The Aerospace Industry in Canada. Opportunities for Swiss Companies. March 2012 osec.ch
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Content Leader: Geoffrey S. L. Green, P.Eng. President, Pegasus Global Initiatives geoff.green@peglin.com Swiss Business Hub Canada uses primary, secondary sources and tertiary sources of information to produce a variety of reports on the Canadian market for small to medium sized Swiss enterprises. For further information on our services, please contact: Elias Bardouniotis, MSc, MBA Director Switzerland Trade and Investment Promotion Swiss Business Hub Canada 154 University Avenue, Suite 601 Toronto, ON M5H 3Y9, Canada Tel. : +1 416 593 5288 Fax : +1 416 593 5083 elias.bardouniotis@eda.admin.ch While this report is intended to provide an overview of this specific market and its opportunities at the time of its edition, each individual manufacturer, exporter or company may have to conduct their own analysis to get a better understanding of the possibilities and opportunities available to them. You are encouraged to explore and develop your opportunities based on research and in-depth analysis. Readers should take note that the Government of Switzerland does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations, associations, companies and individuals listed herein. Readers of this report should verify the accuracy and reliability of the information contained herein before making a business decision. Š Swiss Business Hub Canada 2012
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The Aerospace Industry in Canada. This article has been written to familiarize Swiss companies with the Canadian Aerospace industry and to examine opportunities for trade and investment with Canada. The aerospace industry is very significant and is the fifth largest in the world after the United States, United Kingdom, France and Japan. The industry is comprised of many Canadian and multi-national companies. Companies such as Boeing, Pratt and Whitney, Textron, General Dynamics, ASCO and Thales have significant manufacturing capability in Canada. The Canadian owned industry component is large with companies such as Bombardier Aerospace, Magellan, MDA, CAE, etc. The industry with annual sales of $23.8 Billion is not limited to these very large corporations. There is a supply chain in place to support the industry, whether in Canada or other countries. This supply chain includes not only manufacturers, but also a very large Maintenance, Repair and Overhaul (MRO) capability that serves Canadian and International airlines and the military. The industry produces a broad variety of products and services. Table A shows the contribution by each group of products, in addition to the areas within these categories where the Canadian aerospace industry is recognized as a global leader. Table A. Product categorization. Categories of Production
% of Production
Products Produced for Global Markets
Aircraft, Aircraft & Components
55
Regional and Business Aircraft Helicopters Landing gear systems Airframe structural assemblies Wing structure assemblies
Maintenance, Repair & Overhaul (MRO)
16
Aircraft maintenance, repair and overhaul services Engine rebuilding and maintenance
Aircraft Engines & Engine Parts
15
Gas turbine engines
Avionics, Electro Systems
6
Power conversion and distribution systems Integrated electronic controls Environmental conditioning systems Air traffic control and management systems Aviation communication systems
Simulation & Training
4
Flight simulators
Space
2
Satellite technologies
Other Products & Services
2
Miscellaneous
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The industry is national and has representative companies from the Atlantic to the Pacific coasts. The main centres are Quebec, Ontario and Manitoba, but there are substantial manufacturing centres in the provinces of British Columbia, Alberta, Saskatchewan, Nova Scotia, New Brunswick and Prince Edward Island. Table B. Industry by province, showing clusters and areas of specialization. Province
Number of Companies
Employees (000)
Sales
Clusters
Specializations
Quebec
240
42
$11.1 billion
Aircraft, Aircraft Components Aircraft Engines & Engine Parts Avionics, Electro Systems Simulation & Training Space Other Products & Services
