CANSEC 2015: James Moore : For A Larger Role for Aerospace and Defense in Canada’s Economy.

OTTAWA – Appointed Minister of Industry on July, the 25th, 2013 in the Conservative Governement of Prime Minister Stephen Harper, James Moore was the guest speaker at the breakfast on the second day of CANSEC 2015, May, the 28th,2015.

Mr. Moore recalled that his governement is actively putting in place the conditions for growth in the aerospace, defence and security industries and underlined that ‘military procurement plays a major role in the Canadian economy’.

He reminded his audience of around 350 attendees that the Canadian defence sector includes over 650 firms; directly and indirectly employs more than 65,000 full-time workers; and contributes $9.4 billion to Canada's economy each year.

The Minister underlined that his governement responded to the key recommendations included in the Emerson report on the Canadian aerospace industry submitted to the Federal governemnt in November 2012.

It includes the launch of the Consortium for Aerospace Research and Innovation in Canada (CARIC) modelled on very successful Québec CRIAQ. This research network recently established five regional offices and now has a local presence all across Canada.

The Technology Demonstration Program has been created to support large-scale aerospace, defence, space and security projects led by Canada's top companies.

A stable funding of $1 billion for the Strategic Aerospace and Defence Initiative, known as SADI has been guaranteed.

The latest federal budget included a new Accelerated Capital Cost Allowance for investments in manufacturing and processing machinery and equipment. This new 10-year investment incentive will provide concrete support for the aerospace and defence industries over an extended period of time to help plan the investments needed to compete in a global economy.

And especifically for defence, Economic Action Plan 2015 proposed to increase Canada’s defence budget by $11.8 billion over 10 years to help ensure that the country can continue to field a modern, combat-capable military ready to respond in the defence of Canada both at home and abroad.

This investment will strengthen the government's Defence Procurement Strategy, which is designed to ensure the deliver of the right equipment and services while generating economic benefits and jobs for Canadians.

According to the Minister of  Industry, the Defence Procurement Strategy represents a fundamental shift in the Government's procurement approach.

Under this strategy, Industry Canada designed and is now implementing the new Industrial and Technological Benefits Policy.

The need for a new policy approach was made clear by two expert panels over the past year, which were led by David Emerson and Tom Jenkins.

The Value Proposition Guide describes how the Industrial and Regional Benefits (IRB) Policy has been transformed with the introduction of a new feature: the value proposition.

Winning bidders are obligated to undertake business activity in Canada equal to the value of the contract. As competition for those contracts is based on the economic benefits to Canada, higher-quality investments are expected.

The relationship between Industry Canada and the industry is at the core of the Defence Procurement Strategy said Mr. Moore.

In recent months, the input of the industry helped  adjusting the Industrial and Technological Benefits (ITB) Policy.

Strategic decisions lead to changes to the policy that will:

• attract earlier investment in Canada;
• encourage prime contractors to increase partnerships with small and medium-sized companies;
• reduce red tape; and
• increase the accountability and transparency of the ITB Policy.

Attracting Investment

Canada low taxes and open markets make the country ‘an incredibly attractive place to do business’ acording to James Moore.

But to attract more investment in Canada, changes to the ITB Policy's banking provision will be implimented.

• allowing banking for up to 10 years before the procurement;
• eliminating depreciation of banked activities;
• allowing banking on overachievement of contractual obligations; and
• allowing credit for companies banked activities when these investments are made in Canada.

The policy's pooling provision, which allows companies to get credit against multiple procurement obligations for investments in Canada has been improved. To this end, the threshold for a pooled activity has been decreased to $50 million.

Supporting SMEs

Understanding the importance of small businesses as an important driver of Canada's defence sector in order  to encourage prime contractors to give more work to smaller firms, a second group of changes involves the increase of the cap on investments in SMEs that qualify for multipliers and the streamlining of the application process.

Reducing Red Tape

Third, to ease the red tape that companies face when reporting to the Government, Industry Canada is implementing an electronic template for annual reporting that clarifies the information required and streamlines reporting.

Increasing Accountability and Transparency

Finally, to increase accountability and transparency, starting this fall, Industry Canada will report annually on companies' progress in meeting their IRB and ITB obligations.

According to the presentation given by Industry Minister, James Moore, the ITB Policy is a powerful new investment-attraction tool for Canada. These policy and administrative changes will build on the important achievements made under the Defence Procurement Strategy.

They will ease the compliance burden of the industry, attract long-term investment, help form partnerships that grow businesses and ensure that future procurements are of even greater benefit to Canada.

Defence Analytics Capability

Tom Jenkins' report recommended that the government strengthen Canada's analytical capacity in order to maximize the economic benefits from defence procurement.  So Economic Action Plan 2015 is providing $2.5 million per year to support expert data analysis and research on the key industrial capabilities within Canada's defence industrial base.

Aerospace Supplier Development Initiative.

David Emerson's report recommended that the creation of a national aerospace supplier development initiative.  In Economic Action Plan 2015, the Canadian governement committed $6 million to work with the AIAC (Aerospace Industries Association of Canada) and other stakeholders to create such an initiative modelled on the successful MACH program pionneered by Montréal based Québec aerospace cluster organization, Aéro Montréal.

This new program will improve the performance and competitiveness of firms, many of which are SMEs and by the same token, benefit large aerospace firms, which require a healthy supply chain to support their global growth.

Space

The Canadian government is taking key steps to deliver on the priorities of Canada's space industry to ensure Canada remains a global leader in the fiercely competitive international market.

James Moore highlighted that Budget 2015 includes an important commitment to extend Canada's participation in the International Space Station to 2024 as well as a new $30-million investment in support of Canada’s partnership in the European Space Agency's Advanced Research in Telecommunications System program.

Through this program, Canadian companies in the satellite communications sector will have according to the Minister, the opportunity to simulate their technologies in space, an essential part of commercialization.

 

« »