This document presents key considerations for an aerospace and defence sectoral trade work-plan for consideration by the members of the Aerospace and Defence Industries Association of Nova Scotia (ADIANS).

The primary findings are:

The industry is diverse, minimizing competitive obstacles to sectoral level collaborative activities. For planning purposes it can be divided into four primary “clusters”, software-based products and services, aerostructures, highly engineered niche products and military maintenance repair and overhaul (MRO).

The Nova Scotia industry is highly defence-oriented with air and naval orientations. A core characteristic is the provision of “close to the operator” services to the Canadian military.

The primary target export market should be the United States military supply chain because of its size, proximity and relative familiarity. However, it is a huge and complex market and trade development activities will need to be highly focused. Furthermore there is a range of tariff and non-tariff trade barriers which the industry must understand in developing its marketing strategy. Opportunities may also exist in the U.S. Department of Transport, specifically the U.S. Coast Guard. The second geographic focus should be Europe, especially the United Kingdom, because of its close industrial and political ties with the United States.

The nature of the aerospace and defence supply chain is rapidly evolving with customers demanding higher levels of capability and looking to form long-term relationships with preferred suppliers. Industrial consolidation is also continuing, especially at the lower levels. A key component of the strategy will be determining at what level in the supply chain the relatively small Nova Scotia industry “belongs” and thus identifying the most promising potential customers.

Trade development activities should take into account the following considerations:

Trade activities should complement existing national and regional initiatives to avoid duplication and a customer perception of fragmentation within the Canadian system. There are many excellent trade-related resources elsewhere in Canada which should be exploited to the full. Some of the more important ones are noted in this report.

Experience from other regions suggests that local networking and training events can be very beneficial as well as revenue neutral or revenue generating.

Incoming and outgoing missions will be a critical element of the strategy. While companies favour incoming missions for obvious reasons, we recommend that outgoing missions also be pursued because they demonstrate a genuine commitment to engage the customer.

Initiatives should be undertaken to communicate and manage the potential barriers to penetration of U.S. defence markets such as the International Trade in Arms Regulation (ITARS), the Buy America Act, small business set-asides, and other product-specific trade barriers. In-depth knowledge of the relevant U.S. budgetary and decision-making environments is also critical to success.

Strategic partnering with U.S. companies should be encouraged as a means of entering the market. In most cases the relatively small Nova Scotia industry will not be positioned to sell directly to the U.S. military and partnering can help overcome trade barriers.

We also suggest that there is a need for some Nova Scotia companies to improve their Internet presence, since this is the most important communications medium for them to convey their competencies and products and services.

2 Context and methodology

2.1 Context

ACOA’s Atlantic Investment Partnership includes a trade and investment program whose purpose is to assist selected industry sectors with their trade activities. One of the priority sectors is aerospace and defence. The program will support export market development activities which are of common interest to companies in the sector so that maximum benefit and leverage is obtained from the combined available resources.

The purpose of this study is to present a trade strategy for the Nova Scotia aerospace and defence industry. It includes an assessment of the current export status of the Nova Scotia industry, identification of relevant export opportunities, initiatives to increase the number of export-ready companies and recommendations of high-value sector-specific trade development activities which will benefit the industry at large. This is a five-year strategy, which reflects the industry’s typically long marketing cycles. The proposed strategy will be delivered to the Aerospace and Defence Industries Association of Nova Scotia (ADIANS) which will develop work plans on an annual basis, ensuring that the resource allocation decisions are made by industry for industry.

Defining the scope of the “aerospace and defence” industries is always challenging. For the purposes of this study we have included businesses whose products and services are used in civil aviation and in the sea, air and land defence industries. They include companies engaged in manufacturing, modification and a range of services including maintenance repair and overhaul, system support and training. This definition includes companies involved in the industry’s “high technology” infrastructure such as air traffic systems, mission systems and ground equipment of various kinds. The space industry is excluded because of its distinctive nature and separate treatment. Security-related capabilities have also been excluded, although in the current environment they tend to be closely associated with defence industries. Our definitions focus on companies which deliver products and services directly related to aircraft and weapons systems and excludes companies which supply supporting products such as general supplies and base infrastructure.

Canada’s industry has a strong civil aviation focus. This is due to the presence of large companies such as Bombardier Aerospace, Bell Helicopter, CAE and Pratt & Whitney Canada whose sales are predominantly, although not exclusively, civil. However, the Nova Scotia industry has a very strong military orientation for obvious reasons. This is an important distinction to note in the preparation of this strategy. This study is based on the current capabilities and status of the industry. However, we also attempted to take account of potential future business which may result from upcoming DND equipment acquisitions and support and modification contracts, and on The Department of National Defence’s (DND) research and development priorities. This is important because core capabilities developed in response to DND requirements can be developed into exportable products and services. It is also our experience that credibility in export markets is enhanced if the domestic user, DND, has adopted the product or service, especially if the company itself is not well known.

Aerospace and defence companies deliver a wide range of products, services and competencies. The Nova Scotia industry is no exception and a significant challenge in this study was to attempt to identify current and future “clusters of common interest” which might benefit from given export market development initiatives. These interests can be viewed from several perspectives including geographic, product/service, specific programs, common potential customers and Industrial and Regional Benefits (IRB) opportunities.

2.2 Methodology

The following methods were used to gather relevant information and “views” of the industry:

In-depth interviews with Nova Scotia Aerospace and Defence companies which are currently exporting,
An independent assessment of the overall scope and capabilities of the industry. This was based on, but not limited to, the membership of ADIANS. It also took account of businesses not currently active in aerospace and defence, but with core competencies of potential interest to the sector, and
A review of programs and other initiatives in Canada whose purpose is to support export market development.

These various information sources were then compared and combined with the consultants’ relevant knowledge and experience to develop a set of recommendations for consideration by ADIANS.

3 The Nova Scotia Aerospace and Defence Industries

This section characterizes the Nova Scotia industry for the purposes of this study, including current export activities. It includes observations based on a variety of sources, notably the interviews with currently exporting companies and discussions with the president of ADIANS. The fundamental objective is to identify areas of common interest which could be applied in sector-level trade activities.

3.1 The scope of the industry

Based on the definition in section 1.1 above, Annex A lists 41 companies for which aerospace and defence is the primary business activity. They include both hardware manufacturers and service providers, but many of them deliver both products and services. Annex A attempts to characterize these companies with respect to their core products, services and/or competencies, their military and/or civil focus and whether or not they currently export directly. Several of them are branches or subsidiaries of larger organizations and in these cases we have attempted to document the characteristics of the Nova Scotia facility. The list includes both members and non-members of ADIANS. Companies which were listed as ADIANS members at March 2002 are identified with an asterisk. This list is not necessarily comprehensive and there may well be other companies which could benefit from participation in implementation of this strategy but which we did not identify.

The purpose of the characterization in Annex A is to visualize the industry as a whole and seek potential clusters of common interest. This is obviously a critical step in the process of identifying sector-level trade development opportunities. Best efforts have been made to achieve accuracy. The information was obtained from available public sources and thus may not be totally up to date in all cases. However, we believe it forms an adequate basis for characterizing the industry for the purposes of this study.

For completeness, the second page of Annex A lists additional companies which fall into the category of Fixed Base Operators (FBOs), airlines and flight training centres. They are outside the sectoral scope of this study but are important members of the operational side of the aviation community. Some of them might eventually have an interest in some sector-level trade development initiatives which is the reason that they have been noted. It may thus be beneficial to keep them informed of sector-level trade activities

We have not attempted to develop an independent assessment of the size of the industry in terms of sales and employment because definitions vary widely and it is not directly pertinent to this study. However, for reference purposes, we have reviewed data provided by the Canadian Defence Industries Association (CDIA).

From CDIA (defence only)

A study performed in late 1999 by Mr. Bernie Grover on behalf of CDIA concluded that the Nova Scotia defence industry generated the following revenues in 1998:

Domestic market: $186 million

US market $22 million

Rest of world $24 million

Total $232 million

Thus exports represent just 20% of provincial sales and sales to the U.S. less than half of that.

The national total was around $5.2 billion suggesting that the Nova Scotia share was around 4 per cent, although five provinces had lower sales.

It is important to note that the domestic sales clearly include activities beyond the scope of this study including base installation services, although this is not intended to suggest that they are not exportable services.

This study also concluded that the Nova Scotia defence industry employed around 3100 people in 1998.

3.2 Characterizing the industry

Drawing on the information gathered from the interviews and our independent analysis of the companies listed in Annex A, we have attempted to identify the characteristics of the Nova Scotia aerospace and defence industry in order to establish a basis for sector-level export market development initiatives.

3.2.1 Overview

The following listing summarizes some of the information compiled in Annex A. The information relates specifically to the aerospace and defence activities of the Nova Scotia location.

Number of companies with military or military/civil focus: 24

Number of companies with civil focus: 16

Location of corporate headquarters:

Nova Scotia 24

United States 8

Rest of Canada 7

United Kingdom 1

Based on available information, it appears that around 24 of the companies are exporting directly out of Nova Scotia. The following paragraphs summarize our key observations on the nature and composition of the industry..

Defence orientation

The industry is still clearly defence oriented, although there is a significant number of companies currently selling into civil markets. However, several of them are engaged in activities related to offshore exploration and so will tend to seek naval defence customers within the aerospace and defence context.

Company size

One company, IMP is relatively large, employs around 1100 people in Nova Scotia and thus falls outside the categorization of “SME”. It is also active in two distinct areas, MRO and aerostructures fabrication. The balance of the industry essentially comprises small and medium sized companies employing 10 to 200 people in Nova Scotia. However, very large domestic and foreign corporations ultimately own several of these operations.

Location of headquarters

The locations of corporate headquarters indicate that the marketing and product development strategies of some companies are controlled from within Nova Scotia while others are partially or completely controlled elsewhere. Furthermore, the initial reason for establishing a presence in Nova Scotia may have been to meet regional obligations related to DND procurements. However, the continued presence of the existing operations suggests not only a commitment to opportunities available within the region but also recognition of the importance of doing business there. These operations, may, as a result, be subject to growth including expansion into export markets.

Importance of services

Traditionally, the aerospace and defence industry has been product-oriented. While products remain an extremely valuable revenue driver, there is a strong and growing representation of service providers. This trend is particularly noteworthy in Nova Scotia with a significant number of software-based service providers as well as support services specialists such as IMP and Litton. These are clearly important segments of the industry with significant export potential.

Already exporting

It is also worthy of note that more than half of the 41 companies are already exporting, primarily into the United States. IMP, for example, has capitalized on its wide-ranging capabilities in aircraft support (particularly rotary wing), which were developed for the domestic DND market, and has penetrated the U.S. and even Egyptian markets. At the other end of the size scale, we spoke with one company specializing in machined components with sales of less than $5 million per year, but whose exports to the U.S. market comprise 30-40% of its revenues. We also learned separately that 95% of another company’s revenues are exports. However, as noted in section 3.1 exports represented only 20% of the industry output in 1999.

3.2.2 Product and service “clusters”

The companies listed in Annex A deliver a wide range of products and services, which include:

Systems integration,
Logistics support, including major airframe and engine overhaul and maintenance services (including MRO services for the civil market),
Sub-contract parts and sub-assembly manufacture of, avionics, aerostructures, electronics, engines (turbine and piston),
Design, development, qualification and test,
Data management and informatics,
Simulation,
Training and e-learning (courseware),
Engineering services.

This diversity has a positive implication with respect to sector-level initiatives in that direct competition is relatively limited. However, it does make identification of areas of common interest more challenging. Nonetheless, we believe that a visualization of four “clusters” of capability is appropriate for the purpose of export market development. They are:

Providers of software-based products and services
Aerostructures
Tier 3 and 4 suppliers of highly engineered products
Military MRO and support services

The third category covers a wide range of products/services and target markets. Nonetheless, we believe that it is a reasonable grouping to use as a basis for identifying common interests. It includes companies engaged in the four categories identified above (data management and informatics, simulation, training and e-learning and engineering services). Combined, they represent a growing cluster of aerospace and defence industry suppliers, but which do not necessarily deliver “flyable” items.

Annex A includes information on the first three of these clusters which is summarized in the table below:


Cluster	Number of companies	Currently exporting	Number with HQ in NS	Number with Military or military/civil focus
Aerostructures	5	4 or 5	5	2
Engineered products	10	10	7	9
Software-based products and services	18	11	9	10
None of the above	12	4	7	6

The MRO and support services category is not characterized in this way because most companies participate to some degree, at least to support their own products. However, IMP dominates this segment with respect to business volume.

While some of these categorizations might be questioned, we believe that they provide a reasonable indication of the overall situation. The engineered products category is also diverse, but most of these companies have a military orientation and are “home-grown”.

This categorization does not take account of company size and is thus skewed relative to business volume. It is important to note that IMP’s military aircraft MRO and support services activities represent a substantial proportion of the total volume of the industry. Other Nova Scotia companies also deliver, or have the potential to deliver, contracted support services to naval and air defence operators and certain other companies could also potentially benefit from “flow-down” of these contracts. Thus while a limited number of companies is currently engaged in military support services, this is obviously an important “cluster’ within the Nova Scotia industry. This is reinforced by the continued efforts of DND to let Systems Support Contracts (SSC) to industry and evidence of similar initiatives in other countries.

3.3 Interviews

Eleven requests for interviews were made will companies that currently export from Nova Scotia and seven interviews were conducted. Exchanges also took place with two Nova Scotia provincial government agencies. The president of the Aerospace and Defence Industries Association of Nova Scotia (ADIANS) also participated in the definition and design of this project.

Informal interviews were carried out with key individuals from the participating companies using a series of prepared discussion points and questions. These discussions provided insights from both large and small businesses which export a relatively wide range of products and services.

3.3.1 The companies interviewed

The exporting companies interviewed were:

Advanced Precision (formerly Crooks Mechanical Systems)
IMP Group, Aerospace Division
Litton Systems Canada (division of Northrop Grumman)
Pivotal Power (formerly KB Electronics)
Tecsult Eduplus
Hermes Electronics (division of Ultra Electronics)
Xwave Solutions

The Nova Scotia government agencies interviewed were:

Nova Scotia Business Inc. (NSBI)
Nova Scotia Economic Development (NSED)

All the companies were very communicative and we thank them for sharing their perspectives. They expressed a high level of interest in the concept of collaborative development of export markets.

3.3.2 The Interview Process

ACOA introduced each session by explaining the reason for development of a sector-level export trade strategy and its purpose as a basis for ADIANS to define collaborative export market development activities. Companies were assured that their comments would not be attributed, unless they specifically requested that they be so. It was explained that the purpose was to identify trends and areas of common interest. Each company then provided an overview of their products and services and domestic and export market development activities, prior to addressing the specific discussion points summarized below.

3.3.3 The Discussion Points and Questions

Annex B is a list of the discussion points and questions. They were grouped into the five categories of export market strategies, market development activities and government support, market positioning, looking ahead and any other issues raised by the company.

3.3.4 Results of the interviews

3.3.4.1 General observations

The overall goal was to identify export activity trends supported by a more detailed discussion of each company’s specific export market development initiatives and approaches. We also attempted to understand where each company was positioned in the supply chain for its products and services and to gain an understanding of their intentions and needs concerning future growth of their export markets.

One common theme we noted is a general acknowledgement of defence as an acceptable business to be engaged in. This is not universal across Canada. It is certainly the result of a heritage of industrial support to the needs of the substantial Canadian Forces presence in the province. This in turn translates into a thorough knowledge of, and comfort with, defence markets and defence-related issues. Evidence suggests that approximately 80% of all Nova Scotia aerospace and defence activities are defence related. The majority of the companies interviewed did not envisage diversification into commercial markets as a significant opportunity. At the same time they have become disillusioned with prospects for growth from domestic military contracts, reinforced by repeated delays in procurement, making business planning difficult. They thus see export defence markets as critical to their growth and even future survival.

3.3.4.2 Implications of a Nova Scotia location

The scope of this study excludes an in-depth examination of the economies of doing business in Nova Scotia. However, there are some trends which are worthy of note. The province appears to have an overhead cost-base around 25% lower than in Ontario and Quebec, together with lower labour costs. This is offset to some degree by a lack of local material processing and specialized manufacturing capacity. However, most companies believe that this reduced cost base, combined with the current Canadian/U.S. dollar exchange rate, results in a significant advantage when exporting to the United States, provided that productivity levels are reasonably competitive. The companies interviewed also noted that the quality of life in Nova Scotia is an important factor in the attraction and retention of human resources.

3.3.4.3 Summary of issues

This section summarizes the responses to the various issues raised. These findings were important contributors to our proposed strategy. The apparent areas of common interest are summarized in section 3.3 below.

1. Geography

There is a clear focus on the United States market for obvious reasons of proximity and size. However, export successes have also been recorded in Europe and even, in one case, South East Asia. Some companies exporting to the U.S. have tended to concentrate on specific geographic regions such as the North East, Seattle, Wichita, Southern California and Dallas- Fort Worth. These regions all represent aerospace and defence industrial clusters.

Most of the companies do not appear to consider Europe to be a key export market target, at least at the moment. The general consensus is that this is a difficult market to penetrate, with a strong domestic supplier base. The only notable exceptions were high profile IRB-related opportunities such as BAE Systems which has offset obligations of around $CAN100 million, related to the Victoria-class submarines. BAE is also a major participant in the Lockheed Martin F-35 Joint Strike Fighter (JSF) and has claimed Canada-wide intentions of $CAN350 related to this program.

2. International Trade in Arms Regulations (ITARS)

ITARS continue to be a source of concern and frustration for Canadian companies and their US-based suppliers and/or associate companies. The regulations and particularly the details of their implementation are not generally well understood. Access to engineering drawings and data can still also be costly and time-consuming. Some, but not all, companies are registered under CCGRP (Canadian Controlled Goods Registration Program).

