CME-North Sydney Wins First Job Under $60M MCDV Upgrade

The HMCS Kingston, one of the Royal Canadian Navy’s (RCN) 12 Kingston-class Maritime Coastal Defence Vessels (MCDV), is in dry dock at the CME shipyard in North Sydney for repairs and upgrades, part of a $60 million program to give each of the ships a five-year life extension.

HMCS KINGSTON, MCDV 700 preparing to launch - Halifax Shipyard photo.

HMCS KINGSTON, MCDV 700 preparing to launch – Halifax Shipyard photo.

National Defense spokesperson Andrée-Anne Poulin told me (in an email) that the work is intended to ensure the fleet of Kingston-class vessels, built in Halifax in the mid-90s, remains “operationally capable over the current decade.”

The life extension work will focus on implementing engineering design changes to ship systems and equipment, while also conducting preventive maintenance, repairs, and capability enhancements. New features will include improved firefighting capability in machinery spaces, the installation of new degaussing and galley systems, and configuration improvements to maximize space on the ship.

The cost per ship is $5 million and the work falls under the Minor Warship and Auxiliary Vessels (MWAV) in-service support contract awarded to SNC-Lavalin Defence in 2011 (and set to expire in 2022). Each vessel will be refitted as it reaches the end of its design life.

Poulin said SNC-Lavalin issued a Request for Qualification (RFQ) to select a shipyard for the first docking work period (for the HCMS Kingston, which reaches the end of its design life this year) and CME-North Sydney was selected in May 2020. Work began in June 2020 and is expected to take four to five months. The work is being conducted ” simultaneously on the east and west coasts,” as six of the MCDVs are based in Halifax and six in Esquimalt, BC.

In May, the government issued an Invitation to Qualify to launch a competitive process for the next MWAV in-service contract.


Rethinking the refit

The upgrades to the Kingston-class vessels are interesting, regardless of where the work is being done, and to understand why, you need to know something about the history of these vessels. Well, truthfully, you need to know one thing about their history, which is that they were built in Halifax in the mid-90s which means, as noted, they’re all currently coming to the end of their design lives. (There’s more about their history you might find interesting but I’m putting it in a separate story.)

Mid-way through their design lives, the Navy apparently had a $100 million plan to refit the vessels, but in 2007, Valérie Dufour, a reporter with Le Journal de Montréal, discovered the plan had been scrapped. Stephen Priestley, writing in the Canadian American Strategic Review, said that instead:

MCDVs will be replaced by new vessels to enter service in 2020. It had been intended to retain the ‘mid-lifed’ Kingstons until 2045-2055 but, after its review, planners concluded that, in light of its low performance, the decade-old MCDV did not warrant the refit.

As recently as 2019, the Naval Association of Canada was writing of the Kingston-class vessels:

Age and use have taken their toll on the ships. They are now over 20 years old and suffer from chronic engine trouble and must be continually rotated in and out of service. Consideration has been given to modernizing the ships or replacing them entirely. A planned $100 million mid-life refit was cancelled after the ships were “deemed unworthy” of a mid-life refit, largely owing to the limitations of the platforms.

Halifax Shipyard pre-expansion, 2013. Photo byDan Conlin / CC BY (

Halifax Shipyard pre-expansion, 2013. Photo byDan Conlin / CC BY SA

Given that is now 2020 and work on the vessels seen as the MCDVs’ replacements — the Arctic and Offshore Patrol Ships (AOPS) — is not exactly proceeding apace, I guess there was little choice but to keep the MCDVs in service. The AOPS, now known as the DeWolfe-class vessels after the first in the series, the HMCS Harry DeWolfe, were announced by Prime Minister Stephen Harper in 2007 but it wasn’t until 2015 that Irving Shipbuilding began construction in Halifax.

The AOPS project was behind schedule before the pandemic and is apparently even more so now. Although the HMCS Harry DeWolfe was launched in September 2018, Postmedia’s David Pugliese wrote earlier this month that it is “unclear when the first Arctic and Offshore Patrol Ship will be ready for delivery to the Royal Canadian Navy.” Moreover, while the number of vessels to be delivered has been reduced  from eight to six, the budget for them has risen from $3.1 to $3.5 billion, including a whopping $800 million — twice the price of the other ships — for the sixth vessel, the order for which was only confirmed in 2018.

Critics of the Kingston-class vessels say they were designed  to do too much and therefore are not particularly good at any one thing (I’ll get into this in more detail in the second article). The same criticism has been leveled at the DeWolfe-class vessels. In a 2013 paper for the Canadian Centre for Policy Alternatives (called “Titanic Blunder”), Michael Byers and Stewart Webb argued the DeWolf-class ships were too slow for patrol vessels while lacking the range and hull-strength necessary for Arctic use.

In 2017, the Senate Defense Committee was downright cruel about the vessels, as Pugliese reported:

“…these ships cannot operate in ice more than a metre thick, are slower than a B.C. Ferry, can only operate in the Arctic from June to October and will require a coast guard escort when in the northern waters,” the senators pointed out in their report. These capabilities should be independently reviewed to meet Canada’s sovereignty needs, they added.

The Senate also noted that the ships “will lack significant force projection in the form of weapons system.

