Invest in Canada - AEROSPACE

CANADIAN AEROSPACE SECTOR

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RECENT INVESTMENTS IN CANADA

• In 2009, Esterline/CMC Electronics announced that it would invest nearly $150 million over the next five years in an R&D initiative in Quebec.
• Boeing Technology Canada expanded production in Manitoba with an estimated 200 new jobs in 2008.
• Pratt & Whitney Canada announced in 2008 that it would commit over $500 million over the next five years to establish an aerospace centre in Quebec. They have also expanded operations in Nova Scotia with a new investment totalling $45 million in 2008.
• Goodrich Aerospace of North Carolina announced a new $33.5 million R&D project in Ontario in 2007.

MAJOR GLOBAL INVESTORS IN CANADA

• Atlantis Aerospace
• Bell Helicopter
• Boeing Canada Technology
• Esterline/CMC Electronics
• Eurocopter
• GE Aviation
• Goodrich
• Honeywell
• Lockheed Martin Canada
• Magellan Aerospace
• Messier-Dowty
• Pratt & Whitney Canada
• Rolls-Royce
• StandardAero
• Thales

LEADING CANADIAN COMPANIES

• Avcorp Industries
• Bombardier
• CAE Inc.
• Heroux-Devtek
• Magellan Aerospace Corp.

With $US910 billion expected to be spent on the production of civil aircraft worldwide between 2007 and 2016 [Note1], the global aerospace sector is poised for strong growth— Canada’s aerospace industry, which includes over 400 firms across the country and a highly skilled workforce of 82,000, is well equipped to play a leading role in meeting the rising global demand.

In 2007, Canada’s aerospace output ranked fifth in the world, as civil manufacturers generated revenues of over $17.5 billion [Note 2]. In the same year, investment in R&D amounted to $1.2 billion in aerospace and defence [Note 3].

Over 80 percent of Canada’s domestic production is exported worldwide—more than any other country’s aerospace industry. In the last several years, the bulk of growth in the Canadian aerospace sector has been in manufacturing, keeping pace with global investment trends.

Key Capabilities

Within the global value chain, Canadian aerospace firms have developed a number of product and process-related specializations.

• Regional and corporate aircraft: Canadian-based Bombardier is a leader in regional and business aircraft. Its CRJ Regional Jet is used by over 60 airlines worldwide, with over 1500 in active service.
• Gas turbine engines: Canadian firms supply one-third of global demand for small gas turbine engines.
• Commercial flight and visual simulators: Canadian-made products hold a 70 percent share of the world market for visual simulators.
• Commercial helicopters: Canada produces over 20% of global civil turbine helicopters.
• Landing gear: Canada supplies close to one-third of the world demand for landing gear, including manufacturing 60 percent of all landing gear for new, large aircrafts.
• Structural assemblies: Several industry leaders produce a wide range of structural assemblies in Canada.
• Avionics, including production of communications and in-flight entertainment systems.
• Aircraft, engine and component maintenance, repair and overhaul (MRO): Major MRO facilities in Canada include Magellan Aerospace, and StandardAero.

Canada’s aerospace industry ranks fifth in world output with revenues of over $17.5 billion

*Unless otherwise noted, information pertains to civil aerospace industry only.

KEY CANADIAN CLUSTERS

Manitoba

Winnipeg is the largest aerospace cluster in western Canada, and is a major centre in North America for manufacturing composite aircraft components, and aircraft maintenance, repair and overhaul.

It is home to one of Boeing’s ten major global sites for commercial aircraft, one of only three such sites outside the United States. Boeing’s composite manufacturing facility in Winnipeg is the largest such facility in North America.

The cluster directly employs approximately 5,300 people, led by four global leading firms—Boeing Technology Canada, Magellan Aerospace, Aveos and StandardAero, one of the largest independent MRO firms in the world—plus 23 other established regional and national firms and several mid-sized aerospace suppliers.

British Columbia (BC)

Greater Vancouver, the province’s main aerospace cluster, benefits from its proximity to Boeing’s home in neighbouring Washington State. The cluster’s aerospace strengths include: helicopter services, aero engine overhaul, multi-role aircraft maintenance, repair and overhaul, space systems, and advanced composite aerostructures.

