Industry Committee on March 9th, 2021

[The Chair, Liberal, Sherry Romanado]

Good morning, everyone.

I now call this meeting to order.

Welcome to meeting number 21 of the House of Commons Standing Committee on Industry, Science and Technology.

Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. The proceedings will be made available via the House of Commons website. The webcast will always show the person speaking rather than the entirety of the committee.

To ensure an orderly meeting, I'd like to outline a few rules to follow.

Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice, at the bottom of your screen, of floor, English or French. Please select the language of your preference to receive the translation.

Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself.

I will remind you that all comments by members and witnesses should be addressed through the chair. When you are not speaking, your mike should be on mute.

With regard to the speaking list, the committee clerk and I will do our best to maintain the order of speaking for all members, whether participating virtually or in person.

As is my normal practice, I will hold up a yellow card when you have 30 seconds remaining in your intervention, and I will hold up a red card when your time for questions has expired. Please respect the time limits in order to make sure everyone has an opportunity to ask questions.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on November 5, the committee is meeting today to commence its study on the development and support of the aerospace industry.

I'd like to now welcome our guests.

From Aéro Montréal, we welcome Suzanne Benoît, President and Chief Executive Officer.

From the Aerospace Industries Association of Canada, we have Mike Mueller, interim president and chief executive officer. From the Alberta Aviation Council, we have Kimberley Van Vliet, director of aerospace.

From the International Association of Machinists and Aerospace Workers, we have David Chartrand, Quebec Coordinator.

Finally, from MDA, we have Mike Greenley, chief executive officer.

Each witness group will present for up to six minutes, followed by rounds of questions.

Before we begin the presentations, I want to reiterate to members and to witnesses to please not speak over each other. We would like to make sure that the interpreters are able to do their jobs.

That being said, we will start with Aéro Montréal.

Ms. Benoît, you have the floor for six minutes.

[Suzanne Benoît, President and Chief Executive Officer, Aéro Montréal]

Good morning, Madam Chair, ladies and gentlemen.

I am very pleased to be appearing before you today on behalf of the members of the Quebec aerospace cluster. We are very grateful for this invitation and for the interest you have taken in our industry.

As you know, the global aerospace industry was hit hard by the current crisis. The recent report of Canada's Industry Strategy Council also cites aerospace as one of the sectors most affected by the pandemic across the country and most in need of targeted emergency measures by the federal government.

For a year now, the vast majority of the global air fleet has been grounded as a result of the sharp decline in air traffic caused by the closing of international borders. As a result, thousands of aerospace workers are now unemployed, and hundreds of Canadian businesses are struggling to survive.

However, our industry is developing measures that would allow operations to resume, as many other countries have done and are still doing. Leading executives in our sector have also mobilized as never before and, last May, established the alliance for aerospace recovery to accelerate the industry's emergence from the crisis. The alliance is a strategic committee of Aéro Montréal's board of directors that, in the past few months, has helped to develop a specific action plan that is readily applicable and suited to the industry's needs.

However, the government needs to take a position on it quickly because every day counts. We have already observed a nearly 60% reduction in airlines' new aircraft requirements and do not anticipate a return to previous production levels until 2024-2025.

The global aerospace industry had hit unprecedented heights before the crisis. To meet demand, many airlines took on debt so they could continue expanding at pre-crisis growth rates, acquiring new equipment, investing in automation to increase their productivity and expanding their plants. However, their operations have since declined by as much as 50%.

Many SMEs now have cash flow problems as a result of those capital investments and of the changes made to repayment terms by nearly all decision-makers in recent months because they too are struggling to survive the crisis.

Extending the Canada emergency wage subsidy for our sector until the end of the crisis, which is anticipated in 2024, would help us retain our qualified employees and thus ease pressure on corporate cash flows.

We must block the exodus of sectoral workers to other places around the world where governments are engaged or to other industries less affected by the crisis.

Since the pre-crisis labour shortage will still be intact when the sector recovers, it is therefore vital that we retain workers within our businesses.

