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Canada’s success depends on a strong, competitive, innovative aerospace industry

By Industry Minister James Moore      

Canadian exports of aircraft, aircraft engines and aircraft parts reached a near-record high of $10.8-billion in 2013, a 5.4 per cent increase from the year before.

The following is Industry Minister James Moore’s speech to the Canadian Aerospace Summit in Ottawa on Nov. 19. The speech has been edited for length and style.
I was pleased to join Prime Minister Stephen Harper [recently] in China to strengthen trade and investment between our two nations. China is Canada’s second-largest trading partner, with two-way trade totalling $73.2-billion in 2013, up 38 per cent over the past five years. The relationship between Canada and China is one that the Prime Minister has been working hard to strengthen since taking office in 2006.
And I was pleased to see some of our leading Canadian aerospace firms join our business delegation for what was a very productive visit. This includes Bombardier’s agreement with China Express Airlines for the purchase of 16 aircraft with an option for eight more, with a potential value of over $1-billion. Overall, more than 20 new commercial agreements between Canadian and Chinese firms were signed.
These agreements are valued at more than $2.5-billion.
They will create more than 2,000 new jobs in the Canadian market: over 20 deals, over 2,000 jobs, [and] $2.5-billion.
So congratulations to the industry for its work in contributing to Canada’s economic growth.
Canada’s aerospace industry is one of the key pillars of the Canadian economy: an industry made up of over 700 companies; an industry directly and indirectly employing more than 170,000 Canadians; an industry that contributed $28-billion to Canada’s GDP last year alone.
I don’t have to tell you that your industry ranks third in the world in terms of civil aircraft production.
I don’t have to cite a report from last summer—courtesy of my department and our hosts, the AIAC—that pointed out that Canadian aircraft production is forecast to grow twice as fast as the global market average over the next seven years.
In this room we know Canada is plugged into global value chains. We know our aerospace manufacturers export nearly 80 per cent of their products to diverse markets around the world.
And we will continue our efforts to build a prosperous Canadian economy. In fact, Canada’s economy is widely recognized as one of the world’s strongest. For the past decade, we have led the G7 in economic growth. Our overall marginal effective tax rate is by far the lowest in the G7. The world is taking notice. We are second only to the United States in growth among G7 countries during the recession and its recovery. All credit rating agencies have affirmed Canada’s AAA credit rating.
For the seventh consecutive year, the World Economic Forum has declared our banking system to be the soundest in the world. KPMG recently released a report that declared Canada is the most tax competitive country for business in the world.
Our government has opened markets for Canadian products and services by signing 38 new trade deals, including one with the European Union—Canada’s most ambitious and far-reaching trade agreement yet, opening up a market of 500 million new customers. When Stephen Harper became Prime Minister in January 2006, Canada had free trade agreements with only five countries.
After our years of hard work, Canada now has free trade agreements with 43 countries around the world. Those 43 countries constitute half the global marketplace. These agreements will help you increase your exports—they represent tens of thousands of new jobs for Canadians—and will contribute significantly to Canada’s economic growth.
In fact, Canadian exports of aircraft, aircraft engines and aircraft parts reached a near-record high of $10.8-billion in 2013, a 5.4 per cent increase from the year before. We are pleased to see that foreign companies are looking to benefit from Canada’s low taxes and open markets.
That’s a big part of the reason why Tech Mahindra—an Indian multinational company—is establishing a Canadian headquarters for aerospace, and with it, an additional 300 jobs over the next three years. And it’s why firms like Burger King are looking to move north and expand their footprint in Canada.
Canada has a record in which investors have confidence, a record of which Prime Minister Harper is indeed very proud.
One area of the economy where we have seen tremendous growth since the recession is in manufacturing. In fact, just last week, factory sales for September exceeded expectations and jumped 2.1 percent. It was the eighth such advance in the last nine months, and yet another positive sign for our manufacturing sector.
Production in the aerospace products and parts industry posted a 22-per cent gain to $1.9-billion.
We know Canadian manufacturers are facing a different environment than those of previous generations.
Firms have had to adapt to a fluctuating Canadian dollar, rapidly evolving technologies, more volatile commodity markets, discerning customers, more complex supply chains and increased competition.
Allow me to give you some examples of what we have already done to support Canada’s manufacturers.
We have removed the federal capital tax and renewed the accelerated capital cost allowance, providing $1.4-billion in deferred taxes to Canadian business. We are also well on our way to establishing Canada as the first tariff-free country for industrial manufacturers in the G20. We have introduced innovation funding for the aerospace sector, a new aerospace technology demonstration program and support for advanced manufacturing. We have also lowered business taxes, cutting the corporate rate from over 22 percent in 2007 to 15 per cent today. And we have reduced the administrative burden on firms so owners can spend less time filling out forms and more time running their operations and growing their business.
The results of our government’s action have been impressive.
Manufacturing sales have bounced back and are up more than 25 per cent since the recession.
