Industry Committee on March 9th, 2021

[Mike Mueller]

I would echo what Ms. Benoît said.

The first and foremost piece that we need is the sector strategy. It is critically important that those investments be made. When companies look at where to make investments, they're looking around the world and are looking to Canada to see what funding support there is.

We can be world leaders in green aviation. We just need a willing partner in government.

I see that the time is up.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

Now we will go to Mr. Savard-Tremblay.

Mr. Savard-Tremblay, you have the floor for six minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Madam Chair.

Good afternoon to my colleagues, and thanks to all the witnesses.

Ms. Benoît, I'd like to ask you a very simple question. You said that it's important to establish programs that target your industry but that the aerospace industry first has to be recognized as a strategic industry.

Does your industry suffer from the fact that it doesn't enjoy that status?

[Suzanne Benoît]

Thank you for your question.

Yes, I can tell you that we've been suffering from that for about four years. Before that, the federal government clearly recognized the aerospace industry. Aircraft have been flying for 60 to 100 years. We celebrated the industry's 100th anniversary in 2009. So it's well established here. However, I'd say we feel abandoned. Roughly four years ago, the federal government cut the programs intended for aerospace and decided to create an innovation program embracing all sectors.

We no longer enjoy the dynamic we used to have. Sectoral experts thoroughly understood our sector and could influence the terms and conditions of those programs to make our industry competitive around the world. We haven't enjoyed that support for four years now. The federal government has opted for a supercluster-based strategy.

Superclusters work well for artificial intelligence and advanced manufacturing. Our industry in fact uses those technologies. We have to integrate those disruptive technologies, those new ways of doing things. However, if the sector falls behind and is no longer as strong as it was, it'll be hard to integrate all those technologies and to apply them within the industry.

My message is this: we clearly have to support superclusters, the crosscutting technologies, but we also have to keep very strong industrial sectors, which can use those technologies and make Canada more competitive around the world.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

If my understanding is correct, the sector felt abandoned long before COVID-19?

What caused it to be abandoned?

[Suzanne Benoît]

As I said earlier, the federal government made a strategic decision and a massive investment in the supercluster-based strategy. We proposed a solution, the creation of a nationwide aerospace supercluster, but it declined our offer. It therefore chose other superclusters, and our sector has since been experiencing significant problems.

You also have to consider direct foreign investment. The aerospace sector in Quebec currently consists of an enormous number of subsidiaries of multinational and large corporations such as Airbus, Thales, CMC Électronique and STELIA Aerospace. Those businesses have headquarters in other countries around the world, whether in the United States, Europe, France in particular or elsewhere. For the past four years, companies have decided to assign global contracts to their subsidiaries based on commitments by the governments of the countries where they invest.

They assess whether the government is clearly committed to the aerospace sector, whether it provides specific aerospace programs and whether it supports the sector's talent.

The fact that Airbus is established here in Quebec and operates across Canada through its subsidiaries is really an advantage.

How likely are we to be able to show Airbus that we support the aerospace sector through specifically targeted programs? What programs could potentially convince that company to innovate in hybrid propulsion, particularly involving hydrogen. There are four major engine builders in Quebec that might be interested in those projects.

I'd like to convince the federal government to introduce projects that mobilize players and provide structure for the aviation and aerospace sector of tomorrow. This project would help companies here go green and, especially, position Canada as the best place in the world to invest in aerospace and the green economy.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

I'm particularly interested in the green shift you referred to.

You mentioned that France supports its air sector, which, contrary to what people say, is different from the aerospace sector. However, it has set a fleet-greening condition.

You mentioned Airbus, which has what previously was the CSeries and is now the A220, which is one of the most eco-friendly aircraft in the world. If we go green, sales of that excellent aircraft will spike.

[Suzanne Benoît]

Of course.

It's the most popular aircraft now during the COVID-19 pandemic because it's really optimized for size and energy consumption, pollutes less and is more eco-friendly.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

And in-flight air renewal isn't a negligible featured during a pandemic.

[Suzanne Benoît]

That's correct.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Garrison.

You have the floor for six minutes.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Thank you very much, Madam Chair.

I want to start by thanking the witnesses for being here this morning to remind us all of the importance of government assistance for a restart in the aerospace industry to make sure that we don't lose permanently manufacturing jobs or disrupt the supply chain. Madam Benoît pointed out that we might lose the expertise that will allow future development of the industry.

I also want to thank the witnesses for reminding us of the absence of a sector-specific strategy in aerospace and for reminding us that these are jobs all across the country, not just in Montreal or in the GTA but also in British Columbia, where I represent aerospace workers.

I want to turn, though, to what I see as an important factor in the future of aerospace, and that's the largest procurement by a government in aerospace history: the fighter jet procurement. The government is now evaluating the bids and looking at the industrial and technological benefit packages. I think those are important for jobs, obviously, but I think they're also important to maintain Canadian access to and participation in technological development and to our national sovereignty.

I want to start by asking Mr. Mueller about both the ability of Canadian aerospace companies to provide those technological and jobs benefits as part of the fighter package and whether the government has been really consulting—again, given the COVID crisis—on the importance of this procurement for the Canadian aerospace industry.

[Mike Mueller]

Again, being the national industry association representing over 95% of aerospace activity in Canada, we don't usually comment on specifics when it comes to procurements that involve individual member companies and those that are going on. However, generally speaking, we have long been advocating for action to maximize defence procurement and government partnerships that drive industrial growth.

In terms of COVID-19, there is absolutely no doubt that aerospace is a strategically important sector that can play a significant role in contributing to Canada's overall economic recovery. This is a message that we've been stressing in our discussions with government, including calling for the acceleration of planned program spending in both defence and space.