The few nations that have an aerospace industry support their strategic sector because they know that exports of high-tech products will create jobs and wealth. That is why they advance strong industrial policies to ensure its growth.

To address the crisis, France has invested $26 billion in its aerospace sector, the United States $80 billion and Germany nearly $10 billion. Here in Canada, we are still waiting for the targeted assistance that is so slow in coming. What will Canada do to support this pillar of our economy?

Aerospace is a strategic and key industry for the economy. On its own, it generates total revenue of $34 billion and contributes $28 billion to Canada's GDP. It represents 235,000 direct, indirect and induced jobs, including more than 43,400 in Quebec, and consists of hundreds of SMEs and large businesses. It invests more than $1.4 billion in research and development every year. The sector exports more than 80% of its production, which contributes to Canada's collective wealth. It is therefore essential that we invest now in order to preserve our industry and halt its decline.

In the 1980s, Canada's aerospace sector was ranked fifth largest in the world. Today, we have fallen to ninth position, and, if nothing is done, we should simply consider taking ourselves out of the running.

Canada has set very clear greenhouse gas emissions targets, and the transformation of the aerospace industry will play a crucial role in meeting those targets.

A large number of initiatives conducted by our businesses across Canada are already in development and include the design of new low-emissions engines based on hybrid, electric and hydrogen propulsion.

All these disruptive technological projects are part of a long-term strategy and require a profound transformation. Here in Canada, we are fortunate to have all the operational and technological assets and skilled talent we need to contribute to a greener recovery.

To support the aerospace industry and ensure its long-term viability, the federal government must become our strategic partner and quickly establish an integrated national aerospace strategy. That strategy, together with competitive funding, would enable Canadian businesses to compete with other countries on an equal footing.

By contributing to efforts to develop the industry, the Canadian government will help our country continue to distinguish itself and to shine on the global stage. The facts are clear: support for our industry is a profitable investment for Canada.

Madam Chair, ladies and gentlemen, thank you in advance for your support and attention.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Ms. Benoît.

Our next witness is Mr. Mueller.

You have the floor for six minutes.

[Mike Mueller, Interim President and Chief Executive Officer, Aerospace Industries Association of Canada]

Thank you, Madam Chair, and good afternoon everyone.

It's a real pleasure to be here on behalf of the Aerospace Industries Association of Canada. It's also great to have Ms. Benoît, from Aéro Montréal, here as we represent mutual members in Quebec. We work very closely together.

We appreciate your interest in our industry and willingness to work with us on the challenges we are facing. We know we are not alone in these challenges. Our entire aerospace ecosystem is feeling the pressure, and is eager for a partnership with government.

Madam Chair and members, we appreciate the enormity of the economic and social challenges this government and you as parliamentarians are facing because of the pandemic.

Our members are part of your communities, and they are doing everything they can to ensure that 235,000 jobs generated by this sector are protected, but it has been a difficult task.

More than 60 years ago, political leadership partnered with industry to build Canada into an aerospace sector that has become a global leader. Those political and business leaders had foresight and determination. We need that same commitment now more than ever as we are grappling with the economic affects of COVID-19.

You may have seen in The Hill Times a simple advertisement, calling on the government to do something that all our international competitors have already done, that is to work with the Canadian industry to establish a long-term, nimble sector strategy.

Many of you are thinking, okay, that should be an easy thing to do, and we agree. However, we have been calling on the government to do just that for more than four years now.

Allow me to provide some background.

Our members represent over 95% of aerospace activity in Canada, covering the civil, defence and space sectors. Aerospace has been a driving contributor to Canadian prosperity for decades, responsible for the generation of nearly 235,000 jobs, and over $28 billion annually to our nation's economy. This hasn't happened by accident. Virtually every aspect of our daily life is touched by the innovation and technology driven by our sector.

Our past political leaders knew investment would yield significant dividends, and their vision proved correct. As a result, over the course of many years, Canada became the fifth largest aerospace industry on the planet, and a true source of pride for Canadians.

