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Ottawa makes $250-million investment in CAE

March 5, 2014, Montreal - Flight simulator company CAE is moving ahead with a $700-million project to develop its next generation of simulation platforms over the next five years — with help from the federal government.


March 5, 2014
By The Canadian Press

Denis Lebel, the minister responsible for economic development for Quebec, announced a $250-million loan on Thursday.

 

In making the announcement during a visit
to CAE's Montreal headquarters, Lebel said the money will help the
world's largest maker of aircraft simulators keep its competitive edge.

 

"The market is changing quickly and, with
this support, they will be able to play the game against any
competitors," he told reporters.

 

Stephane Lefebvre, CAE's chief financial
officer, said there's a 15-year repayment period for the loan starting
in 2020 and that it is not interest free.

 

Asked if the project would create any additional jobs, Lefebvre replied:

 

"It's highly dependent on the market and
the number of simulators that we'll be able to sell over the next few
years. We'll maintain highly skilled employees, but we believe we'll
also create some jobs."

 

Lefebvre also conceded that CAE has been feeling the heat from its competitors.

 

CAE's main commercial aircraft
competition comes from L-3 Link, Lockheed Martin and Rockwell Collins,
which have all beefed up their civil simulation operations through
acquisitions in recent years.

 

L-3 bought the civil simulation and
training business of France's Thales, Lockheed Martin acquired
Dutch-based simulator manufacturer Sim-Industries, while avionics
supplier Rockwell Collins signed a joint venture in June with Chinese
simulator maker Bluesky Aviation Technology, a subsidiary of state-owned
AVIC.

 

Small competitors include Mechtronix, whose operations are near CAE's main plant in Montreal.

 

"I think, overall, that it is an industry
that is quite competitive," Lefebvre said. "We always need to be at the
leading edge of the technology to be able to compete on the world
market."

 

He also said that while the civilian side of CAE's business remains "very strong," the military side continues to be soft.

 

"In the past couple of years, we've seen a
bit of softness — especially out of Europe and in the U.S. (where)
we've been impacted by budget issues that our customers had in the
U.S.," Lefebvre noted.

 

"Overall, our level of business in
military hasn't gone down, but it's not increasing at the same pace as
we have seen on the civil side."

 

He added that CAE has had to adjust its workforce in Europe.

 

The federal money is being provided under
Canada's Strategic Aerospace and Defence Initiative. Better known as
SADI, the program supports research and development in the aerospace,
defence, space and security industries.