Canadian Defence Review


December 13, 2013


Title: Quebec aerospace and defence report 2014

Subtitle: With major federal prime procurement contracts awarded out-of-province, Quebec defence firms, many world leaders in their fields, are angling to get in the back door.


A key fallout from the Harper Government’s ongoing defence procurement challenges is growing realization of how they will affect readiness. Delays in getting the 28 proposed Sikorsky Cyclone CH-148 marine helicopters (first ordered in 2004) into action, will for example, hurt the Canadian Armed Forces’ ability to conduct a variety of missions. These include anti-submarine warfare, search and rescue and tactical transport operations.


Canada’s sovereignty will also be affected, in an era in which its Arctic sea lanes are increasingly regarded as “up for grabs.” The repeated stalls in the marine helicopter program, which mirror those in a broad range of other widely-touted initiatives, are having spill-over effects on Quebec’s defence industry.


True, major contracts for the F-35 Lightning II Joint Strike Fighter (now being re-studied), National Shipbuilding Procurement Strategy (unveiled more than three years ago, with construction not yet begun on a single major ship) Close Combat Vehicles (whose future at press time was in doubt) and other major initiatives, were all awarded to non-Quebec players. The upshot is that locals have had to refine workaround strategies to remain relevant.


These Harper Government “zombie” defence programs (which exist on paper, but not-so-much in real life) even those that will eventually get underway, have left Quebec players to bid on scraps left over after the big boys have eaten. Many have thus had to look outside the country for sales. Ironically, as a group, they have been surprisingly successful.


L-3 MAS: ISS, MRO, aero-structures

“The marine helicopters represent a lot of potential work,” admits Jacques Comtois, vice-president and general manager, of L-3 MAS, which was selected to do in-service support on the CH-148 Cyclones, a shipboard military version of Sikorsky’s S-92. “So we are watching developments closely. However in this business you never know. You have to keep your options open.”


Comtois isn’t kidding. L-3 MAS employs 850 people in Quebec, of which 225 do maintenance on Canada’s CF-18 fighters at its Mirabel facilities, which makes it one of Canada’s most important defence contractors.  However, the Harper Government’s Joint Strike Fighter procurement plans have called into doubt whether that key capability will be kept in-country.  


L-3 MAS has responded to the uncertainty by pursing a range of opportunities such as building its aero-structure capabilities, bidding hard to win a follow-on contract to provide ISS work on the CC-150 Polaris Airbus fleet (potentially a $683 million deal) and looking out of country for work, particularly in the US, Switzerland and Australia.


CAE: a better bang through simulation

One way that Quebec defence contractors can stand out is to be the best at what they do. When that happens, no one can ignore you. The good news, is that many, particularly in the aerospace sector, where Quebec is unquestionably a center of excellence, have done just that. CAE, which dominates the world’s flight simulator market is one example.


Fully half of CAE’s 8,000 worldwide employees are located in Canada, and most of those in Quebec. “We continue to be optimistic about our core business,” says Mike Greenley, who took on responsibilities as vice-president and general manager (Canada) in mid-October. “The simple fact is that it is much more economical to train in a simulated environment. So opportunities here and globally look quite good.”


One recent CAE move includes a push to become recognized as a Training Systems Integrator that can help customers “define, develop, and operate,” complete facilities. Greenley cites the Royal Canadian Air Force’s new Air Mobility Training Center in Trenton  and a similar capability that it is helping to set up for the CH-147 helicopters in Petawawa, as examples. In fact CAE, L-3 MAS and several other Quebec companies, got a boost earlier this year when the Jenkins Report identified training and simulation and in-service support work, as key industrial capabilities, which Canada should focus on.


Bombardier looks to exports

Although Bombardier, Canada’s most visible aerospace provider, is primarily known for its civilian products, the company is a also a major contributor on the defence front, notes Michel Bourgeois, president of the Bombardier Specialized and Amphibious Aircraft division, which is based in Ville Saint-Laurent Quebec.


“All Canadian Forces pilots have passed through one of our Military Aircraft Training (MAT) programs,” says Bourgeois proudly, of the initiatives, which are conducted at DND’s Moose Jaw and Cold Lake facilities and are now in the 12th year of a 20-year cycle. “This gives us excellent contacts and sector knowledge, which in turn makes it easier for us to provide solutions going forward.”


Bombardier has been adapting to tight global defence budgets by pushing specialized maritime patrol, SAR, fire control and executive travel aircraft sales in foreign markets (such as Singapore, India, Australia and South Africa). “Lack of funds has been driving governments to take a new look at pre-existing aircraft,” says Bourgeois. “This provides opportunities for several of our platforms ranging from the Global Express, the Challenger and Q-400, the CRJ and the Bombardier 415 Superscooper water bomber.”


