Air industry losing edge: report

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This article was published 12/02/2011 (5360 days ago), so information in it may no longer be current.

Boeing Canada is recalling laid-off workers to keep up with growing demand in the aviation sector, but industry officials say a more coherent national aviation policy is needed for Boeing and the rest of the Canadian sector to maintain its standing against mounting competition.

Demand is increasing in the civil aviation industry around the world, with new aircraft orders over the next 20 years expected to top $3 trillion.

A new study done for the Aerospace Industry Association of Canada says global competition is heating up — in the last couple of years, the Canadian industry has slipped to fifth-largest from fourth — and Canada needs a more coherent aerospace policy framework to maximize the growth potential.

Industry officials said in Winnipeg Friday they are not looking for government handouts, but note that policies in other countries contain more aggressive support of the industry than is the case here.

For instance, the industry report produced by Deloitte shows there is a growing trend toward collaborations between aerospace companies and foreign governments to create high-value clusters within those countries.

The report also indicates Canada is lagging on research and development.

Boeing’s Winnipeg plant seems determined to do its part to not fall victim to that trend.

It is the largest composites plant in the country and one of only three major Boeing plants for commercial aircraft outside the United States. It makes thousands of composite parts for most of Boeing’s aircraft models.

Production rates are increasing for Boeing’s 737, 747, 767, 777 and 787 lines and that means work at the Winnipeg plant is also ramping up.

Late last year the company recalled 20 workers and another 30 are being called back for March 1, which will bring its Winnipeg employment up to 1,400, near its historic high.

Dave Hyem, Boeing’s general manager in Winnipeg, said serious consideration is being given to the production capacity of the plant and its future role in the Boeing supply chain.

“There are entities in China and elsewhere that can do the work we are doing,” he said “Staying on the leading edge of technology is key for us,” he said.

To that end, an important element of Hyem’s mandate as Boeing’s Winnipeg general manager is to move the company farther up the value chain by focusing on developing technologies that lower-priced competitors can’t match.

“From a strategic point of view, we realize we need to pursue more complex structures for our future as opposed to some of the secondary structures we produce today,” he said. “This is our 40th anniversary and we want to be sure we’re here for another 40 years.”

 

According to the recent report by Deloitte, entitled The Strategic and Economic Impact of the Canadian Aerospace Industry, Canada’s research-and-development intensity has declined over the past 10 years. It was the only country among the top six to score a “D” in government programs.

The recent political controversy surrounding the Canadian military’s $9-billion purchase of 65 F-35 Joint Strike Fighters has focused attention on the significance of the government role in the aerospace industry.

While accounting for only about 20 per cent of total industry revenue, military contracts often become the leverage for innovation. In Manitoba, most of the largest players trace their history back to significant military contracts.

Opposition critics have recently questioned the lack of a public tender for the jets, but the Canadian industry has been tooling up over the last decade to take advantage of F-35 contract opportunities.

Canadian industry is expected to generate about $12 billion in production and service support for the 30-year lifespan of the F-35 program.

In Manitoba, Bristol Aerospace has contracts to build horizontal tail components, vane boxes that house the engine as well as some small fuselage panels for the F-35. It has committed about $100 million in capital spending to equip its Winnipeg plant.

Over the lifetime of the project, Bristol expects to ship about $1 billion in parts and had already shipped $35 million in parts before Canada decided to buy the jets.

“The uncertainty around the decision is harmful for investment decisions,” said Maryse Harvey, vice-president of public affairs for the Aerospace Industries Association of Canada, “We have a window of opportunity happening right now. To maximize on the platform we have to do it now and stop second-guessing.”

martin.cash@freepress.mb.ca