Mr. Chairman, distinguished committee members, colleagues and invited guests, it is with great pleasure that I participate in this process as a representative of the Quebec Aerospace Association.
The AQA boasts a membership of over 210 members including SMEs, OEMs, institutions and Foreign Organizations. Our primary objective is to serve the needs of the SMEs of the Quebec Aerospace Industry. To achieve this we operate four principal committees, Business Development, Innovation and Technology, Finance and an Advisory Committee that draws on the insights of the Quebec OEMs to help develop strategic opportunities for our SMEs to grow and develop.
In each of the areas that this committee is addressing, the value of the Canadian dollar, rising energy costs, availability of labour and the impacts of globalization, the AQA has already taken positive steps to develop a strategy to face these challenges through the activities of our committees and regular information sessions.
We strive to educate our SMEs to develop their own tools to address new challenges by keeping our membership informed and up-to-date with current trends, opportunities and competitive forces. We look to the Federal Government for an overarching vision that will help us achieve our goals in a timely and strategic manner. This demands regular communication between the AQA, industry leaders and senior officials within all levels of government.
The AQA was an active participant in the Canadian Aerospace Plan (CAP) that involved industry leaders, associations and the federal government in developing a shared and common vision of the challenges and opportunities facing the Canadian aerospace industry. The AQA applauded this initiative and encourages this government to support and develop a forum for this type of dialogue and work to continue.
There are some key challenges that the Quebec SMEs are facing in Quebec that I think pose opportunities for the federal government to get involved. There is an immediate need perceived on our part to increase the value-added of our SMEs. There's been a paradigm shift in the global procurement from the OEMs to get more from less. This means that the procurement officers within the major manufacturers are looking to get more products, more services, and more value from fewer suppliers and subcontractors. There are integrators in Quebec already, the majority of which are European based, which means that they can rely on and get regular support from their home governments to procure strategic equipment. For the most part, this puts them at a significant advantage compared to our homegrown SMEs, most of which operate in niche markets offering specific services that do not go above a certain level of value-added.
This is where the Canadian government must take a leadership role in developing SME capability and encouraging our talent to grow and stay in Quebec, by responding to the market demands for more added value from the SMEs. In doing so, hopefully we will address two factors: developing SMEs and encouraging the OEMs to look to Canada for higher-value services from aerospace companies rather than shopping themselves abroad.
In the context of developing home-grown markets, Canada does not have a large aerospace land defence budget. The general public does not always appreciate that aerospace is an industry that pays well and fuels the economy. However, the potential returns to the Quebec Aerospace and manufacturing industry are greatly increased through large programs that could involve Industrial Regional Benefits for SMEs. The AQA is eager to participate in several programs including Search and Rescue, Tactical Airlift, and Strategic Airlift programs to name a few. The AQA has been working hard to build bridges in these areas with the potential suppliers of such equipment to secure future work for our OEMs. It is in this way that we may develop markets for our SMEs beyond our own borders in order to alleviate the cycle of dependency of the SMEs on the few Canadian aerospace OEM's that produce products.
It is important that the various governments allocate money specifically to the SME population. When OEMs receive large sums of money for product development, the government should reserve a percentage for SMEs. Doing so would ensure that the work is retained in the country and that the SMEs are given an opportunity to expand. It would also send a clear message to the OEMs that our SMEs are not always playing a waiting role for OEM subcontracts, but that OEM development goes hand in hand with the development of the SMEs and the SME component of the industry.
It is also important that the SMEs be given subsidies or some form of financial aid as it relates to manpower and manpower development. Typically, the SMEs hire young people, and once they've gained their experience, they move on to positions with OEMs or integrator companies that provide higher paying jobs and better benefits. There is definitely a retention problem that needs addressing. With the challenges of the manpower shortage in the Quebec aerospace industry, this only exacerbates the problem.
It is important that committees for raw materials and swap rates, such as hedge funds, be established to allow SME companies to be more competitive. In the case of raw materials, it would allow them to benefit from the same price breaks that the larger organizations, such as Bombardier or Pratt & Whitney Canada, operate at. As it relates to hedge funds, it is important to secure a pool of funds for the protection of fluctuation in exchange rates, particularly with respect to the euro and the U.S. dollar.
It cannot be over-emphasized that all industry players (companies, associations, financing houses, governments, institutes, research centers, chambers of commerce, schools, etc.) must work together in a cohesive fashion to ensure everyone understands the challenges and works together in a defined way. All these elements will help in reducing costs and help the SME population remain competitive in the face of globalization in the aerospace sector.
Finally, on the subject of energy, the AQA regards energy as a determining factor in the development of the Quebec aerospace industry. It is essential for our industries to be able to count on the supply of energy at stable and competitive prices. The AQA therefore endorses the orientation of the Government of Quebec set out in the Quebec government's economic development strategy in terms of energy. The main points of this plan are these: an energy portfolio and production potential in which clean, renewable energy predominates and makes a major contribution to the environmental balance sheet and the limitation of greenhouse gas emissions; available energy at competitive prices; energy innovation and research centres; a modern, efficient network of energy generation; transmission processing and distribution infrastructure; a rapidly growing wind power industry; and a dynamic energy efficiency sector.
The AQA recognizes that these energy advantages have contributed to the development of Quebec's aerospace industry and to its favourable positioning on the international scene. However, with the major changes currently taking place in the world energy sector, the AQA hopes that the aerospace industries will be able to capitalize even more efficiently and effectively on these advantages.
To work towards this goal, the AQA has initialled a partnership agreement with Hydro-Québec on energy efficiency and sustainable industrial development. This agreement, which comes under the corporation's energy efficiency program, is aimed at helping our industries manage energy efficiently.
The AQA supports all initiatives by public and parapublic organizations that aim at maintaining and developing Quebec's energy advantage, which have, to varying degrees, positive economic repercussions on our industrial sector.
Merci beaucoup. Thank you very much.