Canadian Defence Review

 

January 2013

 

Title: Alberta Report 2013

Subtitle: This Western Canadian energy powerhouse is spawning an exceptionally strong defence presence.  

 

Alberta is known for its fabulous geography, enterprising population and envious natural resources. However lately, the province’s 500 defence sector contractors, which generate an estimated $2 billion in annual economic activity, its substantial military installations and a slew of new industry initiatives, are attracting increased attention.

 

“Alberta has a substantial defence presence,” says James Cox, chairman of the Western Canadian Defence Industries Association (WCDIA). “Not many people realize it but our industry employs as many skilled workers as the oil and gas sector (many of which’s workers are unskilled or semi-skilled).”

 

WCDIA’s Calgary head office is a harbinger of that success says Cox, who is also president of the Edge Group, which supplies special forces equipment, specialty optics, helmets and other gear. The association was formed several years ago to bring together Tier I contractors and lower Tier SMEs that can support major initiatives. “Many larger defence sector industrial and regional benefits recipients are looking for ways to spread work around here,” says Cox. “We help them do that.”

 

A Western Canadian Defence show… held in Calgary

WCIDIA’s main event is the WestDef annual symposium, which attracts considerable industry and government attention, including most recently Alison Redford, Alberta’s premier and Lynne Yelich, the federal Minister of State for Economic Diversification.  “We do no lobbying,” says Cox. “That would pose restrictions on contacts with government officials and make it harder for them to be present at organization events.”

 

This year WestDef 2013 will be held on July 8th and 9th, in tandem, as always, with the Calgary Stampede, which enables politicians, DND personnel (big Stampede backers) and other participants to attend the events simultaneously. Each year, symposium participants address a major defence topic, which this time will be Arctic Sovereignty.

 

Increased interest in Alberta’s defence sector should come as no surprise says Cox.  “There has been considerable upsurge in support during the past few years as worries about federal cuts have eased,” says Cox. “Many businesses here are gearing up to bid on long-term sustainability programs. In fact, with Calgary’s unemployment rate consistently coming in at or below the 4.0 percent level, one of our biggest drawbacks may be a lack of skilled labour.”

 

Kimberly Van Vliet, CEO of WAVv Business Development, a consultancy which helps organize WestDev, agrees that the fact that Canada’s third largest defence and security conference takes place in Alberta, is a good sign of the province’s strong sector clout. “The event is designed to attract all Western Canadian industry players,” notes Van Vliet. “The decision to hold it in Calgary was in large part due to its central location, but the sector’s impact here also played a major role.”

 

Four military bases

In fact Van Vliet points to participation in WESDEF, which has tripled in recent years to over 250 people and 20 exhibitors, as a key facilitator of sector growth. That said, the fact that Alberta should attract such strong defence sector interest should come as little surprise says Van Vliet. The province hosts four military bases, (Cold Lake, the Edmonton Garrison, CFB Wainwright and Suffield) which facilitates interaction with DND personnel.

 

“Alberta is playing an interesting role in the Canadian defence industry lately,” agrees Ed Meyer, general manager of Pelican Products.

“There are a handful of Tier 1 players here like GD Canada, Raytheon, Harris and Meggitt and an increasing number of Tier 2 and smaller companies successfully positioning themselves as viable suppliers

for all types of defence initiatives.” Pelican Products is a perfect example of that success, which should continue, if Meyer has anything to say about it. During the past year and heading into 2013, the company has been angling to get work on a slew of packaging, protection, and storage programs related to aerospace, armed vehicles, weapons and communications system components. 

 

General Dynamics Canada: IRBs play key role

It should come as no big surprise that General Dynamics Canada one of the country’s largest Canadian defence players (the largest, when sister company General Dynamics Land Systems is included), should have a significant Alberta presence. Its facilities there, which the company bills as the largest systems integration site in the country, are overseen by Chris Pogue, a vice-president, and house 400 of its 1,300 employees.

