- April 30, 2020
Canada’s aerospace manufacturing industry has been on a growth trajectory, with a strong outlook for 2020. But that was before a global pandemic hit. Now, much like virtually every other industrial sector, aerospace parts manufacturers are adjusting to a new normal.
Canada’s aerospace manufacturing industry is an important contributor to the economy and up until a few months ago, manufacturing suppliers in Canada were busy producing or gearing up for new orders. That has come to a grinding halt as the current COVID-19 pandemic has taken hold of the economy and thrown a blanket of uncertainty over it all.
Despite the uncertainty, there are some silver linings that point to future growth.
For one, the Aerospace Industries Association of Canada (AIAC) has been working behind the scenes helping to secure much needed provincial and federal support for the sector. On April 2, the industry received word that the aerospace, defence and space sectors were designated essential services in all of Canada’s provinces and territories.
Last year, the Aerospace Industry Association of Canada (AIAC) enlisted former Quebec Premier Jean Charest to help launch Vision 2025, an industry-led initiative intended to create dialogue between industry, government, academia and the public, and develop recommendations to support and grow Canada’s global foothold in the sector.
With the current state of the economy in limbo, it’s uncertain when the aerospace sector will return to following its Vision 2025, but news of a rebound in the second half of 2020 and the early stages of 2021 mean there is hope. If companies can hang tight in the time being, plenty of pent up demand for new parts and MRO supplies will help heal the wounds inflicted by the Coronavirus.
In fact, many of the initiatives underlined in the AIAC’s forward-looking document will be especially important when it comes to being ready for an economic resurgence.
Released in June 2019, the Vision 2025: Charting a New Course report outlined the following six top priorities for the industry:
- Increased support for a skilled workforce
- Ensure small to medium sized enterprises (SMEs) in aerospace are able thrive and grow
- Use innovation to capture new opportunities
- Invest and maintain Transport Canada’s internationally recognized status for aircraft certification and regulation
- Maximize Canada’s space program
Maximize defence procurement and government partnerships to drive industrial growth
Canada’s aerospace industry contributes $25.5 billion annually to the economy and employs almost 215,000. Those Canadian companies have total revenues of about $32 billion, according to Keith Donaldson, AIAC chair and vice-president of Apex Industries.
He says that through the Vision 2025 initiative they interviewed thousands of people from companies, universities, colleges and government to capture the true voice of the industry. “From that we came out saying that as of a year ago we are holding our own, but barely. So instead of just trying to hold our own, we want to do the opposite and get aggressive to grow.”
Canada has the fifth largest aerospace industry in the world, but that position doesn’t maintain itself. Investments in R&D programs and support are paramount. “We have new players emerging from places like South Korea, Brazil, Japan, Saudi Arabia, China and Russia all moving into the traditional commercial space. Their governments are partnering with them to help de-risk some of these investments in developing new engines, material types, etc.,” says Donaldson. “I’ve been in the industry for 17 years and I’ve seen more change in the past three years than the previous 14 years put together. We are seeing the supply chain for even big companies having to compete. It’s gone global very quickly and the key to being successful in aerospace is a long-term play. We want to make sure we have our government as a partner.”
About 90 per cent of the aerospace industry in Canada is made up of small to medium enterprises. “And we want to make sure they can scale up. We should be looking at what policies are available and funding to help decrease the risk of making investments. If we double the size of some of the SMEs in Canada, that’s significant for the Canadian economy,” says Donaldson.
“We did have good programs that were working, and the industry is saying let’s go back to that Strategic Aerospace and Defence Initiative,” says Donaldson. “Right now we have the Strategic Innovation Fund, which although it’s really well used, the challenge is that all industries are going after the same criteria and that just doesn’t make sense. Each industry in Canada has its own peculiarities of where the revenue stream is and where the funds are needed.”
Of course, it’s a well-known fact that Canada has some incredibly innovative companies delivering cutting-edge technology. But collaboration and ingenuity are going to be key differentiators for companies working hard to make a comeback after a recession.
AV&R, a Montreal-based SME that specializes in industrial automation is a good example of this. When it started, it was producing robotics and machine vision systems for a variety of industries. “As a small company going after an international market, we needed to figure out what we were good at and where we fit in. That’s when we went exclusively into the aerospace industry, particularly the aero engine market,” says Michael Muldoon, sales and product director for AV&R.
Years ago there was a trend moving toward new engines that would be 15 per cent more fuel efficient. Back when AV&R was focusing on specializing in aerospace, those engines were just engineering designs, but now these engines are flying and manufacturers need to ramp up production volumes.
Today, more than 80 per cent of high-pressure compressor blades that are manufactured by OEMs are profiled by AV&R’s systems. “We build the technology that our customers use to actually create those edges on compressor blades,” says Muldoon.
For AV&R, partnerships and collaborations are key to evolving its technologies. In the past two years it has had partnership programs with Rolls Royce, the University of Laval and Polytechnique Montreal. It also engaged in a project with AIAC for digitizing the inspection and repair of critical components. “The project goal was to implement automation for inspecting and repairing blades, rotors and turbine discs,” says Muldoon. “We’ve found a lot of support with the right partners from government and industry.”
Interestingly, AV&R is also collaborating and learning from its clients. “That’s important for a company like us. We don’t make these parts, we provide the technology to help make it,” says Muldoon. “We’ve started to have customers come to us and they’re actually better at using our systems that we are. They get the concept of the system and they’re able to fine-tune it to do more with it than we thought was possible.”
Partners aren’t always other businesses. Transport Canada is a major global certification body, but it needs public funding. “Some people think that it’s just a waste of taxpayer dollars, but it’s not. When we fund a world-class certification and regulation agency like Transport Canada, guess what? Bell Helicopter, Bombardier, Gulf Stream… everyone will continue to come to Canada to get their aircraft certified.”
In the next few decades the demand for commercial aircraft is going to be extraordinary. “If you look at the number of aircrafts needed, especially the single aisle 737s, for example, in the next 20 to 30 years that’s $10 trillion dollars worth of work,” says Donaldson.
It’s still unclear how much of that work will hit the order books after the world recovers from the shock of Covid-19, but even if it’s cut in half, $5 trillion is a tidy sum for Canadian companies to try to sink their teeth into. The question is, will we try to win the work?
Judging by the support promised by the federal government and provincial governments across the nation, and by the work AIAC has done in helping secure that support and designation as an essential service, Canada’s aerospace manufacturing sector is in good shape to weather the current turbulence. SMT