Government Operations Committee on May 17th, 2022

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Basically, Canada paid $710 million and there were $2 billion in spinoffs. However, there is nothing to stop Lockheed Martin from deciding to keep the parts and expertise we have provided and not renew these long‑term agreements to build the rest of the F‑35s. We have no assurance of that.

Is that right?

[Guillaume Valois]

Yes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Okay.

[Guillaume Valois]

Basically, we're applying a strict free market rule; we are adopting the approach of economic liberalism. In a context where its domestic aerospace market is extremely small, I don't think Canada can afford to waste a few contracts that will be done abroad.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

In your opening remarks, you provided some background. You spoke briefly about the agreements that were signed between Canada and the United States. Are they still in effect? Could one of them force Lockheed Martin to respect SMEs and the expertise of Canada and Quebec?

[Guillaume Valois]

As far as I know, no agreement comes to mind.

There is currently a program in which Canada is a partner in the development of the F‑35, and the criteria of this agreement apply. We are partners in this program precisely so that we can benefit from the spinoffs, and that is indeed the case. If Canada buys the aircraft, we will also be able to benefit from certain other spinoffs, but we aren't in a position to guarantee that. That's where the nuance lies—

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you very much.

I apologize for interrupting, Mr. Valois. If you feel that you'd like to say more in response to that question, please, by all means do put it in writing and submit it to the clerk. We will distribute that to all committee members.

I will now go to Mr. Johns for six minutes.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you very much, Mr. Valois, for your important testimony.

I'm going to continue Ms. Vignola's thread on the economic benefits piece. I know that some politicians really want to talk about cheaper and quicker, and about maybe looking outside of Canada to develop military procurement. Can you maybe speak about the importance of procuring domestically and ensuring that...?

Maybe you could speak about the human rights, the quality, the many different benefits of manufacturing here, the multiplier effect and the importance and significance of that and what it looks like on a “runway”, if you want to call it that—

[Voices]

Oh, oh!

[Gord Johns, NDP, Courtenay—Alberni, BC]

—because here we are talking aerospace.

If we don't take a solid approach.... You talked about a pan-Canadian aerospace policy and strategy. Can you tell me what the runway will look like if we do take an approach that is Canadian security-based, with development and manufacturing here at home?

[Guillaume Valois]

As we all know, the pandemic caused breaks in the supply chains for virtually all goods delivered, assembled and sold around the world. The aerospace sector suffered, as did other sectors. Many players in various countries are trying to attract the supply chains for their strategic sectors by either simply repatriating the work they do or ensuring that it's done in a neighbouring or politically stable economic partner country.

The same is true of the aerospace sector's supply chain. As a result of breaks in that chain, we're experiencing problems on the assembly lines of certain aircraft. In some cases, we've had to take an entirely different approach to finding new suppliers. Some businesses have tried starting work on projects to ensure the work is done in their own plants rather than by a subcontractor in a foreign country.

As for the defence sector, I personally consider the prospect of procuring parts and maintenance for our equipment from anyone other than a group of Canadian workers unthinkable. If we did, we'd be putting the lives of our military personnel in the hands of workers based outside Canada. It's hard for me to view as a realistic option the possibility of having our aircraft maintained in another country where we would have less control under the laws in force.

[Gord Johns, NDP, Courtenay—Alberni, BC]

I really appreciate your comment. In fact, we heard something very similar from Unifor around the shipbuilding sector. Just the pride of our military using military equipment that's been built here in Canada, that alone has been very significant.

You talked about a pan-Canadian aerospace policy. Can you speak about the importance of that and maybe other countries that have developed a really good national policy or strategy around that?

As well, just because I'm going to run out of time here—I have two minutes left—can you also speak about the importance of the development of an aircraft recycling program?

[Guillaume Valois]

With respect to aircraft recycling, I still think that if we can build them, we have to be able to recycle them. That's my approach, and there's a current trend in that direction.

A commercial aircraft has a lifespan of approximately 25 years. It may differ for military aircraft, but it still ranges from 20 to 35 years. In many cases, once aircraft are no longer in service, they're stored in a desert or another dry place where they'll deteriorate as slowly as possible. Those aircraft are then cannibalized as needs dictate.

The creation of an aircraft recycling sector in Canada would make it possible, first, to increase the industry's resilience, and, second, in the event of a crisis such as the one we've just experienced, to assign laid off workers temporarily to aircraft recycling activities.

Other operations can be combined with recycling. Airlines store many aircraft temporarily before recycling them. They can be maintained from the time they're initially stored until a decision is made either to retire them permanently or to refit and return them to service as cargo aircraft, for example, and that's a potentially lucrative activity.

That's something we've included in our pan-Canadian aerospace policy proposal. We think the industry has to react and transform the assets it creates, by which I mean it should be able to reuse and repurpose the raw materials it has used to manufacture those aircraft. Many parts, such as landing brakes, can be reused in other types of aircraft without requiring extensive modification. There would be a reliable and profitable resale market for parts, and that would be in addition to aircraft recycling activities. Ultimately, all we're lacking is the favourable environment that has to be established for that to happen.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Valois.

