Thank you, Mr. Chair.
It is an honour to be here today, along with several of my colleagues from the Canadian aerospace industry. My presentation will be mainly in English, but at a later date you will be provided with French and English versions of it. Of course, I will answer questions in both official languages.
I will provide just a brief picture of what the aerospace industry is in this country.
The first point is that total revenues are close to $23 billion. Out of that, $18.6 billion—that's 80%—is exported, which means that 80% of the jobs and 80% of the revenues are generated outside of this country. In other words, money is coming into this country to pay for jobs here because we are in a position to export our sales abroad, outside of the country.
Civilian sales are about $17.7 billion, military $5 billion. Jobs are at 82,000. A very important point to make is that these jobs are spread across the country. I will come back to that in a minute, but this is an industry that goes from the Atlantic to the Pacific in terms of the people it employs.
Growth has been constant since the dip, of course, after 2001. As I've mentioned, we are now back to the level of 2001, with anticipated revenue this year of about $23 billion. The revenues are divided into various sectors. Aircraft, aircraft parts, and components represent about half of those revenues—55%. Engines and engine parts, which you will hear about in a few minutes in great detail, are about 15%. Repair and overall maintenance is about 16%. We are, in this country, as you again will hear in a few minutes, probably the world leader. We are certainly the world leader in terms of simulation and training. It's an industry that is diversified, that has many revenues spread across the country.
I've already mentioned that 82% is exported, but it's worth repeating the fact that these jobs are created in Canada by money coming from outside of this country. That's an important point. The 82,000 jobs are highly skilled jobs requiring a lot of training, a lot of education. Again, in this area it won't surprise you that we've gone over the number of jobs that we had in the early 2000s.
Employment.... When you get a copy of the presentation, please look at this very carefully: 50% is in Quebec; 30% is in Ontario; you have 15% of the jobs in western Canada; and in Atlantic Canada you have 6%. In every region of this country, the aerospace industry is a major player in terms of jobs, job creation, and wealth creation.
You should know that in the world we are fourth in terms of production of aerospace goods. By the way, I should mention that this includes space, and we're all very proud these days of our accomplishments in space. As you all know, Julie Payette will be lifting off in about a month. I'm sure for some of you that will bring you memories. We're looking now at being fourth in the world, but we are very closely followed by Germany, Italy, and Japan. These countries are investing considerable amounts of money to catch up to the other countries. We are at $23 billion—more than half of what France and the U.K. produce every year. That is also a key point to understand. But Germany at $22 billion and Japan at $15 billion are coming up very fast behind us, and they are investing considerable sums of money to catch up and eventually be ahead of us.
I will come back to that in a few minutes, because I'm sure you will all agree with us that we want to keep our leadership role in the world.
I'd like to quote Anne Golden. We asked the Conference Board to look at our industry and to give us a bit of an opinion on where they see our industry at this point. I'll quote it. It's worth quoting word for word: “...in spite of all of Canada’s advantages, our economy has been underperforming in almost all areas”. It's the Conference Board of Canada saying this. “One exception is the aerospace industry...[where] you face significant challenges, but within the manufacturing sector, aerospace is a good-news story.”
I also want to quote from the Canadian Auto Workers union:
Canada's aerospace industry is considered a "jewel" in our national industrial base. Typically seen as a "plum" industry (one marked by high-technology, intensive exports and high wages), aerospace generates many direct and spin-off jobs that benefit workers throughout the country. Additionally, aerospace generates spin-off technologies that contribute to Canada's production capabilities....
It also links very closely with our universities. With the situation we now face in this country, due to the downturn in many other industries, the aerospace industry has now become one of the major supporters of research in our Canadian universities, playing a key or leading role.
We surveyed our members. I thought you'd be interested in knowing what they think about the situation currently. We asked them, what is the overall impact of the current downturn? It's moderate, at this point. What are the top three challenges? Well, they include the reduced availability of financing and credit. So we were very pleased to see some of that being addressed in the last budget.
Another challenge is the increased competition from emerging markets. I mentioned that already. The investments being made by government and industry in Japan, Germany, and Italy are enormous and will make a difference in the medium and long terms.
Finally, the last challenge is the difficulty of getting credit insurance, and that's something that of course we've been talking to EDC about.
What is the impact of this? You've all read the newspapers. It's the downsizing of some operations, cost reductions, and some personnel layoffs.
How does the industry look in terms of the past and the future? This is an industry that is cyclical; there are ups and downs, due to external factors. But one thing that comes across very clearly is that if you plot the growth of the industry over the years—and you'll see in the presentation that we've gone back to 1974—you will see peaks and valleys. Every peak has been higher than the previous peak so far, and every valley has been higher, which means that we've been constantly increasing the number of jobs and the level of activity in this country. Of course, we want to make sure that when we get to the bottom of the cycle we're currently in, it will still be higher than the previous bottom of the cycle.
What are the predictions for the future? There will be 24,000 new aircraft between now and 2027, in less than 20 years' time. The market value will be over $3 trillion—that's $3,000 billion. We anticipate that world passenger traffic will increase by 5%, and cargo traffic by 6%.
What do we need to do to make sure we keep our competitive advantage? There are not many solutions. We have to be ready with new solutions, new materials, new avionics, and new engines when we return to the upward part of the cycle. So it's time now to invest in R and D. Let's not repeat the mistakes made in other sectors of our economy, where investment in R and D was curtailed every time there was a downturn in the economy.
We have programs like SADI, strategic aerospace defence initiative, which need to be reinforced and strengthened to make sure they can support the whole spectrum of our industry.
We have institutions like NRC that in our country that are doing a fantastic job of helping the industry. We have NSERC, the Natural Sciences and Engineering Research Council, which provides research support in universities and also jointly sometimes with industry and universities. We need to position this industry by developing participation in future major platforms. We have produced a report on this that indicates what the technologies of the future are, where we are able to contribute in this country, and how we can contribute.
We need procurement reform. We need to leverage every dollar that is spent on acquisition. This is particularly true for defence. We have to make sure the investments we make in defence are developing our export potential and that they are done strategically to develop our own industry. For end-service support, which is servicing these planes that we purchase abroad because they are not built in this country, we want to make sure that these planes are serviced here in Canada.
Finally, we have to make sure that whatever investment the government makes is able to create short- and long-term jobs. Let me be clear on this: some of these initiatives will respond to the needs the government has expressed to create jobs now to make sure we reconnect the growth of the economy to spending as soon as possible.
We need to develop and implement a long-term space plan. There has been ample consultation with the Canadian Space Agency. As late as last week we had a meeting of the industry players with the agency, and we feel this is important to develop but also to implement the space plan with the proper level of support.
The last point I want to make, Mr. Chair, is that we need to reduce trade barriers. There are many trade barriers: a particular one that is not called a trade barrier, but its impact is to impede trade, is ITAR, international traffic in arms, the program in the U.S. that keeps us from doing everything we need to do.
Mr. Chair, as I indicated earlier, I am pleased to answer questions in both French and English. I am sure that my colleagues will be able to give you greater details on many of the points I raised in my presentation. Thank you.