However, in recent years that vision, investment and support has been slipping, and so has Canada's global positioning. This decline started before the onset of COVID-19, and now the challenges have been compounded dramatically. As a nation, we're falling further and further behind, and our industry needs support now.

The challenges mean that our skilled workforce, our considerable talent, our jobs, and the good paycheques they provide are all at risk. However, we recognize this, and we started doing the heavy lifting years ago. We laid out the basis for our needed sector strategy in our “Vision 2025” document, and we have a path to once again make Canada a leader in aerospace. It's a path designed to shore up and leverage our strengths, and a path, guided by industry, that laid out a vision for a revitalized aerospace sector that would yield significant results for our national economy.

With the release of our road map, we called on government to join us, and renew Canada's overall commitment to global aerospace leadership. We highlighted priorities and gave detailed recommendations, but to our dismay, concrete action was not taken, and still has not been taken. COVID-19 has now significantly intensified the challenges.

A renewed partnership is essential to protecting the 235,000 highly skilled, well-paying jobs generated by this industry, and located in your ridings right across the country. We can't do it alone. We need partners in Parliament from all parties if we are to overcome the challenges, and leverage the opportunities that lie ahead.

Other countries, our competitors, have realized this. I cannot state this more seriously. Our competitor countries are positioning their sectors for the future to be leaders in this highly competitive field, and the good paycheques that come with it. They are doubling down with new funding partnerships, and we require the same. They know that successful aerospace industries are built on strong, determined government-industry partnerships.

Our question is, what are we waiting for here in Canada?

We are one of the few industries without a strategy for our industry. As a result, opportunities have been and will continue to be lost. We've had a global reputation for cutting-edge innovation, a skilled workforce that is the envy of the world, and a strong supply chain that's second to none.

With our export intensity at over 80%, the aerospace sector, and in particular the space sector, are a natural fit to help drive Canada's economic recovery. There are so many untapped opportunities, including in driving new, high-value jobs, innovation and leadership when it comes to green aviation, a stated priority of the government, but we need a plan and programs to capitalize on them.

As I said, our competitors are taking action. They are factoring this in, and they are implementing industry strategies and support, yet Canada is not.

I'll close off my remarks today by asking you to consider the strategic nature of this industry. Let's ensure that Canadians can continue to take pride in their aerospace industry from coast to coast; that Canada continues its leadership in R and D and in training; and that, most importantly, we protect our skilled workers and good-paying jobs and paycheques across the country. An overwhelming number, I should mention, are small businesses.

Let's not be naive. Let's not lose our talent. Canada's main competitive advantage has been our skilled workforce, and we are losing it due to COVID-19. Let's also acknowledge that aerospace exists in a fierce, globally competitive marketplace. Once our jobs leave, they don't come back.

On behalf of our industry, we urge all of you to continue the tradition and stand by us. Grow this sector for the future and protect its legacy and its jobs.

Thank you for your time.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next presenter is Madam Van Vliet.

You have the floor for six minutes.

[Kimberley Van Vliet, Director of Aerospace, Alberta Aviation Council]

Madam Chair, thank you very much.

Honourable members of the standing committee, thank you for letting me present today.

My name is Kimberley Van Vliet. I am the director of aviation, aerospace and logistics for Invest Alberta. I am also the founder and CEO of WaVv and ConvergX, a strategic consulting company and a global congress that focus on technology transfers across multiple industries, including the aerospace industry.

Today, I am honoured to present to you as the director of aerospace for the Alberta Aviation Council, a catalyst for industry growth and the voice of aviation interests in Alberta. You have heard that the aerospace sector is an umbrella industry. It's an engine that powers economic growth and investment we desperately need for middle-class jobs in communities across Canada to build back better.

We have a unique opportunity. There lies before us a nation-building opportunity on an order of magnitude of the Trans-Canada Highway. The opportunity is the creation of the Canadian centre of excellence for aerospace and aviation research and training, CCEAART, which will attract foreign direct investment to link sustainable and responsible northern development; accelerate Canada’s Arctic sovereignty; and grow Canada’s middle class through advanced manufacturing jobs and training for indigenous peoples, youth and women. This opportunity will also provide job transition and export development opportunities to Canadians from coast to coast to coast.

