CDR's Top 50 Defence contractors
Profiles, numbers 2-10
2013 Rank: #3
- Profile posted separately
# 2 Thales Canada
2013 Rank: #5
Thales Canada’s IT expertise, research work and contributions to the National Shipbuilding Procurement Strategy vault the company three spots to number two in this year’s rankings. The recent promotion of Mark Halinaty to the president and CEO spot should help maintain that momentum. Halinaty was instrumental to Thales Canada’s progress during his stints as vice-president & managing director (defence and security), vice-president (operations) and vice-president (technical director). That background also gave him roots in key divisions including defence and security, transportation and avionics.
Halinaty will need that experience because Thales Canada, whose 1,200 employees generated more than $400 million worth of sales last year, has a lot on its plate. The company continues to develop and support the Royal Canadian Army’s command and control capabilities through a long-term software support contract, which was extended for three years in 2012, bringing its total potential value to close to $300 million.
Thales Canada also hopes to further leverage its AESA radar technology in DND’s upcoming multi-mission radar initiatives. Company officials are also bullish on NSPS. Through its partnership with Seaspan, Thales Canada is angling to get work on both the Offshore Fisheries and Science Vessel (for which the design phase is progressing as planned) and the Joint Support Ships program (which it is continuing to support by pitching in on the initial design review).
Thales, which has facilities throughout the country, may also play a role in France’s Rafale international consortia if Canada decides to look at new next generation fighter options. The company’s Montreal-based Thales Canada Optronics Group also got a big boost during 2013 when General Dynamics Land Systems awarded it a $12 million contract to supply more than 400 infra-red cameras for its LAV III upgrade program. That said, key to Thales’s continuing success remains innovation, a core focus. The company invests heavily in research and development both directly and through the Thales Research and Technology Center and partners with DRDC on numerous initiatives.
#3 Meggitt Training Systems Canada (MTSC)
2013 Rank: #1
Meggitt Training Systems Canada, which produces a wide range of targeting drones, continuously ranks as one of Canada’s top original defence equipment manufacturers. This year is no exception. Led by Spenser Fraser, one of the country’s most seasoned defence executives, Meggitt, which led Canadian Defence Review’s Top 50 rankings in 2013, once again places in the top three, due to its productivity, export prowess, weapons performance measurement solutions, and promising future in a world that increasingly prioritizes effective training solutions.
Meggitt’s primary products: land (Badger), sea (Barracuda), air (Vindicator) and rotary (Mosquito) targeting drones provide defence forces with objects to track and shoot, which increases operational effectiveness. The company’s innovative mindset is showcased through partnerships with key sector players ranging from the Alberta-based Canadian Center for Unmanned Vehicles, to Defence Research and Development Canada and the Royal Canadian Navy.
Meggitt’s 2010 participation in SwarmX, the first exercise to simulate attacks by 16 simultaneous unmanned targets against naval forces, proved to be a major step forward for the industry. The demonstration played a significant role in helping US forces prepare for this ever-present threat in the Persian Gulf region, where US Naval ships and carriers (massed in constant rotation near Iran’s coastline, where they are testing the Islamic nation’s air defences) are seen as particularly vulnerable to kamikaze-style mass attacks by speedboats loaded with explosives.
Key milestones during 2013 included production of Meggitt’s 250th Hammerhead targeting drone, in conjunction with Nova Scotia based A.F. Theriault & Son Limited, with whom the company has worked for years. Meggitt also launched the Snyper UHV-T, a new line of law enforcement and defence aerial targets.
In mid-year Meggitt successful tested Mosquito helicopter targets for the US Military and shipped its first three units there, an effort that is expected to expand significantly in coming years. Despite its small size Meggitt continues to see success in non-US export markets as well. According to Fraser the company had equipment functioning in 12 countries last year including Germany, Sweden, Japan and South Korea.
