ICE Pact Update
I want to believe that it will succeed. But I have doubts.
The ICE (Icebreaker Collaboration Effort) Pact
On July 11th, President Biden, President Stubb, and Prime Minister Trudeau announced the ICE (Icebreaker Collaboration Effort) Pact. The next day I wrote a piece expressing my hope, tempered by experience, of what it might mean:
The joint memorandum of understanding that will guide the ICE Pact’s implementation is under development, due out by the end of this year. Although there are few public details of how this ‘Arctic AUKUS’ might work, there are some official statements from Biden administration officials that strongly hint at how it will work.
New News: Davie to invest in a U.S. shipyard
On July 29, 2024, the White House announced a series of new private sector investments in the U.S. maritime industry. This announcement directly referenced the ICE Pact and contained some new information concerning Davie of Canda (emphasis mine):
Davie, Canada’s largest shipbuilder, intends to make a new long-term commitment to American shipbuilding. Pending final site and partner selection, this would include a major investment in a U.S. shipyard. Davie, operating continuously since 1825 from Quebec, Canada, has delivered over 720 specialized ships. It is currently building the world’s largest orderbook of heavy icebreakers for ICE Pact partner, Canada. Davie also owns Helsinki Shipyard in Finland, which has built over 50% of the world’s icebreaker fleet. Throughout its history, Davie has also supported American shipbuilders on strategic projects such as the U.S. Navy Nimitz Class Aircraft Carriers and Arleigh Burke-class destroyers. Davie seeks to collaborate with U.S. partners to support the growth of American shipbuilding capacity.
Davie echoed this in its own media release:
Davie, the Canada-based multinational shipbuilder, today announced its intention to make a significant, long-term commitment to the American shipbuilding industry.
Pending final site and partner selection, Davie’s decision coincides with a series of actions announced today by the U.S. government to boost the efficiency, resilience, and competitiveness of U.S. shipbuilding. The production of superior U.S. ships for both domestic and international markets is also anticipated to revitalize American sea power, spur economic growth, and create many skilled jobs for American workers.
Davie’s plans are also aligned with the ICE Pact, a trilateral collaboration between the U.S., Canada, and Finland announced on July 11. The ICE Pact will enhance the production of in-demand polar icebreakers in participating countries boosting economic, climate and national security, while supporting vital shared interests in the contested polar regions. Significantly, the U.S. Department of Defense launched its 2024 Arctic Strategy on July 22, outlining steps DOD will take, in collaboration with allies and partners, to preserve the Arctic as a secure and stable region.
This could be good news for U.S. shipbuilders interested in building polar class vessels (including icebreakers) in the long term but is unlikely to have a direct short-term effect. Indirectly, Davie’s investment may help to make a political argument for the U.S. Coast Guard to purchase an icebreaker built in Davie’s Helsinki Shipyard, but this is far from certain.
The White House statement also included other maritime programs not directly related to the ICE Pact. These proposals including the broad outline of educational exchanges between the University of Michigan, HD-Hyundai, and Seoul University and a partnership with Finland’s Konecranes to build ship-to-shore cranes in the United States.
Old News: Bollinger is a Key Player
It is probably for political reasons that every mention of the ICE Pact or a foreign icebreaker must include a mention of Bollinger, and this White House announcement follows the trend:
Bollinger Shipyards: The first and only shipbuilder in the United States to design and build a heavy polar icebreaker in over 50 years, Bollinger will play a critical role in the Icebreaker Collaboration Effort, also known as “ICE Pact”, and its efforts to strengthen the polar capabilities of the United States and its allies through the creation of a fleet of polar icebreakers.
Indeed, much of what I’ve heard from the U.S. side says that any ships that will be eventually used by the USA must be built in the USA. More on this later. For now, let’s look at what Biden Administration Officials are saying about the ICE Pact.
What’s in it for the USA, Finland, and Canada?
A view from the White House:
In a recent episode of its Odd Lots Podcast, Bloomberg interviewed Daleep Singh, Deputy National Security Advisor for International Economics and Deputy Director of the National Economic Council in the Biden Administration. Mr. Singh had some rather interesting things to say about the ICE Pact:
And the deal we announced at NATO is for Finland and Canada to share their expertise with us and make investments in US shipyards to grow our collective production capacity to build icebreakers. And what do they get? Well in exchange, we agree to integrate our icebreaking supply chains so that they are interoperable at every stage of production….
