Title: Western Canada Report

Sub-title: Canada’s defence industry is deployed right across the country. Yet Western provinces, which often get less attention, have built up surprising capabilities.

 

A good way to get a grasp of the latent strength of Western Canada’s defence industry capabilities is to walk around Cascade Aerospace’s Abbotsford British Columbia facility. There, a good chunk of the company’s 700 employees conduct maintenance, repair and overhaul work on Canada’s aging fleet of 27 C-130 Hercules transport aircraft. Yet to many long time industry watchers, the presence of this up-to-date engineering, heavy maintenance, component overhaul and avionics capability in Western Canada may seem somewhat surprising.

 

“We often think of Canada’s aerospace sector as being primarily Quebec or Ontario based,” admits David Schellenberg, Cascade Aerospace’s Chief Executive Officer. “But there is a lot of capability out here in the Western provinces – and we are quite good at what we do.”

 

The fact that Canada’s defence industry is spread widely across the country should not come as much of a surprise. The Canadian government’s industrial and regional benefits policy is in fact designed to ensure precisely that. The defence department itself has a sizeable presence in Western provinces.

 

These range from naval bases and deployments, which help monitor, patrol and protect Western Canada’s sizeable coastline, to both air and land-based facilities. Famed Princess Patricia’s Canadian Light Infantry units are stationed there, as are close to 10,000 personnel at Area Support Units (ASU) in Shilo, Wainwright, Calgary, Suffield, Edmonton and Chilliwack alone.

 

There are also four Air Force Wings based in Western Canada, in Winnipeg, Moose Jaw, Cold Lake and Comox, as well as a helicopter squadron in Edmonton. This sizable western Canadian military presence provides an excellent platform from which industry can grow. Yet the heavy concentration of governmental decision structures, corporate head offices and ancillary services in Central Canada, often obscures the industry’s regional strengths, particularly those of Western Canada.

 

Cascade Aerospace is a true Western Canadian defence industry success story. This subsidiary of parent Conair Group, a world leader in aerial firefighting technology, diversified into the defence sector in 2004 and quickly made its mark. The next year the company snagged the highly sought-after prime contractor role in the Hercules C-130 transport aircraft maintenance initiative.  According to Schellenberg, standards soared almost immediately. “Since we took over the MRO work, we cut turn times in half,” says the CEO. “Furthermore we went from a cost plus contract to a performance based one.”

 

Go West young man

Cascade Aerospace isn’t the only Canadian company moving into the defence industry in a big way. Avcorp, another British Columbia-based civilian-side aerospace sector supplier is also making its presence felt. According to Paul Kalil, the company’s president, only about 25 of the company’s 900 employees currently work on defence sector applications right now. But that will soon change. “We have built up considerable expertise supplying major aerospace players such as Boeing, Bombardier and Cessna,” says Kalil. “Much of those capabilities can be directly leveraged into supplying the defence sector as well.”

 

Avcorp recently landed a prized contract to produce outboard wings for the carrier version of Lockheed Martin’s F-35 Joint Strike Fighter. During the coming dozen or so years, as many as 340 of these aircraft are expected to be produced, which could bring the dollar value of production on that initiative into the $300 million to $500 million range. Not bad for a first effort.

 

However Kalil is hardly done. Recent Department of National Defence strategic lift capability purchases including those of four Boeing C-17 Globemaster IIIs and 17 Lockhead Martin C-130Js, will result in significant offset work being allocated by those vendors. According to Kalil, Avcorp is well positioned to contribute. “During recent years we made a strategic decision to better diversify our customers base,” said Kalil. “Our objective is that over time military orders will account for between 40% and 450% of our total sales.”

 

Land force and homeland security support

Of course Western Canadian defence sector capabilities aren’t just limited to the aerospace sector. For example industry giant General Dynamics Canada, provides an excellent example of how industrial and regional benefits can lead to the development of real long term capabilities. The company, which this year celebrated its 60th anniversary, has staffed 600 of its 2,200 employees at its 140,000 square foot facility Northeast of Calgary.

 

General Dynamics Canada’s Western Canada presence got a real push in 1997 after it acquired the assets of Computing Devices Canada. That company achieved considerable recognition after it picked up the $1.4 billion Tactical Command Control Communications Systems (TCCCS) contract to replace communications devices on the Canadian Army’s tracked and wheeled devices. Since then, the unit has generated considerable worldwide success, notably closing a $4 billion deal to adapt the Canadian system and supply similar capabilities to the British Army.

 

According to Craig Jansen, a vice-president at General Dynamics, the company has by now done more than 20,000 vehicle communications installations and has moved into the long-term support phase on its major earlier initiatives.

 

“We are looking at several opportunities down the road,” said Jansen. “For example Alberta is currently implementing a first responders radio communications system that will connect the RCMP, with municipal, police, fire and ambulance authorities. Although this is an adjacent market, such a system could have homeland security benefits.”

 

According to Jansen, General Dynamics’ vast experience in communications position the company particularly well to contribute to the defence department’s Integrated Soldier Systems Project (ISSP). This $300 million initiative will add individual soldiers as nodes in secure voice and data networks so that they can have increased situational awareness on the battlefield. The new initiative, which will extend to selected CF land personnel, is expected to dramatically improve tactical individual and team effectiveness. At last word, DND’s ISSP unit office was currently staffing up and a request for proposal is expected to be issued by the end of next year.

