Canadian Defence Review
January 31, 2013
Canada's top defence contractors
# 2 General Dynamics Canada
2012 Rank: #2
General Dynamics Canada gets our nod for the number two position for the second year straight, due to its consistent innovation, adaptation to changing markets and ongoing contributions. As one of the country’s largest defence contractors (largest if General Dynamics Land Systems data are included) General Dynamics Canada is a perennial top placer in the Top 50 list.
General Dynamics Canada is prime supplier and integrator of mission systems and sensor hardware and software on the CC-148 Cyclone Marine Helicopter Project and recently landed work related to the CH-147F Chinook. The company continues to provide advanced communications services through the Land Command Support System (LCSS) Engineering and Integration Support Contract (LEISC), several elements of which were recently extended, and its naval capabilities have made it a leading candidate to land NSPS sub-contracting work.
The scale of its Ottawa, Calgary and Halifax facilities means that General Dynamic Canada is always on the look-out for new work so exports are a big part of its business. “We are focusing on areas where we deliver exceptional expertise,” says Ibbetson. “(These include) mission systems integration, signals processing and networks, communications, ruggedized smart devises and displays and digitized battle space.” Not surprisingly, the company has also been increasingly building efficiencies to better perform on the global stage.
That said, there are priorities here at home too. For example General Dynamics Canada is hoping to add value to Alenia’s C27J as part of “Team Spartan” on the Fixed Wing Search and Rescue bid. Like most sector large players much of the company’s work is offset-related and its officials have long been big boosters of the system. In short, General Dynamics Canada will a major player on the Canadian scene for years to come.
2012 Rank: #6
CAE moves up three spots in this year’s rankings due to increasing recognition of its role as one of the few Canadian defence players which develops, produces and markets a dominant, large-scale, domestic, end-to-end military capability. According to Chris Stellwag, a company spokesperson, this flight simulator and training services provider racked up considerable successes during 2012, booking an impressive $950 million in defence orders. New initiatives ranged from a joint venture in Brunei, to dedication of an R&D facility in Alma Quebec, coupled with ongoing pursuit of OTSP recognition for the JUSTAS and FWSAR initiatives.
The current, tight-budget environment plays well to CAE’s strengths. When feasible, it is cheaper to do pilot training in simulators, sparing fuel and expensive air force hardware. As a result, demand remains strong for flight simulation equipment, systems and tools that service the fast jet, helicopter, maritime patrol, and tanker/transport aircraft markets. CAE has also reacted to demand for more cost effective training, by developing new solutions for the land forces (such as tank and gunnery simulators) and UAV markets.
“We are pleased about the recent Special Advisor Report which identifies training systems as one of Canada’s key industrial capabilities,” says Stellwag. “We are confident that this is the first step of a new procurement approach that will support the (report’s objectives).”
Here in Canada, where CAE employs 3,500 of its 8,000 personnel, the company’s most visible presence relates to its prime contractor role in providing aircrew training for Canada’s CC-130J transport aircraft and CH-147F Chinook medium lift helicopters. Earlier this year, two CAE CC-130J simulators, based at Trenton, were certified Level D, the highest possible ranking.
CAE also offers extensive civilian side solutions. To maintain its growth pace it has also been increasingly branching into non-core areas such as healthcare and mining. The results have been impressive. CAE now operates at about 100 or so locations in close to 30 countries. It should thus come as no surprise that close to 90 percent of its revenues come from outside of Canada.
#4 L-3 Communications
2012 Rank: #5
L-3 Communications, a perennial high placer in the Top 50 rankings, registered another good year in 2012, advancing one notch to number four. According to Peter Gartenburg, the company’s vice-president (Ottawa Operations), all major divisions contributed. These included L-3 MAS, which fills several of Canada’s most important defence roles, including maintaining CF-18 front-line fighters and priming the CH-148 Cyclone Marine Helicopter Program’s ISS work.
