06/12/2012 10:57 EDT | Updated 08/12/2012 05:12 EDT

Time to 'cut steel' on shipbuilding contract, Canada's top soldier says

HALIFAX - Canada's top soldier says it is time to get the lead out on the $35-billion federal shipbuilding contract, just as defence analysts warn that belt-tightening in Ottawa could further delay delivery of the country's next fleet of combat ships.

Gen. Walter Natynczyk said the navy is his greatest concern when it comes to modernizing the military, and finalizing the shipbuilding deal would be vital in ensuring that Canada's aging vessels are replaced.

"The National Shipbuilding Strategy is a huge leap in progress," Natynczyk told about the Royal Canadian Legion convention in Halifax on Tuesday.

"But we need to start cutting steel."

Natynczyk said the Arctic offshore patrol ships, the first vessels to be constructed under the deal, are key to the future of Canada's maritime security. But federal budget documents tabled this spring show that they are being delayed, with the first vessel not expected to arrive until 2018 — three years after initially promised — and it won't be fully operational until 2023.

"I've learned that over time it's actually easier buying aircraft and easier buying combat vehicles than it is to get ships moving because you have to build ships," the chief of defence staff said after his speech.

"As I spoke to a number of admirals who have retired now but have a great deal of experience, getting the machinery, getting the industrial complex focused on ships is one of the most complex things we can do as a nation. Therefore it takes years and years of support and energy to get it done."

His comments come as some defence analysts say the shipbuilding contracts in Halifax and Vancouver could be further delayed because of federal budget restraint.

Steven Staples, a defence analyst and president of the Rideau Institute, said it's very early in the procurement process and since no money has actually been spent yet, the multibillion-dollar figure will likely change.

"The $30-, $35-billion figures are estimates — they're ballparks," said Staples from Ottawa.

"We still don't know how many ships will be built, what they'll actually look like or how much they're going to cost."

Staples said as the Defence Department braces for $1.5 billion in cuts over the next three years, the National Shipbuilding Strategy could be looked at as a possible source of savings, given its magnitude.

"So the question is, 'Do we need 12 new patrol frigates or do we need eight? Do we need six Arctic vessels?'" said Staples.

Staples cited Canada's procurement of the Halifax-class frigates in the 1980s as an example where shipbuilding deals can evolve. In that case, the original plan was to build 18 vessels, but only 12 were made.

"I expect that you might see a similar situation arise here," said Staples.

"Reality is going to set it. It was a big party for the announcement a few months ago, but now it's Monday morning and people are saying, 'Well, is that really going to happen?'"

Natynczyk would not say if he believes cuts to the Defence Department budget would affect the shipbuilding contract.

In October, Ottawa announced that the Irving shipyard in Halifax would receive the lion's share of the $35-billion national shipbuilding procurement project.

Under its $25-billion deal, that shipyard will build 21 combat vessels.

The Seaspan Marine Corp. shipyard in Vancouver will construct seven vessels under an $8-billion contract for non-combat ships.

Another $2 billion for smaller vessels is yet to be allocated to another shipyard.

Ottawa's goal in rolling out the national shipbuilding procurement program is to end the boom and bust cycle that has hampered shipbuilding in Canada in the past. The industry has struggled since the last major warship project ended in the 1990s.

The plan aims to see a steady flow of work over the next 20 to 30 years in order to sustain highly skilled jobs.