Again, it goes back to the original call that I made in my opening remarks: the need for a sector-specific strategy. That would then encompass every aspect of aerospace, including civil, defence and space, to ensure that benefits to Canadians are absolutely maximized.

You're absolutely right. There are some amazing companies out in British Columbia doing some amazing things.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Certainly, I wasn't asking you to weigh on the side of any bidder. I do, of course, understand that there are companies, as part of your association, that are potentially part of all the bids that are there for fighter jets.

I think you've emphasized just what I want to emphasize: that if the government steps up its requirements for those industrial and technological benefits, it's very important to the future.

I know that one of the bidders has promised a lot of research and development centres, and others have promised more jobs, so I'm also not weighing in on the side of any bidder but on the importance of that work.

I really want to ask the same question to Madam Benoît, given the importance of aerospace in the Montreal area, about the potential benefits of the procurement to the aerospace industry and the ability of Canadian industry to provide what we need for Canadian fighter jet support.

[Suzanne Benoît]

The Canadian government currently enjoys incredible purchasing power with respect to fighter aircraft as a result of these major contracts awarded to foreign corporations. As we all know, Canada unfortunately doesn't have the industrial capacity to manufacture fighter aircraft locally.

However, in view of the Canadian government's purchasing power, which is enormous, we should focus more on industrial and technological impacts and try to wring more added value from the corporations now competing for this major contract.

Here in Canada, we have extraordinary research centres, university chairs in aerospace technology and, it goes without saying, a world-class supply chain. So we have all the assets we need to work with these major foreign corporations to generate more industrial and technological impact, by either establishing a centre of excellence in aerospace-related artificial intelligence or I don't know what in aerospace 4.0 and robotics. These major corporations have this know-how and could transfer their knowledge here through these programs.

I see major potential here. We know how to build an aircraft from A to Z. Few nations are capable of building an aircraft or have the industrial capacity to complete all the phases involved in doing so. I think it all comes down to negotiating, and the government has to establish more requirements regarding impacts for Canada.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Thank you, Madam Chair.

With so little time, I'll yield the floor at this time.

[The Chair, Liberal, Sherry Romanado]

I will say, MP Garrison, that those are very good questions. It brings us back to the last Parliament.

With that, we'll start our second round of questions.

Mr. Généreux, you have the floor for five minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Madam Chair.

Thanks to all the witnesses.

Ms. Benoît, let me ask you a few questions.

You mentioned that you would like to see the emergency wage subsidy extended into 2024-2025. The program itself amounts to approximately $85 billion a year over three or four years.

First, if you had to choose between getting the emergency wage subsidy for three or four years and a strategy that would provide funding representing three or four times $85 billion, which is an enormous amount of money, would you like to see that money under a comprehensive strategy for Canada as a whole rather than as part of an extension of the emergency wage subsidy?

The federal government has also announced an economic recovery effort that will amount to approximately $100 billion. We all want to see a national strategy and support for the aerospace industry, but no witness has discussed any figures thus far. Have you determined any specific amounts?

[Suzanne Benoît]

I'll answer your first question, Mr. Généreux. Do we prefer a wage subsidy or a financial package for a major aerospace project or program? I'll simply say the impact will be greater on our sector than on other manufacturing sectors.

Even after people have been vaccinated and start flying again, it'll take us two more years to get back to where we were before the crisis, in 2019. We have until 2024. Many other manufacturing sectors will resume operations between now and the fall—many have already done so—and the economy will recover. However, we will still lag behind for at least two years. We can't just restart the industry by snapping our fingers. It's a long process, and the cycles are very long in all areas of our sector.

I want to point out to the government that, if no funding is allocated for a structural project focusing on the aerospace industry, it will have to consider extending the wage subsidy for a few more years to prevent the aerospace sector from breaking up. If you're asking me what we would choose, I'd say you can't implement a strategy by snapping your fingers. It'll take 12 months or more to implement an integrated aerospace strategy.

We're telling the government that, in the short term, we have structural innovation projects on the table that will involve companies across Canada, from British Columbia, Quebec, Ontario and the Atlantic provinces. We have a $1.2 billion project over 5 years based on this green shift. That project concerns hybrid propulsion, based on electric or hydrogen. No one has yet found the magic solution. Everyone's working on it, and it involves the entire Canadian supply chain. Commitments have already been made…

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I'm going to stop you there. You said $1.2 billion. The budget hasn't been tabled yet, and we won't know what's in it until April. However, we expect the deficit from last year to amount to $400 billion. We know that many other sectors are making demands. I'm thinking in particular of tourism, which is closely related to your industry. Everyone wants a lot of money.

I hear all your speeches, which are very interesting, but what actual, absolute measures can the government take? You clearly stated in your presentation that the superclusters are doing nothing for the aeronautics industry, since it wasn't selected at the outset. In spite of all that, all the money that has been spent on those superclusters across Canada hasn't generated any impacts for your industry. The government has abandoned you over the past four years. That's the message you're sending us today. The government has also abandoned you over the past year.

I don't think this $1.2 billion over 5 years is a large figure. I think it's a reasonable amount in the circumstances. Is it really the amount you're seeking?

[Suzanne Benoît]

No. Here's a specific example of a project. The federal government invested…

[The Chair, Liberal, Sherry Romanado]

You'll have to be very quick, Mr. Généreux, because we're out of time.

[Suzanne Benoît]

The federal government invested in Ontario's automobile sector. We're telling the government that we have a project that's ready to go. We've estimated project costs over five years. It's a mobilizing, sustainable development project that will help us go green and combat climate change. We're ready. We have a national plan. It's an investment that will mobilize the industry in the short term. However, it's not the amount we're seeking in asking the government for a package…

[The Chair, Liberal, Sherry Romanado]

My apologies, Ms. Benoît.