We have the perfect storm. As Arctic tanker traffic increases and global forces transcend upon the Arctic with repeated nation-state incursions into Canadian waters and airspace, the challenges facing Canada’s Arctic sovereignty are increasing exponentially.

We are also facing post-pandemic economic recovery challenges, with job and business losses never experienced before. Some of our hardest-hit communities are women. RBC reported that women who have lost their jobs during the pandemic will experience increased joblessness for longer than their male counterparts, and this is amplified in indigenous communities.

The economic impacts of COVID and the mounting pressures to tackle climate change are putting tremendous pressures on our industries and added pressure on Canada’s aviation and aerospace industry. Yet, in adversity, there is always opportunity to develop future workforces, put Canadians back to work and develop industries with jobs of tomorrow. There are countless technologies awaiting development that have yet to be imagined, markets waiting to be explored, and Canadians who are ready to build back better.

We have the vision. The CCEAART is a set of shovel-ready, finance-ready projects in Alberta. The Alberta Aviation Council is a supporter of this initiative, which was created by many devoted people, communities and organizations.

The main campus of this centre would be an innovation hub in the Edmonton area, where companies converge to develop new aviation, aerospace and defence technologies with a focus on space and unmanned systems. The centre, a supercluster of development, would accelerate new unmanned system platforms, materials science, propulsion systems, fuels research and ground systems. Canada and Alberta, with our highly skilled and technical workforce, could lead global use of nanotechnologies, AI, and advanced computing in aerospace.

This centre would also be a nexus of aerospace and aviation education for under-represented groups and provide access to Alberta’s world-leading engineering and business talent at a critical time for an area of the country that has been hardest hit by sectoral downturns and a global health pandemic.

Augmenting the campus, the centre would also manage an air corridor—the largest on earth—for research and testing of unmanned systems with continuous beyond visual line of sight operations, from southern Alberta all the way to the Arctic.

The centre’s programs would help to fund and accelerate Alberta’s Arctic gateway infrastructure, and would leverage Alberta’s research institutions that specialize in space systems, ethical fuels, hydrogen fuels, computing science and advanced materials—materials that are critical to the global, low-carbon energy transformation.

Alberta, with its unique position, is home to the Alaska Highway, a critical jumping-off point to the United States, and to its waterways to Hudson Bay. With Edmonton being one of the world’s most northern metropolises, it has the population and infrastructure needed to support northern development.

The centre would also support Canada’s Arctic sovereignty programs, by linking Alberta’s four military bases and the centre’s massive flight corridor, to accelerate development and testing of unmanned Arctic surveillance platforms. All this means jobs for Canadians and technologies that can be exported around the world.

We have policy asks. Alberta can't do it alone. Alberta has made aviation and aerospace a strategic pillar, backed by new initiatives like the new Invest Alberta Corporation, and the newly created Strategic Aviation Advisory Council, which are intended to aid an initiative like this.

An initiative like this requires collaboration from every level of government, including Ottawa. Federally, there are policies that may inhibit the types of FDI needed to develop the centre of excellence.

The SR and ED program eliminated capital expenditures. This has adversely affected advanced manufacturing industries like the automotive and aerospace industries. An aerospace company exporting its products around the world needs capital expenditures. We would like to see these expenditures reinstated.

The industrial and technological benefits policy could be improved to better incentivize foreign direct investments into small Canadian companies.

An aerospace industry, focused, indigenous benefits program is critical.

We need policies but also funding. We need federal leadership. We need you.

In conclusion, the Alberta Aviation Council is proud to present this Canadian nation-building opportunity, the Canadian centre of excellence for aerospace and aviation research and training.

This centre would leverage Alberta's unique assets. The benefits would reach well into the north, helping to advance reconciliation by developing our northern economies and communities responsibly and collaboratively with indigenous communities. Investments today ensure Canadian leadership tomorrow will benefit across our borders and beyond, providing a sustainable and secure future across Canada.

