Breakfast with Canadian Companies at the Farnborough International Airshow

Speaking Points

The Honourable Tony Clement, PC, MP
Minister of Industry

Farnborough, United Kingdom
July 19, 2010

Check Against Delivery

Good morning. Thank you all for coming today.

Before I begin, I want to take a moment to acknowledge all of the hard work that has gone into the 2010 Farnborough International Airshow. This show, which is held every two years, is always amazing.

I am very pleased to be here at Farnborough to promote the Canadian aerospace industry. I am here to let the world know that our government collaborates with our aerospace industry to ensure that it remains strong, internationally competitive and at the leading edge of technology development.

Canada's aerospace sector is a cornerstone of our economy. Canada is home to more than 400 aerospace firms employing 83 000 skilled professionals. Our firms recorded sales totalling $23.6 billion in 2008 and they export over 80 percent of their output to customers worldwide. Canada ranks fifth overall in world aircraft production and third in civil aircraft production.

Canadian universities and colleges produce 3000 new aerospace graduates each year. Our workforce is highly trained and has the skills to compete on the world stage.

Our firms possess world-class capabilities in the areas of design and production. We are home to a full range of aerospace companies that occupy crucial parts of global supply chains — from flight simulator systems to regional and business aircraft, and from small gas turbine engines to space robotics.

There is no question that Canada's aerospace and defence industries are key drivers of innovation in Canada. Those that continue to innovate will lead us into the economy of the future. 

Innovation is essential to Canada, both in the context of bringing new technologies to the marketplace and in the way industries position themselves in that market.

The pursuit of new technologies, new products and new services is essential not only to the continued success of your industry, but also, more broadly, to that of the Canadian economy. This government is committed to our aerospace sector, and we are setting the right conditions for investment and for research and development.

This is why in 2007 our government launched the Strategic Aerospace and Defence Initiative, or SADI. Through repayable contributions, the SADI program supports private sector industrial research and pre-competitive development in Canada's aerospace, defence, security and space industries.

This program continues to demonstrate our government's commitment to enhancing the competitiveness of Canadian aerospace and defence companies and to fostering collaboration between research institutes, universities, colleges and the private sector.

As of June 1, 2010, SADI had already announced 16 contribution agreements totalling more than $440 million, which have leveraged more than $883 million in additional investment in research and development.

There is also the Canada First Defence Strategy, our 20-year, detailed roadmap for the modernization of the Canadian Forces. This strategy provides the Canadian aerospace and defence industry with an opportunity to more effectively meet defence procurement requirements.

Within this context, we are also committed to helping Canadian companies better seize opportunities and drive more investments to our aerospace and defence sectors through our Industrial and Regional Benefits Policy, or IRB. As you know, this policy requires prime contractors — those awarded contracts over $100 million — to provide Canada with new business activities equal to 100 percent of the contract value.

The success of the policy is clear.

Canada's IRB Policy has a portfolio of over $20 billion in commitments that are creating jobs and opportunities for Canadian companies. These companies are accessing global value chains of large multinational defence companies around the world.

Last September, the government announced improvements to the IRB Policy. The changes relate specifically to the way the government administers the policy within the current procurement process.

We want to allow prime contractors greater flexibility in meeting their commitments and to broaden the scope of opportunity for them to include Canadian industry participation on strategic platforms.

These initiatives help companies of all sizes. National Research Council Canada's (NRC's) Industrial Research Assistance Program supports Canada's small and medium-sized enterprises — or SMEs — as they grow stronger, faster and bigger through innovation and technology.

Canada's Economic Action Plan has invested $200 million to enable NRC to provide science and technology expertise to our SMEs, which in turn take their specialized knowledge from the lab to the marketplace. NRC estimates that this money will support approximately 1400 SMEs until 2011 and facilitate the hiring of more than 1000 new postgraduate students through its Youth Employment Program.

Enterprises that are successful at home are more able to do business with the rest of the world. Our government will promote your strengths and technological capabilities to the international aerospace industry and will position Canadian firms as suppliers of choice to major aircraft platforms.

This is precisely why Canada decided to participate in the Joint Strike Fighter (JSF) Program back in 1997. The JSF Program is the single largest fighter aircraft program in history.

It only made sense to have Canada at that table, so that we would be able to take advantage of the significant economic benefits that will flow to Canada as a partner in this global project.

As you may be aware, I participated in the Government of Canada's announcement last week that Canada will be acquiring the Joint Strike Fighter F-35 Lighting II aircraft to replace our current fleet of CF-18s, which are expected to reach the end of their operational life between 2017 and 2020. This state-of-the-art aircraft fully meets the needs of our Canadian Forces for a fifth-generation fighter jet.

Our partnership has ensured that we can continue to advance Canadian technology, create Canadian jobs and sustain economic benefits to all regions of Canada.

This partnership has already paid off for Canada and for Canadians.

To date, we have invested approximately $168 million in the JSF Program. Since 2002, this investment has led to over $350 million in contracts for more than 85 Canadian companies, research laboratories and universities. This means that Canada has already seen a two-to-one return on its investment.

Extrapolated over 20 years of production, it is estimated that Canadian companies will benefit from up to $12 billion of JSF production work. Even more opportunities are expected as Canadian firms contribute to the 40-plus years of sustainment, maintenance and training associated with operating the worldwide fleet of more than 3000 aircraft.

This landmark economic opportunity for Canadian industry is realized through industrial participation agreements. These agreements ensure that Canadian companies can compete for work on the JSF Program, including the airframe, systems, engines and associated services. This approach was agreed upon by all nine partner countries as the best method for maximizing the affordability of the aircraft and for maximizing meaningful industrial engagement in the JSF Program.

Canadian companies will have a key role to play in the 40-plus years of related work. From the manufacturing of parts, to the development of training and maintenance solutions, this is Canada's opportunity to demonstrate the capability and the expertise of our aerospace sector.

This means that Canadian companies are in an advantageous position to secure high value work that is related not only to the 65 aircraft that Canada is purchasing, but to the entire partnership fleet, estimated at more than 3000 aircraft.

My message to Canadian companies is simple. This is an unprecedented opportunity for you to compete for high-value and long-term work. This is your chance to demonstrate to the world that we have the talent and the skilled workforce that are ready for the challenge.

This project is important for Canada. Know your competition. It is up to you to be innovative and take full advantage of this opportunity.

Your government is here to help. We have undertaken numerous measures to support the Canadian aerospace industry.

The government will continue to attract, expand and retain foreign direct investment by original equipment manufacturers and by leading tier-one system integrators by promoting Canada as an excellent location to establish a North American presence.

Our recent budgets have introduced measures that stimulate business investment, lower taxes, introduce capital cost allowances, harmonize regulations, reduce red tape and create a skilled workforce.

Our government is creating the right conditions for Canadian aerospace firms to thrive in the global economy over the long term. These measures are helping, and we need to continue building on this success. We see and recognize the benefits of a strong domestic aerospace industry that is a key player on global platforms.

Our government will continue to put the right conditions in place to encourage economic growth and investment in Canada. Our aerospace sector has the talent and expertise that place us among the world leaders in the business.

I look forward to continuing working with you, and I look forward to some very productive discussions over the coming days.

All the best for a productive show.

Thank you.