Bombardier executives also feel confident that they can help meet Canada’s Fixed Wing Search and Rescue (FWSAR) needs, this despite the fact that requirements (as currently written) appear to rule out its aircraft, which are not equipped with ramp doors. “There is a strong case that the doors may be needed in some of the aircraft, but all,” explains Bourgeois “A hybrid solution, which involves two different platforms, may be the better way to go.”


Esterline CMC Electronics: a specialized niche leader

Another Quebec-based global aerospace leader is Esterline CMC Electronics, a cockpit systems integration and avionics solutions provider, which houses 850 of its employees there. This niche player has managed to stand out in a competitive industry by focusing on products and services such as navigation and flight management solutions, GPS receivers, portable mission displays and enhanced vision system detectors, much of which are exported.


According to Jean-Michel Comtois, its vice-president (sales, government and public affairs) here in Canada, the company has also been keeping busy doing navigation system development work for the Polaris CC-150 tankers. These aircraft will be an increasingly important piece of kit as the Canadian Armed Forces move to assert the country’s sovereignty in the Arctic. Key to those efforts are the provision of polar navigation capability that will enable the aircraft to operate north of 72o. Esterline CMC Electronics is also angling for work on the FWSAR program, where Comptois believes the company’s avionics technologies and cockpit integration skills can add real value.


Marinvent Corporation: aerospace research and development

One of the few positives stemming from the Harper Government’s ineptitude in the Joint Strike Fighter procurement (which included massive cost over-runs, inadequate assessment of alternative platforms and widespread misinformation all highlighted in a report by then-auditor general Michael Ferguson’s) has been increased public scrutiny. This forced a review of existing processes.


One of the beneficiaries has been Marinvent Corporation, an aerospace research and development provider which has traditionally focused in human factors consulting, systems engineering and flight test certification. This year, the company has taken on additional mandates to integrate specialized software tools to help Public Works and Government Services Canada conduct independent evaluations of their capital equipment needs. “There is clearly a trend to increase transparency and openness in the government’s procurement process,” says John Marris, Marinvent’s president. “This should provide significant benefits going forwards.” 


Davie: bouncing back from NSPS loss

Quebec was particularly unfortunate during the NSPS bidding phase, which took place while Sorel-based Davie shipyards, which bills itself as Canada’s largest, was in receivership. This left the province short-changed in what some say will be the largest defence procurement in Canadian history. (Companies such as L-3 MAPPS, a leader in the provision of integrated platform management systems, will still have the opportunity to bid on NSPS sub-contracts). 


Since then, Davie, whose assets were recently acquired by UK-based Inocea Group, has been looking to make up for lost ground. According to John Schmidt, its vice-president (commercial) Davie has emerged from financial difficulties and now employs 800 people working on large civilian projects, particularly ferry and platform supply ship construction. As a result, the company now appears to be well positioned to bid on work related to the $2 billion allocated for small ships (under 1,000 tons) in the NSPS. Davie has also partnered with Babcock to bid on international work. In a pinch, the company could even pitch in to build the polar icebreaker, whose construction was delayed so that Seapan could prepare to build the JSS vessels. For now though this is all speculation.


Wartsila: an eye on JSS

The big hopes right now in Quebec naval circles stem from the federal government’s recent announcement that work on the Joint Support Ships program will begin in late 2016. That’s great news for companies like Wartsila Canada, which provides marine solutions, power plants, services and support. According to its president Mark Keneford, competitive times had been forcing many Quebec’s naval defence players to bid aggressively on whatever opportunities were waved front of them. The go-ahead on JSS could thus provide new life to the industry.


Wartsila for its part has been angling to work on vessel life extension initiatives, a Coast Guard ship in development and the Arctic Offshore Patrol vessel, being built on the east coast by Irving Shipbuilding. However a main focus remains Joint Support Ships. This despite the fact that the program is somewhat a wild card, with many insiders wondering to what degree ThyssenKrupp Marine Systems’ off-the-shelf design can be modified to accommodate the capabilities of Canadian companies.


Kaycom/JSK Naval Support: partnering and innovation

According to Brian March, president of Kaycom/JSK Naval Support, supplying Canada’s naval defence needs is no different than marketing to any other sector. “You have to innovate,” says March. “That means providing solutions the customer can’t get anywhere else.” March’s response, announced earlier this year, was to partner up with UK defence systems specialists J+S Ltd. in a joint venture to offer DND a range of torpedo and launch systems, sonar, acoustic components, ancillary equipment and other solutions such as the ES800 echo sounder.


This gives UK-based J+S access to a variety of opportunities while Kaycom/JSK Naval Support gets the chance to build its in-service support capabilities. Kaycom/JSK Naval Support has also been developing its own solutions such as underwater telephone capabilities that it hopes to market for use on the Victoria Class submarines.


Land systems: Rheinmetall takes the lead

The Harper Government’s “zombie” program defence strategy also affects Quebec on the land front, as major production continues to be centered in Ontario. That said, there have been small rays of light. For example, Rheinmetall Canada will be doing final assembly, test and systems integration work on the Tactical Armoured Patrol Vehicle contract as a result of a partnership it made with Textron and Kongsberg.


