By Ken Pole | November 14, 2013 Estimated reading time 7 minutes, 24 seconds.
Fresh from its latest annual summit in Ottawa, the Aerospace Industries Association of Canada (AIAC) is moving aggressively to tackle the global competitiveness challenge. Its president and chief executive officer, Jim Quick, agreed in a Canadian Skies interview that the organization has been reinvigorated as “the national voice” of the industry, and that the federal government sees it as a “key partner in going forward as they try to deliver on their public policy objective of building the economy through job creation.”
Quick added that while the AIAC has been able to prove its case as a key economic driver, the government has responded by asking what it can do for a sector which directly employs 170,000 Canadians, and last year generated $42 billion in revenues – some $27 billion of which goes back into the economy in terms of salaries, taxes and continued investment.
According to RE$EARCH Infosource Inc., a Toronto firm which has tracked data for 13 years, aerospace accounted for the largest share of research and development spending in 2012, surpassing telecommunications. The surge on the ranking of 100 companies evidently was fuelled by a third year of explosive growth by Bombardier Inc., which propelled the Montreal-based conglomerate to top spot on its list. Bombardier’s R&D outlay jumped by 42.2 per cent in 2012 to $1.9 billion, overtaking Blackberry Ltd., which held firm with $1.5 billion for second place.
RE$EARCH Infosource also said in its latest annual ranking that four other major aerospace companies also boosted their R&D spending in 2012. They were led by Pratt & Whitney Canada, which moved up one place to No. 5 on the list behind BCE Inc. and IBM Canada Ltd., with an 11.4 per cent outlay of $527 million. The three others, although well down on the list, contributed to the government’s understanding of the sector’s economic importance.
Two reports critical of established practices have emerged as key levers in AIAC’s relationship with government. Beyond the Horizon: Canada’s Interests and Future in Aerospace, written by former Liberal industry minister David Emerson and released in November 2012, examines how Canada’s aerospace industry is threatened by foreign competitors and points out that the space sector has “foundered” for a decade.
“It’s fair to say that the past, and our successes in the past, cannot simply be replicated going forward,” Emerson told reporters. “We’re going to have to change and adapt to new global realities. . . . The right combination of business acumen, cutting-edge research, and government policies will allow Canada to remain an aerospace power for decades to come.”
The other report, more narrowly focused, was Canada First: Leveraging Defence Procurement Through Key Industrial Capabilities. Released last February, it was the handiwork of an expert panel chaired by Tom Jenkins, executive chairman and chief strategy officer of Open Text Corp., the Waterloo-based largest independent software company in Canada.
“Canada has an opportunity to leverage the exceptional circumstances that are being created by the sustained increase in defence procurement to promote a long-term growth trajectory for our defence-related industries,” the Jenkins report said. “This will not happen with a status quo set of procurement policies and related programs, particularly in light of anticipated increased competitive pressure from foreign suppliers that are facing declining markets elsewhere.”
Quick and the rest of the AIAC board are clearly mindful of those concerns. “When I was brought on board (in June 2011), they wanted to effect some change and reposition themselves as a key partner with government,” Quick explained. “We’re taking large steps to make that happen . . . and they feel very upbeat and invigorated by what we’ve been able to achieve.”
The immediate focus for AIAC is to make sure that the Emerson and Jenkins recommendations get implemented. “We’re seeing a government that is being very responsive to both of those reports and has developed processes and strategies to implement the recommendations.” A follow-on, three-year strategic plan focuses on growing a strong global supply chain and, looking outward, re-energizing the Canadian Space Agency with stable funding under its new president, Walt Natynczyk, the former Chief of the Defence Staff.
“The other key objective is to continue to build the association as the national voice of the industry. That’s what we’re going to be focused on over the next three years.” Midway through that process, the AIAC plans to look beyond Emerson and Jenkins. “What’s the next big thing that we need to do to increase our global competitiveness?” will be the key question. “As I said at the summit, one of the things that we don’t want to have happen is that there be some kind of lull again between what happened with Emerson and Jenkins, and then the next big idea that we may have that will help our global competitiveness.”
There is a real sense of progress afoot, even though Alberta MP Rona Ambrose, the minister at Public Works and Government Services Canada (PWGSC) who brought Jenkins into the mix as a dollar-a-year advisor, was reshuffled to the Health portfolio in July.
According to Quick, her successor, Ontario MP Diane Finley, “has stepped right in and continued to move forward with that very aggressive agenda on procurement reform.” He said Finley’s keynote speech to the AIAC summit made it “very clear . . . that they’re going to bring in reforms built around KICs (key industrial capabilities) that will fundamentally change the procurement system, as well as the use of key tools such as value propositions to rate and weight Canadian benefits. This is certainly a big change, long overdue.”
In her speech, Finley said the Conservatives have been “working hard” to change the policy landscape for industry, notably how government procurements are handled. Tackling the ongoing difficulties with plans for new fighters, maritime helicopters and search-and-rescue aircraft, she said the government is trying to ensure predictability so that these and other programs do “not drag on and create uncertainty that makes it difficult for many of you to make important long-term business decisions.”
