Click to edit Master title style

Civil aerospace investment case

Presented by: ….………………….

2

The Canadian civil aviation industry landscape

Canada’s aerospace industry is a recognized global leader

• 5th largest in the world: $22 B in annual revenues, over 80,000 employees

• Exports 80% of output• Civil revenues 90% of total• Complete tier coverage in regional and business aircraft, helicopters, gas turbine engines and landing gear• Critical mass of diverse suppliers located in regional clusters

– Regional clusters serve multiple market subsectors, reducing market risk in volatile times

• Resilient through the fiscal and economic crisis•Network of national and regional industry associations• Headquarters of ICAO, IATA and

Airports Council International3

Canada’s industry is a recognized global leader

• Structured approach to industry-specific education and training – Regular consultations on industry needs and adjustments to delivery

infrastructure– Contemporary collaborative R&D structures:

– Supplier-customer linkage– University and government researchers and resources– Student research includes industry experience– Strong environmental focus– Substantial industry investments– Strategic subjects such as composite materials and health management

• Longstanding industrial and regulatory integration with United States• Civil aviation focus: strong long-term growth forecasts

– E.g. Boeing forecasts delivery of more than 33,000 new air transport aircraft in next 20 years

4

5

Bell Helicopter – civil helicopters

Thales – avionics

Eastern provincesQuébecOntarioWestern provinces

Distinctive regional clusters

Standard Aero – engine MRO

Messier Bugatti Dowty, Goodrich – landing gears

COM DEV – satellite payload subsystems

IMP – MRO

Honeywell Canada – ECS, electrical power

Slemon Park- MRO cluster

Avcorp – aerostructures

Asco Aerospace – aerostructures

Magellan Aerospace – engine parts & R&O

General Dynamics Canada – defence electronics

Northstar Aerospace – gears and gear assemblies

CAE, Mechtronix - trainingand simulation

Turbomeca Canada – Engine R&OBoeing Canada –

composites

Atlantic Turbines – gas turbine MRO

P&WC - engines

Magellan Aerospace – airframe, space systems

Cascade Aerospace– airframe MRO Bombardier –

regional and business aircraft

MDA – earth observation

Héroux-Devtek – Landing gear

CMC Electronics – Avionics

P&WC - enginesEADS Vector Aerospace– helicopter R&O

Roll-Royce Canada- engine MRO

GE Canada - Engine components

P&WC - engines

The four regional clusters have world class capabilities

• Eastern CanadaNew Brunswick, Newfoundland & Labrador, Nova Scotia, Prince Edward Island– Defence systems in-service support– Composite aerostructures– Engine components– Civil MRO cluster

• Quebec– Aircraft, helicopter and engine OEMs– Flight simulation– Modelling and simulation– Avionics systems– Large supplier base with many specializations– Aircraft modifications and MRO– Satellites and satellite subsystems– Hub of international collaborative R&D

6

The four regional clusters have world class capabilities

• Ontario– Aircraft OEMs– Landing gear and electrical integrators– Aircraft and engine components: metal and composite– Hub of Canadian space industry: robotics, applications– Aircraft modifications and MRO

• Western CanadaAlberta, British Colombia, Manitoba, Saskatchewan– Composites materials and manufacturing

• Manufacturing, inspection, repair– Aerostructures integration and manufacture– Unmanned Aircraft Systems (UAS)– Space applications

• Remote sensing, geomatics– Helicopter MRO

7

8

United StatesCanada Europe

Several of the foreign-owned MNEs have world product mandates

Globally connected industry

Japan

Recent high-value investments

• Liebherr Group Landing gear• UTC/Pratt & Whitney (P&W) Engine flight test and assembly• Latécoère/LATecis Electrical systems• GE Canada & DAE Engine testing• Dornier Seaplane Company Amphibious flying boat• DEMA Aeronautics Engineering, structural subassemblies• Rolls-Royce & P&W Icing testing (GLACIER with NRC and

MDS)• Safran Group Landing gear manufacture, composites

R&D • Mitsubishi Heavy Industries Aircraft structural subassemblies• Sumitomo Precision Products Aircraft systems• Thales Canada Aircraft digital control systems• GE Aviation Engine manufacturing, robotics centre• Ultra Electronics Development of new tactical radio systems

9

10

Government support and collaboration with industry

Structured approach to meeting industry’s manpower needs

• Regular national and regional industry consultations

– Includes all employment categories:• Production, technician, technologist, engineer, scientist.