The industry here is also supported by one of Canada’s largest aerospace training centres at the British Columbia Institute of Technology.

Leading BC aerospace firms include ASCO Aerospace, Avcorp Industries, Cascade Aerospace, CHC Helicopter, Kelowna Flightcraft, MDA Corp., MTU Maintenance, Vector Aerospace and Viking Air.

Alberta

Alberta’s aerospace and defence industry contributes $1.3 billion in revenue yearly to the economy, as well as over 5,000 jobs exclusive of airlines and airports, and exports 40 percent of its output. The province offers competitive strengths in robotics and unmanned vehicle systems (UVS); space science, geomatics and navigation systems; and maintenance, repair and overhaul. Over 50 aerospace companies are located in and around Calgary alone, with strong clusters in maintenance, repair and overhaul, and information communication technology. Major aerospace companies in Alberta include ATCO Frontec, Field Aviation, ITRES, Iunctus Geomatics, Pratt & Whitney, NovAtel, and Raytheon.

Saskatchewan

Saskatchewan’s aerospace companies operate in satellite technology, wireless communication systems, atmospheric research and testing, synchrotron research and development, microelectromechanical devices, building structures, cases and harnesses, mini unmanned aerial vehicles and training programs. These organizations employ approximately 2,500 people.

The province’s aerospace companies are located near Saskatoon, including SED Systems, Vecima Networks, Scientific Instrumentations, Summit Structures, SBC Case and Draganfly Innovations.

Quebec

Montréal is the hub of Canada’s largest aerospace cluster and is renowned for its expertise in aircraft assembly, engine manufacturing, maintenance repair and overhaul, avionics and landing gear.

Over 42,400 employees work in Quebec’s aerospace industry for firms such as Bombardier Aerospace, Bell Helicopter Textron Canada, Pratt & Whitney Canada, Rolls-Royce Canada and CAE. In 2008 alone, Quebec’s aerospace exports totalled over $8 billion.

Montréal is home to more than 10 aerospace research centers, including the Canadian Space Agency, the Aerospace Manufacturing Technology Centre and the Consortium for Research and Innovation in Aerospace in Quebec. Montréal also has a well integrated network of support agencies, hosting the Quebec Aerospace Association, Aéro Montréal and the headquarters of the International Air Transport Association (IATA), the International Business Aviation Council (IBAC) and the International Civil Aviation Organization.

Ontario

Southwestern Ontario represents Canada’s second largest aerospace cluster with over 200 firms employing more than 20,000 skilled employees. Toronto, the core of this cluster, has key strengths in aircraft parts manufacturing, aircraft systems development, and maintenance and overhaul. Toronto also hosts many world-leading aerospace firms, such as Bombardier Aerospace, Pratt & Whitney Canada, Honeywell Canada, Magellan and Northstar Aerospace. The University of Toronto Institute for Aerospace Study and Ryerson University’s Institute for Aerospace Design and Innovation collaborate with industry partners on numerous R&D projects.

Nova Scotia

Halifax is home to a number of world-renowned aerospace firms specializing in composite fabrication, electronic assemblies, simulation and modeling technologies, and engine manufacturing. These include Lockheed Martin, Pratt & Whitney Canada, IMP Group, EADS Composites Atlantic, C Vision and CAE.

Prince Edward Island

The Charlottetown cluster specializes in engine maintenance, repair and overhaul and the manufacturing of precision components, engine coatings and airplane interiors. Nine aerospace firms, including Honeywell Canada and Vector Aerospace Engine Services Atlantic, operate in the province, specifically as a part of Slemon Park, “home of Prince Edward Island’s aerospace industry.” Holland College’s Aerospace Technology Centre provides a range of training opportunities for the burgeoning aerospace industry.

INVESTMENT LOCATION BENCHMARKING

METHODOLOGY

This benchmarking study assesses the competitiveness of a number of Canadian clusters against competing international business locations. Based on an investor’s perspective, the research and analysis uses a representative investment project prototype (an operation that manufactures high value added aerospace components—see profiles on page 5) to assess criteria that corporate decision makers typically examine when evaluating location alternatives for foreign investment.

