Going placesClick image to enlargeby Andrew Brooks

Opportunities in Canada’s aerospace market

Canada has an enviable reputation in the aerospace sector. The famous Canadarm that became a signature element of images of the space shuttle in orbit was developed by Canada’s Spar Aerospace, along with Canadian and foreign subcontractors. Aerospace companies like Bombardier and CAE are recognized world leaders in their fields.

Jim Quick, president of the Aerospace Industries Association of Canada (AIAC), says Canada’s aerospace sector is a good place to be. “Over the last 10 years, Canada’s aerospace industry has increased its GDP contribution by 31 per cent, its productivity growth by 39 per cent and its R&D investment by an impressive 64 per cent.”

Today the industry contributes $29 billion annually to the economy and invests more than $1.8 billion in R&D, while supporting 180,000 jobs. Global growth prospects are very good too. US aerospace giant Boeing forecasts global demand for 38,000 new aircraft over the next 20 years at a value of US$5.6 trillion.

“There are some pretty incredible opportunities,” Quick says, “but there’s also very stiff competition.” Besides the tough competition, aerospace work is demanding in its own right. In addition to a complex, tightly interconnected supply chain, the industry obviously has extremely stringent demands when it comes to quality assurance, engineering change management and the tracking and tracing of parts through the production process.

“We have certainly been seeing a trend in which OEMs and Tier 1s are looking for very specific things in their suppliers,” Quick says. “Major OEMs have told us that they’re looking for suppliers with specific minimum revenue and employee numbers. They also expect their suppliers to have AS9100C and ISO9001 certifications.”

Prospective suppliers will need to show that they are vertically integrated and have a diversified client base, design and manufacturing engineering capacity, and research and technology capacity, Quick adds.

These criteria echo larger aerospace trends, notably the consolidation of the supply chain and the expectation that suppliers will be able to take on increased risk, work packages and production volume to help OEMs ensure they meet their cost and production targets.

Trinity Aerospace, based in Mississauga, ON, manufactures sheet metal and machined parts and assemblies, either built-to-print or designed by the company’s engineering partner Altitude Aerospace. Trinity is a direct supplier to aerospace OEMs, other suppliers and major airline operators. Company president Kofi Bannerman-Maxwell points out that the aerospace sector has unique high tech equipment demands.

“A company needs to invest in high tech equipment that will give them a competitive edge; equipment that makes manufacturing more cost effective and efficient.”

Trinity, for example, has invested in a state-of-the-art sheet metal Hydroformer in Toronto and a five axis CNC machining centre with a pallet changer system in its machine shop, DICI Industries, located in Montreal.

Bannerman-Maxwell echoes Jim Quick’s insistence on the need for vertical integration. “OEMs and Tier 1s are no longer interested in micromanaging their supply chain. It’s more cost effective for them to deal with integrated companies that can provide multiple services.” In response, Trinity is in the process of setting up processing services in-house that they traditionally outsourced. “This includes heat treating, coatings, etc. This will not only reduce our costs–and thus pricing–but it will also reduce delivery times, which is always a concern in the aerospace industry.”

OEMs and Tier 1s are trimming their supplier bases. That means that to break into the market, the prospective supplier has to have something truly unique to offer, Bannerman-Maxwell says. That’s in addition to the accreditation required by a Tier 1 or OEM, which can take a year to attain and isn’t cheap to get and maintain.

“There are several consultants out there that would be an asset in the process,” Bannerman-Maxwell says. “In fact, it would be strongly recommended to engage a consultant if you’re going for AS9100 and ISO 9001:2008 certification.” A solid business plan with tangible prospective clients is a must, he adds.

The AIAC has been responding to trends in the aerospace industry by developing a national supplier development initiative in cooperation with the public sector and the aerospace industry. Its goals are to foster aerospace firms that are innovative, responsive and competitive, in particular by developing small and midsized companies as suppliers.

“We need to make sure we’re helping suppliers to adopt the processes and capabilities they need to be attractive to major OEMs and Tier 1’s,” Quick says. “We also need to make sure that small businesses in particular have the resources and help they need to be able to grow quickly and secure opportunities that will move them up the supply chain.” SMT

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