What Canada’s shipbuilding strategy is getting right, and where it is still failing

Canada’s National Shipbuilding Strategy, announced in 2010 and renamed in 2015, has been criticized at length, for well grounded reasons. The River class destroyer, formerly known as the Canadian Surface Combatant, was once promised for the 2020s and is now expected to arrive in the 2030s. The two Protecteur class Joint Support Ships, originally targeted for the early 2020s, are now expected in 2027 and 2028. Work on a polar-class icebreaker will not start before the end of the decade. The Parliamentary Budget Officer has tracked the cost growth, and journalists have covered the delays.

What is missing from this commentary is the comparative perspective. Australia announced its Naval Shipbuilding Plan in 2017. Britain announced its National Shipbuilding Strategy the same year. All three countries faced a similar problem with their large naval ships, defined as 1,000 tons or heavier: rising costs, slipping schedules, and a backlog of multiple fleets needing replacement over the subsequent decades. Comparing their responses reveals that much of what Canada is doing makes sense. It also reveals where critical problems remain, threatening to leave the Royal Canadian Navy without the warships it needs.

Why Do All Three Countries Build at Home

The starting point is sovereignty, or at minimum self-sufficiency. Canada has built its warships at home since the Second World War, codified in a 2001 build-in-Canada policy decision and reaffirmed by the Harper government in 2007. Australia’s 1976 Defence White Paper articulated a doctrine of self-reliance, and the 2017 shipbuilding plan was explicit about generating a sovereign Australian shipbuilding capability. Britain’s 2005 defence industrial strategy committed the country to retaining a sovereign warship-building industry, and the 2015 independent shipbuilding report argued that all Royal Navy warships should be built in the UK for national security reasons.

The three countries diverge on auxiliary vessels. Britain had its Tide-class tankers built in South Korea, and Australia procured its amphibious assault ships and Auxiliary Oiler Replenishment vessels from Spain. Canada builds everything at home, supply ships included. The Conference Board estimates that work at the Irving yard in Halifax under the NSS added nearly $12 billion to Canadian GDP between 2013 and 2025 and sustained over 9,000 jobs.

The build-at-home premium is real but smaller than commonly assumed. A 2008 internal audit at the Department of National Defence found that the premium for the Halifax-class frigates was only 7 percent. A 2009 Industry Canada report found that foreign builds came with a 25 percent increase once in-service support costs were included. Australia’s 2015 RAND study put the domestic premium at 30 to 40 percent. The savings from building abroad rarely include the full lifecycle costs of an externalized supply chain. The premium exists, but it is not quite the disaster the headlines suggest.

Continuous Build with Shipyard Rationalization

The shared logic across all three countries is to avoid the wasteful boom-and-bust cycle in which a shipyard staffs up for a major contract, then dismantles its capacity once the contract ends. A continuous build approach, paced at what Britain and Australia both call a “drumbeat” (Australia targets 24 months between Hunter class frigate starts), holds the workforce together, lowers labour costs through cumulative learning, and avoids paying to recreate infrastructure for each new fleet. Canada launched its NSS more than a decade after the previous major naval build ended, and ended up spending around $300 million on infrastructure at Irving and $200 million at Seaspan before construction could begin. The historian Mark Milner’s line about Wilfrid Laurier still applies: to build a fleet at home, you first have to build a shipyard.

Continuous build implies shipyard rationalization. Canada selected Irving for combat ships and Seaspan for non-combat vessels through a 2011 competition, then added Chantier Davie as a third strategic partner in 2023. Australia consolidated around two yards, Osborne in South Australia for major surface combatants and submarines, and Henderson in Western Australia for smaller vessels. Britain went the other direction. After driving warship building down to a single yard, BAE on the Clyde, Britain’s 2017 strategy concluded the resulting closed-loop monopoly had stifled innovation and produced an unsustainable downward spiral. The strategy reintroduced distributed shipbuilding, with the Type 31 frigate contract awarded to Babcock and the blocks built across multiple UK yards before assembly at Rosyth.

