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Leading Edge: A bold and exceptional future?

Near the conclusion of the impressive Aerospace Industries Association of Canada’s (AIAC) Aerospace Summit Dec. 5-6 in Ottawa, two telling announcements underscored the importance of recommendations made by former cabinet minister David Emerson in his comprehensive new report on the state of the Canadian Aerospace industry. (for more, see “Solving the global challenge,” pg. 22).
On the final day of the summit, the federal government announced it was scrapping the controversial Lockheed Martin F-35 Joint Strike fighter program after a KPMG audit determined costs for the project were markedly higher than originally forecast: in excess of $30 billion for the total life cycle of the program.

The price of the aircraft – the government’s choice to replace its aging CF-18 fleet – was originally pegged at some $9 billion for 65 planes, $15 billion when maintenance and other costs were factored in to the buy.

Given the negative feedback from opposition members and Canadian taxpayers over excessive costs and mismanagement of the process, the Conservatives had little choice but to start over with this poorly managed debacle. They now head back to the drawing board to consider more aircraft options including Boeing’s Super Hornet, Dassault’s Rafale, Saab’s Gripen, the Eurofighter Typhoon and the F-35 itself, which could still end up being the ultimate choice.

Aspects of Emerson’s report likely influenced the government’s decision. In his Beyond the Horizon: Canada’s Interests and Future in Aerospace, Emerson emphasizes a need for the federal government to make sure there are industrial and regional benefits (IRBs) and in-service support (ISS) contracts when signing procurement agreements. Lockheed Martin has been reluctant to share its proprietary technology information with its closest clients.

Continuing to ensure aerospace remains a centrepiece of Canada’s international trade agenda and encouraging state-to-state partnerships with emerging aerospace powers is another key point in of Emerson’s report. Its importance and the current state of the Canadian aerospace industry were underscored when the Conference Board of Canada (CCB) released its Aerospace Industry Outlook days after the conference.

The CCB report shows industry profits have been on a turbulent ride since the 2008-09 recession. After reaching a high of $710 million in 2010, profits fell in 2011 and are projected to dip again in 2012 and 2013.

Fortunately, there’s good news on the horizon for the Canadian aerospace industry. While U.S. economic growth remains slow, many American companies have improved their financial position – a situation that is expected to lead to increased demand for business jets. The improved outlook in 2015 and beyond will also coincide with the anticipated arrival of Bombardier’s CSeries jets on the market.

Opportunities will also grow if the recommendations in Emerson’s report are embraced and implemented by industry, various levels of governments and key suppliers. It’s an effort that’s more than worth it. Canada’s aerospace industry generates more than $22 billion annually with exports making up 80 per cent of that output. Some 160,000 Canadians are employed in Canadian aerospace and the more than 700 aerospace companies are world leaders in technology, manufacturing and space development.

At Wings, we recognize the importance of this key Canadian sector and will be featuring Canada’s world-renowned leading aerospace companies in a special series throughout 2013. Beginning in the March/April issue, we will feature leading aerospace companies, individuals and decision makers from five distinct Canadian regions: the GTA, Montreal, Winnipeg, the Fraser Valley and Atlantic Canada. Please feel free to contact us with any intriguing story angles; it’s our goal to highlight the very best of the industry.

Will it be a positive future for Canada’s aerospace sector? Only time will tell. But judging by the enthusiasm, ideas and passion of industry leaders and government officials at the AIAC conference, the future looks bold, exceptional and bright.

Your feedback is always welcome. Please contact me at mnicholls@annexweb.com.