Canadian Defence Review
June 10, 2014
Western Canada 2014 aerospace and defence report
Jim Reith has a lot on his plate these days. The Abbotsford Air Show, which will be taking place on August 8th, 9th and 10th, is rebounding from a sluggish 2013. Much of Western Canada’s defence industry is in the same boat, reeling from years of Harper Government cutbacks and US sequestration-related hits. However like Reith, the show’s president, sector stakeholders are projecting a stronger 2014.
“We are expecting a 15-20% increase in visitors, up from between 60,000 and 70,000 last year,” says Reith. “But we had to innovate, for example by better coordinating the air show with a local aerospace, defence and security expo. We are also sensing stronger momentum on the ground. The Americans, who cut air show participation last year (including Le Bourget in Paris), will be back, which is great news.”
Western Canadian aerospace players await JSF clarity
The big question troubling many regional sector players at press time was the fate of Canada’s Joint Strike Fighter program. The initiative, which has been suffering from massive cost overruns, is currently under review, and industry participants are waiting with baited breath for a decision.
Larry Glenesk, Avcorp’s senior vice-president (business development) who also co-chairs the Canadian JSF Industry Group has been a vocal proponent of the program. “There is an incredible wealth of capability in British Columbia’s and Western Canada’s aerospace and defence sector,” says Glenesk. “We can as individual companies or as consortia, including educational institutions, take on small to very complex projects.”
Avcorp provides a prime example of regional innovation. The company’s 350 employees manufacture high-end integrated and composite metallic aircraft structures at its 350,000 square foot Delta location and a second facility in Burlington Ontario. Clients include Boeing Defence and Security, for which Avcorp, makes tunnel cover assemblies to be used on the CH-47 Chinook helicopters. It also produces nose enclosures for the choppers. However the company’s biggest defence hopes are tied to JSF. At press time Avcorp had already delivered 16 ship-sets of the outboard wing assembly for the US Navy’s carrier variant, under a sub-contract for BAE.
Another big Canadian supplier watching developments on the jet fighter front is Magellan Aerospace. According to Scott McCrady, its corporate program director, who co-chairs the Canadian JSF Industry Group with Glenesk, Magellan is stepping up low rate initial production on a tail assembly for the aircrafts, for which it was also producing VANE boxes, a key portion of the lift fan modules.
McCrady is naturally a big booster of the program. “There has been a great deal of inaccurate information and rhetoric in the news recently about the benefits of a competition for a new fighter aircraft to replace Canada’s ageing and ever-increasingly more expensive to operate fleet of CF-18s,” says McCrady. “From a business perspective, the short-term reality is that current Canadian F-35 contracts and jobs will very soon start going to countries that are today buying the aircraft.”
MTU Maintenance: an independent engine MRO leader
A new decision regarding Canada’s fighter jets will open considerable new opportunities on the maintenance front says Dan Watson, chief commercial officer at Richmond-based MTU Maintenance. The company employs 400 workers at four British Columbia facilities encompassing 110,000 square feet, at the Vancouver Airport, half of whom do defence related work.
This includes a large contract to maintain, repair and overall the engines on 59 McDonnell Douglas US KC-10 transport and refuelling aircraft. MTU Maintenance also does substantial civilian business, servicing clients such as Air Canada, Southwest Airlines, Viva Aerobus and others, which Watson says provides a substantial talent and infrastructure base that can be leveraged to do more defence work.
Dieter Lehnart a senior manager (military programs) at MTU Maintenance notes that its Munich-based parent company does considerable support work for the Eurofighter. This would clearly give the company a strong leg-up if Canada adopts that option. However Lehnart would not speculate on how MTU’s Canadian operations would leverage those skills, to bid on Canadian fighter jet engine maintenance work.
Kelowna Fightcraft: momentum from Team Spartan
The big news at Kelowna Flightcraft says Bryan Akerstream, its senior manager (business development) has been the momentum gained following the announcement that the company was joining Team Spartan to bid on the Fixed Wing Search and Rescue aircraft program. Kelowna brings significant credentials to the table, notably the full service MRO work that is does for its own fleet, the Royal Canadian Air Force’s Twin Otters and Buffalos and for a range of other customers.
Over the longer term, Kelowna Flightcraft’s Allied Wings, subsidiary, which operates the Department of National Defence’s contracted flying training and support program could also see new business. The facility, known as the Canada Wings Aviation Training Centre, is located at the Southport Airport near Winnipeg Manitoba. Staff have been trying to drub up business in foreign markets, and the unit is thought to be a leading contender, when the Canadian Government opens its Moose Jaw Phase II pilot training contract for bids.
Southport Aviation: targeting UVS training
Mathew Henderson, Southport Aerospace and Commercial Properties’ manager (marketing and business development), will be almost certain cheering Kelowna Flightcraft on in its efforts to broaden its relationship with DND. The company leases space at Southport Airport to civilian and military customers including Kelowna, which provides all Canadian Forces pilots their ab initio training at the facility (which used to house CFB Portage).
“If (Kelowna) gets more business, we could well get more too,” notes Henderson, who isn’t sitting around waiting for work to come in. Southport Airport has been aggressively pursuing opportunities on the UAV front, at events such as the Association of Unmanned Vehicles Systems International (AUVSI) recent get-together. Southport, which also recently hosted the Unmanned Systems Canada student competition, has been marketing testing opportunities in the region, which hosts vast open spaces, considerable local aerospace industry talent and a positive regulatory environment. JUSTAS remains a primary target on that front.