Distributed builds come with their own risks. Australia learned this with the Hobart-class Air Warfare Destroyer, where the central keel block of the lead ship arrived warped and would not fit the other sections. The misalignment contributed to a delay of nearly three years. Australia has since rejected distributed block building in favour of vertical integration at a single yard. Canada has never done block builds in separate yards for integration in a main yard, and current strategy gives no indication of changing that.

The Harder Questions

A continuous build approach concentrates work in one supplier, which makes accountability for cost and schedule difficult. Britain has stated openly that its continuous shipbuilding pipeline cannot endure if industry fails to demonstrate efficiency and productivity. The Ministry of Defence’s leverage in practice is limited. Canada has tried to inject competition through 30-year umbrella agreements that explicitly state that being a strategic partner does not guarantee a build contract. Yet the alternative of returning to one-off competitive bids is not appealing either. These tend to be unaffordable since facility upgrade costs must be incorporated each time.

Regional politics also come into play. Canada’s 2011 competition included yards in Nova Scotia, British Columbia, and Quebec. Britain deliberately spreads work across the country, and Australia retained the Perth yard rather than fully consolidating in Adelaide. Naval historian Marc Milner observed that after 1977, Canadian naval fleets were no longer pitched on their military merits but on their political and economic value. The same point holds for all three governments today.

Modularity is Necessary, Bespoke Requirements are the Problem

At the tactical level, modularity, the ability to swap mission packages in and out of a standardized hull, is becoming mainstream. Britain’s Type 26 and Type 31 are designed for it. The Hunter class and the River class, both based on the Type 26 reference design, have followed. Modular design accommodates the rapid pace of technological advance, particularly in autonomous systems and sensor packages, that cannot be fully integrated during initial construction. At least one analyst has questioned whether mission modules ever actually get switched out in practice, citing the Littoral Combat Ship. Even so, modularity provides upgrade flexibility that fixed configurations do not.

The real Canadian and Australian problem lies in bespoke requirements layered on top of an immature reference design. Both countries selected the BAE Type 26 frigate in 2018 when the design existed only on paper, with one ship in early construction and none in the water. Unsurprisingly, both governments now require extensive country-specific modifications. The River class is being adapted to accommodate Lockheed Martin Canada’s CMS 330 command management system, the US Navy’s Aegis combat weapons system, and the AN/SPY-7 radar. Of 26 major systems on the River class, 19 have required platform changes. Australia is integrating Aegis, an indigenous CEA phased-array radar, and a Saab-Australia combat system to interface with Aegis. The Australian design changes run to six broad categories.

The Hunter and River classes are also being asked to do considerably more than the Type 26 reference design. The Type 26 will sail with Britain’s existing Type 45 destroyers and future Type 83 destroyers. The Hunter and River are designed as combined frigate-destroyers, taking on area air defence, anti-surface, and anti-submarine warfare in a single hull. The River class will also handle command and control of other ships. A 2023 British parliamentary report on UK defence procurement warned against “exquisite procurement,” meaning unnecessarily complex requirements that produce delays, budget pressure, and ultimately fewer platforms. The Hunter and River classes fit that warning. The Hunter is already on track to exceed 10,000 tons, well above its planned 8,800. Australia has cut its Hunter-class order from nine ships to six. Canada is still holding at 15 destroyers.

The Australian and Canadian decisions to integrate Aegis also carry strategic implications. Retired Vice Admiral Mark Norman has warned of the risks of having a US-controlled system running Canada’s new warships at a time when the US is openly hostile to this country.

What the Lesson Actually Is

Norman Augustine observed in 1983 that the unit cost of military equipment was growing at an exponential rate, roughly quadrupling every decade, and predicted that militaries would respond by buying fewer platforms. Canada has resisted that pressure on the River class even as Australia has not. The shipbuilding lesson three quarters of a century after the St. Laurent class is the same one: the most capable warship in the world means little if the country waits a generation to receive it. The strategic frame around build-at-home, continuous build, shipyard rationalization, and modularity is mostly correct. The cultural problem is the impulse to ask one ship to do everything and to ask new ships to be paper designs first and water designs second. Until addressed, the impulse will leave the Royal Canadian Navy without the warships it needs.

Her recent article, “National shipbuilding strategies in Australia, Britain, and Canada,” is published in International Journal and available here.