“These limitations are troubling and raise the question of whether the taxpayers are receiving value for the monies spent,” the Senate report stated.

That’s harsh, but Byers and Webb argued the Kingston-class vessels offered a “cautionary precedent,” which the Navy chose to ignore.



That the Kingston-class vessels need so much repair work has apparently been a boon to CME, which has a number of shipyards including a marine dry dock in Esquimalt, BC. According to the Cape Breton Post:

[Dean] Mitchell [vice-president of operations for Atlantic Canada] said they have been doing a lot of work for the military, including on these vessels 12 months a year ever since the ships were built from 1996-1999.

“A lot of it’s top-secret military stuff and we all needed special security clearance to be able to work on it.”

This is the first time the company has drydocked one of the naval ships in North Sydney. A lot of equipment was removed from the warship before it was towed into the shipyard.

Canadian Maritime Engineering Ltd. sign, North Sydney

Canadian Maritime Engineering Ltd., North Sydney

CME bought the Northside shipyard in 2013 and this is the first time any of this top-secret Kingston-class work has made its way to Cape Breton? Do they not trust us? (I’ve been thinking about this, and while I do not believe for a moment a Cape Bretoner would sell military secrets to a foreign power, I am not absolutely convinced I couldn’t walk into the North Sydney Tim Hortons and leave knowing how to disable the machine guns on a Kingston-class MCDV.)

Joking aside (I was joking…mostly), I think the only reason the HMCS Kingston is here is that CME’s other Nova Scotia yards are busier than usual, Mitchell told the Post companies were taking advantage of the pandemic-enforced downtime to get their vessels refurbished.

And as always, when it comes to the North Sydney shipyard, I am curious as to how many jobs have been created — and particularly, how many locals are employed there. Here’s what the Post (which loves that shipyard, as I’ve chronicled before) says in its latest article:

Meanwhile, Canadian Maritime Engineering Ltd. continues to grow. In 2015, the company purchased the Archibald Wharf property from the Cape Breton Regional Municipality to expand its existing shipyard next door.

In 2019, they announced a $3.16-million expansion to increase its capabilities in the manufacture of steel and aluminum structures and vessels such as fishing boats, tug boats and barges.

At that time it was hoped to get to 60 employed at the shipyard by 2020 but currently they are up to 80.

This cries out for some fact-checking.

First, in March 2016, the Nova Scotia Business Inc (NSBI) gave CME a payroll rebate based on some seriously impressive employment projections for the North Sydney shipyard:

CME…has the potential to create up to a maximum of 80 new jobs under the payroll rebate agreement. Based on the maximum growth forecast of the five-year payroll rebate agreement, NSBI estimates CME Ltd. would spend $17.5 million in salaries.

The new employees would pay provincial, personal income taxes of about $1.94 million. As a result, CME Ltd. would earn up to $1.4 million through the payroll rebate, over five years.

CME Ltd. would receive a smaller rebate if it creates fewer than 80 new jobs.

Of course, when NSBI says “80 new jobs” it means 80 full-time equivalent (FTE) positions, in other words, the shipyard doesn’t have to hire 80 people full-time with benefits, it has to create enough hours to equal 80 people working a 40-hour week but it can spread those hours over as many people as it likes.

I asked Shawn Hirtle, director of communications and public affairs with NSBI, how many FTE positions CME has created since March 2016 and how much it has claimed in payroll rebates. He replied:

To date, Canadian Maritime Engineering (CME) has submitted two performance claims to the payroll rebate:

1st – CME earned a rebate amount of $84,000 for 12.7 full-time equivalent (FTE) positions employed in the year.
2nd – CME earned a rebate amount of $195,073 for 31 FTE positions employed in its second year of the agreement.

Total amount earned to date = $279,073.

That phrase “employed in the year” gives me pause. The payroll rebate is supposed to be for “incremental rebate investments,” but this looks like the counter resets each year. I have asked Hirtle for clarification.

What these numbers don’t show is how many workers shared those FTE positions. Luckily, CME is required to report its progress in meeting its goals every six months and the reports it files include head counts. I’m attaching them below, and you can see that, for example during  April-September 2017, CME said it had created 7.72 FTE positions in North Sydney, but the head count was 15. Assuming a 40-hour-week, this means each worker averaged about 20 hours a week.

During the October 2017-March 2018 period, CME claimed 7.12 FTE positions and a head count of 20, meaning workers averaged about 14 hours per week.

I’m sure this work was welcome to those employed, my point is just that when CME claims to be employing 80 people, the nature of this employment is worth discussing.

As for the announced $3.16 million expansion, that plan qualified CME for incentives under NSBI’s Innovation Rebate Program, which works “as a rebate against a company’s direct costs” for “eligible projects” worth at least $2 million.

The rebate incentives for CME’s “innovative vessel manufacturing project” were announced in December 2018. As of 30 September 2019, the reports show progress on the project was at 5%, while eligible expenditures totaled $0, although the completion date for the project is listed as March 2020.

There should be more recent progress reports under both programs (the most recent six-month period ended 31 March 2020 and the reports were due as of May 1 but they have yet to be posted on the government website) so maybe CME has progressed by leaps and bounds in the past six months. I’m willing to wait and see. In the meantime, here are the relevant documents: