Transport Committee on Aug. 1st, 2025

[Dan Albas, Conservative, Okanagan Lake West—South Kelowna, BC]

I think it's laughable, sir, for you to think that the shipyard is going to honour a contract if its masters in the PRC decide otherwise.

I'll move on. The last thing is this: Do you want BC Ferries to be known as a good corporate citizen?

[Nicolas Jimenez]

Again, what BC Ferries needs to be is a reliable ferry operator, and this decision would allow us to do just that.

[Dan Albas, Conservative, Okanagan Lake West—South Kelowna, BC]

Okay. My question, though, was yes or no, as there's a federal law called Fighting Against Forced Labour and Child Labour in Supply Chains Act.

Every reporting entity—and BC Ferries is one of them—is supposed to have on its website, by May 31, a detailed breakdown of supply chains. BC Ferries was deficient until June 27, and even though you've come into contract with this particular shipyard in China, there was zero mention of it, sir, when it was posted on your website on June 27. What do you have to say about that?

[Nicolas Jimenez]

We are obviously subject to and bound by those federal laws around child labour and forced labour. There are very strict provisions within our contract for the yard and its supply chain. We intend to hold the yard to account, just as we do any yard.

[Dan Albas, Conservative, Okanagan Lake West—South Kelowna, BC]

It's a $250,000 fine. That's what it said in there.

The last point I would make is simply that I hope that your next year will actually address this, because if you look at your current report and the one you did last year, they're almost identical.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Albas, and thank you once again, Mr. Jimenez.

Next, we'll turn it over to Mr. Weiler.

Mr. Weiler, the floor is yours. You have five minutes, sir.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Chair.

Thank you, Mr. Jimenez, for joining our committee today. I appreciate being able to fill in to ask some questions today on behalf of the communities in my riding, especially Bowen Island and the Sunshine Coast, which depend on ferries on a daily basis for commuting to health care appointments and to see families. This is especially so in the summer, when tourism is so important.

These communities are constantly impacted by a fleet of ferries that are, in many cases, a decade or more beyond their useful lives, which leads to frustration when these ferries break down. Unfortunately, we're seeing that more and more, so while it's always important that we buy Canadian, especially right now when our industries are under threat, the need for the renewal of the ferries in this fleet is an urgent imperative for communities in my riding.

My first question is this: Why didn't the $1-billion contract from the Canada Infrastructure Bank go to a Canadian shipyard?

[Nicolas Jimenez]

As I described before, and I'll say it again, there were no Canadian yards that were able to participate in the program, because they didn't bid. They advised us specifically that that was because they were at capacity in their order books based on commitments they had made to the federal government's national shipbuilding strategy.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Was there any requirement for Canadian content or criteria for Canadian content within the bid?

[Nicolas Jimenez]

There were two things that we did specifically. First, we made sure that the standards set within the qualification criteria would encourage and enable Canadian shipyards to apply, to indicate an initial interest, and two did, which was great.

The second thing was that the evaluation criteria had specific marks given for Canadian content.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

You mentioned that Canadian shipyards are at capacity right now and would be for the next decade. What would it mean if this contract were to be cancelled and we were to seek to procure this through Canadian shipyards, perhaps a decade from now? What would that mean to the operation of BC Ferries over the next decade?

[Nicolas Jimenez]

I want to thank the member for the question. It would put the operations at critical risk. We'd be operating ships that would be 70 years old, which is almost twice the normal lifespan of a vessel of this size and this class.

For us, that risk is untenable, and this is not just for us. It's for the people we serve. Certainly, there are the people in the members' ridings. Up and down the 1,600 kilometres of coastline, 23 million people rely on us every year to move back and forth. As ships age, we get things like metal fatigue and other critical failures that just can't be avoided with simple maintenance. It's just that the ships age out.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Beyond procuring in Canada.... What would the additional cost be if this were procured from an allied shipyard?

[Nicolas Jimenez]

I mentioned this in my remarks and one or two other times: If we had gone to a different yard from the one we chose while evaluating the bids, we would have been spending up to $1.2 billion more. In our view, obviously, this didn't meet with the value expectations our customers have—making sure we bring ships into service on time in an affordable manner so we can continue to run the system we're charged to run.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

What if these ships were procured in Canada using Canadian steel? I know there wasn't an official bid from a Canadian shipyard, but do you have an estimate of what that cost would be?

[Nicolas Jimenez]

It's very difficult to estimate a cost against a bid that hasn't been received. I can say that it would be more, but I couldn't give you a quantum without being inaccurate.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Okay.

I think it would be helpful for this committee if you could speak to the governance system of BC Ferries, the ability and flexibility you have in terms of raising fares to deal with additional costs, and the amount of funding you receive from government.

If we are to go with an allied shipyard, how would you absorb that additional $1.2 billion in costs, given the constraints you're operating under?

[Nicolas Jimenez]

I'll answer that question fairly directly and honestly: We're going to have to pass those costs on to our customers. Our system is one in which about 75% of our revenues are generated by users. We have about 20% through the provincial government, a little less than 3% and change from the federal government, and a couple of points from other sources.

The majority of revenues we derive inside the system come from users. Those costs are ultimately borne by users when they have to go up.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Weiler and Mr. Jimenez.

Mr. Barsalou‑Duval, you have the floor for two and a half minutes.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

Mr. Jimenez, on July 16, the government announced that it would apply an additional 25% tariff on imports of all steel poured and melted in China. I believe that this tariff comes on top of the 25% already in force since October 2024, bringing the total to 50%.

Will these taxes be applied to the vessels that you plan to import, or will these vessels be exempt under the Ferry‑Boats Remission Order, 2016, which grants duty remission?

I would like to know whether tariffs will be levied, and if so, who will pay them.

[Nicolas Jimenez]

As I understand it, the tariffs constructed.... We mentioned two sets of tariffs, but the first don't apply to finished goods. Therefore, no, we do not expect those tariffs to apply to finished vessels that will be delivered later on in this decade.

As to the other tariffs the member mentioned in his question, I don't know what's going to happen in the future. Currently, we're exempt from import duties on ships, very specifically.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Do you have any advice for the government to ensure that, in the future, we can buy from local suppliers and avoid this situation? Do you think that all federally subsidized buildings and infrastructure should be produced locally?

[Nicolas Jimenez]

Chair, I'll go back to comments I made earlier about the Canadian shipbuilding industry.

I think it's one that has a lot of strengths. I know this because we work with it very closely, have done so for decades and will do so for decades more. One of the challenges it has is building ships at scale. There are a lot of things governments will need to consider in order to make sure they're cost-competitive in a procurement we run, or that anyone else runs, because most Canadian companies—whether it's Seaspan, Algoma, Marine Atlantic or another—are procuring ships built outside of Canada.

We have an opportunity for sure.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

I'm asking this question because—

[The Chair, Liberal, Peter Schiefke]

Unfortunately, your time is up, Mr. Barsalou‑Duval.

Thank you.

Next we have Mr. Gunn.

The floor is yours once again. You have five minutes, sir.