L-3 MAS was also awarded support assignments related to the CC-150 Polaris Airbus fleet and CH-147F Chinook helicopters, as well as repair and overhaul services work, related to outer-wing panels on Boeing’s US F/A-18s Super Hornets. The division also racked up significant civilian orders, to help diversify its book.
L-3 MAPPS, which provides the Integrated Platform Management Systems (IPMS) currently used on Canada’s frigates, submarines, ORCA class patrol vessels and Iroquois class destroyers, also gained ground. In February, the unit celebrated its 40th anniversary in the power plant simulation business, where it continues to pile up orders. Burlington-based L-3 Wescam for its part logged a series of wins related to its imaging, turret and simulations technology.
Ironically, when it comes to Canada’s fighter jet plans, no news also may also be good news for L-3 Communications. The Harper Government’s decision to look at possible alternatives to Lockheed Martin’s F-35 Joint Strike Fighter could open considerable opportunities. There has been little visibility on what role, if any, the company would have in repairing and maintaining the JSFs, when L-3 MAS’s F-18 assignments are phased out.
However one main JSF alternative is thought to be Boeing’s F/A-18 SuperHornet. L-3 MAS’s experience with these aircraft would prove invaluable. “We are in a very good position to land in-service support work for whatever fighter is selected,” says Gartenburg. “We have memorandums of understanding with most potential suppliers. Our position is that whichever one is chosen, the work should be done at our Mirabel facility, which is ideally suited for this kind of assignment.”
#5 Thales Canada
2012 Rank: #3
Thales Canada, which employs 1,300, including 350 on the defence side, placed strongly again in the 2013 rankings, due in part to an 18% increase in orders, to $570 million. Military business accounts about a quarter of that, balanced out by considerable civil side capabilities.
According to Mark Halinaty, the company’s vice-president and managing director (defence and security) the Canadian unit is known primarily for its development, supply and servicing of command and control software. “LCSS (Land Command Support Systems) remains our greatest success,” says Halinaty. “In 2012 (we) received a three-year extension on the contract bringing its total value to $300 million.”
Thales Canada also boasts considerable soldier systems C2 capabilities, which were developed here in Canada, which company officials say positions it well to bid on the ISSP initiative. On the naval side, Thales is contributing to both the AOPS and JSS initiatives. The company’s domestic defence activities are spread amongst three of its six Canadian locales: Ottawa, Quebec City and Montreal. The latter division, which has a long history of supplying optronics systems to the Canadian military, made news in early 2013 when it announced that it would be delivering 400 infra-red cameras to General Dynamics Land Systems, for use in the LAV upgrade program.
Like many defence-sector players, Thales Group, which owns Thales Canada, is an innovation leader. The France-based parent reinvests close to 20 percent of its revenues on research and development. That commitment is reflected in its workforce, 73 percent of which are engineers, specialists or managers. Those values have flowed down to the Canadian subsidiary.
Here in Canada recent R&D efforts have focused on cyber security, information fusion, social network analysis and modeling and simulation, all of which should solidify the unit’s position going forward. Thales Canada officials say that major defence goals during coming years will center on solidifying the division’s position in existing markets. The unit also hopes to remain an electronic systems integrator of choice and to expand into the army training and simulation business.
#6 Irving Shipbuilding Inc.
2012 Rank: #1
Irving Shipbuilding, which claims to have delivered 80 percent of Canada’s existing combat vessel fleet, ranks solidly again this year, due to the long shadow it continues to cast over the Canadian defence landscape. The company’s win of the massive National Shipbuilding Procurement Strategy combat vessel package, (which, when sub-contracts are included, is expected to total $25 billion) has positioned it as a major sector-player for the coming decades. Specific NSPS assignments will only be handed out in bits and pieces. However according to Ross Langley, its vice-chairman, earlier this month, Irving, began work on the key design phase of the Arctic Offshore Patrol Ships (AOPS) project.
