Thank you, first of all, to all the committee members for giving us the opportunity to present our views. We're the International Association of Machinists and Aerospace Workers. We're the leading union in the aerospace sector and air transportation industry. We represent over 55,000 members across Canada, 22, 000 of whom work in the aviation and aerospace or air transportation sectors.
We represent members of various companies such as Bombardier, Airbus, Boeing, MTU, Magellan, Arnprior Aerospace, Safran Landing Systems, Avcorp, Rolls-Royce, Siemens, L3 and Field Aviation with numerous members across Canada who work in aircraft parts manufacturing, aircraft overhaul and repair. We have workers across Canada and our members proudly complete work for commercial and military purposes. Given the crisis the aerospace industry faces now, but has also experienced over the last several years, we want to bring a two-part solution to the committee's attention.
One is targeted at a short-term solution to address challenges related to the pandemic and the other a long-term solution to build a globally competitive industry.
We also put forward a case study of a funding model that successfully supports aviation and aerospace while building a resilient and competitive industry for the future.
The importance of the aerospace sector, as Mike and Suzanne have already said, is that it's a large contributor to the Canadian economy, some $28 billion annually. It is also export intensive as an industry as 93% of aerospace manufacturing firms were exporters, which is 44% higher than the manufacturing average. The industry is also a source of well-paid, stable, unionized jobs that support middle-class Canadians.
In the Canadian labour market, the aerospace industry employs more workers than the auto industry by a large margin, 208,000 people versus 123,000 workers or 60% more workers than the auto industry.
Yet, to date, the industry has seen little direct support as a whole. Unlike its competitors, Canada relies much more on aerospace as a source of revenue yet in comparison to its competitors it has been doing the least to support this nationally important industry. Not only does the industry generate significant value, Canada also ranks as the second most attractive country to invest in aerospace, meaning the industry also attracts businesses and foreign investment.
Aerospace manufacturing is the most intensive in research and development, which is six times higher than the manufacturing average. Research and development in the industry enable the work of several federal departments and have spillover effects on other industries and applications in everyday life.
In the short term, looking at financial aid for the industry, the challenge for many companies right now is that funding is tied to having a contract, which is a challenge given the situation in the aviation sector. Many airlines have put contracts on hold or cancelled, leaving aerospace companies in a precarious situation. Loans and grants need to be accessible to companies that support smaller business, SMEs, in the supply chain, ensuring the viability of the Canadian supply chain, which is well established. Funds must also be used for operations and bolstering production and must not be used for corporate bonuses, share buybacks or anything else that is not related to maintain production and workers on the job.
This is also an opportunity to tie loans and grants to incentives for the industry to move in the direction of green technologies, which are proving to be the future of aviation and aerospace.
The aerospace innovation plan is meant to provide a direct form of investment to the industry. Research has shown that government spending, much like in other areas of the economy, stimulates corporate spending in the industry on a ratio of 1:4. Through this fund the government could also encourage the shift to green technologies, ensuring contracts, both commercial and military, are available for Canadian companies, OEMs and SMEs.
A bank premised on EXIM, as in the United States, enables access to interest-free loans for research and development, investment in new technologies, ensuring the vitality and competitiveness of these industries. The bank would also offer tax credits and deductions for R and D, which is important given how research intensive the subsector is. EXIM's direct funding ensures working capital guarantees, export credit insurance and direct loans at competitive rates to foreign buyers who make purchases over $10 million. Bank financing could also be tied to employers who provide on-the-job training, skills upgrading and training for new technologies.
An aid package model like in France where funding to Air France, Airbus and major French parts suppliers through direct government investment subsidies, loans and guarantees includes funding for smaller suppliers in the supply chain and small to medium-sized businesses through a special fund jointly financed by the government, Airbus and other big manufacturers.
France's public investment bank, Bpifrance, will provide a total of around 500 million euros in loans to Airbus, Safran, Dassault Aviation, a military and commercial aircraft manufacturer, and Thales.
To ensure its industry's viability, France's defence and interior departments will increase orders for 600 million euros worth of Airbus aircraft.
A critical part of funding is that the plan includes a long-term vision for the industry, enhancing the country's future competitiveness by requiring companies to shift investments to low-emission aircraft powered by electricity and hydrogen. The goal is produce carbon-neutral aircraft by 2035.
When we look at long-term industrial policy development, we recommend a national policy to address the fragmentation of the industry and encourage coordination between the provincial and federal jurisdiction and between regional clusters that operate independently of each other. The policy would have to include a labour strategy to address skilled labour shortages, which have been exacerbated by the pandemic due to layoffs that mostly affect junior employees while pushing more senior workers into early retirement.
In terms of training and education, we recommend earmarked money from the federal level to provinces designated for training programs, apprenticeship and Red Seal programs.
We recommend a cluster policy, based on regional innovation systems, which would include support for academic and industrial research co-operation.
On procurement, we recommend including small to medium-sized enterprises by ensuring they are able to win contracts. This would also apply to procurement for military contracts, which has been essential for aerospace and workers companies in Canada, such as MTU in British Columbia.
Thank you.