3. Availability of skilled labour

No major widely based immediate concerns were expressed, although some shortages of experienced people with specific skills were identified. Examples included power electronics and certain information technology-related competencies especially in the areas of training, elearning and logistics systems. The companies recognized that such specific shortages are not uncommon. They also noted that substantial industry growth could place a wider-based stress on the labour pool and sources of supply. Some of the companies already work closely with local educational establishments which they consider to be of high quality. Others see attracting Nova Scotia ex-patriots back to the province as a viable source of high quality labour, a process which is already underway in some sectors. Retention rates also appear to be relatively high, reflecting a tendency for local people to prefer to stay in the province, provided reasonable employment is available. Some companies did express the concern that if a large “system integration” capability were added to the local environment, this could create significant human resources shortages for them.

4. Access to material processors and specialized parts manufacturers

Because of the overall size of the manufacturing industry, there are limited local sources of a variety of capabilities, notably metal treatments and processing and certain electronic manufacturing specializations. However, the companies recognize the reasons for this situation and contract with suppliers in Quebec or Ontario. While it would be beneficial to have local sources, companies have successfully adapted to the schedule and cost aspects of this situation and they do not consider it to be a major competitive disadvantage in the overall business equation.

Two other areas which may be more adaptable to improvement in local supply are tooling design and manufacture (e.g. for jigs and fixtures) and aerospace-standard welding. The reason is that the existing capabilities supporting the military and civil maritime/offshore industries might form a base for diversification.

5. Transportation

The companies believe that freight and courier services are generally adequate, although a lack of same-day courier service to some Canadian destinations was noted. The major transportation problem cited was the lack of direct air service to most key destinations in the United States and Europe. Travel to Europe often requires a frustrating journey West which may also result in the time and cost of an additional stopover. High fare levels resulting, at least in part, from a monopoly on many routes currently exacerbate this transportation problem.

6. Use of the Canadian Commercial Corporation (CCC) as a contracting agency

Many of the companies use the services of CCC. Most make use of the CCC back-to-back service for contracts over $100,000 in order to obtain the payment schedule benefits. It was noted that in some cases the customer declines to use the service, arguably because of lack of familiarity. Some smaller companies noted that CCC involvement provides reassurance to potential customers, rather than a direct financial benefit to them.

A number of companies reported using the CCC Bid Matching service. However, there is also some evidence that it is not as widely appreciated and used as it might be, given the clear focus on U.S. defence markets.

Two minor concerns related to CCC services were cited:

a. CCC sometimes becomes involved in the bid cycle process at too late a stage, leading to bids not being accepted by the due date. However it is only fair to note that some companies prefer that CCC not be involved during negotiations.

b. The U.S. Government “Fast Pay” service sometimes offers a superior payment schedule.

The companies did not consider these issues to be critical to competitiveness. A number of companies indicated that CCC participation was not a key factor in securing export business, especially from U.S. Government agencies. However, it appears that some prospective customers value the “contractual security” of a Canadian government agency such as CCC.

7. Use of Export Development Corporation (EDC) as a financing tool

None of the companies interviewed currently uses EDC export financing services, although most were aware of them. The primary reason is that the products and services in question do not require such financing support in current export markets.

8. Use of representatives and agents

Most companies use some form of in-country assistance in the U.S. and in other geographic markets in which they are active. However, perceptions of their usefulness varied widely from “very useful” to “we are not well served”. This is not uncommon given that their role varies widely by geographical region and identification of the “best solution” can be very difficult, especially for smaller companies with limited resources. In the U.S. market a number of companies use the services of creditable individuals in the Washington consulting community, to “walk the halls” and unearth opportunities. Most of the companies were aware of, and took advantage of, the recommendation and consulting services offered by the Trade Commissioner Service (TCS) of the Department of Foreign Affairs and International Trade (DFAIT).

9. Trade Commissioner Service (TCS)

With one or two notable exceptions, the companies do not appear to make substantial use of the TCS on an ongoing basis as a source of introductions, intelligence and information on local matters and market information. The reasons were not explored in depth although lack of awareness about the services available and concern about lack of industry-specific knowledge may be contributing factors. Another concern which is sometimes cited, although not in these interviews, is the fact that Commissioners tend to move to new geographical locations on a relatively regular basis causing a break in continuity in the case of long term export development campaigns. TCS is currently revising its services in efforts to increase its effectiveness.

10. Exhibitions, trade shows and missions

Exhibitions and trade shows

All of the companies make use of exhibitions and trade shows, but in a variety of ways and contexts. In the discussion, a distinction was drawn between exhibiting and attending on a “walk-around” basis. Most of the companies were familiar with the Paris and Farnborough aerospace-oriented trade shows and with Eurosatory. Exhibiting at these major events is generally considered to be prohibitively expensive, although some believed that non-exhibiting attendance is worthwhile because it is an opportunity to meet a very wide range of contacts (partners, customers, competitors, etc) on “neutral” territory. Some also considered these events to be a good opportunity to meet with their agents and representatives, especially European ones. Those companies which do not exhibit independently at Paris and Farnborough tend to take advantage of the “Canadian pavilion”, organized by Trade Team Canada. This costs less than an independent presence, reinforces the Canadian brand and also offers some supplementary services such as SME exhibits within the “Showcase Canada” display. It was generally felt, however, that the benefits of exhibiting at these shows did not necessarily justify the high costs. It is worthy of note that the Canadian presence at Farnborough this year will include a national hospitality chalet.

Most of the companies interviewed exhibit at trade shows which are specific to their products and services, and, in many cases, are also geographically specific. Because of the diversity amongst the companies, and the proliferation of Trade Shows, the priorities of each company tended to be relatively specific with limited common threads.

Missions

There is universal recognition of the value of targeted trade missions. A strong preference was expressed for incoming missions. They are far less costly in terms of money and other resources and are an extremely valuable opportunity to display capabilities, facilities, products and services in a ”home field” environment.

The majority of the companies also recognized the value of out-going trade missions, provided that there is a specific purpose, whether it be to a geographical region with a high aerospace/defence density or a mission which targets a key sector or potential program. The primary obstacles to participation are cost and concern as to whether the company will have the opportunity to make direct contact with the right people and make an effective pitch when it is a member of a team of companies. Some companies also expressed a concern that high-level Team Canada missions are not always the best environments in which to do serious business although the value of “branding” Canada at that level is recognized. Thus participation in outgoing missions is rather selective and cost-sensitive.

11. Publicity

This is a very broad topic and was not discussed in detail. We touched upon several aspects including the use of corporate Web sites and exploiting other relatively low-cost opportunities which include listings with industry organizations such as AIAC, CDIA and AFCEA.

All companies recognize the potential value of the Internet as a publicity medium, but our independent assessment is that the quality of implementation varies and there is room for improvement in the overall “Web presence”. Another issue is that those operations which are owned by large corporations based elsewhere are generally not readily identifiable on the corporate web sites. This is, of course, an extension of a wider issue of identity and self-determination.

We have also noted that there is only one ADIANS member profile in the 2002 AIAC Guide to Canada’s Aerospace Industry. This may be due at least in part to the introduction of a $200 placement fee. However, this is a widely distributed publication which is also posted on the AIAC web site and thus arguably represents good value.

12. Export marketing resources

The majority of the company representatives indicated overall satisfaction with the level of export marketing resources allocated by their companies, although there were exceptions. We asked a relatively pointed question concerning the understanding by their companies of the long-term multi-year nature of typical export market activities. The responses were positive although it is clear that the resources required to maintain a consistent campaign are challenging for smaller companies.

13. Electronic communications and collaboration

This is a very broad topic and perspectives were typical of the sector as a whole. Companies recognize the need to be able to manipulate and exchange technical data with partners and customers, and appear to be implementing as required. However, marketing representatives also noted the continued importance of face-to-face contact in developing business relationships, especially when the company is not well known in the target market.

14. Industrial and Regional Benefits (IRB)

The role of IRBs was discussed during the interviews. However, this topic is discussed in section 4.4 below.

15. Enhanced working relations within the sector

A number of companies indicated that they would like to see an enhanced level of collaboration between the key sector-level stakeholders such as ACOA (as the Federal Government representative), ADIANS and the relevant Nova Scotia provincial agencies. The primary potential benefits cited were cooperation, pooling of collective resources and dissemination of information. Industry organizations such as AIAC, CDIA and AFCEA also have a potential role to play in such collaboration, as a number of companies are also members of these associations. One important player, with worldwide defence and aerospace interests indicated that these groups have a role to play in establishing working relationships with other entities such as associations and overseas procurement agencies.

In addition, a number of companies which are in the early stages of export market development indicated that an increased level of mentoring by their exporting peers would be welcomed. Suggested mechanisms included information sessions, while they believe that guidance and advice from industry colleagues, government agencies and associations can all play a part in assisting them to develop export markets. Such activities would obviously require sector-level facilitation.

3.3.5 Areas of common interest

This section summarizes some of the areas of apparent common interest which were received during the interviews.

The majority of the companies are currently defence oriented and they intend to focus on defence export markets, at least for the foreseeable future. They do not believe that diversification into commercial markets is wise. They prefer to stay with what they know best, and thus minimize risk while focussing the available resources.
The United States is clearly the predominant geographic focus. This is quite understandable given familiarity, proximity and size, as well as the current needs of the U.S. Department of Defense (DOD). There is interest in European markets, but also some scepticism, based in part on concerns about market access and the cost of penetration. Europe appears to be regarded by many, but not all, as a market of opportunity. Certain companies are active in other geographic regions but this is not a common theme.
Companies which deliver software-based products and services are pre-disposed toward partnering to penetrate export markets, rather than direct sales. This reflects the dynamic of their industry in which the business structure is much more flexible and inter-company relationships combining both competition and collaboration are accepted. It also reflects a pragmatic recognition that they typically offer niche products and services rather than turnkey solutions for a very large customer such as the United States military.
Industry and government “national level” export market development initiatives and programs are not well known by the sector participants.
Exporting companies appear to be using the available resources in a well-focussed manner. There was little indication of a shotgun approach to export markets. As a result there is widespread recognition of the benefits of targeted missions.
There is no universal concern about labour market supply. However, companies do recognize that should significant growth take place, this will create challenges related to skilled labour.
Most of the companies expressed a belief that local networking and mentoring should be a key mechanism for improving the export readiness and performance of the industry.

3.3.6 Potential areas for action

Based on the information received during interviews, we believe that the following issues may be worthy of attention: They are noted here and reflected in the recommendations.

Information on navigating the ITARS procedures.

There is evidence that some companies are concerned that although they are aware of the “big picture” they are not familiar with the detailed procedures to follow to minimize the impact on their business.

Human resources development

Overall, the companies believe that there are adequate resources to meet current requirements, with certain specific and well-known exceptions. However, should significant growth in the industry take place, significant shortages in certain skills may appear. Given that it takes time to establish or grow some of the required “pipelines”, including cooperation with local education and training institutions, the potential human resources demand should be monitored and the necessary steps taken in a timely manner.

Government support; finance and contracting

While CCC and EDC are relatively well known by exporting companies, it will be desirable to reinforce the various available services especially to newly exporting companies or those attempting to penetrate new geographic markets

Selecting and managing in-country representatives, agents and distributors

This is always a challenging subject, especially for small companies and those new to a particular geographic market. The roles and responsibilities of representatives can vary dramatically as a function of local laws and business practices. Several companies mentioned this as an ongoing concern. The services of DFAIT can be very valuable in the selection process and in explaining the local environment, as can the experiences of companies which are already active in specific markets. In the specific case of U.S. government/military markets it is arguably also very important to understand the political environment as it relates to the budgetary process.

Corporate web sites

Most companies have some form of Internet presence. However, some may benefit from assistance in determining the best methods of using this medium to support export market development.

IRB-related information

Most of the companies interviewed are relatively familiar with IRBs for obvious reasons.

However, IRB-related opportunities tend to be a “moving target” and there may well be some benefit from efforts to provide IRB-related information on an ongoing basis. Two areas which might be worthy of particular attention are:

i) Detailed information on outstanding IRB obligations of prime contractors and their non- Canadian suppliers including direct and indirect obligations.

ii) Ensure continued high levels of awareness within DND and PWGSC of regional capabilities and interests when developing IRB policy for new programs.

Retention of existing operations

Several significant Nova Scotia businesses with export potential are owned outside the province, and are relatively small parts of large corporations. There is arguably benefit to be obtained in maintaining a polite education and information campaign to convey to corporate decision-makers the capabilities and advantages of their Nova Scotia-based operations and their potential for growth by exporting. This process must obviously be led by industry with government support as appropriate. Corporate decisions to authorize direct exports out of their Nova Scotia facilities, potentially associated with certain product or service mandates, would be a positive factor in increasing trade.

4 The international competitive environment

This section attempts to characterize important changes taking place in the international marketplace. Companies currently doing business here in Canada will recognize many of them, but an appreciation of the key dynamics is important to the process of understanding the elements of international competitiveness. This in turn should help to select sector-level export readiness and market development activities. There are exceptions to every rule and these are, as always, general trends which do not apply universally.

4.1 The nature of the supply chain

The vertical structure of the aerospace and defence industries continues to undergo radical change. It is particularly important that new-to-exporting companies understand where they fit in the supply chain and thus who their potential customers and competitors are. A brilliant campaign pitched to the wrong ears will come to naught. The study “Canadian Aerospace Suppliers Base Strategy for Change” which was prepared by PricewaterhouseCoopers on behalf of Industry Canada and the Aerospace Industries Association of Canada (AIAC) is now three years old and focussed on the aviation rather than defence industries but nevertheless contains some relevant information and perspectives. This section provides a brief overview of some of the supply chain changes and their potential impact on what constitutes exportreadiness.

• High level participants are reducing the number of direct suppliers

The many into one model creates a substantial administrative burden and the result is a strong thrust toward acquisition of “integrated” products/services. This applies in multiple contexts. Military operators are outsourcing multi-year integrated support contracts to single suppliers while prime contractors such as aircraft manufacturers are buying “higher level” integrated systems from so-called “Tier 2 integrators”.

These developments do not necessarily reduce the number of organizations in the supply chain or the nature of products and services which constitute the end result. However, they do substantially re-allocate areas of responsibility in the vertical chain and the points at which value is added. In particular lower tier companies are increasingly expected to assume greater design, development and support responsibilities for their contributions. This is a double-edged sword in that it demands a substantially enhanced capability implying significant investment, but it also offers the prospect for increased value-added. This delegation of “increased product responsibility” flows down the supply chain and suggests that companies with a goal of becoming globally competitive on a long term basis must seriously consider developing such capabilities.

• Financial risk is shared by the supply chain

Responsibility and risk come hand in hand. As the development costs of aerospace and defence projects have escalated, the prime contractors have inevitably needed to share the financial risk and investment. This is another trend which “flows down” and implies relatively long payback periods when participating in a new or even upgrade program. This in turn implies financial depth which has tended to encourage consolidation in the industry and threatens to “isolate” small companies with limited financial resources. However, this is not a universal rule; small companies with distinctive highly-engineered products and services may still be competitive, even in export markets.

An associated aspect of “financial risk sharing” is the tendency for prime contractors to “go where the money is” for their “Tier 2” partner/suppliers. One ramification which may sometimes occur is that the partner may be weak with respect to its technical and management capability to deliver the products and services. This may create a market opportunity for innovative companies in that assisting such companies in their areas of weakness may be a market penetration technique.

• Supply chains are increasingly geographically intertwined

Companies participating in design and development activities are increasingly expected to interact technically on a “virtual” basis. Some physical co-location of design teams may take place but cost pressures encourage a high degree of virtual collaboration. This in turn requires the availability of specific information systems and skills. Some of these skills are somewhat elusive to define and include the capability to act as a genuine team member while physically remote. This is arguably easier achieved by younger generations who have grown up participating in various forms of collaborative Internet environments.

This international pre-disposition also encourages purchasers to explore “non-traditional” sources in the search for reduced cost or increased value. This is an important element of the competitive assessment because certain geographical regions can deliver high quality at very keen prices. This threat tends to be most evident in labour-intensive environments, although some less evident regions also have quite a substantial technology capability. Examples of valid “threats” in some product areas include, but are not limited to, Eastern European countries and even Mexico.

4.2 Market access issues

Prime contractors still exchange industrial participation and acquisitions for market access. Even when procurements do not contain formal Industrial and Regional Benefits provisions (for example in commercial aviation) prime contractors may still contract with and invest in local industry to enhance market positioning. Furthermore, this practice is not necessarily limited to the so-called “developing” world.

Topical aerospace industry examples include:

The ongoing battle between Boeing and Airbus in Japan. Boeing has the lion’s share of the market and a substantial industrial relationship and Airbus is trying again to develop industrial ties, notably with the A380.
The current impasse in the People’s Republic of China (PRC) with respect to regional jet purchases; a classic stand-off between airlines, which want to procure Western aircraft “off the shelf” and industrial interests which want to this domestic requirement as a basis for local industrial development.
Italy’s continued participation in both Boeing and Airbus products.
India’s ongoing efforts to link military and commercial procurements with domestic industrial development.

In defence markets, many countries apply formal and demanding Industrial Benefits policies. Recent topical examples include South Africa and South Korea.

These are important issues in understanding the competitive environment.

4.3 Productivity

While not strictly an export market development issue, productivity becomes a key discriminator on the international stage. Information on productivity-related topics with a focus on international best practices will support export-readiness. Such activities also provide an opportunity to present some of the key competitors on the international stage. In-depth discussion of the elements of productivity is beyond the scope of this study, but related topics include:

Quality management systems,
Continuous improvement techniques,
Lean manufacturing and maintenance,
Virtual collaboration,
Enterprise Resource Planning (ERP) and Manufacturing Resource Planning (MRP) systems; selection and implementation,
Human resource requirements.

4.4 Strategic market considerations

The above issues are important elements of the international competitive environment. This section suggests some of the actions and approaches companies might consider in order to respond and create a suitable platform for export marketing. In addition, each individual company will, of course, need to create plans which meet its particular requirements.

