Industry Committee on April 3rd, 2008

[Carl Marchetto]

First of all, I think the intention here is that we will replicate some of this key capability for specific applications, as you mentioned, because of the concern. That's replicate--not cut off, not separate, not sever, but replicate. This is an important difference, I think.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Once work becomes classified and the U.S. begins doing this work, is there not a danger that instead of designing and creating whole systems, as MDA does today—it doesn't just do pieces, it does entire systems—in fact it could be part of what's called a black box, that it'll just be doing pieces of systems where, because of classified information, the Canadian operation cannot know the totality of the project, so that increasingly, total projects will become part of the U.S. production?

[Carl Marchetto]

First of all, we have to abide by the ITAR regulations and the specificity around sensitive programs. There's no doubt about that. But do I see MDA being minimized by getting into this type of work? Absolutely not.

I think there will be some programs that are going to be unique to the United States, absolutely.

[Peggy Nash, NDP, Parkdale—High Park, ON]

It sounds like Mr. Shroyer thinks that's going to be a huge area of expansion.

[Carl Marchetto]

It will only be 30% of our business. As we move forward—

[Peggy Nash, NDP, Parkdale—High Park, ON]

As I understand it, 86% of ATK's business is military, is defence.

[Carl Marchetto]

In the space business right now, less than 50% is military.

[Peggy Nash, NDP, Parkdale—High Park, ON]

But of overall ATK business, 86% of it is defence, as I understand it.

[Carl Marchetto]

Yes, but the imperative of standing up the space systems group is to move beyond just military work. So it's in commercial—

[Peggy Nash, NDP, Parkdale—High Park, ON]

It seems that may be a real synergy of the military work and the space work.

Do you do any work for the missile defence project?

[Carl Marchetto]

Currently, no.

[Peggy Nash, NDP, Parkdale—High Park, ON]

I thought ATK was involved in the shooting down by the navy of a satellite.

[Carl Marchetto]

One group of ATK Space provided some of the capability to boost the target, yes, but that was over on the launch side.

[Peggy Nash, NDP, Parkdale—High Park, ON]

How do you see complying with Canada's decision not to be part of the military defence shield, and still creating the synergy of these two companies? It seems there may be an overwhelming temptation, in fact, to integrate the strengths of MDA into work that is increasing in the U.S. defence production.

[Steven Cortese]

Ms. Nash, if I could take that one on for a moment, all of that work in the United States is done on a competitive basis by the agencies of the U.S. government that acquire those programs. Any participation by any part of what will be Alliant Techsystems Canada would again be subject to a determination by the Canadian government to make that technology available to compete for that potential application by the United States.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Do you see a growing application of Canadian technology, such as RADARSAT-2, for military purposes?

[Steven Cortese]

I couldn't speculate on that.

[The Chair, Conservative, James Rajotte]

That was your final question.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Nash.

We'll go to Mr. Simard, please.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you very much, Mr. Chair.

I would also like to welcome you to Canada.

My first question is maybe a clarification on Mr. Friedmann's comments with regard to the life of this agreement. It seems to me he told us that once the satellite is no longer useful, which is probably seven to ten years, it's basically shot out of space, or taken out of circulation. Is that correct?

[Carl Marchetto]

Taken out of circulation might be a better answer.

[Raymond Simard, Liberal, Saint Boniface, MB]

Okay, that would be a better term.

The question is this. Canada has invested $445 million in the technology. The intellectual property at that point, after seven years or ten years, would then be transferred over to ATK to do whatever it wants with it. Is that correct?

[Carl Marchetto]

The intellectual property, when this deal goes through, will be ATK Canada.

[Raymond Simard, Liberal, Saint Boniface, MB]

It will belong to ATK immediately?