 

Combining defence and non-defence initiatives

One recurring theme regarding Western Canadian defence sector players relates to how well many combine and leverage non-defence sector capabilities into broader offerings, which are of significant interest to Canada’s Armed Forces. One example is Richmond, British Columbia-based MacDonald, Dettwiler and Associates Ltd. This information solutions provider, which has long been associated with the Canadian Satellite Program, made headlines last year when it launched its latest RADARSAT-2 platform, as part of a $600 million public private partnership.

 

One of the new satellite’s biggest applications is a seemingly innocuous ice-monitoring capability, which could yield dramatic benefits over time. Experts agree that ensuring Arctic sovereignty will be among Canada’s highest stakes challenges in coming years.

 

As the polar ice melts, the probability that one day Northern waterways will become public thoroughfares increases. If that happens, Canadian territory could become at risk from threats such as leaks from rusty oil tankers passing through, to natural resources rights disputes to even worse.  In fact, the ability to monitor ice formations could well become a major tool in Canada’s bid to ensure sovereignty over its Northern territories during the coming years.

 

According to Dave Hargreaves, vice-president and general manager at MDA’s Integrated Information Solutions Group, the company is also well poised to contribute to other DND initiatives or enhancements during the coming years. These include SP-140 imaging radar, MCOIN, Navy Combat Operations Trainer and Polar Epsilon.

 

“We are particularly optimistic about the $95 million NOCTUA UAV program contact we were awarded earlier this year,” says Hargreaves. The two-year deal, will see MDA and Israel Aerospace Industry partner to supply aircraft, equipment and staff at Kandahar Airfield for the CF’s vital Afghanistan mission. With considerable swaths of Afghan territory controlled by Taliban forces, even routine patrols can be extremely dangerous. UAV capabilities significantly reduce the need for foot and vehicle patrols and thus play an important role in saving Canadian lives.

 

MDA’s current UAVs deployment consists of larger aircraft with 16 meter wingspans that can carry multiple payloads including electro-optical, synthetic aperture radar and electronic warfare equipments. Although Hargreaves wouldn’t disclose the precise number of aircraft operating in theater, he did say that MDA had between 15 and 20 personnel in Afghanistan at the time, all of which were fairly easy to recruit. “A lot of ex-CF types really believe in Canada’s mission there and are more than happy to step up to the plate,” said Hargreaves.

 

MDA’s substantial contributions to Canada’s defence industry have resulted significant benefits to the Western region. For example fully 850 of the company’s 3,300 employees are located in Vancouver alone. And that number could increase. According to Hargreaves, MDA`s experience in the Afghan UAV deployment will position the company well to compete on the upcoming massive $2.3 billion Joint Unmanned Surveillance Target Acquisition System (JUSTAS) UAV program.

 

A “can-do” attitude

According to Ron Guidinger, vice-president and general manager of Ratheon Canada, Western Canada offers several intangible advantages to defence sector players that want to locate there.  “Although we compete with the oil and gas industry to get access to employees with more specialized technical skills, overall we have gotten excellent labor support,” says Guidinger.

 

Raytheon`s Western Canadian operations, which employ close to 150 personnel are centered around its Calgary facilities. However the division also has staffers both in Ottawa and at the Cold Lake and Bagotville Air Force Bases.  The division includes roughly 12 people who provide maintenance on the Sea King simulators. However its primary roles are mission support, as well as the repair, overhaul and upgrade of equipment such as the CF-18 APG-75 radar. The company also maintains the navy’s 21 Phalanx Close In Weapons System (CIWS) as well as air defence radar on 12 navy frigates.

 

According to Guidinger, these and other contracts have resulted in Raytheon’s Western division growing revenues at double digit levels for several years, a trend he expects to continue. “We have a very proactive business community out here,” jokes the veteran. “A lot of us out here don’t even understand the meaning of the word “can’t.””

     

Challenges of a Western Canada locale

One of the biggest fans of the Western Canadian defence sector is Paul Lindahl, president of NGRAIN Canada. The company designs and produces highly interactive 3D simulations that help users such as the Canadian and U.S. Armed Forces dramatically lower training costs.

 

To remain on the cutting edge of technology, the company needs to attract the industry’s top creative minds, a challenge that its Vancouver location makes far easier. “This area is a real hotbed of 3D talent, so we are really blessed in that respect Electronic Arts is located here and Microsoft, which has a head office just across the border in Seattle, just built a substantial development lab in British Columbia as well,” says Lindahl. “Getting good people is a major priority for us. Fortunately there are many great schools in the area. When we hear of someone good, we bring them in as coop students and hire them when they graduate.” 

 

That said, “…there are challenges irregardless of where you are located,” admits Lindahl. “Defence is a North American as well as a global business. So we have teams working on-site in places ranging from Halifax, Greenwood, Trenton, Gagetown, Cold Lake and Esquimalt. Travel is always an issue.”

 

The good news is that almost all of NGRAINs customers are world leaders in their own right and are thus used to dealing with global supply chains. Despite this, Lindahl is highly focused on making sure that NGRAIN remains on the radar screen in Ottawa, where much of DND’s procurement originates. The company already has three or four personnel in the area, but plans to open a formal Ottawa office in the near future.

 

In short, the Western Canadian defence sector players we spoke to are optimistic about the region’s future prospects. David Schellenberg of Cascade Aerospace summarizes the situation this way: “Canada’s defence sector is known for its high quality, and a lot of that reputation originates right here in the West,” says Schellenberg. “We expect that to continue. Over time we want expand into further into supplying military needs. We want to compete on new procurement initiatives here in Canada, and then leverage on that base to expand further in international markets.”

 

Peter Diekmeyer (peter@peterdiekmeyer.com) is a contributing editor at Canadian Defence Review.

 

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