Regional aircraft Engines Engine Overhaul Simulation Helicopters Components
Ontario
200
22
$6.5 billion
Aircraft, Aircraft Components Aircraft Engines & Engine Parts Avionics, Electro Systems Simulation & Training Space Other Products & Services
Regional & Business aircraft Helicopters Components Electronic systems
Manitoba
27
5
$1.6 billion
Aircraft Components MRO
MRO Gas Turbine repair Composites and Structures
Alberta
20
6
$1.3 billion
Avionics, Electro Systems (Defence) Space Science MRO Logistic Support to the Military
Combat radio systems, defence system integrations MRO (Helicopter & Narrowbody) Unmanned Vehicle Systems (Integration and Development) Space Research
British Columbia
16
5
$1.0 billion
Aircraft Components MRO
MRO Components Composites
Saskatchewan
5
1
$0.5 billion
Space
Space and Satellite Systems
New Brunswick
13
1
$0.5 billion
Aircraft Components Avionics, Electro Systems
Components
Nova Scotia
10
1
$0.5 billion
Aircraft Components
Aircraft Components
Prince Edward Island
15
1
$0.3 billion
Aircraft Components
Components
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Table C. Sales information by Product Type and Annual Investment and Research and Development. Highlights
% of Production
Canadian Dollars
Export
Revenue
100
$23.8 billion
$19.3 billion
Aircraft, Aircraft & Components
55
$13.0 billion
Maintenance, Repair & Overhaul
16
$3.6 billion
Aircraft Engines & Engine Parts
15
$3.4 billion
Avionics, Electro Systems
6
$1.3 billion
Simulation & Training
4
$1.0 billion
Space
2
$.5 billion
Other Products & Services
2
$1.0 billion
Civil Sales
76
$18.2 billion
Military Sales
24
$5.4 billion
Sales by Product Type
Investment in Capital
$1.3 billion
Investment R & D Investment
$0.685 billion
The Canadian aerospace industry serves the major international markets. The United States is the largest market because of geographic proximity, close trading ties and joint programs. Table D. Global markets served.
Percentage of Exports
United States
Europe
Asia
South and Central America
Middle East Africa/Oceania
58
24
7
3
5
3
Canadian companies are represented in all the industry sectors. As can be seen below, there are a number of Prime Contractors in Canada. Some of these companies produce a variety of aircraft from regional jets to business aircraft. Other companies manufacture helicopters, engines and simulation and training equipment.
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Table E. Information on Prime Contractors Company
Locations
Specialization
Ownership
Website
Bell Helicopter Textron
Quebec
Helicopters
United States
www.bellhelicopter.com
Boeing Canada Operations Ltd.
Manitoba Quebec Ontario
Laminate panels Fairings
United States
www.boeing.ca
Bombardier Aerospace
Quebec Ontario
Regional and Business Aircraft
Canada
www.bombardier.com
CAE Inc.
Quebec Ontario Nova Scotia
Flight Simulators Training
Canada
www.cae.com
Diamond Aircraft Industries Inc.
Ontario
Business Aircraft
Austria
www.diamondaircraft.com
Eurocopter Canada Ltd.
Ontario
Helicopters
Europe (EADS)
www.eurocopter.ca
Pratt & Whitney Canada
Quebec Ontario
Engines
United States
www.pwc.ca
Major Suppliers by Sector (Please note that this identifies some of the larger companies, and does not include Prime Contractors) Table F. Major Suppliers by Category, Location and Ownership. Sector
Company
Locations in Canada
Ownership
Website
Aircraft, Aircraft & Components
ASCO Canada Aerospace Inc.
British Columbia
Belgium
www.asco.be
Avcorp Industries Inc.
British Columbia Ontario
Canada
www.avcorp.com
Goodrich
Ontario
United States
www.goodrich.com
Heroux-Devtek
Quebec Ontario
Magellan Aerospace
Ontario Manitoba
Canada
www.magellanaerospace.com
Messier Dowty
Ontario Quebec
France
www.messier-dowty.com
Aveos Fleet performance Inc.
Manitoba British Columbia Ontario Quebec
Canada
www.aveos.com
I.M.P. Group Ltd.
Nova Scotia
Canada
www.impgroup.com
Kelowna Flight Craft Group
British Columbia Ontario
Canada
www.flightcraft.ca
Maintenance, Repair and Overhaul (MRO)
www.herouxdevtek.com
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Sector
Company
Locations in Canada
Ownership
Website
Maintenance, Repair and Overhaul (MRO)
Standard Aero
Manitoba British Columbia Alberta Quebec
United Arab Emirates
www.standardaero.ca
Vector Aerospace Inc.
