08/21/2013 08:59 EDT | Updated 10/21/2013 05:12 EDT

Irving Shipyard says first navy ship to be done by 2018, but questions remain

HALIFAX - The company awarded the biggest slice of the federal shipbuilding project is on track to deliver the first Arctic patrol vessel in 2018, the CEO of the Irving Shipyard said Wednesday, but questions remain over the number of ships that will be built.

Though a contract for construction of the ships hasn't been signed with Ottawa, Jim Irving expressed confidence that his shipyard in Halifax will be ready to build the vessels allotted for the navy.

"The tentative schedule today — start cutting steel in late 2015 and 2018 is the expected delivery time of the first vessel," Irving told a news conference.

The Halifax shipyard is now undergoing renovations and upgrades to ramp up for ship construction after it won a $25-billion contract in October 2011 to build 21 combat vessels.

The federal government has said the shipyard would build between six and eight Arctic offshore patrol ships, the first vessels to be built for the navy. But it has yet to settle on a precise number and Irving officials weren't able to say Wednesday how many would be built.

"We haven't come to an agreement with Canada yet on that part of the contract," said Scott Jamieson, the shipyard's vice-president of programs.

Federal Public Works Minister Diane Finley, who also attended the news conference, would only say the government would adopt a flexible approach within a fixed budget procurement.

"We want to make sure that we design first," Finley said. "Details are yet to be determined based on the design, which hasn't yet been finalized."

In March, Ottawa signed a $288 million contract for the design of the Arctic offshore patrol ships.

The uncertainty comes as company officials said they would begin laying off part of the shipyard's workforce by the end of September as the site prepares for $300 million in renovations.

Irving said the short-term move was necessary in order to tear down some buildings and build new ones to a tight schedule.

"We are working with our workforce to mitigate those job losses as much as possible," he said.

The company didn't reveal the number of employees to be laid off, but officials said a number of trades will be affected at the site, which employs about 900 shipyard workers. Jamieson said the company hopes many will be recalled when work on the Arctic offshore patrol vessels begins in two years.

Cliff Pickrem, president of unionized workers at the shipyard, also couldn't say how many layoffs are expected but added that the union would fight to retain as many jobs as possible.

"It's going to be a little hit but hopefully we can gradually reduce it from the big numbers," said Pickrem. "It should be the last cut for us when we get built back up."

The company received a $260 million loan from the provincial government in March 2012 to help with the shipyard's upgrades, which will include the construction of an assembly hall, painting facilities and a 47-metre high ultra hall used for larger block assembly.

Irving also plans to build a parking garage for employees that will hold 520 cars as well as a $30-million steel fabrication facility at a site in Dartmouth across the harbour from the shipyard.

The company has awarded $127.7 million in contracts since it won the overall contract for the ships.

Under the $35-billion federal shipbuilding procurement project, Seaspan Marine in Vancouver has also been awarded an $8-billion deal to build non-combat ships. Construction of those vessels is expected to begin as early as 2014.

A contract for another $2 billion for smaller vessels is yet to be awarded.

Note to readers: This is a corrected story. A previous version said the shipyard's upgrades include the building of an assault hall.