The State of the Canadian aerospace industry

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Features of Canada's aerospace industry

Summary:
This joint Innovation, Science and Economic Development Canada and the Aerospace Industries Association of Canada report presents the latest facts and figures on the Canadian aerospace industry including its economic impact, innovation, exports, and supply chain perspective. 

 

Innovation, Science and Economic Development Canada (ISED) and the Aerospace Industries Association of Canada (AIAC) agreed to leverage their respective expertise and formed a collaborative research partnership to provide the most accurate, detailed and relevant analysis to both industry and government decision makers

The two parties agreed that:

  • ISED would develop detailed economic statistics
  • AIAC would consult and validate with its network on business drivers, issues and trends
  • They would jointly publish the statistics, issues and trends on an annual basis

Economic impact

Canada’s aerospace industry contributed more than $28B to GDP and 211,000 jobs to the Canadian economy in 2015

The industry generated $29.8B in revenues, 89,000 in direct employment and $13.3B in direct GDPFootnote * in 2015

Figure 1

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Impact on Canadian GDP, $ Billion, 2015
Direct  Indirect  Induced  Total 
Aerospace manufacturing  9.5 5.5 4.4 19.4
Aerospace MROFootnote ** 3.8 3.2 2.1 9.1
Impact on Canadian employment, thousands, 2015
Direct  Indirect  Induced  Total 
Aerospace manufacturing  57.7 43.1 34.1 134.9
Aerospace MROFootnote ** 31.3 28.8 16.8 76.9
Footnote *

There was a revision on aerospace product and parts manufacturing employment and GDP statistics in 2014 by Statistics Canada; see Annex Table 1 for details

Return to footnote * referrer 

Footnote **

MRO represents Maintenance, Repair and Overhaul services 

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Source : ISED’s economic model estimates based on data from Statistics Canada Business Registry and CANSIM, National Input-Output Multipliers (2011 adjusted to 2015 GDP and employment), Canada Revenue Agency, OECD and firm-level observations, 2016

GDP, revenues, employment and R&D all registered positive growthFootnote * from 2010 to 2015

  • Aerospace GDP grew 11% in manufacturing and 25% in MRO from 2010 to 2015
  • GDP, employment and R&D in the Canadian aerospace industry contracted slightly in 2015*

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Growth of the Canadian aerospace industry, 2010-2015
  2010 2011 2012 2013 2014 2015
GDP  0% 3% 7% 11% 17% 15%
Employment  0% 4% 10% 12% 16% 15%
Revenues 0% 14% 14% 25% 38% 49%
R&D 0% 7% 18% 28% 25% 23%
Footnote *

See Annex Table 2 and Table 3 for details

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Source: ISED’s economic model estimates based on data from Statistics Canada Business Registry and CANSIM, National Input-Output Multipliers (2011 adjusted to 2015 GDP and employment), Canada Revenue Agency, OECD and firm-level observations, 2016

Innovation

Innovation-relevant occupations accounted for over 30% of the aerospace industry’s direct employment

  • Close to 60% of the space systems workforce were engineers, scientists, and technicians
  • Annual compensation per employee in aerospace manufacturing was 60% above the manufacturing sector average

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Aerospace (manufacturing, MRO and space systems) direct employment by type, 2014
Engineers, scientists, and technicians  33%
Production workers 47%
All other employees (including management, administration, marketing) 20%

Source: Statistics Canada CANSIM and Canadian Defence, Aerospace and Commercial and Civil Marine Sectors Survey (2014), 2016

Canadian aerospace manufacturing was the number one R&D investor across manufacturing industries in 2015

  • Aerospace manufacturing accounted for close to 30% of total manufacturing sector R&D investments 
  • Canadian aerospace manufacturing was over five times as R&D intensiveFootnote * as the manufacturing sector average
  • More than 20% of aerospace manufacturing activity (GDP) was dedicated to R&D, representing $1.9B in 2015