Development of export marketing strategies and marketing plans.
Products offered or to be offered. (Manufacture of piece parts, sub-assemblies, assemblies and/or systems integration work).
The range of services being offered or to be offered. (Including design, research, development, testing, qualification of their own and/or third party products and systems, MRO services, IT services, training services, etc.)
Customer and geographical targets, including their ability to service offshore markets (for example, accessibility and closeness, travel and living costs, business cycle considerations).
Export pricing policies, including warranty obligations. (Note that some export markets, in particular Far East markets, often demand extended warranties beyond the “normal” 12-month period).
Distribution/sales outlets, use of sales agents and/or representatives, etc. (which can often include payments for commissions and other marketing and delivery costs).
A comprehensive analysis and clear understanding of where they and their existing and prospective customers are in the supply chain (i.e., Tier 2, 3, 4 etc.)
An analysis of the synergies available to them in export markets in areas such as. Marketing partnerships, technology partnerships/collaborations and teaming arrangements.
Consideration of the acquisition of an overseas, in-country entity to give a "toe-hold".
Seek product mandates. Many large corporations are prepared to grant product mandates to subsidiaries and/or associate companies. Reasons may include exploitation of marketing synergies, or lower cost manufacturing opportunities. Product mandates can also cover third party manufacture (or licensing of software) where the product is deemed uneconomical by the parent company or the company holding the intellectual property (IP).
Consideration of the assumption of responsibility for "heritage" products for large OEMs. Consideration should also be allocated to the availability and use of third party Intellectual Property (IP) with respect to ITAR issues, discussed elsewhere in this study.
Detailed analyses of market-specific expenditures. Examples include translation costs, commission rates, taxes and duties and a realistic assessment of the time and cost required to establish credibility and penetrate the market. Aerospace and defence marketing costs can consume 3-5% of revenues and even exceed these values during initial market access which may also require special pricing.
Analysis of the strengths and weaknesses of marketing staff, facilities and sales channels in the context of export markets.
Use of additional marketing services such as sales agents, consultants and brokers to gain access to a specific customer, program or regional target. An examination of effectiveness and associated costs is most important.
An examination of the sources of marketing and sales information. Do these need supplementing, for example through outside market analyses and research?
A thorough analysis of the competition. This will reveal marketing strengths and weaknesses, create knowledge of the export environment and assist in determining the company’s competitive position.

5 A sector-level export market development strategy

Based on the characterization of the Nova Scotia industry in section 2 above, this section outlines the elements of a proposed sector-level export market development strategy. Useful references have also been noted so that this report can also serve as a working document.

This section begins by establishing the key premises for a strategy. Recommendations for

increasing the number of export ready companies are then outlined, including suggestions for familiarization and training. This is followed by some potential sector-level export market development initiatives in the areas of market information and intelligence and trade development opportunities. Finally, some current and potential future export opportunities are described. These are aerospace-oriented, but do also include some Naval defence content.

5.1 Basis of the strategy

This section summarizes the key premises upon which the strategy is based. As a sector-level strategy, it is intended to provide benefits to the maximum number of companies. Given the diversity of capabilities, however, it obviously cannot be tailored to the specific needs of each company.

5.1.1 Geographic focus

The primary geographic focus is the United States and the secondary focus is Europe. Other geographic areas are considered to be markets of opportunity. However, some companies have active campaigns in other regions such as South America and Asia/Pacific, but they are well equipped to pursue them on a stand-alone basis and these regions do not form a solid basis for sector-level activities. They are also more distant, present substantial cultural and business practice challenges and often also involve competing directly with significant U.S. interests.

The reasons for the focus on the United States is the size of the market, a relatively high preexisting knowledge, substantial support systems, both from government and industry peers, geographic proximity and the fact that Canadian capabilities are relatively well known in some parts of the U.S. military. The CDIA statistics quoted in section 2.1 suggest that there appears to be a significant opportunity given the very low levels of defence exports to the United States.

However, the barriers to entry must also be recognized and managed. In this respect Canadian government departments such as CCC, DFAIT and DND can provide valuable assistance and context. The Canadian Embassy in Washington is a particularly valuable source of information in these matters. .

The secondary European focus is based on the size of that market, some cultural similarity, the need for defence interoperability with U.S. and Canada, and the fact that at an industrial level there is increasing cooperation and cross-ownership between the U.S. and Europe, especially the UK, a topical example being the JSF program.

5.1.2 Defence focus

Most companies will be targeting defence (primarily naval and air) markets during the period in question. However the aerostructures cluster will seek both civil and military business. The primary focus should thus be on the defence manufacturing, systems and support services industries. The defence industry strategy should take particular account of the strength and potential for growth of software-based products and services including systems software, simulation, training and learning systems. The focus with respect to hardware should be on highly engineered products. The strategy should also recognize that many of these Nova Scotia capabilities are based on a “close to the operator” focus.

5.1.3 Compatibility with other initiatives

The strategy should be constructed so that selected activities complement, rather than substitute for, national level initiatives. This implies close ongoing cooperation and communication with the relevant agencies and organizations in the early planning phases. A related issue is that potential export customers will usually recognize and relate to the Canadian brand, rather than a regional or provincial identity. The only possible exceptions are companies in search of regional IRB contributions and the New England market. Thus this strategy does not include activities whose specific purpose is to promote the Nova Scotia or Maritimes identity.

The strategy should also complement related provincial and Maritimes export market development activities such as Trade Team Nova Scotia.

5.2 Export development initiatives

This section of the report contains a summary of candidate export market development initiatives which may be amenable to sector-level support.

5.2.1 Establishing export readiness

This section addresses the potential needs of companies which are new to exporting or have limited export experience. It thus focuses on self-evaluation (go/no go decisions) and awareness of the issues involved in developing a suitable strategy. In the aerospace and defence industries export market development is a costly and time-consuming process which cannot be undertaken lightly. For small companies, a failed campaign can be extremely costly. Thus a thorough consideration of the implications of pursuing export markets is desirable. On the other hand, continued reliance on a local or domestic market may also be potentially risky, and ultimately fatal, given the increasingly international nature of supply chains. The entrepreneurial spirit is a key element of export readiness. The simple determination to grow by exporting may in itself represent a competitive advantage. Nonetheless we live in a world where circumstances change rapidly and in which thorough analysis will mitigate risk.

Export-readiness can be defined in a wide variety of contexts, some industry specific, and some generic. The aerospace and defence industries comprise a wide variety of competencies and category of product and service and generalization is dangerous. Furthermore, the Nova Scotia industry tends to contain a relatively high concentration of service/software-based companies and there are notable distinctions in the development of export markets, compared with “classic” products. However, some of the challenges companies may face in evaluating their export-readiness are discussed below. Candidate initiatives which respond to these needs are presented in Section 6.

5.2.1.1 Export readiness; competitiveness of products and services

We suggest that the first criterion to consider is the competitive positioning of the company’s products and/or services in the international context and its potential to sustain that position.

The company must also understand where its products and services fit in the supply chain; i.e. the characterization of its natural customers. Markets of opportunity may appear from time to time, but are unlikely to be of long-term benefit unless there form part of a long-term sustainable opportunity. Sustained success will also require that the company continuously assess how to maintain competitiveness over time as customer needs, product/service technology and competitors evolve. This implies that an export marketing strategy include a well-defined product/service development strategy which incorporates the future needs of export customers.

5.2.1.2 Export readiness; knowledge-based decisions

The marketplace can be visualized as a combination of geographic, program and product/service-based considerations. Depending on the nature of the business, some of these may be self-evident to the company, some may not. In any event we suggest that a situation appraisal essentially requires the gathering and analysis of relevant information and intelligence to form a rational basis for decision-making. New to exporting companies will thus need to identify high quality sources of information and intelligence specific to the export market environment. Section 4.4.1 discusses information and intelligence in more detail.

5.2.1.3 Export readiness; selecting a business model

An important planning issue is determining the best mechanisms to penetrate specific markets. The decision will be based on the nature of the products and services offered and the dynamics of the target markets. Direct selling to customers may be the most appropriate method, with or without local representation. However, other mechanisms may be preferred. For example, exporting of “close to operator” support services may suggest a local presence, whether alone or in collaboration with one or more local companies. Anther approach might be to develop a long term partnering agreement with a local company which has an established market presence. In a more general sense cooperation with local industry can be an important marketing tool. Acquisition of local capability may also be demand consideration in some situations.

5.2.1.4 Export-readiness; business aspects

Export readiness can comprise a very wide range of business issues. It embraces financial, cultural, legal and moral issues. There is a wide range of Canadian export readiness programs, information and training environments. Most are accessible through the Internet. This report does not describe them in detail. A suitable Internet “portal” into this environment is the Industry Canada “Export Source” website. The Trade Team Nova Scotia website http://ttns.gov.ns.ca/index.html also contains a variety of information on export-related subjects. Some of these programs may well provide guidance and ideas on education and familiarization initiatives suitable for local delivery to Nova Scotia companies. Local delivery of related briefings and familiarization might be valuable sector-level trade development activities.

5.2.1.5 Export readiness; technology implications

Most of the Nova Scotia aerospace and defence companies deliver technology-based products and services. Sustained international competitiveness demands continued investment in technology as well as an awareness of technology developments by competitors or potential competitors. Demonstration of such a plan to potential customers may be an important factor in gaining their business.

The Canadian government offers a range of technology development support programs via Industry Canada Technology Partnerships Canada, the Department of National Defence (DND) and the various institutes of the National Research Council (NRC) and its Industrial Research Assistance Program (IRAP). Some of them are oriented toward Small and Medium Sized companies (SMEs). Annex C provides more detailed information on some of these programs which may well be valuable contributors to continued export competitiveness.

5.2.2 Trade development opportunities

For the purpose of this study we consider trade development activities to fall into three categories: attendance at trade events, incoming missions and outgoing missions. Such opportunities are key activities and are naturally suited to sector-level treatment.

A major consideration in selecting opportunities will be to ensure that the locally funded initiatives do not overlap or duplicate federal initiatives, but feed off them where appropriate. The reasons include:

This would represent duplication of scarce resources
While regionally lead initiatives are accepted, as positive contributors to business development, foreign potential customers can become frustrated if they are approached by multiple entities within Canada concerning the same opportunities or agenda. Thus it is extremely important to coordinate closely on an ongoing basis with national and regional trade organizations, federal and provincial government departments, and even foreign Embassies.

Missions

Missions are clearly very high priority activities for exporting companies. Companies express a strong preference for incoming missions. The reasons include low cost, the opportunity to present their facilities and capabilities and the opportunity to have sole access to the visitors during visits to their facilities. While these are valid observations, we suggest that outgoing missions are also extremely important. They show interest, engagement and respect for the customer and a greater opportunity to meet genuine decision-makers. They are also an opportunity to learn something of the business culture of the customer and his country. Finally, they often provide an opportunity to visit several potential customers during one visit. Communicating with potential customers on home soil is convenient and low cost, but it is totally inadequate alone, except perhaps in the case of companies seeking IRBs. Business is only one by going out and convincing potential customers of capability and commitment. We therefore suggest that focused outgoing missions be a sector-level priority.

Priority 2 is focussed trade events. Annex F contains some candidates. We do not recommend supporting participation at the major “generic” international events such as Le Bourget and Farnborough International. The cost is high relative to budget and central support is available for interested companies. This may be unpopular in some quarters but we believe it to be a hard but reasonable compromise.

5.2.3 Market information

The key challenge facing companies today is to identify, analyze and disseminate information which is of true value to them. It is a truism, but we live in a world of information overload. Thus the need is not for access, but for filtering based on relevance and quality. There is a vast range of information sources including Internet sites, media reports, company reports and press releases, industry associations, government briefings and information booklets.

For those involved in marketing and business development, prioritization of information sources is key. The ability to identify which projects can lead to business is critical, whether this is through a thorough analysis of who does what and for whom, (in order to get to the applicable sub-contractor, for instance), or to decide to offer a collaborative bid, to partner or any one of many such scenarios. Competitive information is also critical, including technology developments which may impact future positioning.

Each company must determine the sources of information which best fit its needs. In principle, every employee is a potential source. For example, during a site visit, a field service technician may gather information related to a new program or product development. The real challenge is to manage information effectively so that it is put to maximum use by the organization. This implies the cultivation of a company wide culture for the management of information. This arguably requires a relatively formal approach, with responsibilities allocated to specific individuals who are formally allocated the time to properly perform the tasks.

5.2.3.1 Group purchase of information

An interesting sector-level model to review is the UK SBAC/DTI Aerospace Marketing Centre. http://www.sbac.co.uk/marketc.htm This is a well-funded national initiative for group purchase of information, but the model could have application at a provincial level. Well known information providers have demonstrated a willingness to participate in such arrangements. The concept can also be extended to discussion groups, which allow the potential for peer-to-peer exchanges. While difficult to maintain without moderation, they can be one means of promoting intra-industry cooperation. Annex E contains a summary of the Aerospace Marketing Centre.

5.2.3.2 Some notable sources of information

While sources of information are too diverse to provide a comprehensive list, Annex D contains some suggestions which may be of use to Nova Scotia companies. The paragraphs below provide additional context and suggestions.

Industry Organizations

The various industry organizations can be valuable sources of best practices related to trade development. They include AIAC, CDIA and AFCEA at the national level and regional associations such as the Ontario Aerospace Council (OAC), and the Association québecoise de l’aérospatiale (AQA). Technically oriented organizations such as the Canadian Aeronautics and Space Institute (CASI) the American Helicopter Society (AHS) and the American Institute of Aeronautics and Astronautics (AIAA) can also deliver very useful technology-based market information.

Practices in other countries

There is significant publicly available information concerning approaches taken by the industries of other countries. The Internet is a valuable source. However, Canadian industry organizations such as CDIA and AIAC can also be important sources of information since they have various agreements in place with their counterparts in other countries.

Canadian Commercial Corporation (CCC)

CCC receives daily feeds of United States government procurements and offers a matching service to participating companies. Initial matching is automated based on information provided by the Canadian company. Final filtering is performed manually and companies are contacted where appropriate.

DFAIT Market Studies

DFAIT information is available free of charge to registered companies at the Infoexport website. This information includes reports from Posts, as well as in-depth studies performed by the Market Research Centre (MRC) in Ottawa.

Industry Canada, Aerospace and Automotive Branch

Industry Canada provides a range of information services including sector-specific opportunities analyses and information on the ongoing changes in the international supply chain.

Feedback from other industry sectors within Nova Scotia

Other industry sectors can be valuable sources of information on geographic-specific marketing issues. Sector-level opportunities to network with them may provide value to exporting companies.

5.2.4 Market intelligence

We consider intelligence to be information which is not generally disseminated and is accessed primarily by contact with people who understand specific contexts and ongoing developments. In many respects, intelligence gathering is based on the cultivation of good contacts who can anticipate future developments before public disclosure and connect with key decision makers. Competitive intelligence is also critical; understanding the strengths, weaknesses and intentions of competitors is pivotal to success. By its very nature, market intelligence can be a difficult commodity to share. However, certain sector-level initiatives may be able to promote the sharing of some intelligence. Potential methods of acquiring intelligence include:

Participation in Canadian export-related organizations and events.
Participate in industry organization committees, for example CDIA, AIAC.
Cultivate relationships with the DFAIT Commercial Counsellors and, where available, local hires. They must be well informed on the capabilities and objectives of the Nova Scotia industry help to in a proactive manner. Thus a structured approach to maintaining communications with the counsellors in key markets has substantial potential value. This empowers them to actively search for potential opportunities. They are very busy but those who co-operate with them effectively will inevitably reap the rewards.
Another important potential source of intelligence is the in-country government/diplomatic representatives of target countries. Initiatives to host them and explain capabilities are likely to yield results which may well include insights on local opportunities, especially in government/defence markets. They can sometimes provide insight on the true dynamics within their countries and identification of key decision makers.
It is also important for individual companies to create an environment whereby in-country agents and representatives are motivated and informed to provide proactive intelligence. While this is essentially a company-level activity, sector level initiatives to assist companies in selecting and effectively using in-country representatives may be valuable.
It is also important to bear in mind that customers can also be an excellent source of market intelligence.

5.3 Export opportunities with potential for growth

5.3.1 Context

This section summarizes some current potential export opportunities in the aerospace and defence industries. They are not comprehensive, but are intended to be representative of situations which may be relevant to the Nova Scotia industry. The best method of “viewing” opportunities depends upon the nature of products and services offered. Hardware manufacturers often tend to focus on new programs or products. However, as the industry has consolidated and the higher levels of the supply chain transition to long term relationships, it is increasingly important to target key potential customers who feed a variety of programs and prime contractors. The challenge then is to convince them that they should in turn invest in some form of preferred supplier relationship. Given the nature of the Nova Scotia industry and the size of the US market and programs, this latter approach may well be the predominant one and would be a driver in determining the focus for outgoing missions.

This section is does not pretend to be comprehensive. It simply discusses two important topics: the relationship between DND procurement and export opportunities and some aerospace programs which may offer opportunities in the near and medium term.

5.3.2 DND Programs and their influence on export development

DND has historically been the primary customer for most Nova Scotia aerospace and defence companies. DND programs have not, however, catalyzed significant export success for the participating Canadian companies. The candidate reasons include lack of focus on export markets, inability to compete with the U.S. and European juggernauts and products customized to DND needs which do not necessarily respond to international operational requirements. This is arguably because DND requirements specifications have not generally been adapted to take account of potential export market requirements. This “made-in Canada” approach has limited the ability of Canadian companies to capitalize on export opportunities derived from DND programs. Typical examples are the Canadian Patrol Frigate (CPF), Marine Coastal Defence Vessel (MCDV) and Low Level Air Defence System (LLADS) programs, all of which involved very large Canadian content, but which have not stimulated export sales.

To be fair, there have been exceptions. The Computing Devices Canada Tactical Command, Control and Communications System (TCCS) is the basis of their successful bid on the substantial Bowman project in the UK. Another example is the General Motors Light Armoured Vehicle (LAV) program, the LAV III version having won export orders from several customers. There have also been some indirect and unintended benefits such as Lockheed Martin Canada’s capabilities in Intelligent Transportation (IT) systems.

However, in many cases DND has tended to specify systems which are “all-encompassing”, meaning that the systems procured have to meet a very wide range of DND-specific requirements, many of which are often not required by prospective export customers. .