#4 General Dynamics Land Systems - Canada
2013 Rank: #7
As the manufacturer and upgrade provider of the Royal Canadian Army’s LAV III workhouse light armoured vehicles, General Dynamics Land Systems is one of the country’s most important land defence equipment suppliers. Its prominance as a major original equipment manufacturer, huge job provider in the Ontario region and export powerhouse, inevitably position GDLS each year near the summit of the Top 50 rankings.
This year GDLS climbs three spots to number four, due in part to a huge $10 billion, 14-year export contract the company inked with Saudi Arabia in early 2014, which officials bill as the largest in Canadian history. GDLS remains cagey regarding details of the deal (whose value could increase to $13 billion if all options are exercised), due to security concerns expressed by the Saudi government. What is clear, is that the world’s largest oil producer needs fast, light, manoeuvrable armoured vehicles to patrol its long porous borders with Iraq and Yemen, both of which have sizable al-Qaida inspired groups operating within.
The Saudi Arabia contract is just another feather in the cap of General Dynamic Land Systems, which employs close to 2,400 people and has already exported nearly 9,000 LAV variants - almost 15 times as many as have been purchased here in Canada.
That said GDLS’s London facilities are working hard on the LAV upgrade program, a pillar in modernizing the Canada’s land forces equipment. This $1.2 billion initiative will enhance the mobility, boost firepower and provide increased soldier protection in more than 616 vehicles. It will create and maintain jobs at both GDLS’s London and Edmonton facilities, as well as at a slew of sub-contractors, spread across the country.
According to Danny Deep, a GDLS vice-president and spokesperson, early in 2013 the company shipped its first upgraded LAV III (which will now be known as the LAV 6.0) to the Department of National Defence and by year end 73 vehicles had been shipped. Deliveries are expected to continue through to 2018.
#5 L-3 Communications
2013 Rank: #4
L-3 Communications is one of Canada’s most versatile defence contractors and a perennial high placer in the Top 50 rankings. This year the company, which supplies critical solutions to the Royal Canadian Army, Navy and Air Force grabs the number five spot due to recent contract wins, its continued role in maintaining the country’s CF-18 front line fighter aircraft, its support to the Halifax Class Frigates’ integrated platform management system and supply of advanced turret capabilities.
The big news at L-3 MAS this year was the company’s win of a follow up contract to provide in-service support to the Department of National Defence’s CC-150 Polaris fleet, which supply long-distance travel, tanker capability and head of state transport. According to Peter Gartenburg, L-3 Communications’ vice-president (Ottawa operations) the five-year deal, if extended for the two additional option periods, could be worth as much as $683 million. L-3 MAS, like much of the rest of Canada’s defence industry, is also waiting for the Sikorsky CH-148 Cyclone contract to get into full swing, for which it will handle in-service support. So far four of the 28 helicopters, which were ordered as far back as 2004, have been delivered, with DND now doing flight testing at CFB Shearwater.
L-3 MAPPS for its part remains busy doing upgrade work on Canada’s front line Halifax Class Frigates. So far the company, which was also recently selected to do the integrated platform management and communications systems for the Arctic Offshore Patrol Vessels, has pitched in on six of the 12 frigates. L-3 Wescam’s Burlington-based turret business also continues to chug along with the big question being to what degree its capabilities will be integrated into the LAV 6.0 and TAPV vehicles.
Another open question relates to the stalled Joint Strike Fighter program, on which Public Works and Government Services Canada is currently engaged in a seven stage review process. Recent declarations by the Canadian government that it will look closely at the effects of large programs on local suppliers, could bode well for L-3 MAS, whose Mirabel facilities house the country’s premier fighter jet maintenance, repair and overhaul capabilities.
#6 Lockheed Martin Canada
2013 Rank: #8
Lockheed Martin Canada, which will be celebrating its 75th anniversary during 2014, sent a clear message when it nominated retired Lt. Gen Charles Bouchard, as chief executive of Canadian operations last year: the company remains committed to selling Joint Strike Fighters to the Royal Canadian Air Force.
