Hey there, time traveller!
This article was published 8/7/2016 (1221 days ago), so information in it may no longer be current.
Magellan Aerospace Corp.’s Winnipeg shop is ramping up production on the horizontal tail component for the controversial F-35 fighter jet and is well on its way to eventually shipping about $1 billion worth of parts to that program.
But the announcement from Ottawa this week the minister of defence is launching a new round of industry consultations to determine the best way to refresh the Royal Canadian Armed Forces’ aging fighter jet fleet adds another layer of uncertainty to Magellan’s efforts.
During the federal election campaign, Liberal now-Prime Minister Justin Trudeau expressed concerns about the value of the F-35 (also called the Joint Strike Fighter or JSF) for Canada, and there is plenty of speculation the consultation process may lead to Canada exiting from the program and perhaps selecting the Boeing’s Super Hornet jet fighter instead.
Winnipeg Coun. Scott Gillingham, who represents St. James-Brooklands-Weston, the area where most of the city’s $1.6-billion aerospace industry is centred, said whatever Ottawa’s ultimate decision is, it will have an impact on employment in Winnipeg.
Magellan’s St. James plant is one of the largest participants in the F-35 program in Canada — certainly one of the five largest of about 37 companies that have won supply contracts. It is expected to eventually invest about $100 million in facilities and tooling to handle the work.
It currently has at least 100 people fully engaged in F-35 work, and Paul Heide, the general manager of the Winnipeg plant, said it is ramping up production rates and will continue to do so until 2020.
Former prime minister Stephen Harper was in Winnipeg in 2010 when Magellan broke ground on a 140,000-square-foot, purpose-built facility for the F-35 parts Ottawa helped finance with a $43-million loan. The province also provided a $20-million loan to Magellan specifically for its F-35 work.
Magellan has kept up its work on the project for the past five years despite signs Ottawa was getting cold feet regarding its original commitment to buy 65 of the high-tech fighters. Canada was one of the original consortium partners involved in the program. By virtue of its participation, Canadian companies have been able to bid on production work.
A lobby group called Canadian JSF Industrial Group, which represents companies working on F-35 contracts, recently noted "these opportunities are contingent on the Government of Canada buying the F-35."
But Heide continues to be diplomatic and focused on the work at hand.
"I think that the fact the government is looking to move the process forward is a good sign," said Heide. "All along... we thought consultation is a productive step. It is a good sign. Yes, there was a consultation process before, but this is a new government now."
Meanwhile, Magellan has contractual obligations to deliver to its customer, Lockheed Martin’s partner in the F-35 project, the large British aerospace company, BAE.
"Ultimately our long-term participation is predicated on the Canadian government participating in the program like it has for last 12 years and buying the aircraft," Herde said. "That decision (Magellan’s continuing involvement) would be left up to Lockheed and our customer (BAE). That has been the deal since the get-go."
Gillingham is not partisan as to which fighter jet Ottawa decides on.
"This is a really important issue, and the decision, regardless of which way it goes, will inevitably have an impact for St. James and for Winnipeg as a whole," he said.
Boeing has its largest Canadian facility in St. James with about 1,500 people making all sorts of composite parts for Boeing’s full line of commercial airliners. It does not, however, make parts for Boeing’s military planes.
Despite the fact hundreds of millions of dollars of investment across the country may be at stake, Scott McCrady, a spokesman for the Canadian JSF Industrial Group, was diplomatic about the new consultation process.
"It is encouraging." he said. "The fact that there will be some active dialogue now that will be more focused on what the needs are and what the government needs in terms of input is a good thing."
He said the industry supports competition, but he added, "Everyone is pretty anxious to know the timing of when these thing are going to happen."
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.