DND is now moving towards a more COTS (Commercial off the Shelf) and MOTS (Military off the Shelf) environment in its procurements as part of its adaptation of procurement strategies. For larger procurements, industry is now invited to participate early in the development of the requirement, the specifications and capabilities of the planned procurement, for example through Letters of Interest (LOI), draft releases of Statements of Work (SOW) and a prequalification process. This is resulting in a greater degree of industrial involvement prior to the Request for Proposal (RFP) and contract award, among the benefits being lower cost to DND (through the selection of more readily available technology). Conversely the procurement cycle is longer, a current example being the Maritime Helicopter Program (MHP). However, industry may be more “comfortable” with the resulting platform, with potentially fewer technical and integration problems and the potential for export markets more clearly represented.

Like other military organizations, DND is slowly but surely moving toward more comprehensive contracting out of support services, including incorporation of industry financing into contracted services. This approach to flying training arguably contributed to the evolution of the NATO Flying Training in Canada (NFTC) initiative which has the potential to generate substantial export revenues for Canada.

These processes have been adopted for many major acquisition and support projects (referred to as Defence Strategic Projects, previously known as Major Crown Projects) including:

MHP (Maritime Helicopter Program)
SSC (System Support Contracting) for the CF-18/CP-140/CC-130/CH-146 fleets and
CATS (Contracted Airborne Training Services).

To a lesser degree, it is also being used for sub-projects within upgrade programs such as the CF-18 and CP-140 Aurora Incremental Modernization Projects (IMP).

The following observations by Nova Scotia companies are noteworthy:

One large systems integrator has indicated that a high value sub-project within Aurora IMP, namely the Data Management System (DMS), valued at approximately $100 million (industry portion), will, if successful, be placed through the company’s Nova Scotia operations.
Another has indicated that internal consolidation of a product group will result in the region being the beneficiary.
All of the nationally based companies bidding on MHP intend that part of the ensuing work be placed in their Nova Scotia operations.

A number of existing and planned major DND projects will provide significant opportunities for Canadian exporting companies. While there is no directly equivalent program in the export market, the large investment in company capability and infrastructure can be applied to similar platforms.

Examples include:

The work currently being undertaken by IMP in their SSC role for the CH-149 Cormorant Canadian Search and Rescue Helicopter (CSH) can be applied not only to new Canadian programs such as MHP, but to similar aircraft types in countries moving towards outsourcing of long term logistics support.
Similarly the SSC and AIMP work undertaken by IMP and Litton Systems over the coming years will have applicability to other P-3 fleets world-wide.
The CH-146 Griffon ERSTA (Electro-optics Reconnaissance Surveillance and Target Acquisition) program, for which the prime contactor is Bell Helicopter Textron Canada, will have application on other utility tactical helicopters in overseas markets. The Canadian and Nova Scotia companies potentially involved, include CAE, General Dynamics Canada, Lockheed Martin Canada, MDA and Navitrak.

These considerations demonstrate the importance of constant communication with DND concerning their future needs and potential solutions to meeting them. Early engagement maximizes the potential for influencing requirements and understanding future opportunities before formal request documents are issued.

5.3.2.1 Industrial and Regional Benefits (IRB)

For several of the companies, IRBs remain a mechanism for obtaining business from non- Canadian customers. They do, however, recognize the need to actively promote their capabilities in attempts to obtain IRB-related business, rather than waiting for the work to fall into their laps. They now tend to view IRBs as a means of promoting their products and services to potential customers, usually the prime contractor for direct IRB offsets. Some companies noted that IRB policy is placing increased emphasis on indirect rather than direct benefits, which reduces the potential value of IRBs as a tool to develop aerospace and defence capabilities. There appeared to be some room for further reinforcement of dissemination of IRB-related information and initiatives to help companies focus their efforts.

5.3.3 U.S. aerospace opportunities

As is now well publicized, U.S. defence acquisition and support budgets are on the rise. This may result in increased opportunities on existing and new programs, although in some respects acquisition budgets may remain relatively constrained due to the increased pressure on operations and maintenance resulting from ongoing activities. Annex G provides additional information on some specific U.S. aerospace and defence procurement opportunities. Other emerging programs include the new In-Flight Refuelling (IFR) aircraft. This is likely to be based on the Boeing 767 platform with Smiths Industries and Able the lead contractors for the IFR capability. The U.S. Coastguard is also in the early phases of a major re-equipment program named the “Integrated Deepwater System (IDS) which includes both marine and air assets and acknowledges the potential for increased outsourcing of support services. Another emerging trend is the tendency to abandon re-manufacturing and major upgrades of old vehicles in favour of new systems. This trend is based, at least in part, on recent negative experiences with remanufacturing programs. However, upgrades will continue to offer major business opportunities for industry. Current examples in the support aircraft fleets include UH-60 Blackhawk, CH-47 (U.S. Army), and C-5, KC-10 and C-130 avionics modernization programs, not to mention the various combat aircraft upgrades. The prime contractors for most of these capability upgrade programs are increasingly systems engineering companies, notably Lockheed Martin, Boeing, Rockwell Collins, Honeywell and Northrop Grumman. Thus these companies and their supply chains are inevitably the key focus for market penetration. In some cases local Nova Scotia employees of these companies may be in a position to identify key contacts in the parent company.

Clearly opportunities will also exist in support services markets. In this respect the distinctive characteristic of much of the Nova Scotia defence capability is its “close to the customer” orientation.

6 Recommendations

Based on the information and issues discussed in section 4, this section summarizes recommendations for possible sector-level initiatives intended to assist Nova Scotia companies penetrate export markets.

6.1 Considerations

The key challenge for the industry association is to match ambition with the available resources both fiscal and manpower. Our experience is that it is better to mount a sustained campaign in priority areas rather than attempting to be all things to all people. Export marketing requires persistence, consistency and durability. Every initiative must be well planned, executed and then followed-up. Arguably the follow-up is the most challenging and the most important.

We recommend that the prioritization of effort be based on the focus suggested earlier in this report:

Geographic focus: U.S. market
Primary sector focus is defence products and services
“Groupings of common interest” be based on the four “clusters of common interest” identified in the report or as determined by the industry association.

The Nova Scotia industry should continue to benefit from IRB opportunities resulting from Canadian government procurements. However, we suggest that sector level trade development activities continuously reinforce the message that in the harsh “commercial” world, the onus is unequivocally on the potential supplier to convince customers by being proactive and committing serious and consistent resources to export market development. Sitting at home waiting for opportunities will not result in success. One example we have suggested is to emphasize the need for outgoing missions to complement incoming ones.

6.2 Candidate activities

This section summarizes our suggestions of candidate sector-level trade development activities. They are based on the inputs from companies and other considerations presented in this report.

6.2.1 Networking events as basis for collaborative learning

Companies here and elsewhere express a desire for peer-to-peer information exchanges and networking. However, implementation is often weak because of time pressures and, in some cases, competitive concerns. Thus we see sector level involvement as an important vehicle to increase the level and value of this “made at home” solution. The OAC and AQA have both succeeded in delivering significant value by organizing a variety of events. We thus recommend that the industry association organize a series of networking and training events with trade development content. These events should be designed to educate and inform attendees but should also create an environment which promotes networking in a relaxed and informal environment. Local representatives from supporting Federal and Provincial government organizations should be encouraged to attend to promote their continued awareness of issues and perspectives within industry and provide companies an opportunity to deliver their messages.

We also believe that companies are generally prepared to pay for worthwhile services and events. Indeed, there can be a tendency for “free” services to be interpreted as low quality. We thus believe that partial or complete cost recovery is achievable from such activities. Once momentum has been achieved, they may become revenue generators. A common technique is to charge non-members of the industry organization more than members. This definitely encourages membership, provided, of course, that the activities deliver value. However, we strongly recommend that all activities be made available to non-members on some basis.

Some suggestions

A series of evening events, perhaps 5 or 6 a year, set in a social environment but featuring one or more keynote speakers who discuss a theme of common interest to Nova Scotia companies. In some cases, these evening events might also be preceded by a workshop or training session related to the theme of the evening. They might also be used as a vehicle to recognize export achievements of Nova Scotia companies.
Formal half day or one day seminars or training events on subjects of common interest.

The selection and prioritization of topics should be at the discretion of the industry association, but we suggest the following candidates:

Keynote speakers;

Export-related government support programs and facilities:

Canadian Commercial Corporation; bid matching service, contracting services
Export Development Corporation
Trade team Canada; market information
DFAIT: Commercial Counsellor services and/or commercial counsellors from key US jurisdictions, especially Washington, Program for Export Market Development (PEMD)
Supplier development and technology-related programs (NRC, TPC etc.)
PWGSC (CCGRP office, IRB section)
Presentation on the USCG Deepwater program

Representatives of other provincial/regional trade associations who may be prepared to present their experiences and strategies discuss potential joint activities may also deliver value, especially in the context of commercial markets which tend to be the focus in other regions of Canada.

Representatives of potential customers:

US government representatives
US companies
Representatives of European companies based in Canada

Export successes of Nova Scotia companies from other (but related) industry sectors Education and training sessions:

Managing information and intelligence and/or competitive intelligence
Selecting and using in-country representatives
ITARS procedures
Doing business with US government including topics such as performance-based specifications (PBS), cost as an independent variable (CAIV), earned value management (EVM), revolution in business affairs (RBA).
Using trade shows effectively (focus on prepare/attend/follow-up)
Productivity-related topics:
Quality management (ISO and AS)
Continuous improvement
Selection and implementation of MRP/ERP systems
Virtual collaboration

The U.S. Department of Defence is a large and complex organization and the underlying politics are not always easy to understand. Furthermore there is a range of tariff and non-tariff barriers and obstructions which the industry must fully appreciate in developing a strategy. Related information and education activities may thus be vital for success. Wherever possible participation in delivery by local companies should be encouraged.

It may also be productive to research and present case studies and initiatives from other countries. Substantial information is available on the Internet. This may be a source of interesting practices and can also shed some light on the competitive environment.

6.2.2 Missions

Incoming and outgoing missions are clearly key elements of export market development. We recommend that the industry association and government organizations collaborate to plan specific missions. We suggest the following guidelines:

Avoid repetition or duplication of relevant missions organized at a national level; look for complementary missions of particular interest to Nova Scotia. Maintain close awareness of national and regional initiatives.
Although companies prefer incoming missions for obvious reasons, we suggest that sectorlevel activities place as much, if not more, emphasis on outgoing missions. This is because it is necessary to demonstrate commitment to markets to establish a foothold, and few potential customers will invest in incoming missions unless paid or in support of IRB-related needs.
Seek potential candidates from the perspective of “clusters of common interest”. This report suggests four candidate clusters, but the industry association may see other natural groupings.
Ensure that the organization of missions places emphasis on preparation and follow-up. Demonstration of reasonable effort might even be a criterion for future support.
Look for opportunities to share outgoing missions with other regional or provincial jurisdictions.

For reference purposes, the following list summarizes some upcoming missions to or from Canada:

Delegation to France by Ontario (May-June 2002)
Incoming French Mission (October 2002)
JSF Industry Missions
BAE Incoming Mission
Canada-UK Defence Industry Symposium (16-17 May 2002)
Aerospace Expo, LA (1-3 October 2002)
UK-Canada SME partnering event in Manchester, UK (to be confirmed)

6.2.3 Trade shows and other events

We recommend that support for trade shows and other export-related events be based on the following guidelines:

All event-based initiatives should be structured to strongly encourage planning and followup. The lack of good preparation and, most importantly, follow-up is the key weakness in use of such events.
The events selected should be very specific to products/services and geographic markets. They should also be events which allow companies the opportunity to interface directly with potential customer representatives. There are many U.S. defence events of that genre. While there are benefits to attending the major international trade shows, the cost is substantial. We thus recommend that attendance at them be based on individual company decisions recognizing that certain support services are available at a Federal level.

Annex F is a selection of US military-oriented trade shows and other events included for reference purposes.

6.2.4 Marketing materials

Sector level marketing materials are definitely an important element of a trade initiative.

However, we suggest that they be judiciously to minimize the risk of perception of a “fragmented” approach by potential customers outside Canada. The industry association should determine the key messages but we recommend that the core industry characteristics of products and services delivered in a “close to the military operator” be emphasized. Notwithstanding domestic tendencies to question Canadian military resources, we believe that Canada’s force is still regarded internationally as professional and sophisticated.

We also respectfully suggest that this may provide an opportunity to present a regional face by collaboration with other Maritime Provinces.

The Internet is an important communications medium and some form of sector-level web presence may well be a worthwhile investment.

6.2.5 Understanding Washington

The political environment in Washington is a key to understanding U.S. defence procurements. Arguably the only effective way to maintain insight is to hire a local individual with appropriate access. This is an expensive proposition. Thus there may be some potential for coordination of a jointly supported presence. Implementation of such arrangements are not easy, due to the issue of allocation of resources. However, if a sector-level or cluster of interest mandate could be agreed, this could deliver significant value.

6.2.6 Other candidate sector-level activities

Evaluation of collaborative purchase of information of common interest (cost-sharing between companies). This is discussed in section 5.2.3.1
Support to companies which present technical papers in an international environment.
Financial support to attendance at forecasting/technical events which are relevant to a cluster. Such support would be based on information being forwarded to other interested companies in the province.
Provide incentives for company representatives to participate in national-level working groups and committees such as:
AIAC Trade Committee
CDIA committees
Initiatives to maintain positive relations with Commercial Counsellors in key markets. This is discussed in section 5.2.4.

6.2.7 Prioritization and resources

We have not attempted to prioritize these potential activities since the Industry Association is in the best position to do so, based on knowledge of available financial and human resources and on the priorities of the Nova Scotia companies. However, we submit the following observations:

Team-building

Experience from other jurisdictions suggests that local information, education and networking are very cost-effective activities and may even become revenue generators for the Industry Association. A critical challenge is team-building by encouraging the companies to focus on their common interests and challenges, rather than their differences. Close-to-home networking environments provide the best opportunity to achieve this, although outgoing missions can also be remarkably effective based upon a shared experience. At the end of the day decisions are made by people who decide to like or not like each other and creation of purely social environments can be very important in promoting personal bonding.

Focus

It will be important to identify and retain focus. There is always a danger of trying to do too many things concurrently with limited resources. Inevitably decisions will be made to not pursue initiatives which are of substantial interest to some companies. Thus in the early stages of implementation we suggest that at least some of the activities be as generally applicable as possible to avoid potential polarization and perceptions of “favouritism”. One candidate approach is to invite companies to select preferred activities from a list and implement the most widely requested.

7 Concluding remarks

Prioritizing the trade development activities of a relatively small but diverse industry is challenging. With the available resources it will be impossible for the industry association to meet every need and preference. However, by focusing on the US market and certain “clusters” of capability, we believe that the industry should succeed in increasing its currently modest export sales into that market. To achieve maximum effect, the sectoral level activities should complement rather than duplicate national level and company-specific activities. A key challenge will be determining where the relatively small Nova Scotia industry fits in the supply chain. Once that has been achieved, then the key to success will be establishing long term relationships with industrial customers and partners.

Annex A 15 April, 2002

LISTING OF NOVA SCOTIA-BASED

AEROSPACE AND DEFENCE COMPANIES

- ACOA STUDY

Company: Cincom*

Core products/services and/or competencies: Business information systems

Military or Civil focus: C

Naval/offshore predominance:

Current exporter? (NS presence): Y, world

HQ location (ultimate ownership): USA

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: Bridgeport Wire

Core products/services and/or competencies: Heavy duty wire, rope, tarp. Welding

Military or Civil focus: M

Naval/offshore predominance: Y

Current exporter? (NS presence): Y, USA

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: Amherst Machining*

Core products/services and/or competencies: CNC machining with focus on prototypes and small batches

Military or Civil focus: C

Naval/offshore predominance: N

Current exporter? (NS presence): Y, USA

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: Y

Engineered components or systems: N

Company: Advanced Precision*

Core products/services and/or competencies: Precision machining

Military or Civil focus: C

Naval/offshore predominance: N

Current exporter? (NS presence): Y, USA

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: Y

Engineered components or systems: N

Company: Orenda Recip*

Core products/services and/or competencies: Piston aero-engine

Military or Civil focus: C

Naval/offshore predominance:

Current exporter? (NS presence): Y Various

HQ location (ultimate ownership): Canada (ON)

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: IMP Aerospace*

Core products/services and/or competencies: Military aircraft MRO. Structural components and assemblies A

Military or Civil focus: M

Naval/offshore predominance: N

Current exporter? (NS presence): Y USA, ME

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: Y

Engineered components or systems: N

Company: EADS Composites Atlantic*

Core products/services and/or competencies: Composite products

Military or Civil focus: B

Naval/offshore predominance: N

Current exporter? (NS presence): Y USA, Europe

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: Y

Engineered components or systems: N

Company: Navitrak Engineering*

Core products/services and/or competencies: Airborne and hand-held moving map systems slaved to sensors

Military or Civil focus: M

Naval/offshore predominance: Y

Current exporter? (NS presence): Y USA

HQ location (ultimate ownership): NS

Software-based systems: Y

Structures: N

Engineered components or systems: Y

Company: Nautel

Core products/services and/or competencies: Solid state transmitters and amplifiers for comm and nav

Military or Civil focus: M

Naval/offshore predominance: Y

Current exporter? (NS presence): Y USA

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: N

Engineered components or systems: Y

Company: Ocean Case*

Core products/services and/or competencies: Shipping cases and containers

Military or Civil focus: M

Naval/offshore predominance: N

Current exporter? (NS presence): Y USA

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: Internav

Core products/services and/or competencies: Navigation systems; S&R focus

Military or Civil focus: B

Naval/offshore predominance: Y

Current exporter? (NS presence): Y USA

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: N

Engineered components or systems: Y

Company: General Dynamics Canada*

Core products/services and/or competencies: Acoustic signal processing

Military or Civil focus: M

Naval/offshore predominance: Y

Current exporter? (NS presence): Y (world)

HQ location (ultimate ownership): USA

Software-based systems: Y

Structures: N

Engineered components or systems: Y

Company: Hermes Electronics* (Sub. Of Ultra Electronics)

Core products/services and/or competencies: Sonobuoys, towed arrays, LF sonars

Military or Civil focus: M

Naval/offshore predominance: Y

Current exporter? (NS presence): Y (world)

HQ location (ultimate ownership): UK

Software-based systems: N

Structures: N

Engineered components or systems: Y

Company: Pivotal Power

Core products/services and/or competencies: Electronic power conversion equipment

Military or Civil focus: M

Naval/offshore predominance: Y

Current exporter? (NS presence): Y (world)

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: N

Engineered components or systems: Y

Company: Satlantic*

Core products/services and/or competencies: Remote sensing solutions and optical senors

Military or Civil focus: B

Naval/offshore predominance: Y

Current exporter? (NS presence): Y (various)

HQ location (ultimate ownership): NS

Software-based systems: Y

Structures: N

Engineered components or systems: Y

Company: Provincial Airlines*

Core products/services and/or competencies: Airborne maritime surveillance systems and services

Military or Civil focus: C

Naval/offshore predominance: N

Current exporter? (NS presence): Y (Australia)

HQ location (ultimate ownership): Canada (NF)

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: Focal Technologies Corp. (sub of Kaydon Corp.)