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Aerospace share of total manufacturing R&D, 2015
Aerospace manufacturing 29%
Other manufacturing  71%
Aerospace share of total manufacturing GDP, 2015
Aerospace manufacturing 5%
Other manufacturing  95%
Footnote *

R&D intensity: R&D investment/GDP

Return to footnote * referrer 

Source : Statistics Canada CANSIM and Canadian Defence, Aerospace and Commercial and Civil Marine Sectors Survey (2014), 2016

Exports

Close to 80% of aerospace manufacturing was exported

  • Aerospace was twice as trade diverseFootnote * as the manufacturing sector
  • Aerospace export intensityFootnote ** was 55% higher than that of the manufacturing sector average
  • Aerospace exports grew 54% between 2010 and 2015.  Exports to the Asia Pacific market registered the highest growth (+105%) during that period

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Aerospace exports by region (2015)
United States 60%
Europe 21%
Asia Pacific 12%
South & Central America 3%
Middle East 2%
Africa 2%
Footnote *

Trade diversity refers to the share of total exports to non-U.S. markets; see Annex Table 4 for details of exports by region

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Footnote **

Export intensity: exports/shipments

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Source: Statistics Canada CANSIM and Trade Data Online (2015), Global Trade Atlas (2015), 2016

Close to 55% of aerospace product exports were supply chain relatedFootnote *

  • Half of aerospace supply chain related exports were enginesFootnote **
  • Between 2010 and 2015, supply chain related exports grew by 50%

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Aerospace exports by product category (2015)
Airplanes & rotorcraft 43%
Simulators 3%
Supply chain related 54%
Supply chain related exports (2015)
EnginesFootnote ** 50%
Avionics 16%
Landing GearFootnote ** 13%
Other Parts 21%
Footnote *

See Annex table 5 for details of exports by product category

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Footnote **

Engines and landing gear include their respective systems and components

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Source: Global trade atlas (2015), 2016

The Canadian aerospace industry is national

  • The majority of aerospace manufacturing activity was located in Central Canada
  • Western and Atlantic Canada captured close to 60% of aerospace MRO activities

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Employment Share by Region
  Aerospace Manufacturing Employment Share by Region (2014) Aerospace MRO Employment Share by Region (2014)
Quebec 55% 18%
Ontario 24% 24%
Western Canada 16% 44%
Atlantic 4% 14%

Source : ISED’s economic modelling based on Statistics Canada CANSIM (2014

The Canadian aerospace industry is comprised of a mix of civil/commercial, defence, and space systems activities

  • The majority of aerospace sales were related to civil/commercial activities
  • Aerospace defence activitiesFootnote*** captured almost half of total defence industry sales and exportsFootnote****
  • Space systems sales were evenly split between commercial and civil users

Figure 8

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Aerospace industry sales by category (2014)
Civil/Commercial Aersospace ActiviitesFootnote * 80%
Aersopace Defence activitiesFootnote * 17%
Space Systems 3%
Commercial space systems 1,4%
Civil space systemsFootnote ** 1,3%
Space systems defence 0,3%
Footnote *

Excluding space systems

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Footnote **

Government non-military system

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Footnote ***

See Annex Table 7 for detailed breakdown of aerospace defence

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Footnote ****

See Annex Table 6 for defence sales and exports by associated domains (aerospace, marine, and land and cross-domain/other)

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Source : Source: Statistics Canada Canadian Defence, Aerospace and Commercial and Civil Marine Sectors Survey (2014), 2016

MRO, avionics, sensors, airborne electronics and simulation systems captured over 75% of aerospace defence revenues

The most defence-concentrated market was UAS/V and components

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Aerospace defence sales by value, $ Billion, 2014
Maintenance, repair and overhaul Services  2.00
Avionics, sensors, airborne electronics and simulation systems  1.50
Aircraft, platform structures, propulsion and parts  1.01
Space Systems  0.09
Unmanned aerial systems/vehicles (UAS/V) and components 0.04
Defence share of aerospace sales, 2014
Maintenance, repair and overhaul services  46%
Avionics, sensors airborne electronics and simulation systems  57%
Aircraft, platform structures, propulsion and parts  5%
Space systems  11%
Unmanned aerial systems/vehicles (UAS/V) components 68%

