Industry leaders call for government support

If political parties are looking to strengthen their position with the aerospace sector, Charting a New Course: Canada as a Global Aerospace Champion is a starting point for ideas to take onto the federal campaign trail this fall.

Released in June, the report was written by former Quebec premier and deputy prime minister of Canada, Jean Charest, as part of an Aerospace Industries Association of Canada (AIAC) exercise called Vision 2025.

The report contains recommendations around six core themes: Workforce growth, support for small and medium sized enterprises (SME), innovation and technology investment, space leadership, leveraging defence procurement, and improving Transport Canada certification and regulation capacity.

All have struck a chord with Canadian companies and were the dominant themes during panel discussions and company presentations at the Aerospace, Defence and Security Expo in Abbotsford Aug. 8-9.

For maintenance, repair and overhaul (MRO) companies struggling with an acute shortage of aircraft maintenance engineers, government support for skill development and global recruitment is a top priority.

“Any time we need experience, we are just stealing from each other,” noted Kevin Lemke, vice-president and chief operating officer of Cascade Aerospace. He urged government to take a greater role promoting the sector to young Canadians.

“It is the one thing that keeps me up at night,” admitted Gerry Egan, vice-president of maintenance operations for Harbour Air, which is in the early stages of converting the famed de Havilland DHC-2 Beaver to an electric-powered aircraft. He said the company has attracted apprentices but is short “the more senior people to train them … We are turning away revenue.”

Squeezed by foreign competition and the retirement of senior technicians, aerospace needs to do more with college and university programs to develop the right talent, said Helmut Neuper, president and chief executive officer of MTU Maintenance Canada, which is currently revamping its product portfolio to make it more future proof.

“The talent pool is too small,” he said, and will struggle to grow in part because of long lead times to become proficient. “We need to find a way to be more effective and efficient in how we train.”

Tracy Medve, president of KF Aerospace, which is in the process of adding a widebody MRO facility in Hamilton, Ont., noted that the federal government’s temporary foreign worker program is “starting to work,” but more assistance is needed to attract foreign talent. She also called for a far greater effort from across the sector to attract, train and retain women, who currently make up just 25 per cent of the aerospace workforce. “We need to figure out ways to solve that.”

More support for SMEs, both in accessing defence procurements and with investments in emerging technologies, was a frequently repeated theme. Jim Quick, president of AIAC, noted that while there is often “a lot of talk about supporting SMEs,” most programs are geared more toward large multinationals incorporating SMEs into their supply chains, and not necessarily designed specifically for small businesses. “We need a policy that addresses SMEs,” he said.

Lemke argued for an aerospace defence industrial strategy, noting that the government’s Industrial and Technological Benefits policy leaves many medium tier companies “caught in no man’s land.”

“We want our nationally spent dollars … to have an impact,” he said.

Medve urged the government to buy Canadian, suggesting that while it might mean higher costs for some military equipment and services, the investment in Canadian capability would be worth it. She also challenged procurement officials to recognize the value of Canadian business, saying there is no difference between a prime contractor and a Canadian company. “These are not two separate things.”

Carla Qualtrough, minister of Public Services and Procurement, acknowledged “how much work we make you do to get involved with us. It is tough on small businesses.” But she said the adoption of an e-procurement platform with e-blasts of tenders and more risk-based analysis of projects should help streamline the process and move more projects through the system faster, generating more ways for SMEs to engage.

“It has fundamentally changed the way we process procurements within PSPC,” she said of the analysis that allows projects of lower risk to bypass the intensive Treasury Board approval process.

She also affirmed the government’s commitment to getting economic benefits from defence projects, pointing to the current Future Fighter Capability Project as an example of using the ITB policy to generate industrial value when a platform won’t be built by Canadian companies.

“We bake it into the RFP, [and] it’s not an insignificant portion of the RFP,” she said. “We also baked it into our process. Over the past year and a half, as we have worked with the suppliers, we have made sure there is sufficient time to build consortiums, to make sure there are Canadian companies involved, small and medium … We have been very explicit in our discussions with suppliers that they have to have supply chains and consortiums that reflect the diversity of the type of business that we have here in Canada … We want to make sure that the legacy of this purchase is not just the 88 fighter jets, but it is also an enhanced, more robust flourishing aerospace industry in Canada.”

Another topic discussed was the need for more efficient industry engagement and the need to compete defence projects when a Canadian company has the capability and capacity to meet the requirements, pointing to future aircrew training as a possible example.

More support on defence programs may have little impact, however, if small and medium companies don’t adapt quickly to emerging technology. That message was underscored by Rahul Gangal, a partner with Roland Berger. The global consultant’s annual survey of over 90 leading companies, many in aerospace, found that while 98 per cent recognize the importance of Industry 4.0, only five per cent have a handle on how to approach the topic.

“While it is widespread and everybody understands it is severe, very few people have any idea about how they want to approach it,” he said.

From artificial intelligence and robotics, to cloud computing, the Internet of Things, additive manufacturing and human-machine learning, the aerospace sector is poised for significant disruption.

“Methods are changing, processes are changing, materials are changing. As a result, the way we delivered business itself is changing, so we will have to adopt completely new business models that we are not very familiar with but which will define whether we are successful in the industrial structures of tomorrow,” said Gangal.

Additive manufacturing, for example, could blow apart tradition profit centres of products and services if parts are printed by the customer and a company’s primary service is power and a printer. Boeing, he noted, is already sourcing 50,000 parts delivered through additive manufacturing. “There is a massive technology shift that is coming.”

More challenging for the aerospace sector, many of the companies vying for contracts will be new players. In areas like urban air mobility, where a almost 100 projects are up and running globally, “a disproportionate number are run by companies that are not traditional aerospace companies,” he noted

“Where will Canada play in this. Do we have a story, have we thought it out, and how do we engage in it?” he asked. The Vision 2025 report provides a solid foundation, but more government involvement will be necessary to retain Canada’s strong position in aerospace.

“If we don’t compete, we are going to lose it,” said Lemke when asked what message he had for the political parties now knocking on constituent’s doors. Don’t take aviation for granted, added Neuper, because the sector is a key economic driver.