“It’s a transformational year for Lockheed,” says Bouchard, a highly decorated former RCAF officer, who the led air arm of the multinational effort to overthrown the Gaddafi regime in Libya. He thus a walking advertisement for the F-35, which he is convinced is the best aircraft for Canada. However marketing is just one of Bouchard’s many functions at Lockheed Martin’s Canadian operations, which grew from 550 employees to 700 during 2013, due to the acquisition of the assets of the now-defunct Aveos Fleet Performance’s Montreal engine maintenance, repair and overhaul facility (which will be run by Lockheed Martin’s Texas-based Kelly Aviation Center) and the acquisition of Calgary based CDL Systems. Lockheed Martin also oversees in-service support work done by Cascade Aerospace on its C-130J transport aircraft.
At sea Lockheed Martin provides substantial support to the Royal Canadian Navy, through its work on the mission systems portion of the Halifax Class Modernization project, and mandates on the Victoria Class Submarines. Lockheed Martin will also be the prime contractor handling the command and surveillance systems integration needs in the design phase of the Arctic Offshore Patrol ships, which will be build by Irving Shipbuilding. That project will be especially important, as Lockheed Martin is also hoping to do similar work on the Canadian Surface Combatants, as they come on stream.
That said, despite this impressive performance, Lockheed Martin’s combined existing Canadian operations are dwarfed by the potential benefits that landing the Joint Strike Fighter deal, (which will be the largest single contract awarded in Canadian history) could bring. As such, like Bouchard, their new head man, Lockheed Martin’s Canadian operations, even those not directly related to the air effort, will be constantly evaluated during coming years and months, not only in terms of how they perform in their assigned roles – but also in terms of how well they contribute to helping to close the F-35 deal.
#7 Irving Shipbuilding
2013 Rank: 6
The big news at Irving Shipbuilding during 2013, which due to its frigate life extension work and recently won contracts, is the Royal Canadian Navy’s most important supplier, was the mid-year nomination of Kevin McCoy as president. A highly decorated former US Naval officer, McCoy will oversee production of Canada’s next generation combat ships, including the Arctic Offshore Patrol vessels and Canadian Surface Combatants.
First out of the gates will be the Arctic Offshore Patrol vessels, for which Irving Shipbuilding won a controversial $288 million definition contract early last year. The deal will see Irving produce detailed three dimensional electronic modelling of the proposed vessel, make down-payments on major equipment items such as radar and engines, and produce a large section of the first ship to test the design.
In early 2014 the federal government gave the go-ahead on $53.5 million worth of that AOPS related engineering design and project implementation proposal development work. Production of the ships is scheduled to start in 2015.
Irving Shipbuilding is also simultaneously investing $300 million to modernize its yards to get them ready to produce the Canadian Surface Combatants. New constructions will include an assembly hall, parking garage (to accommodate employees, on the company’s cramped Halifax Shipyards site) and an offsite steel cutting, bending and forming plant.
By the end of 2013 $175 million of contracts related to the shipyard upgrade had been made. McCoy will have a lot on his plate during coming years, facing up with a resurgent Davie Shipbuilding which was excluded from the Harper Government’s National Shipbuilding Procurement Strategy. In recent months the Levis Quebec yard has significantly picked up activity and has been making a new bid to get a cut of the action.
#8 Seaspan Shipyards
2013 Rank: 9
Seaspan Shipyards continues to rank high in Canadian Defence Review’s Top 50 list in 2014 due to its importance to the Royal Canadian Navy stemming from its role in the FELEX (Frigate Life Extension) and VISSC (Victoria In-Service Support) programs. These coupled with the increasing urgency of the Joint Support Ships (which Seaspan is expected to build) program, in the wake of the crippling fire suffered by an auxiliary oiler replenishment vessel last year (HMCS Protecteur), coupled with the company’s win of a $3.3 billion contract to build Canadian Coast Guard vessels, push Seaspan up one spot this year to number eight in the rankings.
According to Brian Carter, Seaspan Shipyards’ president, the $200 million upgrade investments the company is making, to handle construction of two projected Joint Short Ships (expected to start in late 2016) and five other National Shipbuilding Procurement Strategy vessels (a polar icebreaker and four fisheries/science vessels) is going well. The company’s Vancouver Shipyards upgrade, with its showcase 85 meter, 300-tonne gantry crane, is now 70 percent complete.