Source: Statistics Canada Canadian Defence, Aerospace and Commercial and Civil Marine Sectors Survey (2014), 2016

Canadian-owned aerospace firms accounted for the majority of the industry’s overall activities

Canadian operations of foreign-owned firms contributed to over 40% of the industry’s R&D investments

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Shares of key aerospace industry variables relating to domestic vs. foreign-owned businesses
  Canada U.S.  Other (Non-U.S.) country 
Sales  56% 30% 14%
Employment  64% 24% 12%
R&D 58% 38% 3%
Exports  60% 25% 14%

Source: Statistics Canada Canadian Defence, Aerospace and Commercial and Civil Marine Sectors Survey (2014), 2016

Supply chains

Sourcing patterns varied according to firms’ country of ownership

Canadian-owned aerospace operations purchased the majority of their materials and supplies from Canadian suppliers

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Sourcing patterns of domestic vs. foreign-owned businesses 
  Total Parent company in Canada Parent company in U.S. Parent company in other (Non-U.S.) country
Domestic suppliers  39% 55% 22% 39%
U.S. suppliers 50% 36% 74% 37%
Other foreign suppliers 11% 9% 4% 24%

Source: Statistics Canada Canadian Defence, Aerospace and Commercial and Civil Marine Sectors Survey (2014), 2016

Key findings

  • Canada’s aerospace industry contributed more than $28B to GDP and 211,000 jobs to the Canadian economy in 2015
  • Canadian aerospace manufacturing was the number one R&D investor across manufacturing industries, was over five times as R&D intensive as the manufacturing sector average and accounted for close to 30% of total manufacturing’s R&D investments
  • Innovation-relevant occupations accounted for over 30% of the aerospace industry’s direct employment; annual compensation per employee in aerospace manufacturing was 60% above the manufacturing sector average
  • Close to 80% of aerospace manufacturing was exported, and the industry was 55% more export intensive than the manufacturing sector average and twice as trade diverse
  • Close to 55% of aerospace exports were supply chain related, and these grew by 50% between 2010 and 2015
  • Canadian-owned aerospace firms accounted for the majority of the industry’s overall activities; Canadian operations of foreign-owned firms contributed to over 40% of the industry’s R&D investments
  • Sourcing patterns varied according to firms’ country of ownership; Canadian-owned aerospace operations purchased the majority of their materials and supplies from Canadian suppliers

Annex

Table 1: Economic and employment impacts of Canadian aerospace product and parts manufacturing and MRO Industries, 2015Footnote *
Impact on Canadian GDP ($ Million) Impact on Canadian employment  (persons)
Direct Indirect Induced Total Direct Indirect Induced Total
Aerospace manufacturing 9,461 5,492 4,435 19,388 57,663 43,146 34,118 134,927
Aerospace MRO 3,800 3,188 2,081 9,069 31,298 28,758 16,832 76,888
Aerospace total 13,261 8,680 6,516 28,457 88,961 71,903 50,950 211,814
Footnote *

There was a revision on aerospace product and parts manufacturing employment and GDP statistics in 2014 by Statistics Canada

Return to footnote * referrer 

Source: ISED’s economic model estimates based on data from Statistics Canada Business Registry and CANSIM, National Input-Output Multipliers (2011 adjusted to 2015 GDP and employment), Canada Revenue Agency, OECD and firm-level observations, 2016

Table 2: Canadian aerospace industry economic activities breakdown, 2015 adjustedFootnote *
Aerospace manufacturing Aerospace
MRO
Aerospace
total
GDP ($ Million)
(% Change of 2014-2015)
9,461
(-5%)
3,800
(+8%)
13,261
(-1%)
Employment (persons)
(% Change of 2014-2015)
57,663
(-4%)
31,298
(+3%)
88,961
(-1%)
Revenues ($ Million)
(% Change of 2014-2015)
22,179
(+9%)
7,659
(+3%)
29,838
(+8%)
R&D ($ Million)
(% Change of 2014-2015)
1,874
(-1%)
40
(N/A)
1,914
(-1%)
Footnote *