In terms of the numbers, we're actually working on an MOU. I can't give you the exact numbers, but I mean, I would go back to the global order book that I mentioned. There are 70 to 90 icebreakers that the likes of India and Brazil and Argentina and Chile and Sweden, many countries want icebreakers. We want to be their supplier of choice. All three of our countries do. And so instead of building two icebreakers in the past 50 years, we want to capture, let's say 10, 20, 30 icebreakers of demand over the next decade. And you can only have the kind of investments and workforce development that I'm describing if you have that sort of demand signal.
So according to a White House Official, the ICE Pact is designed to leverage the expertise of U.S. allies Canada and Finland in order to improve U.S. shipbuilding capability resulting in 10-30 new icebreaker orders- to be built in the USA- over the next decade.
How will this work? According to senior administration officials:
The first part of this is we’re going to have an increase in information exchange on our polar icebreaking construction…the idea is to increase interoperability for all three countries….it should lower the cost of vessel repair. It should also reduce the cost of design and construction.
The second piece is workforce development. And the idea here is to train workers that can operate in each of the three countries. So American workers might take advantage of opportunities to learn from Finnish or Canadian shipbuilders, and then Finnish and Canadian designers could be sent to the U.S. to learn from American shipbuilders. That’s what helps to create the interoperability I was just referencing.
And then, the last bit is we’re going to encourage Allies outside of the pact to build — really to help us build economies of scale in American, Finnish, or Canadian shipyards to create polar icebreakers. As I mentioned, the global order book from Allied countries is quite large, and it’s very difficult for each country to develop their own industry of this kind. We’re offering that opportunity to our partners now, as we think they’ll be quite interested in taking advantage of it.
With that in mind, the concept of the ICE Pact expressed by the Deputy National Security Advisor and “Senior Administration Officials” doesn’t make sense. The Biden Administration’s plan, as described above, is for the USA to leverage the expertise of its allies (Finland and Canada) in order to make U.S. shipyards more competitive in icebreaker design and construction in order to attract additional private investment. The U.S. shipyards will then compete head-to-head with Finland and Canada in this niche market. This can only make sense if the global orderbook for icebreakers and ice capable ships reaches the numbers cited by Mr. Singh in similar enough types to take advantage of economies of scale. If you take a closer look at the numbers, it simply doesn’t add up. We’ll return to those numbers in a bit.
Some Views from Finland:
A few days after the ICE Pact was announced, Stig Gustavson, Chairman of the Board of the Finnish shipbuilder Rauma Marine Constructions, expressed his concerns about the ICE Pact in the Finnish publication Kauppalehti:
"Cooperation in itself is a good thing, but it should be on our terms. Otherwise, the specialist knowledge [in icebreaker design and construction] that we now have will slowly start to leave. That expertise is quite valuable," he says.
Gustavson believes that the state must ensure that decision-making power and core manufacturing competence remain here [in Finland].
"You can't think of just designing here and someone else manufacturing," he says.
…
“We wouldn't have companies like Konecranes, Kone and Wärtsilä in Finland if we hadn't protected our headquarters and know-how in Finland."
Gustavson sees little role for the Rauma shipyard if American vessels could not be built in Finland.
(Original article in Finnish. Translations by me and google.)
I’ve since spoken to many Finns involved in icebreaking, and they all tend to agree- there is little new that Finland will get out of a deal that does not involve building icebreakers for the USA in Finland.
But they all have a pretty good idea of what the USA can get from Finland:
Training for icebreaker crews aboard modern icebreakers in tough ice conditions.
Assistance with icebreaker design throughout the process- from initial hull design all the way through human factors in the set-up of ship’s equipment
Possible lease of a polar capable icebreaker
Proven equipment for icebreakers, including ABB’s Azipods, Steerpop propulsors or thrustors, and Wärtsilä Diesel Engines
Assistance in design from Finland’s Aker Arctic would definitely help the U.S. icebreaker program, as covered in a recent Foreign Policy article by Keith Johnson:
“Icebreakers have been a key Finnish know-how for a long time. Now that we are part of NATO, this is one thing that Finland can provide—we are tops in the world in designing and building icebreakers,” said Mika Hovilainen, the CEO of Aker Arctic, the world’s leading designer of icebreakers….