Our government will continue to create the right conditions for success so that your businesses can do what they do best—grow our economy and create jobs.
Aerospace is an industry that is indispensable to our economy. And if we are to continue punching above our weight in aerospace, we must build on our successes. It was with this validation in mind that three years ago we asked former Cabinet minister David Emerson to consult the industry and come back with a report on aerospace policies and programs.
Our goal was to better support innovation and advancement.
As you know, Mr. Emerson did indeed table such a report, complete with recommendations that came largely from you.
Our government has delivered on those recommendations. One of the first steps we took was to confirm stable funding of close to $1-billion over five years to the Strategic Aerospace and Defence Initiative, or SADI. SADI encourages research and development that leads to innovation. It helps bring about new products and services, enhances competitiveness and fosters collaboration between the private sector, research institutes, universities and colleges. It also helps develop a highly skilled workforce across the country.
This year, we added to the growing list of SADI contributions. And we didn’t stop there. Last fall, we launched Canada’s first Technology Demonstration Program to support large-scale aerospace projects with strong commercialization potential and promote cross-industry collaboration. We encouraged interested companies to take part.
Tech Demo clearly answered an industry need, triggering an innovative impulse and a demand for new products.
Last spring, we were pleased to welcome the official launch of the Consortium for Aerospace Research and Innovation in Canada, or CARIC. The launch of CARIC was a tremendous milestone.
Thanks to those who helped make the consortium a reality. Building on the momentum of CARIC’s launch, our government was pleased to announce last summer a $30-million investment for the new entity. The support will be provided over the next five years as the consortium expands aerospace research and development in this country.
Canada has a proud history in space, and I would be remiss if I did not take this opportunity to touch on our government’s commitment to its continued success.
We appointed strong leadership at the Canadian Space Agency.
Let me thank General Walt Natynczyk, who recently took up a new position as deputy minister of Veterans Affairs, for his incredible work to make Canada’s space industry stronger.
Earlier this year I unveiled Canada’s Space Policy Framework—a plan for Canada’s future in space.
Since its implementation, we have: announced support for the James Webb Space Telescope project, the next-generation space observatory and the most powerful space telescope ever; awarded an $8.8-million contract to MacDonald, Dettwiler and Associates to develop the OSIRIS-REx Laser Altimeter, a sophisticated laser-based mapping system and Canada’s contribution to the NASA-led mission that will be used to create unprecedented 3D images of an asteroid and allow for the collection of samples from its surface; and
provided $6.7-million to 12 companies to support the development of products to better use RADARSAT data for earth observation missions, which will survey 90 per cent of the globe, studying the Earth’s lakes, rivers, reservoirs and oceans.
In terms of space exploration, we had proudly Canadian companies involved in the European Space Agency’s Rosetta spacecraft mission. Saskatchewan’s SED Systems, Ottawa’s ADGA Group, and NGC Aerospace from Sherbrooke, Que., were integral parts of the mission and they are here today.
As you know, its lander, Philae, made history by being the first to land on the surface of a comet—a remarkable human achievement. The success of the Rosetta mission and other future missions will bring greater opportunities for Canada’s space industry in the years to come. In our response to Mr. Emerson, we also committed to creating the Space Advisory Board to guide our government’s space policy.
Today, I am pleased to announce the members of the Space Advisory Board.
• General (retired) Walt Natynczyk, deputy minister of Veterans Affairs Canada, former chief of defence staff and former Canadian Space Agency President;
• Dr. Mamdouh Shoukri, president and vice-chancellor of York University
• Terry Malley, president and CEO of Malley Industries, a New Brunswick manufacturer of advanced specialty vehicles;
• Dr. Arlene Ponting, president emerita of MindFuel, a not-for-profit organization dedicated to inspiring young people’s involvement in science through education;
• Lorne Trottier, co-founder of Matrox Electronic Systems and the Trottier Family Foundation. He is a lifelong space science advocate and recognized philanthropist for science education in Canada;
• Fred George, president and CEO of JLK Global Fund International, honorary captain to the Royal Canadian Navy, a venture capital adviser, and one of Canada’s leading CEOs;
• John Keating, director of Sandvine and former CEO of COM DEV, the largest Canadian designer and manufacturer of space hardware subsystems; and
• Colonel Chris Hadfield, retired Canadian astronaut, former commander of the International Space Station.
I look forward to working with all of our board members in the days and months ahead. I will hold regular meetings with the board for updates on progress. Our government has listened to your industry. And we have worked diligently to help create new opportunities for growth.
Let me close by reiterating that Canada’s success depends on a strong, competitive and innovative aerospace industry.
Over the coming year, we will take further action to ensure that companies in Canada’s aerospace and space sectors continue to be leaders in innovation and job creation. With strong leadership from Prime Minister Stephen Harper, the AIAC and the private sector, I am positive we will continue to strengthen aerospace and space sectors that all Canadians will be incredibly proud to call their own.
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