Globalizing markets is a reality we cannot escape. We must think globally, and by this I mean that we must equip ourselves to survive and prosper on the world scene. The days of squabbling must pass if we are going to succeed. Certain countries have long since organized themselves to promote their national marine industry. I'm referring, for example, to Holland and Denmark. Certain companies here are beginning to join together by pooling ships. The railways are constantly searching for ways to make themselves stronger, as are airline companies.

Ultimately, I am a strong believer that private industry and the Navy would benefit from building stronger ties. How? You may have heard it before, but I will try it again. Here are a few ideas for what they are worth.

• Use the same schools for the initial training of navigators and engineers, so that the students could later branch out either to the navy or the private sector. This would certainly reduce the cost of training and would help the navy recruit reserve personnel.
• Work together to promote the role of ships and their importance not only for the transportation of goods and people or the defence of our territory but also for our economy.

Several avenues are open to us that would allow us to keep our identity and modes of operating, but that would also allow us to become stronger and to grow. The status quo is no longer an avenue. What are we waiting for?