Why does the country that invented the nuclear aircraft carrier find it so difficult to build a ship that can drive straight into a six-foot chunk of ice and keep going? It turns out that icebreakers, like nuclear carriers and subs, are very complicated to design and build, and practice does indeed make perfect. Icebreakers need not only specially strengthened hulls, with different attributes depending on whether they will crush the ice or shear it, but also massive engines and absolute all-weather systems.
Aker Arctic, for instance, spent a decade working on hull-strength analysis to figure out just where an icebreaker needs to be strong and where designers can save steel. That matters enormously when building a ship that is explicitly designed to steer straight for what everything else afloat avoids.
“We are gaining that kind of experience with icebreakers, because we design icebreakers all the time,” Hovilainen said. “We have a lot of standard solutions, we know what works, and we can apply that to new projects. If you have to reinvent the wheel in all areas of the ship, it is going to be super complex.”
But Aker Arctic has always been available to assist. The company provided assistance during design and construction of the U.S. Coast Guard’s medium icebreaker Healy, provided concept development and model testing for the Great Lakes Icebreaker Mackinaw, and partnered with Fincantieri and Philly Shipyard in an unsuccessful bid for the much delayed and over budget Polar Security Cutter.
All of Finland’s services have been available for the U.S. market. Canada, through Davie, is certainly taking advantage of Finland’s know how- Canada’s new Heavy Polar Icebreakers were designed in part by the Finnish company Aker Arctic and will use Azipods, Steerprop thrustors, and Wärtsilä diesels.
As one of my Finnish colleagues involved in icebreaker production put it, “we don’t use the Finnish components by default just because they’re built here. We use them because they are the best available.”
What I’ve gathered is that when it comes to the ICE Pact, my Finnish colleagues see a large potential downside if they share their core competencies, not just their services and equipment, with U.S. Shipyards. And if the U.S. is not going to build icebreakers in Finland, then there is no real upside to this trade.
Especially because the main assumption from the White House seems to be that if you build it (the capacity to build more icebreakers in the USA, Canada, and Finland) they will come (there will be a large growth in orders up to 70-90 icebreakers).
About those numbers-
I’ve been trying to figure out where those numbers that Mr. Singh used- the global order book of ‘70-90 icebreakers- actually come from. And I can’t quite figure it out. Here is an estimate, compiled with some assistance, of the current planned icebreakers:
USA: 10 polar icebreakers. 8-9 for the U.S. Coast Guard (including the 3 Polar Security Cutters), and the Arctic Research Vessel (ARV) to replace the Nathanial B. Palmer. Also an additional Great Lakes icebreaker and renewal/replacement of the Great Lakes icebreaking tugboats. (All likely built in USA)
Canada: 24 new icebreakers. But the Canadian Coast Guard’s icebreaker fleet renewal (2+6+16=24) is already assigned to Canadian shipyards (Seaspan and Davie).
Estonia: 1-2 icebreakers or multi-purpose vessels long term. Not polar capable.
Finland: 7-8 new icebreakers in the coming decades as part of its fleet renewal. They will be built in Finland, and most will not be polar capable.
Germany: 1, the Polarstern 2 research vessel. Probably will be built in Germany.
Japan: 1, the Mirai II (already under construction).
Latvia: 1 multi-purpose vessel (not polar capable) to replace icebreaker Varma.
Norway : 1 eventually to replace KV Svalbard. Not currently planned.
South Korea: 1 new icebreaking research vessel, planned to be built in Korea.
Sweden: 4-5 new icebreakers long term, and possibly one polar icebreaking research vessel. One out for construction bid now.
That’s a total of 54 vessels. Adding in a handful of polar research and supply vessels for Antarctic and Arctic exploration, and maybe you can reach 60.
But we already know where most of them will be built. As icebreakers are normally custom-built vessels (with the exception of the icebreaker classes for the U.S. and Canadian Coast Guards such as the Canada’s six planned program icebreakers), this leaves little room for U.S. shipyards to acquire new business and take advantage of economies of scale. There are also EU procurement rules. Although I’m not an expert, I believe they favor the use of EU shipyards especially when competing against nations which have protectionist shipbuilding laws.
And there is worldwide capacity to build more icebreakers. For example, Helsinki Shipyard has openings in its order book1. This shipyard, and others in Finland, can build icebreakers faster and cheaper than those in North America.