This international location benchmarking exercise was conducted by IBM-Plant Location International (IBM-PLI), a renowned global location consultancy. IBM-PLI performed objective research to assess the comparative cost and quality of doing business in various locations, simulating the approach used by investors when screening candidates for corporate investment projects. The benchmarking study examined 250 to 300 financial and qualitative location indicators in the assessment of each industry subsector.

To assess the quality of a location’s operating business environment, data were collected from a variety of sources for the different subfactors in each of the categories featured in the operating environment table (page 5). Data for the qualitative assessment were translated into comparable scorings (zero to 10) for each category and subfactor using a weighted scoreboard approach. Weights were assigned to each location category and subfactor to demonstrate their relative importance in the location selection process. These weights are specific to each industry subsector and are based on IBM-PLI’s experience in helping investors make strategic decisions when choosing locations.

A high-level financial analysis was also completed to take into account major location sensitive investment and operating costs and revenues for each representative project profile. Cash flow projections have been calculated and discounted over a 10-year period, incorporating anticipated inflation rates, to determine their net present value and to assess the profitability of the project in each of the benchmarked locations.

benchmarking the comparative cost and quality of doing business in global locations

REPRESENTATIVE PROJECT PROFILE

OPERATING ENVIRONMENT

GENERAL BUSINESS ENVIRONMENT » 10%*	Availability of financial support & incentives; Business permitting procedures; Political stability; Economic and financial stability; Quality of support from local government & development agencies
LOCAL POTENTIAL TO RECRUIT SKILLED STAFF » 25%*	Presence of experienced aerospace employees, including manufacturing related; Presence of student population; Overall size of labour market; Overall tightness in labour market (unemployment)
PRESENCE OF INDUSTRY/CLUSTER » 25%*	Market proximity; Importance of R&D; Presence of aerospace industry base
FLEXIBILITY OF LABOUR & REGULATIONS » 20%*	Working time regulations; Hiring & firing flexibility; Industrial relations/attitude of unions; Work permits
INFRASTRUCTURE & COMMUNICATIONS » 10%*	Air access; Highway network & congestion; Quality & reliability of IT & tele-communications; Reliability of power supply; Quality & reliability of IT & tele- Waterways and seaports
REAL ESTATE » 5%*	Availability of large industrial sites
LIVING ENVIRONMENT » 5%*	Cost of living; Attractiveness for young international recruits; Attractiveness for expatriates

*Factor category weight; corresponding location factors are ranked in order of importance.

CANADA’S VALUE PROPOSITION

Investors in the aerospace industry will find some of the world’s best locations in Canada and a range of established, cost-competitive aerospace manufacturing clusters with superior operating environments and highly experienced staff.

A better return on your investment

Among leading aerospace clusters in North America, Canadian cities like Saskatoon, Winnipeg, Charlottetown, Calgary, Montréal, Halifax and Vancouver represent some of the most financially attractive locations for aerospace investors. These cities, together with Toronto, represent eight of the strongest propositions in North America. The Mexican city of Queretaro may provide the highest profitability overall, but this should be considered in the context of qualitative trade-offs required to achieve the potential benefit.

*Unless otherwise noted, graphs represent IBM-PLI assessment scores.

Strong clusters with a wealth of expertise

Several Canadian clusters are among the top ranked in North America. Compared to many other locations, Canada’s three largest cities, Toronto, Montréal and Vancouver, also provide access to large pools of potential employees experienced in the manufacturing of aerospace components. Canadian cities, such as Winnipeg and Calgary, compare favourably with cities of similar size in North America, in areas such as the presence of related industries or clusters.

*Unless otherwise noted, graphs represent IBM-PLI assessment scores.

*Unless otherwise noted, graphs represent IBM-PLI assessment scores.

*Unless otherwise noted, graphs represent IBM-PLI assessment scores.

*Unless otherwise noted, graphs represent IBM-PLI assessment scores.

*Unless otherwise noted, graphs represent IBM-PLI assessment scores.

*Unless otherwise noted, graphs represent IBM-PLI assessment scores.

*Unless otherwise noted, graphs represent IBM-PLI assessment scores.

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Invest in Canada Bureau
Foreign Affairs and International Trade Canada
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Catalogue Number: FR5-38/1-2009E-PDF

ISBN Number: 978-1-100-12043-0