 

The Calgary location was set up in 1993 to handle systems design, integration and fielding of the army’s Tactical Command, Control and Communications System (TCCCS/Iris) project, which the company won several years earlier. Key to the facility says Pogue, were the $1.4 billion worth of Western Canada Industrial Regional Benefits credits for TCCCS which General Dynamics is getting for its contributions to the local economy. In fact IRB credits are a major activity generator for the province and were cited by several sector stakeholders as a key issue to watch going forward.

 

GD Canada’s contributions to Alberta’s economy are likely to continue, if not increase, in coming years its officials say. For example the company will be supplying Land Command Support System systems to the LAV III upgrade work that General Dynamics Land Systems will be doing. Earlier this year DND amended the LCSS contract to exercise three of the five option years available, extending the deal to 2017. The benefits from this work and its associated research and development, have been substantial with production now exported around the world. “The world is becoming more aware of the importance of Alberta’s defence industry,” says Pogue. “Shows like WestDef are gaining traction and attracting high profile guests.”

 

General Dynamics Canada’s sister company General Dynamics Land Systems also has a strong Alberta presence. According to Ken Yamashita, a spokesman, GDLS recently expanded its Edmonton facilities, which perform maintenance, combat and battle damage repairs and vehicle retrofits, for the Canadian Armed Forces, so they can handle work on the more than $1 billion Light Armored Vehicle (LAV) upgrade contract the company won in 2011.

 

In late November reports emerged that the federal government would be spending an additional $151 million to upgrade another 66 LAVs, and that some of that work would also be done in Alberta. As a result of the expansion, the Edmonton facilities can now handle complete vehicle final assembly, component assembly, turret assembly and final testing.  An additional 40,000 square feet was also added to the 100,000 square foot facility, to accommodate a parts warehouse to support the LAV work.

 

Raytheon:  repair and overall for all three services

The idea that Alberta, a land-locked province, would have core naval sector competencies would seem laughable - if it were not true. Meggitt Canada, which produces targeting drones with naval applications, has a significant presence there, as does Raytheon Canada Limited, which currently supports the Royal Canadian Navy through repair and overhaul of the Phalanx rapid-fire, computer-controlled radar and 20 mm Gatlin-gun system, which provides last line ship defences.

 

According to Terry Manion, the company’s vice president and general manager, Raytheon’s Calgary locale also provides MRO services for land and air needs and houses 160 of the company’s 1,500 employees. The site is also far more influential than it appears at first glance, as several other Raytheon locations report there including Shearwater Nova Scotia, Ottawa and Renfrew Ontario. “(With) many major platforms now being bought off-shore, off-the-shelf, most of our benefit in Alberta will be in providing in-service-support,” says Manion, noting however that other trends provide a continuing ability to add value. “The optimized Weapon System Support concept means that Alberta companies can provide technology insertion through the in-service life of the platform.”

 

Meggitt: a major Canadian UAV OEM

The presence of Meggitt Training Systems Canada, gives Alberta a foot in the door into the fast growing targeting drone unmanned aerial vehicle market. According to its president and general manager Spenser Fraser, the company, which employs 50 of its 75 Canadian workers at its Medicine Hat locale, has just come off its best year ever, sparked by a slew of international customers and sales of its Hammerhead drones, should hit 250 by March of this year. Meggitt Canada, which bills itself as the only Canadian UAV original equipment manufacturer (other than universities) has also been doing considerable development work on special purpose helicopters.

 

The company’s newly introduced Mosquito helicopter targeting drone, which was developed in conjunction with Defence Research and Development Canada and is currently being marketed internationally also shows great promise says Fraser, who remains optimistic about the Medicine Hat site’s future. “Going forward the appointment of the Jenkins committee implies that Canada is serious about supporting its defence industry,” says Fraser, a strong advocate of UAV technology and IRBs within industry and government, who last year was named Canadian Defence Review’s defence executive of the year. “Our positioning in a fast growing market means that that could play out well for us.”

 

Viking Air: two new Twin Otter 400s a month

Viking Air, which many have cited as a contender in the Fixed Wing Search and Rescue Aircraft sweepstakes, is another important Alberta aerospace and defence sector player, whose role could grow in coming years due to increased focus on Arctic sovereignty and other defence initiatives. According to Rob Mauracher, its vice-president (business development and general manager), the company is on a roll, with sales up close to four-fold over the past five years.