There was a revision on aerospace product and parts manufacturing employment and GDP statistics in 2014 by Statistics Canada

Return to footnote * referrer 

Source: ISED’s economic model estimates based on data from Statistics Canada Business Registry and CANSIM, National Input-Output Multipliers (2011 adjusted to 2015 GDP and employment), Canada Revenue Agency, OECD and firm-level observations, 2016

Table 3: Canadian aerospace industry economic activities breakdown, 2010-2015 adjustedFootnote *
2010 2011 2012 2013 2014 2015
GDP ($ Million) Aerospace manufacturing 8,493 8,610 8,974 9,485 9,976 9,461
Aerospace MRO 3,048 3,266 3,348 3,322 3,520 3,800
Aerospace total 11,541 11,876 12,322 12,807 13,496 13,261
Employment (persons) Aerospace manufacturing 52,801 54,067 56,648 58,079 60,139 57,663
Aerospace MRO 24,837 27,050 28,542 28,695 30,242 31,298
Aerospace total 77,638 81,117 85,190 86,774 90,381 88,961
Revenues
($ Million)
Aerospace manufacturing 13,953 16,147 15,860 17,926 20,310 22,179
Aerospace MRO 6,078 6,620 6,985 7,022 7,401 7,659
Aerospace total 20,031 22,767 22,845 24,948 27,711 29,838
R&D ($ Million) Aerospace total 1,552 1,662 1,837 1,988 1,936 1,914
Footnote *

There was a revision on aerospace product and parts manufacturing employment and GDP statistics in 2014 by Statistics Canada

Return to footnote * referrer 

Source: ISED’s economic model estimates based on data from Statistics Canada Business Registry and CANSIM, National Input-Output Multipliers (2011 adjusted to 2015 GDP and employment), Canada Revenue Agency, OECD and firm-level observations, 2016

Table 4: Share and growth of aerospace exports by region, 2010-2015
Share of total exports (2015) Growth of exports (2010-2015) Growth of exports (2014-2015)
United States 60% 77% 15%
Europe 21% 14% 20%
Asia Pacific 12% 105% 23%
South and Central America 3% 9% -5%
Middle East 2% -8% -43%
Africa 2% 11% -1%

Source: Global Trade Atlas (2015), 2016

Table 5: Share and growth of aerospace exports by product category, 2010-2015
Share of total exports (2015) Growth of exports
(2010-2015)
Growth of exports
(2014-2015)
Airplanes and rotorcraft 43% 58% 17%
EnginesFootnote * 27% 47% 11%
Other Parts 11% 64% 2%
Avionics 9% 24% 19%
Landing gearFootnote * 7% 85% 17%
Simulators 3% 43% 9%
Footnote *

Engines and landing gear include their respective systems and components

Return to footnote * referrer 

Source: Global Trade Atlas (2015), 2016

Table 6: Shares of total defence industry sales and exports by associated domains, 2014
Aerospace Marine Land and cross-domain/other
Sales 47% 13% 40%
Exports 48% 10% 42%

Source: Statistics Canada Canadian Defence, Aerospace and Commercial and Civil Marine Sectors Survey (2014), 2016

Table 7: Canadian aerospace defence sales by type of goods and services, 2014
Sales
($ Million)
Share of aerospace defence sales
Military aircraft maintenance, repair and overhaul services 2,001 43%
Aircraft fabrication, structures and components 1,012 22%
Airborne communications, navigation, & other information systems, software, electronics 765 17%
Airborne sensor/information collection; and fire control, warning & countermeasures systems 578 12%
Simulation systems for aircraft 153 3%
Military space systems 90 2%
Unmanned aerial systems/vehicles & components 40 1%
Total aerospace defence sales 4,639 100%

Source: Statistics Canada Canadian Defence, Aerospace and Commercial and Civil Marine Sectors Survey (2014), 2016

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