Thank you, Mr. Chairman and members of the committee.
My name is Richard Bertrand. I'm vice-president of government affairs in the office of the president at Pratt & Whitney Canada. We thank you for this opportunity today. It's a very timely discussion.
I want to take this opportunity to share our opinion on the impact and challenges represented by this global recession. My comments will be brief, because your time is better used through questions and suggestions to reinforce the policy choices affecting our sector.
It is these choices that will strengthen the Canadian economy as a whole.
Pratt & Whitney Canada is based in Montreal, with a proud 80-year history of continuous innovation, achievement, and success. We are a global aerospace leader shaping the future of business, helicopter, and regional aviation with new-generation engines. In fact, we have introduced a record 65 new types of engines into production over the last 12 years alone. No other company in the world has introduced that many offerings.
Our next-generation engines surpass International Civil Aviation Organization standards for low emissions and low noise. This success is proof positive of the benefits that have accrued from our 50-year relationship with the Government of Canada and the various policy and fiscal supports that have been accorded our company and the broader aerospace and defence sector during this time.
We employ close to 10,000 people throughout the world and nearly 7,000 in Canada, namely in Halifax, Longueuil, Mississauga, Lethbridge and soon in Thompson, Manitoba.
This geographic footprint results in an annual economic contribution of $2 billion to the GDP, according to a KPMG study. We are also the number one research and development investor in Canadian aerospace. In fact, we invest over $400 million per year in R and D, which represents 50% of the total spent by the sector.
We have committed $1.5 billion over a five-year period to create the next generation of green technologies in our research and manufacturing facilities. On the knowledge economy, we employ over 1,200 engineers across Canada.
Finally, as a company we take pride in our ongoing work with 16 Canadian universities, with 400 programs completed to date and another 200 in progress or in planning stages. We also plan to invest $75 million into the university sector over the next five years. Of course, the present economic climate is hurting our company and our sector, like so many others.
For Pratt and Whitney Canada the marked delay and decline of orders in the regional and corporate aircraft market has had an impact on our operations, although I was pleased to see this morning in a newspaper that Porter Airlines will be ordering 18 more Q400 Bombardiers with our PW150 engine, so that's a nice little ray of sunshine in the middle of all this. In turn, the spillover effects--and I think it's important--have an impact on the 1,500 suppliers situated from coast to coast, and that cannot be discounted.
Like the others, our company has had to make difficult adjustments in our workforce. Although these decisions are never easy, we have worked with our employees and union groups in order to minimize their impact as much as possible. We remain committed, nonetheless, to the pursuit of excellence and global leadership in terms of developing energy-efficient and low-noise technologies for the next generation. The Government of Canada has a special interest in ensuring our success in this area.
Previous investments in pre-competitive technologies and research efforts, through legacy programs such as DIPP--the defence industry productivity program--and Technology Partnerships Canada have yielded and continue to yield annual royalty payments back to the crown, in some instances with payments continuing decades after the initial investment, royalty payments that are already in the hundreds of millions of dollars back to the government.
As my colleagues have noted, Canada's aerospace sector is ranked fourth by global standards. And when we consider that those countries that rank ahead of us are the benefactors of a massive military presence when compared to Canada's defence expenditures, the success of our company and our sector is all the more remarkable.
The innovative culture, record, and ambition of Pratt & Whitney Canada are unequalled in the small to mid-engine marketplace. By the way—a comment on that—that is a marketplace right now that is being hurt because of, as I said, the corporate aircraft market.
If I may, the other company sharing this table with me this morning can make similar claims about their global leadership in their respective service and product domains.
The point is that our sector is innovative at and to its core. And this innovation has flourished best in terms of products, sales, and economic spinoff benefits to Canada when it has been supported—supported through consistent collaborative and concrete government policy statements, programs, and funding.
Let me be frank. Government support for the aerospace sector is not only in our collective economic interest, it is essential to our national security interest.
During the 2001 economic downturn, Pratt & Whitney Canada made a conscious choice to invest in its innovation capacity and engineering excellence with the support of the Government of Canada. As a result of this longer-term thinking, we emerged from that period as a stronger and more competitive company with sustained growth in orders, employment, and revenues. This also resulted in a greater contribution to our community efforts in the arts and education spheres. And for the taxpayers of Canada, it meant more taxes paid and continued repayments on previous investments.
Today, we do find ourselves in a similar situation, and perhaps a little bit more difficult than what existed in 2001, with the additional problem of a devastated financial community without the resources to lend funds.
For its part, we encourage the government not only to continue with SADI, the strategic aerospace and defence initiative, but to go beyond its additional $200-million election commitment.
As an aside, as politicians, I must emphasize that you're well served by a competent, professional public service at Industry Canada, HRSDC, and other departments with which we interact regularly.
Furthermore, a number of our investments take years to develop and reach the market, and the return on such investments spreads out over several decades. While there is intense and rapid innovation in our sector, returns on such investments in innovation happens over a much longer period of time.
This brings us to our recommendation that aerospace sector policy must remain constant and stable over the same period.
Let me reiterate: it is important that government investment is stable and consistent on a long-term basis.
We recognize that the democratic process is such that governments change depending on the will of the voters.
However, we know that all parties represented in this room today comprehend the present value and future potential and contribution that our company and our sector offer to our economic prospects. Therefore, consistency in the basic policy fundamentals in tax policy, program supports, and shared financial risk initiatives is extremely important.
Finally, as a global company with national operations, Pratt & Whitney Canada urges the federal government to, when possible and practical, align its programs and initiatives to complement provincial sectoral tax policy and training efforts. Ultimately, this degree of federal-provincial cooperation will result in optimal investments and partnerships that yield the maximum return for our economy and the taxpayers' investment.
When our sector and our governments work together in partnership with common purpose of mission and a shared objective to succeed, we put the world on notice that the innovation and resiliency of our industy, of Pratt & Whitney Canada, of the Canadian industry as a whole, are competing and competing to win.
I want to thank you for your interest and your attention. I am eager to begin our discussions shortly. Thank you.