Initial AOPS definition and design work will be done in Halifax, starting with a team of 90 engineers, supply chain leaders and technical specialists. These professionals, which are expected to be in place by spring 2014, will manage specialist sub-contractors, major suppliers and work on integrating ship major systems. The overall process is expected to take 30 months. In fact Irving Shipbuilding’s impact will be magnified considerably in coming months, as it will be short listing numerous additional sub-contractors to take part in the process. (Several major subs have already been announced including Lockheed Martin Canada, which will handle command and surveillance systems integration and GE which will take care of integrated propulsion systems integration).
As the project unfolds an additional 110 production workers will bring the initial AOPS team to about 200. The overall NSPS design and production process, which is expected to be spread out over three decades, will solidify Irving Shipbuilding as one of the most important Nova Scotia employers and will go a long way in spreading regional economic development into Canada’s Atlantic region.
Irving is also making considerable investments in infrastructure at the Halifax Shipyard, where construction on the AOPS vessels is expected to begin, possibly as early as 2015. Activity though will really heat up in 2020, when construction on the Canadian Surface Combatant vessels, the other major NSPS element, is currently scheduled to begin.
#7 General Dynamics Land Systems - Canada
2012 Rank: 11
General Dynamics Land Systems inched up in the rankings after capping another milestone year by delivering the first upgraded LAV III troop carrier/assault vehicle to the Canadian Armed Forces. GDLS won the $1 billion contract to enhance mobility, firepower and soldier protection in the CF’s 550 Light Armored Vehicles, in 2011. In late 2012 the company landed an additional $133.5 million order to upgrade 66 reconnaissance and surveillance LAVs.
As key provider of this crucial end-too-end OEM capability on backbone military hardware, GDLS, which operates major facilities in London Ontario and Edmonton Alberta, will under considerable pressure to get the LAV IIIs back into service on schedule.
GDLS is also a major player on the export front. It has shipped close 9,000 LAV variants, a number which dwarfs production for local use. As recently as early 2013, GDLS announced yet another export contract, this time a $24 million deal to produce 13 vehicles for the US Marine Corps. That said, GDLS has also been gearing up to navigate challenges posed by US sequestration budget cuts and other initiatives that could have a considerable impact on defence spending.
One possible path is by redoubling GDLS’s focus on innovation. For example the double-V-hull technology which will be incorporated into the LAV IIIs (which were consistent targets of improvised explosive device attacks during the CF’s Afghanistan mission) is an innovative enhancement developed by the company’s London engineering team that significantly enhances passenger protection. Another possible route could involve further building the company’s base of non-US customers.
Like all major Canadian defence industry prime contractors, GDLS also provides considerable work to a series of local suppliers, which considerably enhances its economic footprint and domestic visibility. They and the rest of the country’s defence community will be closely tracking its progress.
#8 Lockheed Martin Canada
2012 Rank: 7
Lockheed Martin Canada, which provides naval combat management systems, C4ISR, in-service support and trainers, solidified its position in the Canadian defence sector last year. The company announced key contracts and acquisitions as well as delivery of the 17th (and final) CC-130 Hercules transport, ordered by DND several years back, in the midst of heavy overseas Canadian deployments.
According to Michael Barton, a Lockheed Martin Canada spokesperson, the company, which accumulated considerable Canadian naval experience in the Halifax Class modernization initiative, got good news last month when Irving Shipbuilding, the prime contractor on the Arctic Offshore Patrol Ships project, announced that Lockheed would handle command and surveillance systems integration needs in the design phase. This assignment will position Lockheed to further contribute as AOPS moves forward into the construction phase.
In late December Lockheed Martin Canada also announced the acquisition of Calgary-based CDL Systems, a software engineering firm that develops and licenses vehicle control station software for unmanned systems. As if that were not enough, the company also picked up legacy assets formerly owned by Aveos, a defunct Montreal-based aerospace maintenance, repair and overhaul provider.