Core products/services and/or competencies: Engineered rotary couplings and instrumentation

Military or Civil focus: M

Naval/offshore predominance: Y

Current exporter? (NS presence): Y

HQ location (ultimate ownership): USA

Software-based systems: N

Structures: N

Engineered components or systems: Y

Company: Metocean Data Systems

Core products/services and/or competencies: Data collection & telemetry systems

Military or Civil focus: C

Naval/offshore predominance: Y

Current exporter? (NS presence): Y

HQ location (ultimate ownership): NS

Software-based systems: Y

Structures: N

Engineered components or systems: Y

Company: Amirix Systems

Core products/services and/or competencies: Embedded systems, hardware and software including integration. Telecom focus

Military or Civil focus: C

Naval/offshore predominance: N

Current exporter? (NS presence): Y

HQ location (ultimate ownership): NS

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: Astrotech*

Core products/services and/or competencies: Space - related eng. services, including V&V and qualification

Military or Civil focus: C

Naval/offshore predominance:

Current exporter? (NS presence): Y

HQ location (ultimate ownership): NS

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: Logical Paths Training Dev.

Core products/services and/or competencies: Instructional training systems

Military or Civil focus: C

Naval/offshore predominance: N

Current exporter? (NS presence): Y

HQ location (ultimate ownership): NS

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: Seimac

Core products/services and/or competencies: acoustic, oceanographic and meteorological data management, telemetry systems, rf devices. S&R focus

Military or Civil focus: B

Naval/offshore predominance: Y

Current exporter? (NS presence): Y

HQ location (ultimate ownership): NS

Software-based systems: Y

Structures: N

Engineered components or systems: Y

Company: Tecsult Eduplus*

Core products/services and/or competencies: Training systems and services, elearning

Military or Civil focus: M

Naval/offshore predominance: Y

Current exporter? (NS presence): Y

HQ location (ultimate ownership): Canada (QC)

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: SNC-Lavalin

Core products/services and/or competencies: Engineering services

Military or Civil focus: C

Naval/offshore predominance: N

Current exporter? (NS presence): Y

HQ location (ultimate ownership): Canada (QC)

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: Pratt $ Whitney Canada

Core products/services and/or competencies: Gas turbine engine components

Military or Civil focus: C

Naval/offshore predominance:

Current exporter? (NS presence): N

HQ location (ultimate ownership): USA via Canada

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: Litton Systems Canada* (sub. Of Northrop Grumman Corp.)

Core products/services and/or competencies: Systems engineering and test, electronic control systems, avionics and defence systems MRO

Military or Civil focus: M

Naval/offshore predominance: N

Current exporter? (NS presence): N

HQ location (ultimate ownership): USA

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: Simulation Technologies

Core products/services and/or competencies: Physical simulators for emergency systems eg aircraft egress

Military or Civil focus: C

Naval/offshore predominance:

Current exporter? (NS presence): N

HQ location (ultimate ownership): USA

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: Survival Systems

Core products/services and/or competencies: Air and sea survivial training

Military or Civil focus: B

Naval/offshore predominance: Y

Current exporter? (NS presence): N

HQ location (ultimate ownership): USA

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: Fleetway Incorporated (sub. Of Irvine Industries)

Core products/services and/or competencies: Ship design, ship/military systems integration, ILS

Military or Civil focus: M

Naval/offshore predominance: Y

Current exporter? (NS presence): N

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: Eastcan Geomatics (part of MacDonnell Group)

Core products/services and/or competencies: Geomatic Information and mapping systems

Military or Civil focus: C

Naval/offshore predominance:

Current exporter? (NS presence): N

HQ location (ultimate ownership): NS

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: Atlantic Avionics

Core products/services and/or competencies: Avionics distribution and repair

Military or Civil focus: C

Naval/offshore predominance:

Current exporter? (NS presence): N

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: Martec*

Core products/services and/or competencies: Engineering services, structural analysis software development, Ocean science

Military or Civil focus: B

Naval/offshore predominance: Y

Current exporter? (NS presence): N

HQ location (ultimate ownership): NS

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: InNOVAcorp*

Core products/services and/or competencies: Venture capital, business innovation

Military or Civil focus: B

Naval/offshore predominance:

Current exporter? (NS presence): N

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: PerformPlus Management*

Core products/services and/or competencies: Human resources consulting training and performance measurement

Military or Civil focus: B

Naval/offshore predominance: N

Current exporter? (NS presence): N

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: N

Engineered components or systems: N

Company: CAE Inc.*

Core products/services and/or competencies: Simulation and training

Military or Civil focus: M

Naval/offshore predominance: N

Current exporter? (NS presence): N

HQ location (ultimate ownership): Canada (QC)

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: xwave Solutions*

Core products/services and/or competencies: Software systems; incl mission critical

Military or Civil focus: M

Naval/offshore predominance: N

Current exporter? (NS presence): N

HQ location (ultimate ownership): Canada (ON)

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: MacDonald Dettwiler & Associates*

Core products/services and/or competencies: Signal porcessing and sonar technology

Military or Civil focus: M

Naval/offshore predominance: Y

Current exporter? (NS presence): N

HQ location (ultimate ownership): Canada (BC)

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: Lockheed Martin Canada*

Core products/services and/or competencies: Systems integration, engineering services

Military or Civil focus: M

Naval/offshore predominance: N

Current exporter? (NS presence): ?

HQ location (ultimate ownership): USA

Software-based systems: Y

Structures: N

Engineered components or systems: N

Company: Bartlett Plastics*

Core products/services and/or competencies: Plastic injection moulding, sheet metal

Military or Civil focus: C

Naval/offshore predominance: N

Current exporter? (NS presence): ?

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: Y

Engineered components or systems: N

Company: Banc Metals Industries

Core products/services and/or competencies: Metals, pressure vessels (primarily offshore)

Military or Civil focus: C

Naval/offshore predominance: Y

Current exporter? (NS presence): N

HQ location (ultimate ownership): NS

Software-based systems: N

Structures: N

Engineered components or systems: N

Sector Trade Study for:

The Aerospace and Defence Industries of Nova Scotia

DISCUSSION POINTS AND QUESTIONS

Basic Rules of Engagement

Based on the availability of company representatives and the time to complete interviews with as many companies as possible over a 2-3 day window, we intend to use the following questions as discussion points.
We will assure anonymity unless a company specifically allows their responses to be used in our study under their name.
We will take notes, and summarize trends, common threads of answers, etc.
It is recognized that certain companies may want to avoid specific responses on the grounds of company confidentiality, and we will respect that. (We feel that it is important to come away with a broad sample of responses from which we can extract an overall picture of “export readiness” and from which we can define the key issues and impediments to successful export penetrations and growth).

Discussion Points/Questions Company: ______________________

Date: _________________ Contact: ______________________

1. Export Marketing Strategies

Do you control your business development strategy from here in Atlantic Canada?

(As applicable) Do you use the marketing arms of your corporate parent in overseas markets? If so, how do you make use of these services and how do you finance them?

Do you currently export directly or indirectly? Details on what/how/where.

What portion of your business is related to direct exports, and to indirect exports, (ie selling through another company as part of an aircraft, system or sub-system, which is then exported)?

What do you see as the main obstacles or impediments to developing export markets in your business?

Do you see export markets as important for you in the next 2/5/10 years. Any specific targets (program, geographic, partners, etc.)?

Do you use overseas in-country agents, distributors and/or representatives?

Do you consider that you get good value for their services? (ie in terms of leads, in-country marketing support, access to decision makers, value as an extension of your own marketing activities).

2. Market Intelligence and Promotions

Do you attend export-oriented trade shows? What is your experience? Do you consider these good value ? If not, why not? Any good ones/bad ones? Preferences for specific vs general.

Do you participate in overseas missions? Any comments?

Do you access sources of info/intelligence to understand export markets? (What information sources do you use/rely on to provide you with information on export opportunities, which you would be interested in pursuing?) If so which ones? Are there any you would like to consult but don't for cost or time reasons? Any specific desires/ideas on how you could be helped in this area?

Do you use Trade Commissioner Service? If yes, any observations.

Do you use make extensive use of DFAIT information booklets and other government publications to assist in accessing or exploring export opportunities?

Do you use/get contracts through the services of CCC?

Do you use the services of EDC? If yes, do you believe that EDC provides you with a competitive edge?

Do you ever combine forces (eg by spreading costs) when travelling and/or exhibiting to overseas markets, trade shows, etc?

3. Market Positioning

Do you believe that it is worthwhile to maintain up-to-date profiles in web-based and hard copy industry in listings such as AIAC, ADIANS, WAD, WinExport and Strategis? Do you try and ensure up-to-date entries in directory issues of major publications?

What do you consider are the main purposes of your corporate web site?

Do you do any export e-commerce through the web? Eg for pricing, contracts, program status?

Is NS sufficiently served by logistics service providers, (eg international airlines with direct access to key export markets such as the US, packaging, freight forwarders, customs brokers, etc.), to allow you speedy communications without having to go through other major transportation centres in Canada?

In your view, is NS well served by Federal Government agencies, which play a key role in managing your export business, such a Canada Customs and Revenue Agency (eg for clearance of import and export shipments)?

4. Looking Ahead

Can your company act in a “virtual” environment, eg direct electronic exchange of technical and business information supported by the associated internal software systems?

How important is it to you to have a large systems integrator here in NS? Would such a presence help you obtain business and develop export markets?

Do you think that your company allocates sufficient resources to export marketing? Do you think that “corporate” understands the investment needs and longer-term marketing cycle to allow you to pursue export opportunities?

Do you think that NS (and the Atlantic Provinces) has sufficient infrastructure in terms of suppliers (for both labour and material) and process providers, to allow you to retain or achieve a competitive position?

What additional industries or capabilities would you like to see as being of benefit to the NS A&D sector, but which are not located here currently?

Other comments or feedback you would like to see included in our study.

Technology Support Programs; an overview

1 DND

The Defence Research and Development Canada (DRDC) http://www.drdc-rddc.dnd.ca is the DND organization responsible for technology priorities. Its current Technology Investment Strategy (TIS) includes 21 R&D activities:

Autonomous Intelligent Systems

Chemical/Biological/Radiological Threat Assessment &

Detection

Command and Control Information Systems Communications

Electro-Optic Warfare

Emerging Materials and Bio-Molecular Technologies

Human Factors Engineering and Decision Support

Information and Knowledge Management

Multi-Environment Life Support Technologies

Network Information Warfare

Operational Medicine

Platform Performance and LCM

Precision Weapons

Psychological Performance

RF Electronic Warfare

Sensing (Air & Surface)

Sensing (Underwater)

Signature Management

SMART

Space Systems

Weapons Effects

2 Technology Collaboration

Because of the changes in supply chains described in this report, some government support programs favour situations where companies collaborate to jointly develop “higher levels” of product and services which will, de facto, enhance export readiness. The Office of Collaborative Technology Development, (OCTD) jointly sponsored by NRC/IAR and AIAC coordinates these efforts. http://technology.aiac.ca/ This site also contains a link to the Canadian Aircraft Technology Road Map. OCTD also manages the Canadian Aerospace Technology Sourcebook (CATS). This sourcebook is a web-based database of Canadian expertise in technologies of critical importance to the aerospace industry. It has been based on the Technology Partnerships Canada Technology Framework document. Version 1 of the Sourcebook includes Canadian universities, colleges and research organizations; future versions intend to add Canadian industrial firms and consultants.

The aims of CATS are:

Members of the industry will be able to locate technology experts for assistance on R&D projects.
Researchers and strategic planners will be able to identify gaps in critical technology areas and therefore opportunities for R&D.
Teaming partners can be identified for collaborative technology development projects.

The OCTD and Technology Partnerships Canada (TPC) have collaborated to offer the Canadian Aerospace Collaborative Technology Development Initiative whose goal is to:

Encourage multi-partner research and development projects to develop critical technologies by Canadian aerospace and defence suppliers, especially small or medium-sized businesses, that will maintain and enhance global competitiveness.

An appendix to this annex contains additional information on the OCTD.

3 National Research Council (NRC)

The NRC Industrial Research Assistance Program (IRAP) offers support programs for technology development. More information can be obtained from the local resource who is Halifax-based Brian Hachett, who has substantial aerospace experience. NRC also offers technology and business consulting via the Canadian Technology Network. http://ctn.nrc.ca/

The Institute of Aerospace Research (IAR) of the NRC is in the process of establishing the Aerospace Manufacturing Technology Centre (AMTC). The main facilities will be located at the Université de Montréal, but this initiative is intended to support the development of manufacturing technologies by Canadian industry, with a focus on SMEs. http://www.nrc.ca/cgi-bin/corporate/external.pl?http://www.nrc.ca/iar /

Within the framework of the Atlantic Canada Investment Partnership the NRC is also implementing an Atlantic Initiative which fosters clusters of capability, http://www.nrc.ca/atlantic/english/index.html. The primary focus appears to be biosciences.

The appendices to this annex provide additional information on some of the government support programs available from the NRC and TPC.

4 Other information sources

Substantial information concerning technology developments in other jurisdictions is now available on the Internet. The table presents a few of the more notable sources:

Web address: http://europa.eu.int/comm/research/growth/gcc/ka04-projects.html

Description: EU aeronautics research portal

Web address: http://www.aerosme.com/

Description: Initiative to encourage SME involvement in EU R&D

Web address: http://www.cordis.lu/fp5/src/programmes.htm

Description: EU Fifth Framework programs (aero/defence in growth)

Web address: http://www.asme.org/gric/2001/Workshop/Agenda05.html

Description: ASME event, December 2001; state of US Aero R&D

Web address: http://www.anvar.fr/

Description: French innovation centre

Web address: http://www.aero-space.nasa.gov/curevent/news/

Description: NASA office of aerospace technology

Web address:

Description: UK aerospace R&D organizations

Web address: http://lean.mit.edu/

Description: Lean Aerospace Initiative

Announcement of Opportunity

The Aerospace Manufacturing Technology Centre

Institute for Aerospace Research

National Research Council Canada

THE CENTRE

The Aerospace Manufacturing Technology Centre (AMTC) will be a new initiative to be brought about through partnership between the National Research Council Canada and Canada Economic Development for Quebec. Its aim will be to develop core competencies and/or to demonstrate modern methods of manufacture for the aerospace industry that have the potential for significant cost savings, while also maintaining high levels of quality, reliability and performance. It will be established in the greater Montreal region as a laboratory of the NRC Institute for Aerospace Research (IAR).

THE OPPORTUNITY

The Institute for Aerospace Research invites expressions of interest and proposals from the aerospace community for research and development projects that might be considered as collaborative projects with IAR under the AMTC initiative. While the areas of activity have been broadly defined, in the implementation of this program, the NRC wishes to ensure that the new Centre focuses on priority R&D issues of the industry and this is the purpose of this invitation. At the same time the interests of industry will be used to provide guidance to NRC in the selection of research staff and facilities to support the program. Proposals are invited in the following fields:

Advanced metal removal processes, such as high speed machining, adaptive machining, milling or grinding, or laser beam technologies.
Advanced techniques in metrology and inspection.
Advanced metal forming processes such as superplastic forming, precision forging, isothermal forging, or semi-solid forming.
Spray forming technologies.
Advanced joining techniques such as electron or laser beam technologies, friction stir welding, other friction welding technologies, or magnetic pulse or pulsed plasma welding.
Specialty casting processes such as vacuum die-casting or investment casting.
Technologies for surface protective coatings such as Cold Spray, electron beam physical vapour deposition or sol-gel technologies.
Technologies that have the potential to produce novel materials that might be used in advanced sensors, transducers or avionics systems.
Out-of-autoclave processing of composites such as resin transfer molding, or advanced methods for low cost tooling.
Information systems to support manufacturing operation, and/or technologies that facilitate the efficient interface between design and manufacturing.
Robotic technologies for manufacture or assembly.

The above list is not intended to be exclusive, and proposals will be welcome in any other area that has the potential to lower aerospace manufacturing costs and/or produce new products that can address new market opportunities and create jobs.

LIMITATIONS

This call is concerned particularly with identifying the equipment needs of collaborative research projects such that equipment may be procured by the NRC and made available to the program. The selected equipment will be bought by NRC and located at the Centre once suitable accommodation has been built. Collaborators are asked to indicate whether they would be prepared to temporarily house the equipment at their own facilities until the NRC Centre is operational, and if so under what terms. Under this solicitation there is no intention to provide operating funds to non-NRC organizations to support selected research projects, but assistance will be provided to secure funds under other available government assistance programs. The primary target of this solicitation is Canadian industry, but proposals will also be welcome and will be considered from universities and other research organizations that have a significant track record in research for the aerospace sector.

