Thank you, Mr. Chair.
On behalf of the CAE, I want to thank you for giving me the opportunity to speak to you today and to present to you our opinion of the challenges facing the aeronautics sector given the current global economic crisis.
Like a number of other companies, we are not immune to the recession that is affecting all industries. Quite fortunately, we have been able to work in close collaboration with our clients, develop new activities both in the civil and military sectors, and stay in the black despite the economic recession.
As you know, the CAE is a world leader in simulation and concept technologies as well as in the area of integrated training services for civilian aviation and defence forces around the world. In fact, the CAE is the largest defence company in Canada. Our headquarters are located in Montreal and we employ at present approximately 7,000 individuals in over 75 facilities in 20 countries. Our shares are listed on the Toronto and New York stock exchanges, and more than 90% of our annual sales figures, totalling $1.4 billion, comes from our global exports and our international activities.
We work with the NRC, the CRIAQ and the CAMAQ. We support universities through research and development projects and grants; we also participate in numerous charities including United Way, the Canadian Cancer Society, and the Fondation Marie-Vincent, which helps children who are raped before the age of 12. For your information, one in five children in Canada falls into that category. We also work with hospitals and various other organizations. We have a large pool of investors, and we are Canadian controlled. We work with over 300 suppliers in Canada to whom we grant contracts of over $300 million. We provide high-quality jobs, with an average salary of $65,000. In short, the CAE is a real Canadian success story.
Created by a pilot of the Royal Canadian Air Force after the Second World War, the CAE is a world leader in the area of simulation for civilian and military markets around the world.
So why is CAE a global leader? Part of our success is due to our employees as they continually strive to push the innovation envelope further, thus making the skies even safer than they are today. But success is never due to one person or one group. Our success is also the result of supportive government policy that spans back decades. This support has been and must continue to be stable, predictable, and comprehensive. Government support is fundamental to maintain a vibrant and globally competitive aerospace sector, and the continued health of our sector is strategically important to the Canadian economy.
Government support manifests itself in several ways. One way is through repayable investments in R and D. In a sector where lives are at stake, we must always find ways to improve the training of pilots, be they civil or military. With the participation of the federal government through the SADI program, CAE will invest $714 million over the next five years to continue to make flights safer, including those of our soldiers presently serving overseas.
Another avenue of support is through the competitive tendering of military programs. During the month of February, a pan-Canadian team led by CAE was chosen as the prime contractors for DND's operational training systems provider, also called the OTSP program. In this program, CAE will lead the provision of training systems and services for Canada's tactical airlift, the C-130J, for medium- to heavy-lift helicopters, and potentially for other aircraft fleets as they come on line. Against stiff competition the CAE-led team won this contract after the appropriate due diligence by DND and Public Works officials. Our provision of this training will not only better equip the brave women and men of our Canadian Forces; it will also create and sustain high-quality jobs throughout Canada. It will also position Canadian companies for future international training system integrator opportunities.
The third vehicle of support comes in the form of investment tax credits. We fully agree that this program is presently very generous. However, given the present economic context we would like the Canadian government to make these tax credits refundable. This would greatly help all sectors of the economy that are research-intensive and hence would give a welcome boost to the Canadian economy.
The fourth pillar of policy support comes from EDC. With a tightening of international credit, EDC must have the flexibility to offer credit to clients in markets where it has not operated before and to clients facing more difficult financial situations.
Taken together, the successful implementation of these measures will strengthen the Canadian aerospace sector and put us on a more level playing field with our competitors in the favourable environment in which they operate. Canada's aerospace sector is ranked fourth globally today, yet nations like China, Korea, Japan, and India have put the world on notice through rapid development of their own industries. The common denominator amongst emerging companies from these countries is found in the strategic, sustained, and substantial support they are receiving from their national governments. Moreover and more troubling is that these companies and countries are aggressively looking to woo our best young talent and leapfrog Canada on the innovation continuum. On a positive note, successive Canadian governments of various political stripes have laid a good foundation on which we can build for the future.
However, more specifically, the Government of Canada must, through such measures, ensure that our partnership continues to grow.
In short, we recommend that the Canadian government: first, continue to support and increase the SADI's annual funding base; second, maintain and expand its commitment to the Canadian industry while rebuilding our military forces and providing it with new equipment; third, ensure the participation of our industry in discussions on programs such as the Joint Strike Fighter Program, in order to bring to the table on the very first day the technological know-how and expertise—that is essential for our participation; fourth, make the research tax credit fully refundable; and fifth, ensure that the special funding framework and support provided to EDC in budget 2009 is used to ensure easy access to credit so that international buyers can invest and purchase major Canadian aeronautics technologies.
Thank you for your attention, Mr. Chair.