Cascade Aerospace: a new president looks outwards
The big news at Cascade Aerospace was the appointment of Benjamin Boehm as executive vice-president & chief operating officer, late last year. It’s an important role as Cascade does critical in-service support work for Canada’s legacy C-130 transports under direct contract with the Department of National Defence and for its 17 newer CC-130J transports under contract with Lockheed Martin.
Boehm’s primary challenge will be to broaden Cascade Aerospace’s focus from that of a local defence contractor to an international player, and its offerings from standard maintenance to major overhaul and upgrades. The company is also active in discussions regarding Canada’s Fixed Wing Search and Rescue Aircraft. One of Boehm’s first arguments will be to encourage the government to think about why they would get new planes, when, in his opinion, the old ones (the C-130s, which Cascade services) appear to be performing just fine.
Western naval players: NSPS and more
With half of Canada’s naval fleet based on the west coast and Seaspan ULC revamping its Vancouver Shipyards to gear up to build the Royal Canadian Navy non-combat vessels slated for construction as part of the National Shipbuilding Procurement Strategy, it should come as no surprise that the Western Canada region has a shipbuilding industry presence.
According to Jeff Taylor, a company spokesman, construction at Vancouver Shipyards, where the Offshore Fisheries and Science Vessels, Joint Support Ships and Coast Guard Vessels are slated to be built, is moving on pace. Earlier this year the company held a ceremony to name the 300-tonne gantry crane, a key feature which will dot the city’s skyline, as a result of the $200 million yard renovation.
Seaspan is also hiring some top talent, in an attempt to head off recent pressure by Davie Shipbuilding, which has been angling to get a bigger role in NSPS. Tim Page, the long-time president of the Canadian Association of Defence and Security Industries announced earlier this year that he will be joining the team as VP of Government Relations.
Babcock: building on existing relationships with DND
The Seaspan facilities also house Victoria In-Service Support Contract (VISSC)-related work on Canada’s four ex-British submarines which is being overseen by Babcock Canada. The company recently announced the hiring a slew of top talent to beef up staffing. These include Gordon Fleming, as chief operating officer, Jake Jacobson, the former chief of staff (material group) at the Department of National Defence who takes over as vice-president (business development, defence and security) and Brett Johnson, who was appointed as vice-president of business development (marine and technology).
Babcock’s British Columbia footprint took a big jump last year, when staff there increased by 50 employees to 145, almost half of its Canadian presence. According to Mark Dixon, Babcock’s president, work is proceeding well at the facility. The HMCS Chicoutimi’s refit was recently completed. The vessel is conducting commissioning activities and should be delivered back to the fleet this summer.
However Babcock, which provides a range of project, data and engineering management services, is far from satisfied. Dixon hopes to build on its existing relationship with DND. A key focus will be to draw on experience built up with the UK, Australian and New Zealand to support the development of in-service support solutions for the NSPS vessels.
Atlas Elektronik boosts supply chain to position for NSPS
Another emerging player on the Western Canadian defence scene, is Atlas Elektronik Canada, a submarine and surface combatant command and control and mine warfare systems supplier. According to Rick Gerbrecht, its president, the company’s five employees are building up from a sales office, to fostering indigenous growth through numerous research and development and other initiatives.
The key focus remains on NSPS related opportunities, notably the Arctic Offshore Patrol Ships, Joint Support Ships, and Canadian Surface Combattants, as well as on VISSC parts supply initiatives. Key to the company’s sales pitch is the international experience its parent Atlas Group, has acquired by supplying integrated command and control and sonar systems to more than 20 navies.
“We are committed to supporting Canadian industry,” says Gerbrecht. “For example we recently started a Canada-wide effort to procure defence system components for Atlas Group’s international programs, in a bid to strengthen our supply chains. We are also conducting a feasibility study on the possibility of setting up a software integration lab.”
International Submarine Engineering Ltd.
Western Canada’s large naval presence has spawned development of a range of specialized players. One these is International Submarine Engineering Ltd, whose 70 employees, located in a 40,000 square foot Coquitlam British Columbia production facility, manufacture the Explorer family of underwater UAVs. These are modular vehicles that can be used for commercial scientific or military applications such as mine surveillance and route survey operations.
According to James McFarlane, its president, International Submarine Engineering currently has two active COTS Aurora Towfish in operation with the Canadian Navy, both of which support the country’s Marine Costal Defence Vehicles in action, and recently inked a deal to sell its underwater ROV technology to Japan, the Japanese government’s first known foray outside its borders to purchase underwater military equipment
Weatherhaven: touts Western diversification
One large, but often-overlooked regional defence industry supporter says Ray Castelli, executive officer of Weatherhaven, which manufactures portable shelter systems, is the federal government’s Western diversification division. Weatherhaven, which employs 150 people in the Vancouver area (up from 50 a few years ago) and has facilities in Burnaby, Port Coquitlam and Surrey, is one of the few 100% Western Canadian owned and operated original equipment manufacturers. The company has recently been boosting efforts to work with IRB partners internationally. However the local market remains a key focus.
Castelli recently participated in an innovation forum in Vancouver where the federal minister, Michelle Rempel (who Castelli notes comes out of a university patent technology background and thus understands the issue well), brought together major international primes (such as Lockheed Martin, Boeing, General Dynamics, Alenia, Babcock) with the ADM mat and major government figures.
Castelli was quite impressed with the effort. “Participants got a chance to meet many of the key decision makers (through a “speed dating” type set-up), which was very important for us,” said Castelli. “If you are based in Ottawa, you get many chances to meet these people all the time. Out here it’s much rarer so we really appreciated the effort.”
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