Economic downturn doesn’t deter Canadian deals

As goes the United States military industrial aircraft base, so goes much of the world’s military aircraft manufacturing. At almost half of the globe’s defence spending, the U.S. is a prime indicator of where the industry is heading. And with the 2011 Pentagon budget forecasting just one new program start – a long-range bomber development – many analysts are predicting a bumpy ride.

So speculation heading into the 100th anniversary of the Paris Air Show was on the numbers: would fewer companies attend? Would the number of deals – and the all important dollar figure – be down?

The final numbers are not yet in, but although talk in some of the business chalets was of a quieter event than past years, a record number of companies were expected to attend the show and plenty of deals were being struck. Ian Pearson, international account manager for Kanata-based EMS Satcom, said, if anything, the volume of traffic around the booth was up.

“We learned from the last downturn that those [companies] that stood pat struggled; those that invested thrived,” Jim Albaugh, Boeing’s president of Integrated Defense Systems, told a briefing on Monday. So while it intends to strengthen its core programs such as heavy-lift helicopters, airborne early warning and control systems and multi-mission maritime patrol aircraft, Boeing has invested heavily in unmanned systems, C4ISR and cyber solutions.

Mairead Lavery, vice-president of strategy and business development for Bombardier Aerospace, said in the company’s 10-year forecast that “despite the current recession, the market fundamentals are strong in the long term. As the world begins to emerge from this economic crisis, demand should gradually return and future prospects remain solid.

By Day 2 of the show, Claude Lajeunesse, president and CEO of the Aerospace Industries Association of Canada, was talking excitedly of the country’s expertise and accomplishments.

Among the deals struck prior to or during the show:

·     Viking Air of Victoria, B.C. signed a purchase agreement with Global Aerospace Logistics of Abu Dhabi, United Arab Emirates, for ten new Twin Otter Series 400 aircraft, a deal that, if all options are exercised, could push the value over US$65 million.

·     Toronto-based Magtron, the aerostructure division of Héroux-Devtek was awarded a multi-year contract related to electronic chassis components for the F-35 Lightning II aircraft (Joint Strike Fighter) by Noranco Inc. The contract begins in calendar 2010 and continues through 2017and is valued at approximately Cdn$10 million.

·     DRS Technologies, acquired by Finmeccanica in 2008, was awarded a $43.9 million contract to supply aerial training systems to the U.S. Navy and Air Force. DRS will build, test and field P5 aerial training systems for use on aircraft including the F-15, F-16, FA-18 and AV-8B.

·     CAE of Montreal confirmed a series of contracts from Lockheed Martin for the C-130, including building simulators and training devices for Indian Air Force, the U.S. Air Force and the Air Force Special Operations Command. CAE also partnered with Bombardier in the development of the CSeries aircraft program and initial training devices, and will build an engineering development simulator and prototype CSeries full-flight simulator.

·     Mississauga-based Cyclone Manufacturing signed a contract with Embraer to supply structural components on the 190/195 commercial aircraft and the Legacy 450-500 business jet, a contract valued at $12 million over the next three years.

·     Esterline CMC Electronics has been contracted by Air France Industries to supply its latest flight management system, known as the CMA-9000; the IntegriFlight CMA-5024 GPS receiver; and a Fuel Management Panel for the avionics upgrade of the Air Force’s C-135FR and KC-135R fleet of fourteen tanker aircraft. CMC also signed an agreement with Boeing to have the multi-channel SwiftBroadband compliant CMA-2102SB Satellite Communications high gain antenna system available from the Boeing factory on the B777.

·     The CSeries aircraft from Bombardier Aerospace, scheduled to enter service in 2013, picked up an order for eight of the Q400 aircraft from MIG Aviation 3 Limited, a subsidiary of Marfin Investment Group Holdings S.A. of Greece. Bombardier also announced another 17 suppliers for the aircraft program.

·     Eurocopter and the National Research Council Canada signed a ten-year agreement on research and technology cooperation, the result of a MOU between EADS, Eurocopter’s parent company, and the NRC. The agreement covers a spectrum of technical subjects, ranging from manufacturing technologies to flight tests for environmental investigations.