Ontario British Columbia Alberta
Canada
www.vectoraerospace.com
Aircraft Engines & Engine Parts
Liburdi Engineering Inc.
Ontario
Canada
www.liburdi.com
Unison Industries
Ontario
United States
www.unisonindustries.com
Rolls Royce Canada
Quebec British Columbia
United Kingdom www.rolls-royce.com
Avionics, Electro Systems
Esterline CMC Electronics
Ontario Quebec
United States
www.cmcelectronics.ca
General Dynamics
Ontario New Brunswick Alberta
United States
www.gdcanada.com
L-3 Communications
Ontario Quebec
United States
www.l-3com.com
Lockheed Martin Canada
Nova Scotia Quebec Alberta
United States
www.lockheedmartin.com
Thales Canada
Quebec Ontario British Columbia
France
www.thalesgroup.com/canada
Adacel Inc
Quebec
Canada
www.adacel.com
Atlantis International Systems Inc.
Ontario Nova Scotia
Canada
www.atlantisSI.com
Kelowna Flight Craft Group
British Columbia Manitoba
Canada
www.flightcraft.ca
MDA
British Columbia Ontario
Canada
www.mdacorporation.com
Magellan Aerospace
Ontario Manitoba
Canada
www.magellanaerospace.com
Com Dev International
Ontario
Canada
www.comdev.ca
EADS Canada Inc.
Ontario Quebec Nova Scotia
Europe
www.eads.net
SED Systems
Saskatchewan
Canada
www.sedsystems.ca
Simulation and Training
Space
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As stated previously, the industry is represented in all industrial provinces. Further information on the provincial clusters is located below:
Quebec: Quebec has the largest aerospace industry in Canada. It is largely located in the Montreal area. Below are some key facts on the industry: • 225 businesses, including nearly 20 principal contractors and equipment manufacturers and over 200 subcontractors and product manufacturers. • Employment is 42,000 jobs. • Annual growth rate of 8.5% over 24 years. • Roughly 50% of Canada’s total sales. • Over 80% of Québec production is exported. The strength of the Québec aerospace industry stems from the presence of several world-class prime contractors: • Bell Helicopter Textron • Bombardier Aerospace • CAE Inc. • Pratt & Whitney Canada • Rolls Royce The areas of expertise include: • Commercial aircraft (regional and business) • Helicopters • Turbo-shaft and turbojet engines • Flight simulators • Avionics • Landing gear • Space systems • Systems integration Montreal is also the site of more than ten aerospace research centers, including the Canadian Space Agency and the Aerospace Manufacturing Technology.
Ontario: Ontario has the second largest aerospace industry in Canada. The companies are located across Southern Ontario from Ottawa to Windsor. The companies employ in excess of 20,000 skilled workers and annual sales are $6.5 billion.
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World-leading aerospace companies such as Bombardier Aerospace, Pratt & Whitney Canada, Honeywell Canada, L-3 Electronic Systems, Magellan and Northstar Aerospace are recognized globally for their strengths in aircraft parts manufacturing, aircraft systems development, and maintenance and overhaul and are located in the province. Ontario is a leading supplier of: • Regional and business aircraft • Unmanned aerial vehicles • Small and medium turbine engines • Commercial helicopters • Aero structures • Landing gear • Environmental systems • Electronic systems
Western Canada: Western Canada is represented by British Columbia, Alberta, Saskatchewan and Manitoba.
