A Great Industry in Peril

May 15 1920

A Great Industry in Peril

May 15 1920

A Great Industry in Peril

Confined from Page 7

at present about ends the program. And the reason again is not a question of orders but of money.

The yards have had an opportunity to bid on large contracts of late from foreign governments, notably for the French Government, and these orders could be arranged if they could be financed. But ships run into money fast, and while these construction companies are strong and capable of meeting any reasonable demand for credit, they cannot possibly be strong enough to carry this business indefinitely on credit.

The best offers of business being received at the present time provide for 10 to 15 per cent, of the purchase price during course of construction, and the balance over a period of ten years at an interest rate to be mutually arranged. When it is remembered that even a comparatively small ship will run into the hundreds of thousands of dollars, it will be seen that such a method of financing would be ruinous for any private company, no matter how strong.

. Yet foreign countries cannot face the situation of buying on Canada’s present exchange rate. Enquiries there are in numbers sufficient to indicate a keen desire to buy, but unfortunately all negotiations on these enquiries end the same way; in proposals of payment aimed to free the purchaser from the increased financial burden imposed by the serious exchange situation.

There could be only one result if these conditions were permitted to prevail. Other markets would be developed, either in the country originating the demand, or in some other country where the exchange is not so adverse, or where the Government is willing to co-operate with the ship-builder to make business possible. Such a turn of events of course would practically mean the death of this great industry. These are the days of promise, the days in which a sure and sound foundation can be laid for future business. The great yards of the world that have heretofore provided the world’s ships are crowded to their capacity. There is a chance to get the business, and to establish a reputation, that would carry the industry over leaner years.

Two Possible Remedies

IT IS idle to suggest a danger unless a x remedy is possible. There are then two possible remedies that have been proposed for existing ills. The first is that the Government should in a measure subsidize the shipbuilding plants, so that they would be in a position to split the exchange with possible customers. It is urged by those interested, that this would not be anything in the nature of “pap feeding.” They would still be faced with an adverse exchange and would have to fight keenly to get the business; but at least they would have a fighting chance. The other proposed solution that has been advanced is that the Government be asked to finance the deal, in such a way that fifty per cent, of the purchase price could be paid m Canadian funds on the completion of {he work, and the balance held over for say five years in which time there is a reasonable ground for belief that exchange Would have returned to normal. The Government has done as much, it is urged, for various other industries in Canada during the war years; industries indeed

where the burden of financing has borne much more heavily upon the country than it would in the case of this particular industry.

It is fortunate indeed that at last the Government has been prevailed upon to take action. They have been slow to move, because governments are always more or less at the bidding of the people, and the people of Canada as a whole, knowing little of this growing industry, were not, interested. There was and is perhaps reason for the Government to fear that some sections of the people would be inclined to charge them with something akin to paternalism if any move were made. That there is nothing of truth in such an idea is surely evidenced by the facts given above.

The Government Plan

TN THE concluding days of the session there will come before parliament a resolution that will have to do with the safeguarding of this industry. The bonusing proposal noted above has been considered and rejected, and in place of it the Government proposes to adopt in some measure at least the second suggestion.

Under this resolution the Government proposes to back the notes of the purchaser to the extent of 50 per cent, of the purchase price. As security for this endorsation the Minister of Finance and the Minister of Marine are required to assure themselves that the contracts are bona fide. Ten per cent, of the purchase price must be paid to the builder on the placing of order and the remaining forty per cent, during the course of construction. The first notes have Government backing for a period of 21 months, and the remaining notes for a period of five years. It will be seen therefore that the constructing companies are still left to bear a very considerable measure of the financing burden.

The Government requires as security that the ships shall be mortgaged and insured in the name of the Government until the transaction is completed. In instances where such mortgage arrangements cannot be made, as in the case of vessels building for foreign owners, such securities for the payment of these promissory notes shall be provided as are deemed necessary by the Governor-in-Council.

Providing that this proposal becomes effective in something approaching its

ͻresent form there is good ground for beieving that the shipbuilding industry of Canada will be able to weather the storm. It may be built up until in the years to come, it will hold a premier position among Canadian business activities.

Certainly if the Maritimes’ shipbuilding plants can weather the present storm there is little question but that they will prosper.

The great steel merger involving as it does so much money and so many activities must develop its own shipping facilities, to a considerable extent at ¡east. In this fact, there is a bright promise for the Maritime shipbuilding plants which by reason of their affiliation with this merger will naturally benefit by this building program.

Whatever be the future, and whatever be the remedies needed to meet an unfriendly present, it would seem unquestionable that this great industry should not be permitted to again fall into decline. The Maritimes were born to a seafaring destiny, and it would be a disaster if they were robbed of their heritage.