Shipbreaking in the Free Market

You’ve got to love the free market.

Look at the wonders it produces when simply left to its own devices: an Ontario-based shipbreaking outfit suddenly realizes it should be busting up old naval ships in Sydney harbor, so moves here and starts hiring.


Her Majesty’s Canadian Ship (HMCS) Athabaskan arrives at Lisbon commercial port in Portugal during JOINTEX 15 as part of Exercise TRIDENT JUNCTURE 15 on October 18, 2015. Photo: Corporal Alex Parenteau, Canadian Forces Combat Camera IS22-2015-0008-003 ~ Le Navire canadien de Sa Majesté (NCSM) Athabaskan arrive au port de commerce de Lisbonne, au Portugal, au cours de JOINTEX 15, dans le cadre de l’exercice TRIDENT JUNCTURE 15, le 18 octobre 2015. Photo : Caporal Alex Parenteau, Caméra de combat des Forces canadiennes IS22-2015-0008-003

Her Majesty’s Canadian Ship (HMCS) Athabaskan arrives at Lisbon commercial port in Portugal during JOINTEX 15 as part of Exercise TRIDENT JUNCTURE 15 on October 18, 2015. Photo: Corporal Alex Parenteau, Canadian Forces Combat Camera

Although, as the Cape Breton Post explained in an editorial making the case for CBRM Mayor Cecil Clarke as provincial Progressive Conservative leader, he’s helped market forces along a bit. Among the achievements he “no doubt” takes pride in is:

…engaging the private sector to invest in Cape Breton. The list here under his watch includes a controversial shipyard expansion in North Sydney, revitalizing Sydport as the site of a new tug service and federal marine recycling program…

Yes, the CBRM provided just the tiniest smidgen of help to these private sector investors, paying $1.2 million to businessman Jim Kehoe for some old docks in Sydport to rent to Port Edward Marine (a subsidiary of McKeil Marine, the “tug service” operator which, for the record, is not providing tug service in the Port of Sydney because we can’t afford it) which in turn sub-let part of them to Marine Recycling Corporation, which is doing the actual shipbreaking.

But other than that, what we’re witnessing around the harbor is just that old invisible hand at work…Well, except for a touch more help from the federal government (through that “federal marine recycling program”) which has awarded Marine Recycling contracts to dismantle the HMCS Preserver, the research vessel Quest and the Iroquois-class destroyer HMCS Athabascan.

Sydney-Victoria MP Mark Eyking staged a photo op at Sydport to announce the Preserver/Quest contract, so anxious was he to attach his name to the deal. And Public Services and Procurement Canada said (rather grandly, given the subject is shipbreaking) of the $5.7 million Athabascan contract:

The Government of Canada is committed to rebuilding our marine industry, supporting Canadian technological innovation, and bringing jobs, learning opportunities and prosperity to communities across Canada…

So Marine Recycling benefited from the kind assistance of the federal and municipal governments, but that aside, the company’s decision to locate (kind of, part-time, at least for the next few months) in Sydport is simply a case of supply meeting demand…Although, there is the small matter of the provincial government subsidizing the salaries of some of its workers through a $10 million program called New Opportunities for Work.

I had heard Marine Recycling founder and director of business development Wayne Elliott talking about hiring Mi’kmaw workers for his operation in Sydport, but he failed to mention that those workers’ salaries are being subsidized by the provincial government through the program which, according to the Cape Breton Post:

…has a goal of helping to connect people from underrepresented groups to jobs in their field. It requires an employer pay a minimum salary of $15 an hour and they are eligible for a wage subsidy of up to $10.50 an hour over a period of up to two years. It also helps provide access to other support services and training for those involved in the program.

A 26 February 2018 Department of Labour and Continuing Education press release about the program said it has placed 170 workers in 104 workplaces “surpassing its goal of helping 150 people.”

I contacted the Department of Labour to ask for a list of companies benefiting from the program, an explanation of how the wage subsidy is determined and an accounting of how many workers have been placed with Marine Recycling.

Spokesperson Chrissy Matheson told me that when the department says employers are eligible for a “$10.50/maximum” wage subsidy, what it means is that employers are eligible for a $10.50 an hour wage subsidy. Period. So, if Marine Recycling is offering $15 an hour, it’s actually paying $4.50 per employee.

She provided me with a list of the 10 “proponent organisations” which have contracts with the 104 employers. I already knew these names because they were provided in the press release, but for what it’s worth, here they are:

  • Autism Nova Scotia, Halifax
  • Immigrant Services Association of Nova Scotia, Halifax
  • Island Employment Association, Nova Scotia Works Centre, Sydney and Port Hawkesbury
  • Mi’kmaw Economic Benefits Office, Membertou
  • TeamWork Cooperative, Nova Scotia Works Centre, Halifax
  • Trucking Human Resource Sector Council Atlantic, Halifax
  • Mi’kmaw Native Friendship Society, Halifax
  • Native Council of Nova Scotia, Truro
  • Valley African Nova Scotia Development Association, Nova Scotia Works Centre, Kentville
  • YMCA of Greater Halifax/Dartmouth, Nova Scotia Works Centre, Halifax

As for the names of the actual employers, Matheson was “unable to share the employer details,” nor could she tell me how many workers have been placed with Marine Recycling. (I just FOIPOPed the information so perhaps by this time next month I will have an answer.)

I don’t begrudge anyone work and I honestly hope that those “underrepresented” workers hired through the program end up being retained, but has that ever been our experience with such programs in the past? Don’t the jobs have a tendency to disappear when the subsidies do?

And how sad is it that the best three levels of government working together can achieve in the name of “economic development” for the CBRM is a contract-based shipbreaking operation? It almost makes you wish they had left it to the free market.

Featured image: Sign at Sydport industrial park, March 2016.