Manitoba: Manitoba is home to the largest aerospace cluster in Western Canada and is a major centre for composite aircraft component manufacturing, aircraft structures and aircraft maintenance, repair and overhaul. Sales exceed $1.6 billion with an estimated 5,000 persons directly employed. Sector Capabilities • Design, development, manufacture, & repair/overhaul of: - Composite aircraft components and assemblies - Engine components and accessories • Repair and overhaul of: - Commercial aircraft - Advanced alloy turbine engines - Piston engines and accessories • Precision machining and precision sheet metal fabrication of high strength metals and alloys • Spacecraft and payload design and integration • Sounding rocket design and integration • Development of advanced strategic target systems • Military pilot simulator and flight training
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British Columbia: Aerospace companies in the Vancouver area benefit from their closeness to the Boeing plant in Seattle, Washington. The specializations within British Columbia’s aerospace industry include: • Design, manufacture, maintenance, repair and overhaul • Advanced composite aircraft structures • Remote sensing • Satellite communication • Robotics • MRO • Training
Alberta: Alberta’s thriving economy is home to 150 aerospace and aviation companies, employing over 6,000. Alberta strengths are in specialized niches of the industry: It is recognized for the following areas of expertise: •
Robotics and Unmanned Vehicle Systems (UVS) As part of the diversification and expansion of industry in Alberta, a strong Unmanned Vehicle Systems sector is emerging. This innovative niche is expected to grow tremendously in the coming years because of its wide-ranging applications for military and commercial uses. The industry is supported by the Canadian Centre for Unmanned Vehicles in Medicine Hat and by the Alberta technical institutes and universities. Because of a small population and open land, Alberta can provide test ranges and facilities, such as in Foremost.
•
Defence Electronics Currently there are 12 Alberta firms in this sub-sector, employing approximately 1,200 highly qualified and skilled people. Sales are over $264 Million, 60% of which are exported. Companies manufacture and provide maintenance for Canadian and foreign militaries in these areas: secure tactical communications systems, software, specialized sensors and other components in military applications.
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Products include: • Avionics navigation systems • Control systems • Global positioning systems • Systems integration
•
Space Sciences and Aerospace Geometrics Alberta has over 25% of Canada’s geometrics, navigation and positioning firms, which accounts for $200 million in sales. 75% is exported to the United States and Europe. The research done through Alberta’s university is world-class and is funded by the federal and provincial governments.
•
MRO Alberta-based companies provide maintenance, repair, overhaul and modification of both military and commercial aircraft, including: avionics; airframes; engines; equipment and component parts; interior refurbishment; and, aircraft painting.
•
Logistical Support to the Military With four large military bases in Alberta, the province’s local communities are increasingly answering the military’s local procurement needs, while on a nationalscale; the province’s industry is collaborating to enter the supply chain on largerscale capital procurement projects.
Eastern Canada: Eastern Canada is represented by New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.
New Brunswick: The aerospace industry is located in Fredericton and Moncton. Areas of specialization include: • Aerospace design • Advanced composites • Communication research
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Nova Scotia: The aerospace industry is located in Halifax. Areas of specialization include: • Composites fabrication • Electronic assemblies • Engine manufacturing
Prince Edward Island: The aerospace industry is located in Charlottetown. Areas of specialization include: • MRO • Engine coatings • Airplane interiors • Precision components
Newfoundland and Labrador: Areas of specialization include: • MRO • Systems integration • Communications systems
Summary It can be seen that the aerospace industry is a nationally located industry. It is an innovative and sophisticated industry that is world-class. As a result, the industry is a global force in a very competitive global industry and is recognized for its excellence.
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The Canadian aerospace industry’s success has been developed through a combination of factors including: • Using world-class technology and materials. • Investing heavily in machinery and equipment to ensure that costs are competitive or lower than other producers. • An available educated and skilled work force. • The development of global export markets. While the US market is one of the keys markets due to geographic closeness, joint programs, etc., there is global recognition of Canada’s aerospace capability. • The development of a wide network of research institutes and Universities. • Ongoing research being conducted within the industry. Company research activities are encouraged by a generous system of tax credits. • Government support at all levels. • Low corporate tax. • Reduction and elimination of tariffs on all manufacturing inputs. Most were eliminated in 2010, but completion will be in 2015. • Encouraging and supporting investment by international corporations to develop operations in Canada. The industry is acknowledged as a technology leader for the products made. Companies work to a number of standards including ISO 9000 and AS9100. The industry continues to grow and it is anticipated that Canadian sales will reach over $30 Billion by 2020. The momentum of this industry offers many opportunities for Swiss companies, including the development of strategic alliances, direct investment and acquisition. More information is available through the websites listed below: Aerospace Industries Association of Canada www.aiac.ca Ontario Aerospace Council www.ontaero.org Association Quebecoise de l’aerospatiale www.aqa.ca Western Canada Aerospace Association www.canadawestaerodef.ca
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