Alberta’s Aerospace and Defence Industry
A sluggish oil and has sector in this province has opened up opportunities in Defence and Aerospace
Alberta’s economy continues to reel, despite a strong rebound in oil prices during the past twelve months. The province lost almost 20,000 jobs in 2016 and its defence sector, which could be carrying more of the load, remains in transition.
Provincially, the Notley regime continues to feel its way around and federally the Trudeau government is moving toward the release of a long awaited defence policy review later this year.
Unlike the politicians, Kimberly Van Vliet isn’t waiting for things to bounce back. In early February, Van Vliet organized ConvergX, a conference that brought together defence, energy and mining executives in Calgary, to discuss cross-sector cooperation and ways to escape the torpor.
“Experts often dismiss Alberta as a resource economy,” Van Vliet told CDR. “The implication is that we just have to ride out the tough times. But, Alberta’s greatest resource is its people. If we put our heads together, we’ll get things moving a lot faster.”
Bruce Gilkes, chairman of the Western Canadian Defence Industries Association agrees. “The dismal economy provides a perfect opportunity for businesses looking to expand their supply chain to get access to great people,” says Gilkes. “There are many good engineers available these days, and that is not always the case in Alberta.” The province’s defence sector, which generates excellent spinoff benefits per dollar invested, appears to be a perfect place to invest says Gilkes. A 2014 CADSI report notes that Alberta’s defence industry generates $4.5 billion in annual revenues, and creates 27,000 direct and indirect jobs.
Gilkes is a particularly big booster of backing innovation, that he identifies as a core provincial strength which is manifested in several sub-sectors. These include: robotics and unmanned vehicle systems, defence electronics, aerospace-based geomatics, domestic in-service support, maintenance, repair and overhaul, as well as the emerging field of cyber-defence.
Gilkes agrees with numerous experts who concur that if fiscal and other targeted measures were taken, Alberta’s defence sector could play a significant role in helping to reboot its economy. “Simple things like developing a shortlist of defence priorities, and ensuring funding for future capital programs would help, as would a renewed focus on federal research and development investment,” says Gilkes. “This would generate increased local manufacturing and exports.”
NOVATEL A LEADER IN ANTI JAMMING
If Alberta is to better leverage its people on the defence front, one of the most obvious places to start would be by developing and building upon existing cutting-edge technologies. For example, according to the Alberta government, the province is home to more than a quarter of the country’s geomatics, navigation and global positioning firms. These collectively export more than 60% of their wireless communications and sensor technology products.
One such company is NovAtel, a producer of precision positioning solutions. In December, the company announced a successful Canadian Armed Forces live fire test of its GPS Anti-Jam technology (GAJT) on the M777C1 Howitzer.
The tests were carried out under the auspices of Public Services and Procurement Canada’s “Build in Canada” program, which helps companies navigate the pre- commercialization process. “NovAtel continues to grow,” says Peter Soar, its business development manager (military & defence). “We’ve seen significant success for specialized products in Canada, the US and other key allied countries.”
As its name implies, GAJT protects GPS-based navigation and precise timing receivers from intentional jamming and accidental interference. The null-forming antenna system ensures that the satellite signals needed to compute position and time are always available. NovAtel officials certainly talk a good game but the proof is in the pudding says Soar, who points out that the best guarantor of GAJT technology is its widespread use by major players such as the United States Navy, which recently bought its 600th GAJT antenna.
NovAtel isn’t stopping there. Late last year the company launched OEM7, a new positioning technology which, through use of an “Interference ToolKit,” enables users to better detect and mitigate intentional (and unintentional) jamming.
Leveraging human capital on the defence front, should in theory be easier for Alberta than other provinces, due in part to its geographic advantages. For example, the four major Canadian military bases located in Alberta, where soldiers come to take advantage of the province’s vast dedicated airspace and instrumented test ranges, generate more than $10 million in annual local procurement and services.
However, CFB Edmonton (headquarters of Land Force Western Area and Joint Task Force West), CFB Wainwright (a Canadian Army training center), CFB Suffield (home to Defence Research and Development Canada) and the British Army Training Unit (BATUS), and CFB Cold Lake (the country’s premier fighter training facility) generate far more than local procurement.
For example, the array of sophisticated equipment located at No. 410 Tactical Fighter Operational Training Squadron in Cold Lake, which reportedly trains between 20 and 22 pilots (more than any other RCAF squadron) each year, has led to the build-up in the area of a variety of suppliers that specialize in avionics, airframes, engines, equipment and in-service support work.
HARRIS CANADA ACQUIRED BY VERITAS
One of these is Harris Canada Systems which supports the CF-18 fighter jets. “In-service support is a core element in CAF operations and we plan to expand our footprint,” says Jim Gillespie, Harris’s director of programs. “When government buys fleets of ships, aircraft and armored vehicles, they are used over many decades, and several upgrades will be needed during their useful lives. There are significant opportunities for companies like ours to create jobs in this area.”
Harris’s workload could increase even further in coming years, if Canada goes head with its plans to buy 18 Super Hornets from Boeing, due to the aircraft’s similarity to the current CF-18.
But, it was recently announced that Harris Corporation has entered into an agreement to sell some of its business lines to Veritas Capital, a New York based private equity firm that specializes in defence and aerospace.
The portion of Harris Canada Systems Inc. located in Calgary, Alberta is part of the transaction that is expected to be completed by the end of June 2017. Harris Canada Systems, Inc. has been carrying on business within the Canada’s Aerospace and Defence industry, for over 33 years.
