Enhancing Our Aerospace Future: National Aerospace and Defence Strategic Framework
The new realities facing Canada's aerospace and defence industry are calling for a fresh look at the strategic approach taken in the sector. By adopting the Framework, Canada will join a host of other countries, including some of its key competitors, that have developed strategies to promote the development and competitiveness of their national aerospace sectors in light of significant changes in the industry.
Why Invest in Aerospace and Defence?
Most governments in countries around the world that have aerospace and defence industries invest in the development of those industries. One of the primary drivers for government intervention is the link between the industry and national security. The economic characteristics of the industry with its high development costs, high risks and long payback periods, combined with the highly cyclical nature of the sector, have also been driving forces calling for government involvement. These characteristics make it difficult for the private sector to shoulder all financial requirements alone and require the government to intervene to support the sector. Internationally, governments have used various policy instruments on the supply and demand side to create an environment that nurtures the industry. Instruments utilized include state ownership, domestic market protection, R&D funding, directed public procurement, export sales financing, domestic content requirements and offsets (including placing work with local firms for aerospace and defence contracts). Within that supportive environment, the aerospace and defence industry is the driving force, and it finances, designs, develops, produces and markets aerospace and defence products.
Traditionally, government investment in the industry was justified on defence and national security grounds, but economic factors and the pursuit of national objectives are also important justifications. Investments in the aerospace and defence industry help meet some key economic and social policy objectives.
The aerospace and defence industry is a source of national pride and a symbol of Canada's technical accomplishments. Canada was one of the first three nations into space and the first in North America with a jet-powered passenger aircraft. The Canadian industry has produced some major success stories, including the Alouette and Anik satellites, the Beaver, Otter and Twin Otter airplanes, the PT6 turboprop engine, the Canadarm I and II, and the Canadair Regional Jet. The Canadarm played a crucial role in the recent return to flight of the United States National Aeronautics and Space Administration's space shuttle. Canadian-made aerospace and defence products can be found all over the world and are a powerful symbol of Canadian achievements.
Support for the industry contributes to the government's goal of having a growing, innovative and prosperous economy. As previously noted, the sector contributes to employment, innovation and trade. Aerospace and defence also supports the government's regional economic development objectives, as activities in the sector are located in all regions of the country.
Investing in aerospace and defence promotes technology development within the Canadian economy. Not only does this investment promote the development of aerospace and defence technology, but it also helps promote development in other sectors of the Canadian economy as the aerospace and defence industry is in the vanguard of using new technologies. As a first user, the aerospace and defence industry utilizes the output of several high technology industries including electronics, information technology and new materials. Examples of aerospace technology spin-offs include those that have found important commercial application such as microminiaturization technology used to produce the first single-chip pacemaker, carbon pistons that are lighter and more heat-resistant than aluminium pistons for automotive applications, and non-destructive evaluation technologies for steel structures and other structures where detection of fatigue and corrosion is critical.
Contributing to Canada's Security
The products and services produced by the industry are used in support of the federal government's defence and national security requirements. The sector is heavily involved in providing equipment and related support services to the Department of National Defence and agencies entrusted with public security. When the Department of National Defence purchases a foreign-made defence platform, Canadian suppliers play a crucial role in meeting Canadian requirements and providing life cycle support for those platforms. Technologies produced by the sector, such as remote sensing, satellite communications and unmanned vehicle systems, are key tools in confronting the emerging threats to national security. The sector also allows Canada to contribute to international cooperation, peace and security through partnerships with its allies to develop and procure defence technology.
Observing and Protecting Canada's Environment
Technology from the aerospace and defence industry has played, and will continue to play, an important role in helping to achieve environmental and sustainable development goals. For example, Canadian-developed remote sensing technology is playing a key role in monitoring the environment. Earth observation satellites such as RADARSAT I, RADARSAT II and SCISAT help raise our understanding of environmental changes and improve environmental management. Another example is provided by R&D investment into more environmentally friendly aerospace technologies that will help reduce the impact of aviation on the environment. Pratt & Whitney Canada, for example, is undertaking long-term research aimed at developing engine technology that is more fuel efficient, makes less noise and gives off fewer emissions.
Importance of Government to the Aerospace and Defence Industry
Governments have worked as key partners with industry, labour and academia in the effort to develop the industry. Government investment has made a substantial contribution to the concerted investments made by all industry stakeholders. In the past, actions such as public investments made through the ownership of de Havilland and Canadair, augmented by leading technology developments achieved by public research organizations, led to the development of the Challenger business jet and the Dash 8 regional turboprop. Other examples of critical public investments include those made to attract major international firms such as Bell Helicopter Textron Canada. Canada's public research organizations assisted Pratt & Whitney Canada in its rise to pre-eminence in small turbine engines and MacDonald Dettwiler & Associates' international successes in space robotics. Access to United States markets was enhanced for Canadian defence products through the Defence Production Sharing Agreement and the Defence Development Sharing Arrangement.
The federal government continues to work with other industry stakeholders to assist the aerospace and defence industry. It does so through support for R&D, public procurement, sales financing and research infrastructure. Programs and policies such as Technology Partnerships Canada and the Industrial and Regional Benefits policy, as well as organizations such as Export Development Canada, the Canadian Commercial Corporation and the National Research Council's Institute for Aerospace Research, continue to provide targeted assistance to the industry. The Canadian Space Agency provides support through its domestic platforms/programs, space R&D and participation in international space initiatives.
Some provinces have also provided assistance to the industry. Quebec has recently provided support for R&D on several major aerospace projects (including Bell Helicopter Textron Canada and Pratt & Whitney Canada) and has also provided sales financing. More recently, it has agreed to provide a repayable contribution to support research and development with respect to CSeries-related R&D projects. Manitoba assists the Composites Innovation Centre located in that province. In the Atlantic region, Prince Edward Island has helped to create Slemon Park, an aerospace business park near Summerside, which is home to established aerospace firms in a growing sector of the province's economy. In the West, Saskatchewan has invested in, and is home to, the Canadian Light Source, a state-of-the-art synchrotron located at the University of Saskatchewan. The Alberta government contributed funding for the Southern Alberta Institute of Technology's new education and training centre for aerospace in Calgary. The B.C. government contributed toward the construction of a new aerospace training facility in Richmond, B.C. for the British Columbia Institute of Technology.
Working in Partnership with Industry Stakeholders
Recognizing that the past success of the Canadian aerospace and defence industry was due to a strong partnership between government, industry and other stakeholders, the government, in concert with the industry, launched the Canadian Aerospace Partnership (CAP) in April 2005. CAP is focussed on enhancing the global competitiveness of Canada's aerospace industry. The CAP comprises senior executives from industry, federal and provincial government ministers as well as senior labour and academia representatives. Working in partnership, CAP members have developed a long-term strategic vision for the aerospace industry and, through the creation of working groups, have examined issues related to major platforms, technology investment, procurement, skills and market access. Their initial conclusions, as well as broad consultations across Canada and with all federal government departments, are reflected in large measure in this strategic framework.
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