Lockheed Martin also made significant waves in 2012 due the debacle surrounding projected federal procurement of its F-35 joint strike fighter, arguably the most sophisticated piece of conventional warfare kit on the planet. The politics surrounding Canada’s decision to sign onto early stages of the project generated considerable publicity, not all of it good. That said, the company’s Canadian operations had little involvement in the deal, which was overseen by the US parent, and thus appear to be emerging unscathed by the process.
That said, although JSF program is under review, Lockheed Martin remains the leading contender. This, combined with continued progress in Lockheed’s Canadian operations, will be keep this top tier provider on the hot seat as developments unfold.
#9 Raytheon Canada Limited
2012 Rank: #10
Raytheon Canada, a subsidiary one of the world’s largest defence contractors, Waltham Massachusetts-based Raytheon Company, placed well on CDR’s Top 50 list again this year, for the shear range of its capabilities and the continuing importance of the kit it supplies the Canadian Armed Forces.
According to Val MacDonald, a spokesperson, Raytheon Canada, markets high technology capabilities ranging from engineering services, to surveillance and navigation systems, air traffic control radars and maritime surveillance gear; through its Ottawa head office and sites in Alberta, Ontario and Nova Scotia.
The firm’s Calgary’s locale, was particularly active during 2012, due to continuing work with the Royal Canadian Navy to modify the support strategy for the Phalanx weapons system (a rapid fire computer controlled radar and Gatling-gun system), in order to better reflect the impact of the Halifax Class Modernization project.
Raytheon Canada is also part of the
GDLS team, which provides support to the LAV, the Harris team which
provides avionics support for CF-18 and the Boeing team which is setting
up support for the CH-47. “All of these contracts have been proceeding
well,” says MacDonald. Raytheon’s Waterloo facilities have also been busy
working on a project with Defence Research and Development Canada, to
develop High Frequency Surface Wave Radar (HFSWR) capabilities, and have
hit all required milestones in 2012. Delivery of a prototype unit should
thus be ready for testing on schedule in 2013 at Hartlen Point, Nova
Going forward, Raytheon Canada’s Support Services Division has teamed with firms such as Nexter and Sagem to try to get work on the Integrated Soldier Systems Project and the Close Combat Vehicle program. This should enable Raytheon to bid as a prime or as an in-service support provider on major weapons systems projects as these come up for bid.
#10 Seaspan Shipyards
2012 Rank: #9
As one of Canada’s two main shipyards chosen to do National Shipbuilding Procurement Strategy work, Seaspan Shipyards would be a high placer in any ranking of the country’s top defence providers. However the company did particularly well this year due to its quickness in beginning to tool up its facilities to begin building the NSPS non-combat vessels and to continued efforts on the Frigate Life Extension (FELEX) and Victoria Class submarine refit programs.
According to John Shaw, Seaspan Shipyards’ vice-president (government relations and business development) all three programs are going well. The company’s work on the HMCS Calgary frigate was completed in April of last year, and its work on HMCS Winnipeg will be wrapped up by April 2013. Work on the HMCS Chicoutimi submarine is also nearing completion, after which it will be the HMCS Corner Brook’s turn.
But right now NSPS is attracting all the attention. In October Seaspan Shipyards broke ground on what are to be $200 million in new investments at its Vancouver facilities, where the initial vessels (two joint support ships, one oceanographic science vessel, three offshore fisheries science vessels and a polar ice breaker) are to be built.
The $8 billion NSPS non-combat contract, which company officials say will create 4,000 direct, indirect and induced jobs, in British Columbia and other Canadian provinces which receive industrial and regional benefits contracts from the program, was a huge win for Seaspan. It will provide considerable security for its existing 2,400 employees and position the company as key defence sector player during the coming decades.
For facilities upgrade initiatives, progress on NSPS and overall project management capabilities, Seaspan Shipyards once again cracks the Top 10 in Canadian Defence Review’s Top 50 rankings.
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