Veritas has said it is committed to supporting existing customers, industry partners, suppliers and other stakeholders during the transition period. While no immediate changes are planned, a comprehensive re-branding effort under a new company name will be undertaken. Until then, Jim Gillespie, Director of Programs, says it will be “business as usual”.
NAVY CONTRACT FOR CALGARY’S RAYTHEON OPERATION
Another example of a company well-placed to thrive in a new info-centric defence environment is the Calgary-based Raytheon Canada Limited Support Services Division. The unit provides electronics and weapons systems maintenance, repair and overhaul services to the three branches of the Canadian Armed Forces. According to Terry Manion, Raytheon’s vice-president (and general manager) the company’s win of a contract to install up to 58 Naval Remote Weapon Stations on Royal Canadian Navy surface vessels, has expanded opportunities within the group. Remote weapons systems are far safer than manually operated ones, because operators don’t have to sit on deck where they are exposed to enemy fire.
Raytheon’s service offerings have also expanded to include the delivery of new C4ISR offerings, weapons systems and other capabilities, Manion says. Raytheon also continues to offer life-cycle support across its various product lines. One open question remains whether Raytheon can leverage opportunities presented by Canada’s plans to buy 18 Super Hornets from Boeing. Raytheon’s Alberta facilities have supplied support work related to radars on the RCAF’s existing CF-18s and would therefore appear well positioned to do support work on the Super Hornet.
QINETIQ ACQUIRES MEDICINE HAT’S MEGGITT
Alberta, which is home to the Canadian Center for Unmanned Vehicles in Medicine Hat, has strong core potential in the field. Earlier this year the test facility became the first in Canada where companies can fly drones at high levels, up to 18,000 feet, thereby testing long sight lines, over a 2,400 square-kilometer expanse.
And, one key UAV defence player, Meggitt Target Systems, also got good news, after it was announced that it had been acquired by QinetiQ, one of the UK’s largest defence contractors. The unmanned aerial, naval and land-based target systems provider, will be renamed QinetiQ Target Systems, and report to the organization’s UK global products division.
According to a spokesperson in Meggitt’s Alberta office, the deal will not affect relations with existing customers. However, Canadian operations, which were no longer a priority of previous owners, could get a shot in the arm from the reinvigorated focus. The division, which produces non ITAR (International Traffic in Arm Regulations) restricted products, should thus able to more easily export its production. The Canadian design and manufacturing capabilities should fit in well with QinetiQ’s plans to grow their international business.
CHANGES AT C4I
As is often the case in a variety of sectors, some of the best innovations on the defence front come from SMEs (small and medium sized enterprises), whose people are less prone to the “group think” silos, that dominate the large players. One example is C4i Training & Technology, whose new president Thomas Putt is a big believer in the defence player’s ability to increase its operational effectiveness.
“Training techniques have advanced exponentially in recent years, into areas many of us never thought possible,” says Putt, who says increased use of software simulations technology has been a key driver. “Costs have come down too. That’s particularly important in an era of tight budgets.”
Putt cites emergency and disaster management training, as a key defence capability, which is ripe for advances. For example, the latest versions of C4i’s scenario-based interactive digital tabletop exercise, now include EDMSIM (Emergency and Disaster Management Simulation) integrated into other company products, to facilitate training in a virtual constructive environment. Another C4i innovation, MILSIM, incorporates a “Monte Carlo event generator” capability, which enables scenarios to be run hundreds, or even thousands of times, so managers can statistically or quantitatively assess the outcomes.
C4i disaster relief training software is currently being used by the Canadian Army Reserve forces and sales have been strong overseas. However, Putt admits that the challenges of scale, inhibit C4i’s ability to grow. Over the years, he has become a bigger believer in the consortia model, through which smaller players pool their talents to increase their scope.
In other C4i news, Bruce Gilkes a founder of the company and former president has left the firm. Gilkes, a former Canadian Army officer, led the company through its early growth phase and saw it achieve the status as one of Canada’s Top 50 Defence Companies in CDR’s annual survey and ranking.
WESTDEF BOUNCES BACK
Another promising Alberta development is the return of the WESTDEF defence show. WCDIA was forced to move the event away from the week of the Calgary Stampede to the week prior, on July 6th & 7th, 2017. Officials say that was because numerous government employees had been denied the opportunity to attend previous iterations of WESTDEF, due to the conference’s alignment with the world famous western event. The intention was to avoid the appearance of generating “convenient” work-related travel opportunities.
That said, helping spark a broader bounce-back in Alberta’s economy won’t be easy. For one, tough times weren’t limited to the oil and gas sector. General Dynamics Land Systems’ employees got bad news this fall, after its Edmonton repair and retrofit facility was shuttered, impacting 61 workers. According to a company spokesperson, employees were notified in September, and where possible, were offered other positions within General Dynamics Land Systems.
In short, if the defence sector is to further contribute to Alberta’s recovery, greater support on the political front will be needed. Van Vliet, for her part is optimistic. “Alberta officials are quite interested in extending a helping hand and are already doing so, particularly through targeted investments in higher level education,” says the organizer of ConvergX.
“They are also pushing hard to diversify and many came to the conference to hear new ideas. We just have to give them a bit of time.”
By Peter Diekmeyer – CDR’s Quebec Bureau Chief