• Canadian Council for Aviation and Aerospace (CCAA) is a dedicated national organization

– Covers both manufacturing and MRO– Labour market information

• Development and management of occupational standards• Training program curricula and accreditation

• Supported by regional organizations with local focus– E.g. CAMAQ (Quebec), Ontario Aerospace Council (OAC)

• Graduate and post graduate research and work experience embedded in collaborative R&D programs

• Regionally-tailored youth outreach programs

11

• Distributed across the country: responding to regional needs– Around 200 graduates each year from aerospace engineering programs

and around 2,000 students enrolled in 2010 and 2011• Ten universities with aerospace focus

– Aerospace engineering and mechanical engineering with aerospace specialization

– Formal linkages between teaching, research and industry internships• Graduates from technical college aerospace programs in 2011:

• Complemented by non industry-specific technical programs followed by industry training– Electronics, NDT, machining, sheet metal, metallurgy, engineering

• Industry-specific business and management courses• Skills upgrading and continuous education programs

Large number of industry-specific education and training establishments

12

West Ontario Quebec East Total485 440 475 100 1500

Coordinated support for innovation: infrastructure and strategies

• Government laboratories and researchers with broad coverage– National Research Council (NRC) Institute for Aerospace Research

• Aerodynamics, flight research, Structures and materials, propulsion, aerospace manufacturing

– NRC Industrial Materials Institute (IMI)• Includes materials processing, non-destructive testing

• Technology insertion roadmaps– Industry Canada/NRC and industry– E. g. Composites, coatings, cabin interiors, health management

• Future Major Platforms Initiative– Industry-government joint activity to identify key capabilities and

technologies required for future aircraft platforms• Networks of Centres of Excellence

– Linking university researchers with private, government and not-for-profit sectors

• MITACS, a federally funded not-for-profit research organization– Domestic and international research internship programs

13

Comprehensive support for innovation: support programs

• Comprehensive set of support programs for all segments of the industry

• Complemented by Provincial support programs customized to regional needs

14

Program Managed by PurposeStrategic Aerospace and Defence Initiative (SADI)

Industry Canada Repayable contributions to Canadian aerospace and defence companies

Industrial Research Assistance Program (IRAP) National Research Council

Innovation assistance for SMEs. Includes advisory services, funding for innovation, networking and youth employment

Scientific Research and Experimental Development (SR&ED)

Canada Revenue Agency Income tax credits and refunds for expenditures on eligible R&D activity in Canada

Natural Sciences and Engineering Research Council (NSERC)

Industry Canada Funding for university researchers

Export marketing support Foreign Affairs and International Trade Canada (DFAIT)

A range of advisory services and programs for industry

Export Development Canada (EDC) Crown Corporation reporting through DFAIT

Export credit agency. Financial services and small business solutions to Canadian companies. Support to Canadian direct investment abroad and investment into Canada.

Canadian Commercial Corporation (CCC)

Crown Corporation reporting through DFAIT

International contracting and procurement agency

Collaborative R&D initiatives

• Focus on:– Civil aviation; economics and environment– More efficient processes for high value activities– International collaboration

• Green Aircraft Research and Development Network (GARDN)– Business-led network of centres of excellence– Collaborative R&D projects focussed on environment– Recent MOU with Air Transport Advisory Group (ATAG)

• CRIAQ– Based in Quebec, includes researchers from across Canada– Collaborative R&D, embedded training and supply chain matching– International collaborations

• Composites Innovation Centre (CIC)– Based in Manitoba, collaborative R&D– Manages Canadian Composites Manufacturing R&D (CCMRD)

• Composites Research Network: Based in British Columbia• CANNAPE: Increase engagement between Canadian and EU aeronautics

R&D communities15

16

Maintenance, Repair and Overhaul (MRO)Maintenance, Repair and Overhaul (MRO))

Canada’s industry is large and diverse

• $5.5 B revenues: 20% of total Canadian industry (civil and military)• Key strengths include:

– Gas turbine engine MRO (all types and thrust ranges)– Business and regional aircraft MRO and modifications

• Interior refurbishments and reconfigurations• Special mission modifications

– Helicopter MRO and modifications– Landing gear MRO

• Privileged access to U.S. market– Longstanding industrial relationship– High level of harmonisation in bilateral aviation safety agreement

• Internationally respected safety and quality regime• Large fleets of helicopters and business aircraft

– Second largest helicopter fleet in the “Western world” after USA

17

MRO capability is distributed across the country

• East: Civil cluster: airframe, engines and engine components

• Quebec: Airframe, business aircraft MRO and modifications, landing gear, engines

• Ontario:Airframe, landing gear, special mission modifications, components

• West: Gas turbine engine, narrowbody airframe, helicopter

18

GLACIER engine testing facility in Manitoba. Rolls-

Royce, P&W, NRC and MDS

Canada specializes in regional and business aircraft MRO and modification

A selection of Canadian MRO companies

19

This list is representative only

Area Selection of companiesBusiness and regional aircraft airframe maintenance

Premier Aviation, Jazz Aviation, Innotech Aviation, Discovery Air, Avmax, Skyservice