The list of 54 vessels above may also be more of a ceiling than a floor. Facing inflation, domestic concerns, and a rising Russia, European nations must choose between priorities. This may result, as in Sweden, in procuring vessels over a longer period of time. In other nations, increased military spending may squeeze out government plans to fund new research icebreakers. When it comes to tight budgets, tanks, aircraft, and missiles may earn a higher priority than government-funded research icebreakers.
There is one possibility- a major policy shift planned to encourage oil/gas/mineral exploration in the North American Arctic that will drive substantial commercial investment in icebreakers. But I see that as unlikely regardless of who wins this November’s presidential election.
My Assessment:
I want to believe in the ICE Pact. I hope that it will succeed- in my earlier article I went further, saying that it must succeed. If the USA, along with its allies, can make progress in icebreaker construction, the effort can serve as a model for improvement in other maritime sectors.
But I’m concerned. Statements by the Deputy National Security Advisor and Senior Administration Officials seem to show a lack of understanding of the icebreaker market. Icebreakers are custom vessels, built for specific purposes- they are not large classes of ships that can take advantage of economies of scale. There is slack in the market. Nations that must upgrade for practical reasons- like Sweden and Finland, who use icebreakers to keep their ports open in the winter- are delaying and scaling back purchases because of inflation and competing priorities2.
Many others also seem to misunderstand the differing requirements of icebreakers. In an article for Forbes, Craig Hooper calls the ICE Pact to commit to achieving an ambitious goal-
a goal of fielding a multinational fleet of between 21 to 41 ice-ready ships within the next two decades. Instead of just icebreakers, this prospective new “Fleet for Polar Freedom” can be a diverse, international mix, consisting of icebreakers, ice-ready patrol craft, as well as ice-hardened cargo vessels, drone carriers and research platforms. With American, Canadian and Finnish ships at their core, this big and ice-ready fleet can push back ongoing efforts by Russia and China to appropriate territory and resources at both corners of the globe.
Many others look at ‘icebreaker charts’ and see the same thing. But icebreakers are not destroyers; almost every single one is different. Saying icebreaker is more akin to saying ‘warship’, a category that includes both coastal patrol boats and aircraft carriers. Finland, Sweden, and Canada use most of their icebreaking fleet to keep ports open. These ships are capable in ice but are not made for polar work. Adding polar capability to these vessels (which are not planned to have it) will serve to make the next generation of icebreakers more expensive- at a time when Finland and Sweden are struggling to replace their aging fleets with tightening budgets and ever-increasing tensions with Russia.
If Finland is not going to build icebreakers for the USA, and if the USA intends only to leverage Canadian and Finnish expertise to add icebreaker capable shipyards to a slack market, the proposal will not provide the advertised benefit. And yet, that seems where we are headed.
Someone, anyone, please explain to me how I’m wrong.
Thanks for reading. If you like what you’ve seen, press the heart and subscribe to make sure that you never miss an update. Consider sharing with a friend or fifteen; it takes me some time to research and write these articles, so I’m happy to see them spread far and wide. It’s important to keep this conversation going. Next up: U.S. Coast Guard/Polar Security Cutter program update. And maybe a non-icebreaker related article.
Until next time.
All the Best,
PGR
On September 30, 2022, Finland’s Ministry of Foreign Affairs denied Helsinki Shipyard an export license to build an icebreaker for the Russian mining company Norilsk Nickel. Since then, there has been no news concerning newbuild icebreakers under contract at Helsinki Shipyard. Note that Davie finalized the deal to buy Helsinki Shipyard on November 3, 2023. According to a press release, Davie has the largest order backlog for icebreakers in the Western World. But there have been no specific announcements concerning plans to build them in Helsinki. As many are for the Canadian Coast Guard, they will likely be built in Canada.
Sweden recently modified its plan and will build only one icebreaker instead of two. This is not due to a change in need, but to the cost of the vessels. Sweden still plans to replace all five of its icebreakers that were built in the 1970s but must do so at a slower rate. See here for more information.
What in the world do India and Brazil need icebreakers for? Do the Ganges and Amazon have ice buildup?
Yet again our beloved government (gag) fails to see where the problem lies. The problem isn't "investment" or "technology transfer", the problem is government BS! Throwing someone else's money and intellectual property at the problem will NOT make it better! Geez...am I the only one that sees this?!