Building on momentum

Staying competitive in a challenging global market has been a key focus for the Canadian aerospace industry.

 From the leasing of aircraft like KF Aerospace’s DC10, to the manufacture of high-tech parts at Celestica Aerospace’s Haley plant, Canada’s depth in aerospace capability helps the industry maintain its competitive edge on the global stage. Supplied

From the leasing of aircraft like KF Aerospace’s DC10, to the manufacture of high-tech parts at Celestica Aerospace’s Haley plant, Canada’s depth in aerospace capability helps the industry maintain its competitive edge on the global stage. Supplied

Jim Quick, president and CEO of the Aerospace Industries Association of Canada (AIAC), says the sector remains strong and is well positioned to continue competing internationally thanks to the momentum generated by industry and government initiatives over the past five years.

In particular, the Emerson and Jenkins reports made recommendations, most of which were accepted by the previous government, that addressed key competitive issues and were welcomed by the industries.


We’ve got to figure out the industry’s needs, where the pinch-points are and how we can carve out a niche of capability.
— Daniel Zanatta is vice president of business development, marketing and contracts at Magellan Aerospace

“Program and policy development at the federal government level is very important for us,” he says. “It allows us to stay on top of our game.”

Mr. Quick points out that AIAC worked closely with the previous government for five years to improve Canadian programs and policies that will better support the ongoing growth and competitiveness of the industry. The efforts resulted in across-the-board achievements relating to technology development, defence procurement, controlled goods, space and international trade.
It’s not surprising, therefore, that some industry leaders are now waiting anxiously to see what the new government’s attitude towards their sector will be.

Bryan Akerstream, director of business development at Kelowna, B.C.-based KF Aerospace, says the previous government’s defence procurement strategy (DPS), for example, was embraced warmly by the industry, and he hopes that the new government will see its merits and move forward with, at least, something similar that includes industry engagement.

The DPS was backed by a “Value Proposition Guide” released a year ago and was widely welcomed by the aerospace sector. The guide was meant to provide clarity and direction for companies preparing bids under the DPS rules.

Daniel Zanatta, vice president of business development, marketing and contracts at Magellan Aerospace, says it’s important to keep in mind that the DPS is a work in progress and not set in stone.

“If this model gets tweaked by the incoming government, which we expect, we hope it will be something more global and uniform in nature, and that it will be implemented as a more stable process, less likely to be changed significantly as we go through transitions in government,” he says. “One of our concerns longer term is that the program is stabilized. Tweaking from time to time is okay and usually leads to improvements. But it remains to be seen how significantly it may change under the incoming government.”

Having stable and predictable programs and policies is important to Canada’s aerospace companies because of the trends emerging in the sector globally. For example, globalization and shifts in the supply chain present new challenges, but also opportunities.

Mr. Zanatta points out that shrinking budgets are affecting aerospace companies throughout the global supply chain, and Canadian firms in particular need to find new ways to meet the challenge.

“A few months ago I had an opportunity to speak at a workshop for a group of Ontario-based SMEs,” he adds. “They are looking for ways to differentiate themselves – that’s now the commonly used term – and it’s no different for us at Magellan. We’ve got to figure out the industry’s needs, where the pinch-points are and how we can carve out a niche of capability.”
Mr. Zanatta believes the changing global market makes it very difficult for most Canadian SMEs to make it on their own.

“They need to partner to create more critical mass to allow them to better utilize the human, technical and financial resources available to them so that they can compete for some of the opportunities out there,” he adds. “Right now, many Canadian companies are vulnerable because they’ve become dependent on government legacy programs at home and internationally.”
While legacy work creates short- to medium-term opportunities in Canada, it doesn’t draw on leading-edge technologies and market differentiators, and will not help Canadian companies position themselves for the long term.

Mr. Akerstream says the cost pressures in global supply chains are forcing Canadian companies to adapt as best they can.

“For the most part, we try to be more efficient and keep our focus on quality, which is our competitive advantage,” he says.

However, for some OEMs, it comes to quality versus cost, and suppliers need to find the right balance between the two.

“We’ve managed to do that by being cost competitive while keeping quality high,” adds Mr. Akerstream. “Canadian maintenance technicians are trained to a very high standard, and that helps.”

Jay Teichroeb, vice president of AIAC Pacific, based in Abbotsford, B.C., says supplier consolidation is a global trend impacting aerospace firms in Western Canada.

“We are seeing OEMs and prime contractors reducing the number of suppliers they deal with, which puts pressure on SMEs to find ways to collaborate to pursue opportunities,” he says.
For example, a number of B.C. companies in aviation training and flight simulation are now combining their capabilities and skills to bid for export opportunities.

“There is a clear recognition among industry leaders in B.C. of the importance of Canada working as a cohesive cluster to pursue global opportunities,” says Mr. Teichroeb.


ABOUT the AIAC
The AIAC is the national association representing Canada’s aerospace manufacturing and services sector. As the world’s fifth-largest aerospace industry, Canada’s aerospace sector contributes nearly $28-billion to the economy in GDP, exports 80 per cent of its output, and dedicates over 20 per cent of its activity to research and development. Aerospace is responsible for the employment of 172,000 Canadians. AIAC represents the interests of over 700 aerospace companies across Canada.

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