Halifax Class Modernization (whose importance was highlighted in early 2014 when the HMCS Regina interdicted a major international drug smuggling effort in the Indian Ocean, as part of Operation Artemis) is also coming along says Carter. The HMCS Vancouver is being completed (the third frigate the company will handle, following work on the HMCS Calgary and HMCS Winnipeg). HMCS Ottawa will be next. The Victoria Class In-Service Support Contract (on which Seaspan is partnered with Babcock) is also making headway. The HMCS Chicoutimi went back in the water in November, and the company is now getting ready to take on the HMCS Corner Brook.
“It’s an excellent period for the shipbuilding industry,” says Carter. “We are already seeing spinoffs from our work. For example we now have the opportunity to extend our success on FELEX, through a bid to do similar work on two New Zealand ANZUS frigates and have also just signed a contract to build a ferry.”
#9 Raytheon Canada Limited
2013 Rank: #10
Raytheon Canada moves up a spot on the rankings this year to number nine, following its win, in early 2014, of a five-year contract to operate and maintain the North Warning System, coupled with the ongoing support, its more than 1,000 Canadian employees, based in facilities across the country, provide to Canada’s defence efforts.
According to the Canadian government, Raytheon’s bid to manage the 47 unmanned long and short range radar stations stretched between Labrador and Alaska, came in $13.8 million per year lower than that of its main competitor Nasittuq Corporation.
The incumbent joint-venture provider, made up of Atco Structures & Logistics, and Pan Arctic Inuit Logistics, had held the contract for more than a decade. As part of the deal, one fifth of all salaries must be paid to Inuit beneficiaries.
The timing of the contract award could not have been better targeted. The Harper Government (which has been particularly critical of Russia’s recent reintegration of the Ukraine’s Crimean territory into the federation) clearly wanted to send a message to Canada’s former Cold War adversary, from whom the North Warning System (formerly the Distant Early Warning or “DEW” line) was meant to protect.
Raytheon also supports Canada’s Phalanx close in weapon system (CWIS) overhaul, which should last until 2017. The company is also working on a technology demonstration contract from Defence Research and Development Canada related to high frequency surface wave radar, which officials say is a crucial tool needed to protect Canada’s 200 nautical mile Exclusive Economic Zone (EEZ).
#10 The Boeing Company
2013 Rank: #11
Boeing is a perennial high placer in Canadian Defence Review’s Top 50 rankings, due to its leading role in key Canadian defence capabilities ranging from the ScanEagle unmanned systems, to C-17 strategic transports, helicopters, satellites, cyber security solutions and, most importantly, the country’s CF-18 fighter jets. This year Boeing leaps into a coveted Top Ten spot, due to the looming presence of its F/A F-18 E/F SuperHornet in discussions surrounding next generation fighters.
According to Robert Valla, vice-president (international business development) at Boeing, the company’s existing contracts with the Canadian Forces progressed steadily during 2013. The first CH-147F Chinook was delivered in mid-year and as March 2014, 11 units had been shipped, with the remaining four scheduled to be delivered during coming months. In early 2013 Boeing’s Ottawa offices were moved to a larger locale, in order to be able to better provide in-service support for the choppers.
Boeing officials are also working hard to stir up new work in programs ranging from the Fixed Wing Search and Rescue Aircraft initiative (Boeing is offering the V-22), to UAV, pilot training, cyber security and other weapons projects. However by far the biggest unresolved question is whether the F/A F-18 E/F SuperHornets will be given a chance to compete in a fair competition, to determine Canada’s best next generation fighter option.
The fact that advanced SuperHornet has two engines, which is seen by many as a critical to operating effectively in the north, coupled with the Royal Canadian Air Force’s decade long use of its younger brother (the F-18s) would make the upgraded Boeing option a daunting competitor in any open competition. Further clarity is expected from the Harper Government during the coming months, regarding its intentions.
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