We'll now go into our second round and to Mr. Lobb, for five minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks, Mr. Chair.

Mr. Valois, I think you mentioned a couple of times your concern that if the F-35 contract is agreed upon, there is some risk that some or all of the repair and maintenance work would be done in a country other than Canada.

Is there any country that has purchased F-35s and has an existing maintenance fleet to maintain them, and which has sourced that in another country? I am not familiar with any. Do you know of any?

[Guillaume Valois]

I'm not sure I really understand the question. Are you asking me if there are any countries that don't maintain their own F-35s?

[Ben Lobb, Conservative, Huron—Bruce, ON]

It's more along the lines that the United Kingdom has an existing trained fleet of people such as you, as does the United States, as does Canada, who are qualified to maintain aircraft. I have just not heard of any countries where they have an existing capacity and capability and where the maintenance would be outsourced. I don't see that.

It doesn't seem to me that it would be a risk that the work would be sourced elsewhere, but maybe I am incorrect.

Nevertheless, the next question I have is in regard to the ramping up of the training. From the parts that you would be maintaining or manufacturing, is there a timeline in which you would be ramping up to provide the services among your workers?

[Guillaume Valois]

We have no objection to the maintenance operations for Canada's next fighter plane or the manufacturing of components to be installed in them being done by our suppliers in Canada, such as L3Harris, if they're prepared to submit a bid. I think they're actually ready to do so. The workers at L3Harris, whom our association represents, maintain CF-18s, so they could also maintain the next aircraft. We would like that, but we have little control over it. We represent the workers, we defend their rights in the workplace, and we negotiate their collective agreements, but we have limited influence over the contracts those companies negotiate with their clients.

[Ben Lobb, Conservative, Huron—Bruce, ON]

My point was about the training of your members and bringing in the next generation of young men and women who would maintain and manufacture. I'm more curious about the lead time in your eyes for your people to get trained up for the different parts and the different capabilities of maintenance. Do you have any thoughts on that?

I'm asking that because in my area, we have a nuclear power plant, and they're going through a major, once-in-a-lifetime component replacement, and there's been a major effort over the last five or six years to bring in all the skilled people.

[Guillaume Valois]

As a result of the expertise that workers in Canada's aerospace sector have acquired over the years, that sector is now a very rich ecosystem. Consequently, I have no problem imagining that we can find an actor that can submit a bid and do the work within reasonable deadlines.

Canada's next fighter aircraft won't go into service and start flying tomorrow morning. Once the decision is confirmed, we'll have all the necessary leeway to establish the tools and training on the sites where maintenance and component manufacturing operations are carried out.

I think it's a rich, diversified and competent enough sector the do the work.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Lobb.

We will now go to Mr. Bains for five minutes.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair.

Thank you to Mr. Valois for joining us today.

Many years before I took this position, I was an aircraft mechanic in British Columbia, so I know a bit about the industry and its strength with respect to our workers, the mechanics and machinists.

Are there any particular trades in the air defence sector that have challenges with the retention of employees. If so, which ones are they?

[Guillaume Valois]

I don't have the exact information to answer your question, but I can look into it.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Okay.

I'll ask about the pandemic and the impacts of COVID-19. How did that contribute to the loss of livelihood and affected careers in the aerospace industry? Was there a major downturn? Were people leaving and not coming back? Were there any of those impacts?

[Guillaume Valois]

The pandemic clearly had an impact. Earlier I mentioned that the average age of our members in the aerospace sector was closer to retirement age than their age when they were first hired, if I can put it that way. Having gone through the pandemic, many workers who had 20 or 25 years' experience were laid off. They simply decided to throw in the towel and find another occupation. There was a loss of trust.

It's not true that this is a declining industry that's bound to disappear. The Canadian government has a role to play in rebuilding that trust by becoming a partner in this ecosystem, supporting jobs in the industry and being the ambassador of the Canadian aerospace industry around the world by relying on the products that are made here.

For example, Canada will be replacing its CC-150 Polaris aircraft, which are used to transport troops and refuel fighter aircraft. A single company, Airbus, with its refuelling tanker aircraft, has been selected to take part in the bidding. The contract is worth $5 billion. That will have to be negotiated. Could the impact of that contract actually support the Airbus operations already established in Canada, such as those of its A220 program? Can an improved A220 become the next aircraft that transports Canadian government representatives? That's something that should probably be discussed with Airbus.

This is the kind of project and the kind of vision that Canada must put forward to promote its products. It's not as though it has never done this or isn't doing it now. For example, Challenger aircraft are already in service in the Royal Canadian Air Force. However, we should do more and do better by building our strategy around an industrial policy specifically designed for the aerospace industry. It should include an innovation and training component and anticipate technological changes in the industry. We have to adopt an approach designed to make the industry more resilient so it's less vulnerable to crises. We also have to begin a green shift within the industry.

A lot of good things are being done in Canada right now, but they aren't being done in a concerted way or in accordance with an industrial policy. It's quite simple: we have to increase cooperation in the sector by developing a policy specifically for it. I think the initiatives targeting the industry right now are too scattered.