Industry body aims to reduce aerospace sector's reliance on USA and look for new markets in European Union

The Canadian government and the Aerospace Industries Association of Canada (AIAC) are seeking ways to reduce the Canadian aerospace sector's reliance on exports to the USA and increase competitiveness in today's procurement environment.

AIAC figures show that Canada's aerospace companies recorded sales of around C$20 billion ($14.5 billion) last year, down from C$23 billion the previous year because of the global economic slowdown.

Canada is one of the largest aerospace producers in the world - government department Industry Canada ranks the country third behind the USA and the combined European Union nations.

More than 80% of Canada's aerospace output is exported, with around 80% of sales going across the border to the USA, says Jeff Rochon, assistant director aerospace of Industry Canada.

Rochon says: "Canada's challenge is to open new markets, principally to Europe, as it is not good to be reliant on a [single] client base." Canada is a stepping-stone for European companies seeking to enter US markets, he adds.

Industry Canada believes more research and development spending is essential to maintain and improve Canadian competitiveness. The ministry aims to rise from fifteenth to fifth in the league of R&D expenditure, according to Rochon. He says that Canada offers attractive research and development incentives, among them the Technology Partnerships Canada scheme, which allows the government to become a risk-sharing partner in technology acquisition.

The World Trade Organisation criticised the scheme in its 2001 rulings on the regional-jet subsidies row between Brazil and Canada, but Rochon says it has now been altered to cover only pre-competitive and non-product-specific R&D.

Ron Kane, AIAC vice-president policy and research, says Canada's aerospace industry includes many small and medium-sized enterprises, which find it more difficult to compete in today's procurement environment.

Original equipment manufacturers previously acquired components from hundreds of suppliers, but are now depending on fewer suppliers delivering large finished components and complete systems, such as undercarriages already fitted with wheels, brakes and ancillary equipment.

But to compete successfully, companies need to have a critical mass to manage and afford such participation in programmes. Kane hopes that some of the smaller companies can merge "to get them more globally competitive".

Source: Flight International