AIAC oversees innovation policy report

The Canadian aerospace sector may be ranked fifth globally, but it is facing stiff competition from both emerging markets in South America and Asia, as well as established peers in the United States and Europe, where new investments in research and development are spurring growth and supply chain consolidation is creating stronger international clusters.

“Our industry really turns on innovation,” said Jim Quick, president and chief operating officer of the Aerospace Industries Association of Canada (AIAC). “If we are not innovating and developing technology, then we will lose that global standing.”

It’s not surprising then that the sector has been an energetic first responder to government initiatives that encourage innovation and aim to help businesses compete in global supply chains. In recent years, for example, it has supported and adopted many of the recommendations of the 2012 David Emerson report on the future of aerospace and space and backed the 2013 Tom Jenkins report on making key industrial capabilities, including aerospace, a deliberate focus of defence procurement.

So when Navdeep Bains, minister of innovation, science and economic development (ISED), on June 14 launched an innovation agenda and issued a call to action, AIAC had an immediate response: it restructured its technology committee, now called the innovation and technology committee, and brought together key members and other vital contributors to write the first of several reports laying out the framework for an aerospace innovation policy.

The request for guidance from the minister comes as ISED itself examines aerospace and space as part of a larger departmental policy review, one of many such reviews now underway across federal government departments.

While the government is open to a broad range of ideas around aerospace innovation and technology development, it has narrowed the focus of its national innovation agenda to six areas for immediate action, “almost all of which are relevant to aerospace,” Quick noted. These include building world-leading clusters and partnerships; growing companies and accelerating clean growth; ensuring companies can compete in a digital world; and making it easier to do business in Canada.

With those larger objectives in mind, the AIAC committee is comprised of 15 members from across the association, as well as representatives from academia, the Consortium for Aerospace Research and Innovation in Canada (CARIC), and the Green Aviation Research and Development Network (GARDN).

Faced with an aggressive time line–the committee held its first meeting in June and its first report is due by the end of August–AIAC has narrowed its focus to several areas of particular importance to the sector.

Lee Obst, managing director of Rockwell Collins Canada and chair of the committee, declined to go into details until after the report is submitted. But he said the government’s policy review represents an opportunity to help streamline and coordinate programs that provide investment funding, encourage more experimentation and buy-and-try projects, develop new tools for collaboration, support long-term job creation, and advance a green agenda.

The goal, he said, is to answer a fairly straightforward question: “What can the government do to help stimulate and incentivize industry to make investments in Canada?”

For example, he asked, “How do you really take advantage of green technology and become a leader in applying green technologies in the aerospace sector?”

Because no industry operates in isolation, the committee is looking across sectors, to green and efficiency efforts in high tech, automotive and other industries that would apply to aerospace.

“We deliberately wanted to look at those overlapping areas and highlight things that would benefit not just our industry but Canada as a whole,” Obst said. “This gets to, what sorts of investments in technologies and structures should the government make, and what tools could they use to help promote research and development and innovation?”

Aerospace may be in better shape than other industries. According to a 2016 report, it ranks first in R&D expenditures among Canadian manufacturing sectors and more than 30 per cent of its jobs are in innovation-related occupations. The previous Conservative government designated aerospace a strategic sector, recognizing that 80 per cent of the $28 billion a year that it generates comes from exports.

However, Obst believes there are more opportunities to be realized by leveraging the strengths of small and medium-sized enterprises (SMEs), which comprise the bulk of Canada’s 700 aerospace companies.

“There is a lot of creativity and cost efficiencies in SMEs, but they often don’t have the infrastructure or means to go and compete globally and sometimes they are invisible to the very large OEMs [original equipment manufacturers]. We need to promote that innovative spirit.”

Still, it’s not easy being innovative. Government programs to support small and medium businesses with strategic R&D, technology demonstrations, or other support services are often operated independent of each other.

“You almost have to be an expert to even know what the programs are,” Obst acknowledged. “They are run by different departments with different objectives, priorities and means. If you put yourself in the shoes of a small business of 10 people, how do you chase those, staff them, read the proposal requirements, and meet the timelines and everything else? That is a full-time job.”

As part of its internal programming, AIAC has made SMEs a priority. John Maris, president of Marinvent and the first small business owner to become chair of the association’s board of directors, is leading work on a “consortium model” that would help small firms involved in a particular area of the sector cluster together to provide OEMs and Tier 1 companies with a single point of contact for a capability.

As those larger players push SMEs to take on more risk–and therefore more R&D–and larger work packages, more government support will be required. “We have some ideas around how government programs may be able to help with that,” Quick explained. “It is more than an outlay of funding. We will put together a set of recommendations we think will be helpful in achieving that.”

“This industry is very much reliant on government partnerships as it develops new technologies and innovations because it takes such a long time. Look at where the [Bombardier] C Series started and where it is today: it took years to get to a brand new aircraft. So government assistance in helping with R&D and things of that nature is pretty important.”

The committee will also be putting forward recommendations for a growth agenda–how to help small companies grow into medium companies, and medium into large–and how to make programs like the Strategic Aerospace and Defence Initiative (SADI) more accessible to more companies. And it will be exploring ways to make the aerospace clusters that have flourished across the country more collaborative.

“You look at the consolidation, particularly in Europe and the United States, that has created some very large, powerful OEM groups that then really control that supply chain and write the rules around it,” observed Obst. “We are still operating more independently in Canada and trying to compete globally as independents rather than at the level consolidation or collaboration offers.”

He added that one area for further government support could be education and training. The sector faces intense competition for skilled hi-tech workers, so any programs to ensure an innovative workforce would be “beneficial to all.”

Whatever success the Canadian aerospace sector has had to date, both Quick and Obst cautioned that it can be replaced if its rests on its laurels. So new investments and a willingness to “up your game” are vital for all concerned.

But with a new government and “a new desire to have a more open dialogue and engagement with industry,” both are optimistic the committee’s report in August will be just the first of several to help set new policy.