PROPOSALS

Short proposals of up to five pages are required containing the following information:

Project title
Name(s) of the collaborating organization(s).
Brief outline of the business of the collaborating organization(s)
Description of the need or opportunity to be addressed and the benefits to the aerospace industry.
Brief synopsis of the work to be carried out, including description of the main tasks to be accomplished.
Description and approximate cost of the equipment required (performance specifications will be required for candidate equipment, suitable for use in government procurement).
Description of the resources that the collaborating organization would be prepared to commit to the project.

TIME-FRAMES AND CONFIDENTIALITY

Proposals may be made at any time, although the first round of project selections will be based on those received by the end of March 2001. Evaluation of project proposals will occur in April 2001. Proposals that appear promising may be refined through discussion with NRC project leaders before final acceptance. Procurement of equipment will begin immediately after project selection and acceptance, and will follow standard government practices involving open bidding against defined requirements. All proposals will be kept in confidence by the National Research Council Canada and no details will be divulged to any third party without the express written permission of the originating party. The selection of proposals will be dependent on the availability of funding and the associated cash flow. Prioritization is likely to be required.

CONTACT

Proposals should be sent to:

Dr. W. Wallace,

Director General,

Institute for Aerospace Research,

National Research Council of Canada,

Ottawa, Ontario, K1A 0R6.

Tel: 613-993-0141

Fax: 613-952-7214

e-mail: bill.wallace@nrc.ca (www.nrc.ca/iar/)

Aussi disponible en français

BACKGROUNDER

Canadian Aerospace Collaborative Technology Development Initiative

Goal:

To encourage multi-partner research and development projects to develop critical technologies by Canadian aerospace and defence suppliers — especially small or medium-sized businesses — that will maintain and enhance global competitiveness, while making more efficient use of scarce R&D resources.

Key Features:

Partnership between the Aerospace Industries Association of Canada (AIAC)-National Research Council (NRC) Office of Collaborative Technology Development (OCTD) and Technology Partnerships Canada (TPC);
Three-year pilot project with a notional budget of $9 million over three years;
Partners will collaborate on early stage R&D that involves significant innovation and advances team members’ technological capabilities;
Support cost-shared on a 50-50 basis, with TPC contributions ranging from $100,000 to $1 million per project, and
Unconditional repayment over 10 years.

Straightforward Process:

Companies wishing to participate submit a brief letter of interest (LOI) to OCTD;
The OCTD Selection Committee evaluates the LOIs within a short time (expected to be three weeks);
Successful applicants then submit a project plan for review by TPC.

Project Teams:

Eligible teams will consist of at least two Canadian aerospace or defence firms, of which one must be a small or medium-sized enterprise (SME). One of these Canadian firms must serve as the project leader. University researchers, government laboratories and other public institutions may also participate in the project.

Eligible Projects:

Design technologies;
Environment technologies;
Maintenance, Repair and Overhaul technologies;
Manufacturing technologies;
Materials and Structures technologies;
Systems technologies, and;
Visualization technologies.

BACKGROUNDER

TPC Aerospace and Defence (A&D) Supplier Development Initiative

Goal:

To work in partnership with small and medium-sized Canadian aerospace and defence companies to help them meet the challenges of globalization through the development and incorporation of world-class business and manufacturing practices and technologies.

User-friendly Design:

Streamlined and highly focussed — with eligible activities and contractual terms, including repayment, clearly specified and determined in advance using standardized approaches;
Every effort made to reduce processing times and administrative burden;
Application procedure will be as simple as possible, with due consideration for the use of public funds.

Supported Activities:

In general, the following categories of activities are supported under this initiative:

Quality management systems;
Advanced manufacturing systems;
Process planning systems;
Robotic cells and systems;
Technical data transfer studies, and;
Capital equipment specifically required to implement these activities.

Key Features:

Total eligible costs for a project not to exceed $2 million, with TPC funding ranging from 40 to 50 per cent of eligible costs, depending upon need;
Projects must meet key criteria — strategic relevance, technological feasibility, need and repayment;
Three-year pilot program, after which time its utility and impact will be evaluated;
Notional funding within TPC’s authorized budget will be $30 million over three years.

Eligible Companies:

Operating in Canada, with a minimum of 33 per cent of total revenues from sales to the aerospace and defence industry for the full company year immediately preceding the date of project submission;
Total sales of $20 million per year maximum at the time of project submission, or a maximum of 100 employees;
Have a company business plan incorporating the proposed project within its overall strategy;
Preference will be given to projects having mentors from large Tier I or Tier II aerospace and defence firms. Mentors may be active either in Canada or globally and must agree to participate in the proposed project.

CANADIAN AEROSPACE

COLLABORATIVE TECHNOLOGY

DEVELOPMENT PROGRAM

1. INTRODUCTION

The Office of Collaborative Technology Development (OCTD) 1, in partnership with Industry Canada’s Technology Partnerships Canada (TPC) 2, is pleased to invite the submission of Letters of Interest (LOIs) for 50/50 cost-shared, collaborative technology development projects. This national solicitation is designed to encourage multi-partner research and development projects by Canadian aerospace and defence firms 3 to maintain and enhance their competitiveness, whilst maximizing the use of scarce resources.

TPC has allocated $3 million per year for 3 years to support this collaborative technology development initiative for Canadian aerospace and defence firms. Proposals will be accepted until such time as these funds have been committed. An early response to this solicitation is therefore advisable.

It is anticipated that five (5) to ten (10) contribution agreements will be awarded, with TPC contributions ranging from $100,000 to $1,000,000. The actual number of projects will depend on the quality of the proposals received, and their cash flow requirements.

If you have any questions or require further information on any aspect of this solicitation, please contact:

Peter Trau

Manager, Office of Collaborative Technology Development

National Research Council Canada

Institute for Aerospace Research, Building M-3

Montreal Road, Ottawa, ON, K1A 0R6

Tel: (613) 993-7929

Fax: (613) 952-7214

e-mail: peter.trau@nrc.ca

Internet: http://www.technology.aiac.ca/

________________________

1 For more information on OCTD see: http://www.technology.aiac.ca/

2 For more information on TPC see http://strategis.ic.gc.ca/sc_mangb/tpc/engdoc/homepage.html

3 The designation “Canadian aerospace and defence firms” refers to Canadian-based and established corporations, who supply goods and services to the Canadian and global aerospace and defence industry. (They can be foreignowned.)

2. GOALS AND OBJECTIVES

The goal of the OCTD is to act as a catalyst in the undertaking of multi-partner collaborative R&D projects to develop the critical technologies required by Canadian aerospace firms to meet the future requirements of their customer base. By encouraging multi-disciplinary collaboration, OCTD seeks to develop a “teaming” culture among Canadian aerospace and defence firms as well as universities and research organizations, to strengthen the capabilities of individual firms and collectively make more efficient use of scarce R&D resources, whilst reducing cost and risk. TPC is a technology investment fund, supporting research, development and innovation in environmental technologies, enabling technologies, and aerospace and defence. It supports the government’s objectives of increasing economic growth, creating jobs and wealth, and supporting sustainable development.

3. SCOPE OF PROJECTS AND PROJECT TEAMS

Project proposals approved under this program will relate to the R&D of critical technologies, which are required by two or more Canadian aerospace and defence firms. The spectrum of eligible technologies includes the following seven areas: (1) design technologies; (2) environment technologies; (3) maintenance, repair & overhaul technologies; (4) manufacturing technologies; (5) materials and structures technologies; (6) systems technologies; and (7) visualization technologies.

Examples of technologies in these seven areas can be found in the “Canadian Aircraft Design, Manufacturing and Repair & Overhaul Technology Road Map” (TRM) 4, which describes 50 critical technologies, required to design, build and maintain aircraft, aircraft systems and components to meet customer requirements in the period 2001 – 2005. Please note that the TRM includes an eighth category of Management Technologies, which are NOT eligible under this program.

Project teams must include a minimum of two (2) Canadian aerospace and defence firms including at least one Canadian aerospace and defence small and medium-size enterprise (SME) 5. One of these firms must serve as the team’s leader / project manager. University researchers 6, government laboratories, other public/not-for-profit institutions and organizations may participate in the project, but not as the lead organization. Foreign firms may participate but cannot be recipients of TPC funding 7.

It is expected that projects are completed within 36 months from the date at which costs incurred on the project will be accepted by TPC, and that all development activities and exploitation of resulting technologies will take place in Canada, unless specifically described and approved otherwise.

_______________________________

4 See http://strategis.ic.gc.ca/SSG/ad03117e.html for TRM Volume 1, and www.technology.aiac.ca/roadmap_v2/ for TRM Volume 2

5 SMEs are defined as companies with fewer than 500 employees.

6 For a database of Canadian universities, colleges and research organizations with expertise in technologies of critical importance to the aerospace industry see the Canadian Aerospace Technology Sourcebook (CATS) at http://www.nrc.ca/iar/cats/.

7 It may be advantageous to the project team to include a foreign owned and located firm as a partner, but such a firm is ineligible to receive TPC funding for its share of the project costs

4. APPLICATION PROCEDURE

OCTD has adopted a two-stage process.

Stage 1 - LOI:

Submit a brief, 1 to 2 page “letter of interest” (LOI), via e-mail, fax or mail, to Peter Trau (see Section 1).

The LOI should include:

A brief description of the project;
The project team composition and structure, including the identification of the lead firm and complete contact information;
The relevance / benefits of the project to the team members;
A preliminary schedule and budget, and sources of project funding.

A clear definition of the proposed project and the demonstration of a strong commitment to the project from all participants will be essential to the success of the LOI.

An Evaluation Committee chaired by OCTD will evaluate the LOI against a number of project selection criteria, which are documented below. It is expected that applicants will be informed about the status of their LOI within 3 weeks after receipt.

Stage 2 – Project Plan:

Successful applicants under the LOI stage of the review process will be invited to submit detailed Project Plan to the OCTD. The Project Plan will consist of three parts: (1) a comprehensive Statement of Work (SOW); (2) a signed Collaboration Agreement between the project team members; and (3) individual Canadian industrial team members’ ownership, financial and economic information. The lead firm will be expected to submit this Project Plan to OCTD within 8 weeks of being notified of the success of their LOI.

(1) The SOW must include:

(a) Scope of the work to be undertaken: provide an overview of the project, including its scope, objectives and overall performance goals (if possible, this description should be limited to one page).

(b) Major activities and milestones should adequately reflect the entire scope of work to be undertaken, and should be framed in terms of objectively verifiable indicators. These major components/elements must be identical to those used in the Project Schedule and Project Cost Breakdown described below. List all locations in which the work is to be performed. Describe each activity, including its challenges, measures in place to mitigate risk (e.g. performance reviews), and anticipated performance goals.

(d) Cost Breakdown of the project’s estimated TPC-eligible costs for all government fiscal years (1 April–31 March) of the project by major activities. TPC-eligible costs are direct labour costs 8, direct material costs 9, sub-contracts and consultants costs (to non-team members), special purpose equipment costs 10, other direct costs 11, and overhead costs 12.

(e) Identification of the environmental impact of the project (an Environmental Screening Report may be required to comply with the Canadian Environmental Assessment Act 13).

(2) The Collaboration Agreement 14 between the project’s industrial team members identifies the organizational structure and the leadership of the team, how project costs will be apportioned, as well how the Intellectual Property (IP) resulting from the project will be shared, protected and exploited.

(3) Individual team members’ ownership, financial and economic information can be provided separately and directly to OCTD by each team member to ensure confidentiality. This must include:

(a) Team member’s ownership, management, financial results (three consecutive recent historical audited financial statements).

(b) Project cash flow requirements and details of its financing (by government fiscal year), including identification of any other federal, provincial or municipal government financial assistance, except for scientific research and experimental development (SR&ED) tax credits, deductions or allowances.

(d) Exploitation plan for the technology/IP (geographic location, potential spin-offs, potential for further development).

(e) Need for TPC investment.

(f) A duly completed TPC Certification and Authorization Form 15.

_____________________________

8 The unburdened hourly, monthly, or annual costs incurred by the team members while working directly on activities of the Project. Direct labour costs excludes all benefits, vacation pay, sick pay and statutory holidays.
9 The cost of material which can be specifically identified and measured as having been used or to be used on the project.
10 The cost of all equipment regardless of cost, for work, which can be specifically identified and measured as having been performed or to be performed on the project.
11 Any costs for work which can be specifically identified and measured as having been performed or to be performed on the project, which have not been captured in the preceding cost breakdowns.
12 Overhead will be charged at EITHER a flat rate of 65% of direct labour (using the SRED tax credit definition for direct labour, which is the salaries or wages of an employee engaged directly in the project, including such amounts as vacation pay, statutory holidays and sick pay) OR a fixed rate as determined by Public Works and Government Services Canada (PWGSC) which would apply without adjustment for the duration of the project (note: PWGSC will establish the rate in consultation with the applicants prior to the commencement of the work).
13 The Canadian Environmental Assessment Act can be found on website http://www.ceaa.gc.ca/act/act_e.htm
14 A generic Collaboration Agreement can be found on the OCTD website http://www.technology.aiac.ca/.
15 A copy of this form can be found on page 8..

The OCTD Evaluation Committee will review the Project Plan against the project selection criteria and the TPC information requirements, and evaluate the project for submission to TPC. Project Plans may also be returned to the proponents for limited rework under OCTD guidance. OCTD will then submit those projects meeting the selection criteria to TPC. TPC remains the sole authority for final approval of projects. The OCTD submission to TPC will include a written assessment of the eligibility, technical risk and proponents’ capabilities, government strategic considerations, technological benefits and appropriateness of the collaboration agreement and the SOW.

TPC will take this assessment under advisement and undertake its due diligence with respect to the business case, the financial capacity of participants, the need for TPC assistance and the economic benefits expected from the project. Ongoing administration of projects will be conducted by TPC with technical support from OCTD in the review of progress achieved against the stated objectives.

The Project Eligibility Date (i.e. the starting date at which costs incurred on the project will be accepted by TPC) will coincide with the date on which TPC receives the completed Project Plan.

5. TPC CONTRIBUTION LEVEL AND REPAYMENT CONDITIONS

TPC will provide a contribution of 50% of eligible project costs, which will be disbursed through the lead firm, according to a TPC Contribution Agreement, which will be signed by each Canadian industrial team member receiving TPC funding. The TPC contribution will be fully repayable, in eight equal, annual installments, starting within two years after completion of the project’s work phase. For projects where the SOW is discontinued prior to completion and for which either TPC has disbursed 30% or less of the total authorized assistance, or for which the elapsed time from project start-up is less than 12 months, the project will be deemed a failure and no repayment will be required, except for cost recovery on special purpose equipment, if applicable. For projects which carry on beyond these thresholds of 30% or 12 months but are discontinued, for whatever reason prior to completion, repayment equal to the total amount of TPC disbursements received will be required within one year. Repayments will be collected by TPC from each team member according to their share of the TPC assistance received. No team member will be held liable for any other team member’s repayment obligations.

6. PROJECT EVALUATION CRITERIA

All proposals will be reviewed against a set of mandatory criteria. Projects that fail to meet the mandatory criteria will not be submitted to TPC. Proposals that meet the mandatory criteria will also be reviewed against a set of desirable criteria. Evaluation of proposals relative to these two sets of criteria, shown in the table below, will constitute the basis for the ultimate decision on whether or not the project will be submitted to TPC and, ultimately, whether or not a project will receive TPC funding under the Canadian Aerospace Collaborative Technology Development Program.

Applicants must be prepared to accept the standard General Terms and Conditions of TPC Contribution Agreements 16.

Projects which do not qualify or are not selected under this program may still be forwarded by the proponents directly to TPC for consideration under the standard TPC terms and conditions.

______________________________

16 If you are not familiar with these terms and conditions, please contact Peter Trau for more information.

EVALUATION CRITERIA

MANDATORY: 1. Teams must consist of at least two Canadian aerospace firms and include at least one Canadian aerospace SME (section 3.)

APPLICATION STAGE: LOI - Project Plan

EVALUATION

OCTD17: Yes/No

TPC 18: OCTD Report

MANDATORY: 2. One of the team’s Canadian firms must assume the role of leader / project manager (section 3.)

APPLICATION STAGE: LOI - Project Plan

EVALUATION

OCTD17: Yes/No

TPC 18: OCTD Report

MANDATORY: 3. The team must demonstrate evidence of strong commitment to the project and have an acceptable Project Collaboration Agreement (section 4.)

APPLICATION STAGE: Project Plan

EVALUATION

OCTD17: EGAPU

TPC 18: OCTD Report

MANDATORY: 4. The project must fall within one or more of the seven technology elements identified in section 3.

APPLICATION STAGE: LOI - Project Plan

EVALUATION

OCTD17: Yes/No

TPC 18: OCTD Report

MANDATORY: 5. The project must be innovative, technically feasible and within the combined technological capabilities of the team members (section 4.)

APPLICATION STAGE: Project Plan

EVALUATION

OCTD17: EGAPU

TPC 18: OCTD Report

MANDATORY: 6. Industrial team members must be financially viable (section 4.)

APPLICATION STAGE: Project Plan

EVALUATION

OCTD17: none

TPC 18: Yes/No

MANDATORY: 7. Industrial team members must be compliant with any current financial and other obligations to the federal government (section 4.)

APPLICATION STAGE: Project Plan

EVALUATION

OCTD17: none

TPC 18: Yes/No

MANDATORY: 8. The project will have a significant impact on the competitiveness of the team members (potential impact on jobs and growth) (section 4.)

APPLICATION STAGE: Project Plan

EVALUATION

OCTD17: EGAPU

TPC 18: OCTD Report

MANDATORY: 9. The project must be undertaken largely in Canada, and there must be an acceptable exploitation plan for the resulting technology/IP (section 4.)

APPLICATION STAGE: Project Plan

EVALUATION

OCTD17: EGAPU

TPC 18: OCTD Report

MANDATORY: 10. The project must be completed within 36 months of signing the TPC Contribution Agreement (section 4.)

APPLICATION STAGE: LOI - Project Plan

EVALUATION

OCTD17: Yes/No

TPC 18: OCTD Report

MANDATORY: 11. The project must not have adverse environmental impacts (section 4.)