Narrowbody airliner airframe maintenance

Premier Aviation, Cascade Aerospace, Kelowna Flightcraft, Air Canada, Westjet

Gas turbine engine MROP&WC, Rolls-Royce Canada, Safran-Turbomeca, Standard Aero, EADS-Vector Aerospace, MTU Maintenance Canada, Magella-Orenda, CHC-Helipro, MDS Aero Support

Landing gear MRO Goodrich, Héroux-Devtek, Safran/Messier-Bugatti-DowtyBusiness and regional aircraft interiors and special mission modifications

Field Aviation, Innotech Aviation, Flying Colours, Tronos, Goderich Aerospace

Helicopter MRO and modification

EADS-Vector Aerospace, CHC-Helipro, Bell Helicopter Textron Canada, Discovery Air

Component MRO Honeywell, L-3 CMRO, Avianor, Avcorp-Comtek, Navhouse Canada, Goodrich, Precision Heliparts

Technical training CAE, Mechtronix, NGRAIN, Appendix/Eduplus, Simgraph

IT-based InfrastructureAV&R Vision & Robotics, Creaform, Mxi Technologies, Boeing/Aeroinfo, AMS/Flygt, Star Navigation, Appendix/Sonovision

20

Canada’s space industry

Canada has several globally-competitive capabilities

• Robotics and vision systems– Canadarm/ISS– Planetary exploration

• Satellites and their subsystems– Telecommunications payloads– “Smallsats”

• Radar-based earth observation– Radarsat family

• Value-added downstream services– Earth observation– Geomatics– Telecom services

21

A selection of Canadian space organizations

• Canadian Space Agency (CSA):– Manages national space priorities with other departments– Supports industrial development and competitiveness– Manages international relationships e.g. NASA, ESA, JAXA, ISRO

• MDA: Earth observation, satellites, antennas, robotics• Telesat: Owner and operator of communications satellites• ComDev: Satellite subsystems and components• Neptec: Vision systems• Magellan Aerospace: smallsats, solid propulsion, sounding rockets• L-3 MAPPS: Modelling and simulation of space systems• Honeywell –EMS: aircraft satcom systems • Large number of world class SMEs in niche areas

22

Canada is application rich

• 2nd largest landmass in world• Longest coastline in world• Large Arctic territory and impact of global warming• Low population density and remote communities• Increasing demand for support to natural resources industry• Defence needs: domestic and international joint operations• Canada was early adopter of space-based applications

– Mature applications environment– 3rd nation in space with Alouette 1 comms satellite– 1st domestic satcomm system (Anik, 1972) and direct to home

satellites (Hermes, 1976)– Radarsat-1 was 1st fully operational SAR radar EO satellite

23

24

Canada as an investment destination

Canada is an ideal platform for an advanced aerospace industry

• Ranked “Best Country for Business” of 134 countries in 2011 by Forbes Publishing

• Excellent foundational education and training system– Canada has the highest % of individuals Aged 25-64 having attained Post-

Secondary Education in top 10 OECD Countries• Resilient and diversified economy

– Canada ranks 1st in G7 in likelihood of economic prosperity in 2020 (Potential Prosperity Index)

• World’s soundest banking system– Ranked first amongst 142 countries by World Economic Forum

• Cost-competitive location: Leads the G-7• Favourable business tax environment

– Second lowest statutory corporate tax rate in the G-7 – Tax credits and accelerated deductions for R&D

25

Canada is an ideal platform for an advanced aerospace industry

• High quality of life and standard of living– Inclusiveness, diversity, safety, cost base – Canada ranks highest in the G-7 and second among the 34 OECD

countries in overall living conditions and quality of life.– Highest public reputation ranking among 50 developed countries

by Reputation Institute• Trust, Esteem, Admiration, Good feelings

• Globally connected– World class transportation and ICT infrastructure– Multicultural population with extensive international linkages– Strategic location for aerospace MNEs– Suitable as hub for aerospace global value chains

26

Canada is an ideal platform for an advanced aerospace industry

• Duty free manufacturing tariff regime– Tariffs on all manufacturing inputs removed by 2015

• Accelerated (50%/straight line) depreciation schedule for manufacturing inputs

• Access to NAFTA market– United States, Mexico Canada

• Canada ranked 3rd in the G-7 and 14th in a 110-country study measuring innovation by Boston Consulting Group

• Canada ranks first in the G-7 in terms of the availability of qualified engineers in its labour market.– IMD World Competitiveness Yearbook

27

28

Canada is an innovative, internationally connected, export oriented, low risk

choice for high value-added aeronautics and space industries