 

Its Alberta operations have played a key role in that success. Viking operates a facility at the Calgary International Airport, where 120 employees assemble the Twin Otter 400 series (the company is producing two a month) that also acts as a spare parts depot that feeds the company’s strong export performance. The aircraft, which has been sold to numerous international military clients from the Peru, to Vietnam and the United States, is incredibly versatile says Mauracher. It can be notably customized for a range of operations including search and rescue, medical evacuation, parachute operations and atmospheric data collection.

 

VariSystems, X-Act Technologies: defence connectivity solutions

One key factor which Alberta’s defence sector promoters harp on incessantly is the number of non-industry players who benefit from ancillary work stemming from major initiatives.  One such player is Vari-Systems, which operates a 50,000 square feel mixed manufacturing facility in Calgary that can produce up to a million feet of cable per month. The company’s products are used in industries ranging from mining to petroleum, but according to Kevin Pelletier, its marketing manager, in recent years VariSystems has moved increasingly into the defence market, for which it now produces cables and harnesses for the CWES system at CFB Wainwright, supplies the CF-18 fleet and produces products for the ISSP program.

 

“We were a little bit surprised to find out that procurement was slower and more complex than the major industrial processes we were used to, says Pelletier. “However the results have been positive.” So positive in fact, that VariSystems attracted the attention of US-based Teledyne Technologies which acquired it last February. “The integration is going well, says Pelletier. “Now we are looking forward to new bids, including TAPV (Tactical Armored Patrol Vehicle), where we were recently down-selected to the vendor list on that program.”

 

Cable providers also benefit from excellent export opportunities agrees Jeff Appleby, a spokesperson for X-Act Technologies, which supplies electric assemblies to both the Canadian and US defence departments. The company last year opened its second Calgary locale, a massive 50,000 square foot facility. Not surprisingly X-Act has been working overtime to build backlogs to keep the place busy, notably landing several contracts with Textron Marine & Land Systems and closing a deal to supply custom molded cables to the US military.

 

Novatel: GPS and GNSS technologies

Information-centric warfare doesn’t go so well if battle groups don’t get that information. Novatel’s Alberta facility, which houses the majority of the company’s engineering, manufacturing and administrative staff, helps make that happen. According to Graham Purves, Novatel’s executive vice-president, the company recently released its GAJT (GPS anti-jam technology) system, an antennae retrofitted to land-vehicles, that provides jamming protection against as many as six independent threats.

 

Not surprisingly, Novatel is far better known south of the border, where it counts the US military and several major contractors as clients. As defence technology improves, so too are demands on suppliers, says Purves. “Historically GPS and GNSS (global navigation satellite systems) were sold as commercial off the shelf solutions,” says Purves. “But as these technologies mature, there has been a move to more formalized military specifications and requirements.”

 

C4i Consultants: simulation and training exports, Alberta jobs

“Partnership” is another theme that emerges repeatedly when talking with Alberta defence sector players. “We are always looking to team up on projects in Canada or abroad,” said Bruce Gilkes, president of C4i Consultants, a simulations and training services provider, in a telephone interview from Saudi Arabia, where the company recently expanded its office to better service Middle Eastern customers. “For example we are working closely with Thales, and hope to provide software engineering services, as part of a signals operations tool suite to the Canadian Army. This project could revolutionize the way that operations are planned and monitored from a signals perspective.”

 

Another example of C4i Consultants’ success has been in Iraq, where the company helped provide the Persian Gulf oil-rich nation with enhanced MILSIM capabilities. In fact C4i Consultants’ success in overseas markets coupled with maintenance and growth of some 30 high value-added jobs in Calgary, where it does most of its technological development, provides an excellent example of a model seen repeatedly throughout Alberta’s defence sector.

 

However unlike energy, which once extracted is gone forever, Alberta’s defence sector brainpower gets stronger and more competitive with repeated use. There are few better arguments for a balanced federal and provincial industrial strategy than that.

 

peter@peterdiekmeyer.com

 

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