Aircraft

Many of the big names in Canadian aerospace are foreign-owned, and CMC Electronics is the latest to join the list. In fact, it has rejoined, as the Montreal-based avionics specialist was owned by BAE Systems until 2000, when it was acquired by an investment fund established by Canadian private-equity firm Onex.

Last month CMC was sold to US aerospace and defence supplier Esterline. "We knew it would happen, and for the company and management it is a very good outcome," says CMC president and chief executive Jean-Pierre Mortreux. "It will be different to belong to a strategic investor like Esterline that has been in the same aerospace and defence business since 1967.

"They know investment for a new product takes three to five years to be fruitful, and are not expecting instant reward," says Mortreux. "And they have companies with which we could have a good top-line synergy." With 30 subsidiaries, Esterline is a diversified Tier 2/3 supplier with ambitions of becoming a Tier 1 integrator, he says. "That is why we fit their strategy."

Under Onex, CMC invested heavily in research and development that is now paying off. "In the past five years, in each of our 'classic' product lines like flight management systems, we have introduced a new generation," says Mortreux. "We have also launched new product lines like electronic flight bags and enhanced vision systems. We are the only GPS supplier in North America developing a Galileo receiver."

There has also been a major initiative in cockpit integration, particularly for military transports and trainers like the Beechcraft T-6B, and the recent contract worth more than C$10 million ($9 million) to upgrade Finland's BAE Hawks is a breakthrough that opens up a big retrofit market, Mortreux says.

The six years spent under Onex ownership were positive for CMC. "They have a great track record - 90% of the companies they acquire are in better shape when sold than before," Mortreux says. "But ownership by Esterline is the basis for a long-term view. We think it reinforces CMC's strategy of growth in aerospace and defence."