Standard wins Hercules work

Hey there, time traveller!
This article was published 21/01/2010 (5816 days ago), so information in it may no longer be current.

In two weeks, barring some unforeseen calamity, it will be officially announced that Standard Aero has won the engine-maintenance contract for the Canadian Forces’ newly purchased fleet of 17 Hercules cargo planes.

Details and the value of the work are not being disclosed but Peter Simmons, a Lockheed Martin spokesman based in Marietta, Ga., where Lockheed manufactures the C-130J Hercules planes, confirmed the Winnipeg gas-turbine maintenance, repair and overhaul (MRO) is part of the in-service support team.

"We have run a competition to put together a team of industrial participants that would do the support work for that program," Simmons said on Wednesday. "That team has been selected after a rigorous and exhaustive selection process… and Standard Aero is on the team."

Simmons said Lockheed and the companies involved will make an announcement on Feb. 5.

It has been two years, almost to the day, since federal cabinet ministers and senior officials from Lockheed Martin and Boeing Corp. were in Winnipeg. They were talking about the prospects for western Canadian companies to take advantage of work the two companies were obliged to provide in Canada as part of the agreements to pay $1.4 billion for Hercules planes and $1.5 billion for four much larger C-17 Globemaster cargo planes from Boeing.

At that time, $341 million worth of so-called industrial regional benefits (IRBs) were announced for Western Canada related to the Hercules and the Globemasters.

But the Hercules maintenance work was still being negotiated and it has taken two years to complete the deal.

Last week, Industry Canada said deals have been made with Lockheed Martin worth $763 million.

The fact that the public announcement two years ago was made at one of Standard Aero’s Winnipeg plants might have been a tip right away that Standard was in line for a major piece of the Hercules service work.

The way these military procurement contracts work is that the winning manufacturer must agree to spend 100 per cent of the value of the contract with suppliers from across the country.

There are legendary regional political squabbles around those IRBs. Who can forget the Mulroney government’s decision to award the CF-18 maintenance work to Montreal’s Bombardier over a better and cheaper bid from Winnipeg’s Bristol Aerospace back in 1986?

But even if anyone wanted to quibble with this selection, the argument would be severely impaired considering Standard Aero’s Winnipeg plant is the only maintenance, repair and overhaul facility in North America certified to work on the Rolls Royce AE2100D3 engines used on the C-130J’s.

In addition to Standard Aero’s reputation as a high-quality service provider in the exacting and highly regulated gas-turbine MRO business, it is also clearly a reliable and discreet partner when it comes to the timing of public pronouncements.

Regardless of what Lockheed was prepared to say, Ian Smart, Standard Aero’s senior vice-president in Winnipeg, was still keeping things under wraps this week.

"We believe we are very well-positioned for this thing," Smart said. "But there is nothing certain at this time that we can comment on."

Two years ago, if there had been a bookie taking bets on who would win the contract — likely worth more than $100 million for the first phase up to June 2016 — Standard Aero would have been the prohibitive favourite.

The company has been servicing Hercules engines for militaries around the world since the early 1960s. By the beginning of the 1990s when it was clear those earlier engines were starting to age, Standard set out to become certified on the engines used on the newer models as well. Since 1991, the Winnipeg company has been doing the service work for the newer versions using the AE2100D3’s for the Royal Australian Air Force and the U.S. Air Force.

It now repairs more than 50 per cent of the world’s market share on that model of Rolls-Royce engine.

The Boeing plant in Winnipeg has already been the recipient of IRBs related to the C-17 Globemaster, but it was awarded work that it essentially was already doing.

Standard already has the Rolls-Royce engine in its portfolio and it’s not clear if the additional work will mean more jobs. But it will add further lustre to the company’s reputation as a global leader in a business that is becoming increasingly tough to compete in.

martin.cash@freepress.mb.ca