APPLICATION STAGE: Project Plan

EVALUATION

OCTD17: EGAPU

TPC 18: OCTD Report

DESIRABLE: 12. The project includes work at one or more Canadian university or research organization (section 3.)

APPLICATION STAGE: LOI - Project Plan

EVALUATION

OCTD17: EGAPU

TPC 18: OCTD Report

DESIRABLE: 13. The project advances the capabilities of the Canadian aerospace industry beyond the team members (section 4.)

APPLICATION STAGE: Project Plan

EVALUATION

OCTD17: EGAPU

TPC 18: OCTD Report

DESIRABLE: 14. The project strengthens supply-chain linkages with domestic and foreign customers (section 4.)

APPLICATION STAGE: Project Plan

EVALUATION

OCTD17: EGAPU

TPC 18: OCTD Report

_________________________________________________________

17 OCTD evaluation can be Yes/No or EGAPU, which stands for Excellent, Good, Acceptable, Poor, and Unacceptable
18 This column identifies either the OCTD Report to TPC as the primary source of information for TPC in its evaluation / due diligence, or a direct assessment by TPC (Yes/No).

7. CONFIDENTIALITY

All information received from applicant teams by OCTD will be held proprietary and confidential. Company ownership, financial and economic information can be submitted separately by individual firms and will not be revealed to other team members.

TPC will not disclose any commercially confidential information received from companies, unless: the information is specified to be disclosed by the company; the information is required to be released by law 19; the information is required to be released by the Minister of Industry to an international or internal trade panel for the purposes of the conduct of a dispute in which Canada is a party or a third party intervener. Companies should annotate any information they consider as commercially confidential accordingly.

8. SCHEDULE

Please note that LOIs and final Project Plans will be date-stamped. In the event that the number of eligible proposals exceeds the TPC funding envelope, the proposals received first will have priority.

19 Information on the Canadian government’s Access to Information Act can be found on the web site: http://canada.justice.gc.ca/en/laws/A-1/8.html

Technology Partnerships Canada

Certification and Authorizations

I certify that:

the information provided in this Investment Proposal and attachments is accurate and complete;
(name of company) is in full compliance with all of the company’s current obligations, financial and otherwise, to the federal government, including other contribution agreements; execution of the proposed project will not prevent (name of company) from continuing to meet these obligations and from maintaining the economic benefits anticipated by the other agreements; and that these obligations will in no way preclude (name of company) from fulfilling its obligations under the proposed project;
the work to be performed on (name of R&D initiative) will be performed in accordance with the requirements of all the regulatory bodies which have jurisdiction over (name of company) on this project;
(name of company) will advise if the services of a lobbyist are used for the purpose of its Investment Proposal and if a lobbyist is engaged for this purpose, the lobbyist will be in compliance with the Lobbyist Registration Act;
(name of company) is currently in compliance with all municipal, provincial and federal environmental requirements; and

I authorize Technology Partnerships Canada (TPC) to gather from, and share with, other government sources of assistance the necessary information to ensure there will be no duplication of assistance and confirm that all agreements are being adhered to.

I understand that no commercially confidential information provided in this Investment Proposal and attachments will be disclosed unless: otherwise specified by (name of company); required to be released by law; or required by the Minister of Industry to be released to an international or internal trade panel for the purposes of the conduct of a dispute in which Canada is a party or a third party intervener.

I understand that TPC is a discretionary program subject to available funding, and that submission of a complete Investment Proposal, meeting any or all of the assessment criteria, or responding to requests from TPC investment officers for further information in respect of an Investment Proposal, does not mean that funding will be granted. All applicants whose projects are approved for TPC funding will be so notified in writing.

I acknowledge that any approved Investment Proposals will be the subject of public announcements.

______________________________________________________________________________

Name/Title

Information Sources

1 News and information services and related sites

Aviation Today – http://aviationtoday.com – weekly free e-mail service with some paid access sites offering more specialized and detailed reports, again concentrating on commercial and general aviation topics.
AviationNow – http://www.aviationnow.com - published by McGraw-Hill’s Aviation Week, daily free access, plus paid access to other sites, eg Aviation Daily, Aerospace Daily.
SpeedNews – http://www.speednews.com – weekly paid access news service and biweekly paid access defence news, both offering headline news (contract awards, program updates, airline fleet changes, personnel changes, industry forecasts) with calendar of events pages, industry conferences with agenda, etc.
Yahoo! Finance – aerospace and defence news service – http://www.yahoo.com – signup news alert service, with daily and hourly updates.
McGraw-Hill also publishes World Aviation Directory and other magazines and directories in addition to AviationNow, for example: Weekly of Business Aviation, Airports, ATC Market Report, Homeland Security and Defense, Aviation Week Intelligence, Overhaul and Maintenance, plus information on all related Conferences and Exhibitions – http://www.mcgraw-hill.com .
Aerospacemedia publishes several versions of Interavia, a series of monthly European-published magazines featuring a number of geographical regions, including aerospace headline news – http://www.interaviabt.com .
AvWeb - http://www.avweb.com/ - twice weekly free e-mail service newsletter, in summary format, concentrating on commercial and general aviation topics, with free access to more detailed reports beyond the summaries.
Defence Systems Daily www.defence-data.com provides an excellent daily summary of defence-related industrial news. Includes links to specialized sources concerning Southern Africa and Australasia.
Shephard publishes a number of UK-produced magazines – http://www.shephard.co.uk – covering aerospace and defence, namely Helicopter World, Defence Helicopter, Unmanned Vehicles, Regional Airline World, Inflight (inflight entertainment/IFE), AirAmbulance. Helicopter news is covered by www.rotorhub.com. Shephard is also very active in conferences and exhibitions, eg electronic warfare, night vision, search and rescue and unmanned vehicles.
The US-based National Defense Industries Association – http://www.ndia.org – publishes National Defense Magazine, http://www.nationaldefensemagazine.org , which includes information on defense and naval events and exhibitions, including those undertaken by the National Training Systems Association – http://www.trainingsystems.org .
Daily news updates from the Pentagon are available from http://insidedefense.com.
The Navy League of the US publishes www.seapowermagazine.org , which organizes the annual Sea-Air-Space systems and technology symposium.
Naval Technology http://www.naval-technology.com/ is a comprehensive site with news and naval program information, including a program listing with, in some cases, leading suppliers.
Janes, http://www.janes.com , is the pre-eminent publisher of directories and magazines covering all aspects of defence (air, land, sea and C4I) and aerospace, including Jane’s Defence Weekly, Navy International, Naval Construction and Retrofit, Naval Weapon Systems, Defence Upgrades, Intelligence Digest, International Defense Review.
A sample of the many acquisition and development sites of the U.S. government/military:

U.S. Government General Accounting Office (GAO). www.gao.gov

FedBizOpps, www.fedbizopps.gov contains Federal government business opportunities and essentially replaces the Commerce Business Daily.

http://www.dodbusopps.com is the primary DoD portal for business opportunities

DEFENSElink http://www.defenselink.mil provides top level information on the DoD

The ARNet website, http://www.arnet.gov/ contains information on acquisition reform site

The defense Logistics Information Service (DLIS) Central Contractor Registration (CCR) website is at http://www.dlis.dla.mil/ccr/default.asp

http://www.acq.osd.mil/ is the website of the Undersecretary of Defense for Acquisitions, Technology and Logistics. This is the top level acquisition-related site with information on procedures and policy.

U.S. Navy Office of Naval Research (ONR). http://www.onr.navy.mil. Contains information on future-oriented programs and initiatives.

The Naval Aviation Systems Team website http://www.navair.navy.mil/products/products.cfm contains information on the various upgrade programs for naval aviation.

The Defense Advanced Research Projects Agency (DARPA) is the central research and development organization for the Department of Defense (DoD). www.darpa.mil

The Secretary of the Air Force Acquisition page (SAF/AQ) http://www.safaq.hq.af.mil contains information on Air Force acquisition programs, including acquisition reform.

Information on U.S. Navy acquisition reform is at http://www.acq-ref.navy.mil/index.cfm

http://www.nawcad.navy.mil/ is the site of the Naval Air Warfare Center, aircraft division.

Information on the 2002 Naval-Industry R&D partnership conference of the Office of Naval Research (ONR) is at http://www.naval-industrypartners.com

The defense Logistics Agency (DLA) http://www.dla.mil provides logistics support to U.S. military forces. The site contains a Business Opportunities section.

The Defense Modeling and Simulation Office (DMSO) has a top-level website; https://www.dmso.mil/public /

The Special Operations Command website has a page “USSOCOM Special Operations Acquisition and Logistics” specifically to “assist industry in doing business with SOCOM” http://soal.socom.mil

The U.S. Army Directors of Information Management (DOIMs) website http://www.doim.army.mil/ has a variety of content related to information systems.

The Defense Technical Information Center (DTIC) is the central facility for the collection and dissemination of scientific and technical information for the Department of Defense (DOD). www.dtic.mil

http://jcs.mil/ contains information on DOD testing and training. It is managed by the Joint Program Office for Test and Evaluation (JPO(T&E))

The National Defense Industrial Association (NDIA website http://www.ndia.org/ . NDIA is a “non-partisan, non-profit international association”

He website of the United States Coastguard Deepwater program is http://www.uscg.mil/Deepwater

2 Canadian government sites

http://www.can-am.gc.ca/sell2usgov is a recently-initiated DFAIT site containing information and links related to selling to the U.S. government.
The Canadian Commercial Corporation website contains comprehensive information on doing business with U.S. DOD and NASA: http://www.ccc.ca/english/ccc_services_USDOD.cfm
The Canadian government site http://www.sourcecan.com/ currently contains information on security-related needs of the U.S. government.

3 Business Opportunities

US federal business opportunities (FedBizOpps/Commerce Business Daily) – http://cbd.cos.com – offering daily updates to procurement opportunities for all federal departments. Lists notices of proposed government procurement actions, contract awards, sales of government property, and other procurement information over $25,000. Fee for service access. This is a very comprehensive service, and it would be particularly useful for defence and shipbuilding companies outside of the core aerospace group within the Nova Scotia sector.
MERX (Canadian Government Bidding Service) – http://www.merx.bmo.com – an essential tool for doing business with the Canadian federal government and agencies, offering daily updates for all federal procurements, plus some provincial, city and educational establishments opportunities. Small monthly access charge plus applicable charges for downloading or delivery of associated bid documents.

4 Aviation publications

While there are many, a few stand out as very useful information sources for weekly news, annual and semi-annual surveys, and technical articles.

Flight International – http://www.flightinternational.com - published weekly by Reed Business Information, http://www.reedbusiness.com .
Aviation Week and Space Technology – http://www.aviationnow.com - weekly (plus annual Aerospace Source Book and special show editions).
Wings (Canada publication) – http://www.wingsmagazine.com - bi-monthly.
Aviation International News – http://www.ainonline.com - monthly, plus special show editions.
Helicopters (sister publication to Wings) – http://www.helicoptersmagazine.com – bi monthly.
Aircraft Technology Engineering and Maintenance – http://www.aviation-industry.com – monthly.
Rotor and Wing – http://www.rotorandwing.com – monthly.
Rotor – http://www.rotor.com – quarterly.

Introduction

As part of its initiative…

to make the UK Aerospace Industry a market leader, the SBAC launched the UK Aerospace Marketing Centre (Marketing Centre) at the Farnborough International Exhibition and Flying Display in September 1998.

The Marketing Centre…

is an interactive information service, accessed through the Internet, which gives those responsible for business development and marketing vital market intelligence and contact information.

The SBAC’s Unique Position…

as the national Trade Association for UK Aerospace Industry, enables the Marketing Centre to bring together the best of the Industry’s information providers with the SBAC’s own dedicated researchers to create a one-stop-shop. The Marketing Centre is the single most comprehensive source of market intelligence available to the UK Aerospace Industry.

Benefits

How the Marketing Centre Will Help You

The Marketing Centre has been developed by the industry, for the industry, to meet all your information needs, enabling your company to access new markets and new projects.

Keep Informed

- Daily summaries of industry news from around the world.

- Receive daily e-mails letting you know what’s new.

- Continuously updated, responsive and flexible, the Marketing Centre continues to grow in size and value.

Keep in Touch

- Network with our virtual team of industry experts.

- Make contact with key Government personnel.

- Link to other aerospace web sites.

- Access useful industry contacts from all over the world.

Save Time

- Fast and easy access to a vast range of industry information, both Civil and Defence.

- The user-friendly system enables you to search on specific topics.

- Your information needs met from a single source.

Save Money

- The SBAC’s low cost subscription enables smaller UK Companies, who maybe constrained by limited resources, access to vital market intelligence.

- Larger organisations can also save by purchasing multi-user licences at a negotiated discount, empowering key personnel with industry essential information at the click of a button.

The Marketing Centre has been designed not just for the marketeer or analyst, but also for the industry professional who needs to stay in touch with the latest news or requires one-stop information.

Information Sources

The Marketing Centre includes access to five of the industry’s best known information providers.

Air Transport Intelligence (ATI) brings you the latest air transport news everyday from around the world as it happens.

Aerospace Market News, part of the Industry Research Group, is a quarterly publication that reviews what is happening in the market as a whole.

Defence Intelligence Tracker, produced by Walters Research Company, comprises summaries of all open-source “trade” news to give users instant access to all aspects of the world-wide defence market. It highlights details of current and future programmes, marketing opportunities, new technology product launches and company and national strategies.

Forecast International, is one of the industry’s leading providers of market intelligence. Throughout the Marketing Centre, Forecast International provides a focused selection of market reports and industry studies.

USA Information Systems Federal Logistics Data Files, contain information on all companies that do business with the US Department of Defence including company name; address; phone/fax number; list of NSN/NlNs produced, assembled or supplied by; price of item sold; quantity sold, sold to whom and when.

SBAC Research

The Marketing Centre delivers research in a format unavailable from any other source. This research enhances industry insight and is invaluable for planning marketing strategies.

Statistics

A comprehensive range of industry statistics, everything from market share information, sector analysis, to exchange rates.

Country Libraries

Extensive market research on UK priority markets (deemed to be of the greatest export potential by SBAC for the UK Industry). The SBAC has exclusively designed a country library for each potential market containing information on aerospace companies, airlines, trade associations, armed services, UK and overseas government web sites, air and trade show information, regulatory bodies, market research and aerospace defence agencies.

Joint Strike Fighter (JSF) Database

The database has been created exclusively for the Marketing Centre and contains over 150 records of distinct activities/products for development of the JSF Concept Demonstration Aircraft.

Future Research

As the Marketing Centre continues to grow, so does its value to industry. Our aim is to grow in accordance with the changes taking place in Industry, and to respond to the needs of Marketing Centre members. Developments include an extensive analysis of the A3XX programme and a North American Market Study, covering the effects of industry consolidation and the market entry process. Marketing Centre members are welcome to feedback to SBAC their suggestions on information for inclusion whether it be on new markets or current programmes.

Interactive – Networking Information

One of the Marketing Centre’s unique and most valuable functions is its ability to be interactive. All members can add as well as receive information.

Industry Experts

All members of the Marketing Centre have individual profiles identifying their e-mail address, telephone number, responsibilities and company details. This virtual team can communicate at all levels, sharing views and market information.

Government Roadmap

The Export Support Roadmap is designed to help UK companies find their way around the Government agencies and departments that support the UK Aerospace Industry.

The UK Aerospace Marketing Centre is open to all UK aerospace companies and Government agencies

For More Information

or an on-line demonstration call Marie-Pierre Bettoni at the SBAC on: 020 7227 1022

What Next?

Upon receipt of your application form, a welcome pack will be sent to you. This will include your personal password and a user-friendly manual to get you started.

An invoice will be sent to you at this time.

Payment by credit card is accepted.

The centre is a non-profit making solution for UK industry, supported by the DTI and the SBAC

UK aerospace marketing centre

“It’s a very important central information source, especially for smaller firms, but it is still very valuable to larger firms...our usage over the next 6 months will increase considerably.”

Head of Market Research, Smiths Industries

“It is far in advance of anything we could achieve on our own.”

St Bernard Composites

“It’s the best starting point for ideas on any subject. It’s excellent value for money.” Business Development Manager, Rolls-Royce Aerospace Engines

“It’s my most useful source of information ”

Marketing Manager Darchem Engineering Ltd

www.sbac.co.uk

THE SOCIETY OF BRITISH AEROSPACE COMPANIES LTD

Duxbury House, 60 Petty France, Victoria, London SW1H 9EU

Tel; (+44) 020 7227 1000 Fax: (+44) 020 7227 1067

A selection of predominantly military trade shows and other events

Information systems focus

2002/2003

2002

May 11-15 AAAA Nashville, TN
Army Aviation Association of America
http://www.quad-a.org/

May 13-16 DOIM Conference Atlanta, GA
US Army Directorate of Information Management
http://www.doim.army.mil/dc2002/GenInfo.htm

May 21-24 Clearwater Beach, FL.
Aircraft Maintenance Management Seminar and Workshop

May 21-22 IQPC Network Centric Warfare Arlington, VA
International Quality and Productivity center)
http://www.iqpc.com

May 28-30 Fort Rucker Army Aviation Industry Day Fort Rucker, AL American Helicopter Society
http://www.vtol.org/

June 3-6 Special Ops Tampa, FL
Special Operations Command (SOCOM)
http://www.socom.mil/

June 11-13 TechNet International 2002 Washington, DC
AFCEA International.
http://www.technet2002.org

June 17-21 Eurosatory Villepinte, France
http://www.eurosatory.com/affiche2.htm

June 17-19 Defense Modeling and Simulation Annual Forum Norfolk, VA.
Defense Modelijng and Simulation Office, US DOD
https://www.dmso.mil/public/

July 9-11 AUVSI Orlando Fl
Association for Unmanned Air Vehicle Systems Inc.
http://www.erols.com/auvsicc/index.html

August 19-22 Testing and Training Symposium Orlando, FL
National Defense Industries Association

http://register.ndia.org/interview/register.ndia?~Brochure~2070

Sep 7-9 NGAUS Long Beach, CA
National Guard Association of USA.
http://www.ngaus.org/

Sep 16-18 AFA Aerospace Technology Exposiiton Washington DC
Air Force Association
www.afa.org

Sept 16-18 Advanced Distributed Learning Conference Alexandria, VA.
Advanced Distributed Learning (ADL)
www.adlnet.org

3rd Annual Aviation Industry Suppliers Conference in Europe (AISCE-3) – 23-25 September, 2002, Toulouse, France.
http://www.speednews.com/Conference/euroconference.html

Oct 7-10 MILCOM Anaheim,CA
Military Communications Conference
http://www.milcom.org/2002 /

Oct 1-3 Aerospace Expo Conference and Exhibition Los Angeles, CA. http://www.aviationweek.com/conferences/aemain.htm

October 16-16 Collaboration Strategies for Aerospace MRO Dallas, TX.