However the movement is not broad-based. Case in point: the $2 billion Close Combat Vehicle initiative is now significantly behind schedule and there is talk that it will be halted altogether with the funds shifted to other uses. “Things are slow in Quebec,” admits Guy Dumouchel, of TCP Cable, whose 135 employees, based in Carignan, produce sophisticated cable assemblies for the defence industry, most of which end up in armoured vehicles. “That means we have to go outside the province for customers. However things aren’t much better in the United States.”


That sluggishness is hard on companies like TCP Cable, which produces close to 80 percent of its output for the defence sector. The upshot is that the company is being forced to make do with existing contracts on programs such as the LAV upgrade and supplying parts to General Dynamics Land Systems for production of Stryker armoured fighting vehicles. The hope is that these will tide TCP Cable over, until programs such as LCSS and hopefully CCV get fully on track.


Revision Military: preparing Canada’s “Iron Men”

There is an old military expression: “Don’t die for your country…make the enemy die for his,” which is increasingly appropriate for today’s day and age, in which Western soldiers and the officers and civilian authorities who employ them, are far less willing to make personnel sacrifices to advance missions. That directly benefits companies like Revision Military, whose CEO Jonathan Blanshay, is obsessed with safety.


 “Our vision is that by 2020, the defence industry will largely be acquiring its soldier equipment as complete and fully-integrated head-to-toe systems,” says Blanshay. “Dismounted troops will more closely resemble Hollywood’s Iron Man, than current day soldiers.”  The big recent news at Revision, which employs 230 people, at five facilities, but whose head office is in Montreal, was its win of a $9.5 million contract to supply DND with body armour plates. However its major focus is in its research and development efforts, which have helped broaden the company’s reach far beyond its roots as a provider of protective eyewear.


Ultra Electronics: working beyond “good enough” solutions 

One reason innovation is so crucial in today’s tough defence environment is that in the field, weapons and tactics quality, continue to be major success drivers. One challenge presented by force draw-downs in a variety of theatres, according to Paul E. Zweers, vice-president (business development and strategy) at Ultra Electronics Canada, is ensuring that the sector does not lose its edge.


“Like many nations withdrawing personnel from conflict regions and facing budget constraints, DND is looking for solutions that leverage an installed base of infrastructure and equipment through upgrades and affordable “good enough,” solutions,” says Zweers. “(However) user expectations regarding communication systems are also strongly influenced by new commercial technologies such as smart devices, tools and applications such as full motion video.”


Ultra Electronics, which has produced and sold more than 40,000 units, which are deployed in 33 countries, has made it its business to stay ahead of the curve. This summer the company launched the Ultra Orion, its 4th generation software defined radio, which generated significant interest including an order for more than one million units from the US Army in September.


Meggitt Training Systems (Quebec)

Peter Longstaff, president of Meggitt Training Systems (Quebec), agrees that increased demand for more efficient and cost-effective solutions stemming from local and overseas budget cuts are key drivers of innovation. Like CAE, Meggitt, which provides a variety of small arms and other training and simulation solutions, stands to be a beneficiary in the process. The company has been steadily building up staff, due to a variety of initiatives such as servicing its existing contracts and its involvement in the US Stryker program, where the company is working to integrate embedded vehicle software into the US Army’s institutional training systems. 


Longstaff also has high hopes for the Land Vehicle Crew Training Systems (LVCTS) initiative, which could lead to new solutions being developed for the LAV, Leopard tank, CCV and TAPV, though the company isn’t just sitting around waiting for that to unfold. “We have been looking at opportunities in Europe and the Middle East,” says Longstaff with a smile. “The latter area is one of the few regions in which defence spending continues to grow.”


Looking out to the future

How things will play out in the future is anyone’s guess. As far as the marine helicopters are concerned (the fate of the Sikorsky deal remained uncertain as this article went to press), the program been bogged down for decades. As a result, the Department of National Defence has long been accustomed to working with obsolete kit. However our seasoned pilots will no doubt skilfully squeeze the additional hours they need out of the ageing Sea Kings, that the Cyclones were scheduled to replace.


As for the F-35 Lightning II Joint Strike Fighter debacle, the Harper Government’s widespread mismanagement of that issue could ironically lead to one of its most important contributions to Quebec’s defence industry. That’s because while the “mini-review” of the program it has been forced to undertake (which left the future of ISS work in doubt) drags along, in-service support work on Canada’s existing F-18s, which is among the country’s most important defence capabilities, is likely to remain in centered at L-3 MAS’s facilities in Mirabel. 




Highlight this quote:


“The Harper Government’s widespread mismanagement of the F-35 Lightning II Joint Strike Fighter program could ironically lead to one of its most important contributions to Quebec’s defence industry.”






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