Oct 21-23 AUSA Washington DC Association of the United States Army
http://www.ausa.org/

Oct 27-30 AOC National Nashville, TN
Association of Old Crows (Electronic warfare)
http://www.aochq.org/

Dec 2-5 ITSEC Orlando, FL Interservice/industry simulation and education conference

2003

Jan 14-16 AFCEA Intl., U.S. Naval Institute San Diego, CA
Armed Forces Communications and Electronics Association
http://www.afcea.org/

Feb. 26-28 AUSA Winter Symposium Ft. Lauderdale, FL Association of the US Army
www.ausa.org

April 15-17 MRO Conference and Exhibition Ft. Lauderdale, FL.
http://www.aviationweek.com/conferences/mromain.htm

April 15-17 Sea-Air-Space Exposiiton Washington, DCNavy League of the USA
www.navyleague.org

April 24-26 AEA Annual Convention Orlando, FL
Aircraft Electronics Association
www.aea.net

April 29 - May 1 ITEC London, England
International Training and Education Conference
www.itec.co.uk

May 14-16 World Aviation Training Conference and Tradeshow Dallas, TX.
http://www.trainingsystems.org/events/21D0/index.cfm

Some U.S. military programs

This Annex summarizes some ongoing or proposed development programs. This summary is aviation-oriented and focuses on platforms. However, it is important to recognize that increasingly military capability developments are “network-based” with a priority focus on “Network Centric Warfare” and precision guidance of munitions. This has caused the focus of system architectures to increasingly focus on information management and integrated command, control and communications. Thinking has evolved to a point where some believe that there are adequate sources of data and information (sensors) but that the weakness is in effective sharing and interpretation. The current environment is also accelerating the trend toward flexibility and rapid deployment of compact special operations units.

This proposed “transformation” is causing a “vicious budget fight over how many people and machines the new U.S. military needs and how new funding should be spent”. The cancellation of the U.S. Army Crusader is a recent high-profile example.

An associated issue is the relative contributions of manned and unmanned air vehicles. There is clearly increased interest once again in UAVs. While some believe manned aircraft will be of much less importance, implying reduction in volumes or cancellation of programs, others, believe that the transition will be much slower and full “operational maturity” of UAVs will take time to develop.

1 Lockheed Martin Joint Strike Fighter (JSF)

The best known is the JSF, Lockheed Martin being the Prime Contractor, with Northrop Grumman and BAE Systems as Level I partners and primary sub-contractors. The JSF has received the USAF designation of F-35. The initial program plan calls for 3,002 shipsets of production aircraft, to be procured by the USAF, USN, USMC and the UK RAF over the period FY2006 through FY 2026, in addition to 21 shipsets of pre-production aircraft for SDD (System Design and Definition). This program will be the largest defence procurement ever released, initially estimated at $200 billion, and over $1 trillion over its full 40-year life cycle. It is anticipated that other nations, eg The Netherlands, will join the program as Level III partners, in the same way that Canada has. In all, including third country buys, orders for over 4,500 aircraft are anticipated.

Canada has announced, on 7 February, 2002, its participation as a Level III partner for the SDD phase, under an MOU signed with the US. Canada’s participation includes a contribution of US$150 million ($240 million Canadian) over the 10 years of the SDD phase.

The program will provide Canada with access to some of the cutting edge technology in the program and give Canadian industry an opportunity to become involved in the SDD program, through access to a wide variety of JSF program technologies, data and new management and engineering approaches for this and other projects. However, time is relatively short and opportunities will soon be taken.

In our discussions with potential Nova Scotia participants, we noted that only three companies had (through end 2001) registered with DND/DGIIP as potential bidders. These three companies are EADS Composites Atlantic, Focal Technologies and Pivotal Power. We were encouraged to note that other companies with whom we spoke were actively considering participation, although some commented on the comparatively low SDD airframe quantities and the lengthy development cycles, upwards of 5-6 years, before initial productions rates ramp up.

From the experience which the two study consultants have to date, we should point that, while the potential rewards in gaining JSF business are very considerable, the proposal effort can be very resource intensive, both in terms of people and money. We have noted that the necessary responses to the RFP/RFQ bid conditions are onerous. However, we also consider that once the “boiler plate” responses have been addressed once, much of this would be re-usable on subsequent bids, given that the procurement approach is likely to be adapted to other US military capital acquisitions. The Department of Foreign Affairs and International Trade (DFAIT) Program for Export Market Development (PEMD) can offer financial support to proposal efforts.

It was also encouraging to note that those companies expressing JSF participation interest were looking beyond Lockheed Martin as the prime contractor and were anxious to use introductions, missions (incoming and outgoing) and industry briefings etc., as a “conduit” to the major subcontractors. We believe that the JSF/F-35 represents substantial opportunities for Canadian and Nova Scotia based companies. We have thus included a listing of the JSF World Class Team by company and manufacturing location, for those companies already selected for this program.

2 Lockheed Martin F-16 and F-22

Companies are also looking at the very large numbers of other LM programs, for example the F-16 Falcon and F-22 Raptor as business opportunities. The F-16 is fielded by 22 nations, with over 4,000 aircraft delivered to date. Block 50 deliveries (50+ aircraft) start this year, with Block 60 (next generation F-16) deliveries scheduled for 2004. The US Department of Defense estimates a program worth US$12.7 billion (1997 through 2020) in post-production support, which includes major component repairs, return, modification kit acquisitions and on-site support. USAF retirement is seen as 2025.

The F-22 program has seen recent releases of an additional 23 Lot 3 production aircraft, for delivery by 2005. By December, 2003, high rate production for 36 aircraft per year is anticipated, for deliveries through 2013. Approximately 240 US companies are considered as major subcontractors, with over 1,150 other US firms plus companies in 7 other countries participating. While the F-22 is now in initial production, the program is under scrutiny by the US government as being late and over-budget, which could lead to opportunities by Nova Scotia companies to compete for participation in cost reduction exercises, capitalizing on competitive rates for example.

3 Boeing C-17A Globemaster

This aircraft is being considered as the CC-130 Hercules replacement, although we do not anticipate a government decision for 2-3 years. One option being considered is leasing of a small number of aircraft, as opposed to outright purchase, and even sharing of aircraft between government and commercial interests has been discussed. The UK RAF is leasing 4 aircraft over a 7 year period. The USAF is considering up to 120 aircraft through 2004, with potentially another 60 after that. If Canada selects a lease or procurement option, the opportunities for offset work should be available, particularly for support work of avionics.

4 Unmanned Combat Air Vehicles (UCAV)

The appears to be an interest in the United States in accelerating developments of unmanned air vehicles as a result of some apparent recent successes in current combat situations and the increased resistance to personnel losses amongst the general public. A number of programs are in development, the most well-known being the Northrop Grumman Global Hawk, the General Atomics Predator and the Boeing X-45. However, other development programs funded by DARPA include UCAV-N for the US Navy, which Northrop Grumman and Boeing are pursuing and UCAR rotorcraft. Northriop Grumman appears to have selected the PWC 308 engine to power vehicles (X-47B) for the upcoming demonstrator program. We believe that there may be opportunities for Nova Scotia based companies in these programs. particularly for those engaged in information systems and specialized systems and aerostructures. The Boeing X-45 program is described below in more detail because Boeing Military has ongoing IRB obligations related to the CF-18 upgrade and is also attempting to sell or lease the C-17 to Canada.

In addition to the above, a number of other UAV and UCAV programs are being developed in Europe (Altec, CAC Systems, EADS, FR Aviation, Sagem) and in Israel (IAI and Elbit). Other US activities include work being undertaken by a number of companies (AAI, AAC, Aerovironment, Aurora Flight Sciences, BAI Aerosystems, Bell, General Atomics Aeronautical Systems, Mission Technologies, Northrop Grumman, Scaled Composites, UTC/Sikorsky).

4.1 Boeing X-45

Boeing’s Manufacturing, Prototyping and Produce Processes division has been tasked to reduce the time, risk and cost of developing and transitioning new manufacturing technologies, such as high speed machining and automated fibre placement, into aerospace production, and of producing advanced systems prototypes to demonstrate their capabilities. One such early program is the X-45 UCAV.

On 24 March, 1999, DARPA and the USAF selected Boeing to continue the $131 million Phase II of the UCAV program. The USAF, DARPA, and Boeing jointly fund this advanced technology demonstration. Boeing Phantom Works will design, fabricate and flight test their X-45A UCAV demonstrator system in a 42-month, $131 million cost-shared effort. Boeing's Seattle location will be responsible for the mission control system and overall program management, whereas the St. Louis location will have the lead for the air vehicle segment. First flight is imminent.

During Phase II, Boeing will develop the larger X-45B demonstration vehicle and associated systems, including two air vehicles and a reconfigurable mission control station. In addition, Boeing will develop and integrate critical technologies, continue risk-reduction activities and conduct flight tests. The X-45B will be powered by a General Electric F404 engine and is scheduled to fly in 2005.There is a priced option, currently unfunded, to continue the program into operational evaluation (Phase III) with current plans for deployment of up to 14 vehicles by 2008.

The Boeing UCAV concept exploits real-time, on-board and off-board sensors to quickly detect, identify and locate both fixed, relocatable, and mobile targets. Secure communications and advanced cognitive decision aids will provide a human operator with the situational awareness and positive air vehicle control necessary to authorize munitions release. Boeing's tailless, stealthy air vehicle will carry multiple advanced, precision-guided munitions and relay battlefield damage indication information back to the mission control system. Maintained in pristine condition and stored in ready-to-ship containers until called into service, the Boeing UCAV system will be capable of global deployment and operations in concert with manned Air Expeditionary Forces.

The British Defence Ministry has showed significant interest in the X-45B, within the context of developing understanding of UCAVs and more specifically the Future Offensive Air System.

5 US Navy MMA

The longstanding “P-3 replacement” saga continues. The program is currently named the Multimission Maritime Aircraft (MMA). Phase 1 is named “Component Advanced Development” (CAD) Phase 1, and contract award is expected in June. The MMA program is inteded to deliver a replacement for P3-C and EP3-E aircraft. The intent is that the 6-month CAD effort will result in selection of two or three preferred concepts being selected for CAD Phase 2. Selection of a single contractor for System Development and Demonstration (SDD) In early 2004.

Currently bidders appear to be focusing on new airframes. Lockheed Martin is proposing new build P-3s, Boeing the B737 and BAE Systems the Nimrod. Raytheon has focused on are manufactured P-3 solution. Lockheed Martin had also considered joining with EADS to propose an alternative A320-based system but this appeared to be stymied by domestic political concerns. There is some evidence that Northrop Grumman has also held discussions with EADS reconsideration of an Airbus platform, but this is still highly contentious in an increasingly protectionist United States, at least in the short term.

However, this program is also potentially in flux as debates rage over allocation of resources. The U.S. Navy appears to visualize a combination of P-3s then MMAs and UAVs as the airborne data collection mix. Others also believe that there are inadequate funds for new airframes, although the majority of the program value is likely to be in the airborne systems. This re-raises the possibility of avoiding procurement of new airframes. However, latest U.S. Navy public “discussion” talks of perhaps 130 airframes.

Meanwhile systems upgrades of existing P-3s continue under the AIP (Anti-Surface Warfare Improvement Program) designation. The ageing of the P-3 fleet is real, however, and some relatively well-equipped airframes are due for retirement in the next few years.

6 U.S. Navy DD-X

In April Northrop Grumman Ship Systems (Ingalls) with partners Raytheon and United Defense was awarded the first segment of a $2.9 billion contract for development of the DD-X “next generation” of warships. Losing bidder General Dynamics (subsidiary Bath Iron Works) has filed a protest with the General Accounting Office (GAO). General Dynamics was teamed with Lockheed Martin. These companies are expected to participate in the winning bid primarily to assure the possibility of dual sourcing of production units. Northrop Grumman has also selected around 30 additional contractors.

DD-X as currently conceived is a common platform for destroyer, cruiser and littoral warfare fleets. Production is scheduled to begin in 2005.

The current Northrop Grumman concept comprises the following major sub-systems:

Integrated Composite deckhouse and apertures
Total Ship Computing Environment
Hull and Mobility
Integrated Undersea Warfare
Integrated Power System (GE LM 2500 and LM 500 gas turbines)
Peripheral Vertical Launch System
Dual Band radar
Advanced Gun System

7 Military network systems

7.1 U.S. Navy

The U.S. Navy Office of Naval Research (ONR) Future Naval Capability (FNC) includes “Knowledge Superiority and Assurance. This is the basis for increased deployment of networkcentric warfare capabilities. Deployment plans are:

In FY 2002: Integrated knowledge services and workload management.
In FY 2003: Integrated and fused track and non- positional all-source intelligence.
In FY 2004: Seamless integration of ISR sources into the COP.
In FY 2005: Representation of meteorological and oceanographic effects for strike operations.
In FY 2006: 3-D fused acoustic data management and visualization; common undersea picture analysis.
In FY 2007: Cross-echelon situational awareness with timely correlation and information fusion.

L-3 Communications was recently awarded a contract for a networked airborne communications package within the scope of this initiative.

7.2 U.S. Army

In March Boeing and team partner Science Applications International Corp. [SAIC] were awared the U.S. Army's $4 billion Future Combat Systems [FCS] integration program. This is an effort to “combine new technologies and capabilities into a more rapidly mobile and lethal force.”

The estimated value of the initial contract is $154 million and comprises a 16-month concept and technology development phase. The program is designed to fuse a variety of new aviation platforms, ground systems, air defences and reconnaissance assets into the backbone of an ideal "objective force" by 2010. It should allow the U.S. Army to have on the ground anywhere in the world a fully-assembled brigade within four days, a division in five days a full corps in 30 days.

Lockheed Martin JSF World Class Team

Manufacturing Locations – Listed by Company

Company System/Service Location

BAE Sanders Electronic warfare and countermeasures Nashua NH

BAE Systems Vehicle Management Computer Johnson City NY

Curtiss Wright Leading-edge flap drive Fairfield NJ

Eaton Hydraulic Power Generation System Jackson MS

EDO Stores and release system North Amityville NY

General Electric Alternate engine Cincinatti OH

Aircraft Engines

Goodrich Landing gear system Cleveland OH

Goodrich Fuel System Vergennes VT

Hamilton Sundstrand Electrical power system Rockford IL

Harris Corp Common resources Palm Beach FL

Honeywell Power thermal management system Torrance CA

Kaiser Electronics Multifunction display San Jose CA

L-3 Communications ICP panel Camden NJ

Litton Amecon Electronic warfare and countermeasures College Park MD

LM Aeronautics Radome Palmdale CA

LM Aeronautics Edges Palmdale CA

LM Aeronautics Final assembly, fwd fuselage and wing Fort Worth TX

LM Information Trainers and simulators Orlando FL

Systems

LM Missiles & Electro-optical distributed aperture system Orlando FL

Fire Control (EO-DAS)

LM Naval Electronics & Integrated core processor Eagan MN

Surveillance Systems

LM Naval Electronics & Training systems Akron OH

Surveillance Systems

Logicon Advanced Training systems Colorado Springs CO

Technologies

Marion Composites Radome Marion VA

Moog Electo-hydrostatic Actuator System/ Torrance CA

Leading-edge flap drive, Wing fold actuation

Moog Leading-edge flap drive East Aurora NY

Northrop Grumman Centre fuselage El Segundo CA

Northrop Grumman Electro-optical distributed aperture Linthicum MD

Electronic Systems system (EO-DAS)

and Sensors

Parker Aerospace Electro-hydrostatic Actuator System/Fuel Irvine CA

System

Pratt & Whitney Engine East Hartford CT

Raytheon Systems Integrated core processor (25%) Plano TX

Rockwell Collins Communication, navigation, identification Cedar Rapids IA

Rolls-Royce Lift fan assembly (Rolls-Royce Allison) Indianapolis IN

Smiths Tactical Data Equipment Grand Rapids MI

Smiths Fuselage remote interface unit Floreham Park NJ

TRW Communication, navigation, identification Rancho Carmel CA

TRW Lucas Aerospace Driveshaft Utica NY

VSI Helmet-mounted display San Jose CA

UK Manufacturing Locations

Company System/Service Location

BAE Systems Aft fuselage, horizontal & vertical tails UK

BAE Systems Active Inceptor System Rochester, Kent, UK

Honeywell Normal-Air Garrett Life support system Yeovil, Somerset, UK

Martin Baker Ejection seat Middlesex, UK

Rolls-Royce Roll off-take ducts/three-bearing Nozzle Bristol UK

Smiths Industries Electrical power system Cheltenham, UK

TRW Lucas Aerospace Weapons bay door drive (inboard) Wolverhampton, UK

Netherlands Manufacturing Locations

Company System/Service Location

Fokker Embedded training, simulation software The Netherlands

Fokker Aerostructure Airframe structure The Netherlands

Fokker-Elmo Wiring harnesses The Netherlands

National Aerospace Wind tunnel testing, simulation software The Netherlands

Laboratory architecture, embedded training systems,

integrated help environment

Perot Systems Integrated help environment The Netherlands

Phillips Voice recognition The Netherlands

Signaal Cryogenic coolers The Netherlands

Sun Electric Integrated help environment The Netherlands

TNO Simulation software, Advanced The Netherlands

Algorithms, integrated help environment

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