Thank you very much.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Madame Van Vliet.

Mr. Chartrand, you have the floor for six minutes.

[David Chartrand, Quebec Coordinator, International Association of Machinists and Aerospace Workers]

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.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Chartrand.

I now turn the floor over to Mr. Greenley. You have the floor for six minutes.

[Mike Greenley, Chief Executive Officer, MDA]

Thank you for the opportunity to make a presentation to the committee today. As opposed to an association, I'm now speaking as a corporation, on behalf of MDA.

MDA is a homegrown story of innovation and entrepreneurship. In 1969 University of British Columbia professor Dr. John MacDonald and his physics grad Vern Dettwiler founded MacDonald, Dettwiler and Associates. Their goal was simple—to create an advanced technology company where talented engineering graduates could find employment in British Columbia. That humble start was the catalyst for B.C.'s technology industry, which today employs more than 100,000 people in the province.

Today MDA serves the world from our Canadian home and global offices as an international space mission partner and robotics, satellite systems and geo-intelligence pioneer with a 52-year story of firsts on and above the earth. With more than 2,000 employees across Canada, located in multiple provinces, MDA is leading the charge toward viable moon colonies, enhanced earth observation and communication in a hyper-connected world.

MDA's success is a direct result of Canada's early recognition, dating back to the dawn of the space era some 60 years ago, that it needed to harness space to achieve its national needs for telecommunications services and remote sensing of our large land mass and long coastlines. Today Canada's comparative advantage in this sector involves our country's robust space ecosystem, where the industrial and academic community collaborate to develop, build and operate complex space systems, all from within our domestic borders. Beyond manufacturing, the importance of space to Canada's national security, economic prosperity and place in the world cannot be understated. Space also has the ability to inspire the next generation to pursue science, technology, engineering and math studies in their education.

MDA plays an important role as a prime contractor for Canadian government flagship space programs and an anchor company in Canada's space innovation ecosystem, creating, developing and building solutions in Canada, exporting these solutions globally, and reinvesting in future Canadian innovation and intellectual property. Many of MDA's, and Canada's, space technologies are world-renowned. Our Canadarm robotics technology has branded Canada on the world stage, and serves as a source of inspiration and pride for Canadians. Our RADARSAT earth observation satellite technology is a leading source of knowledge about our planet.

MDA is pursuing a number of exciting commercial initiatives, such as our plan to build a commercial earth observation satellite mission as our follow-on to RADARSAT-2, as well as advanced technology work on Telesat's recently announced low-earth orbit satellite broadband network, Telesat Lightspeed. We are also planning to leverage our work on Canadarm3, the Canadian Space Agency's third-generation robotic system for NASA's moon-orbiting space station, into commercial opportunities in the on-orbit satellite servicing and space tourism sectors.

In April 2020 a group of enthusiastic Canadian investors, led by Northern Private Capital, repatriated MDA as a stand-alone, Canadian-headquartered private company. Together we are charting a path for growth as a pure space-play company focusing on the burgeoning space economy. Countries around the world are moving swiftly and decisively to participate in the new space economy, because while space may not be a final frontier, it is the next one. The global space market is worth over $420 billion today and is projected to surpass $1 trillion in the next decade. In 2020, in spite of the pandemic, this sector experienced record investment.

Canada is well positioned to lead in the future if we keep our hand in. Canada and the entire space community are planning to be part of this trillion-dollar economy in a big way. In order to do this, however, we need to have the Government of Canada as a partner. In this global sector, the government's role is paramount—as an investor, owner, regulator and anchor customer.

In terms of the post-pandemic economic recovery, the government should turn this epic challenge into an opportunity to build back better, building on strengths, charting a path to a future that focuses on areas of strength and claims them for this country. Space is one such area. Every dollar invested in space by the Canadian government has a strong multiplier effect, producing roughly twice the impact. Investments in space have an immediate effect. They are rocket fuel for Canada's economic recovery. This sector is poised to play a significant role over the long term as Canada positions itself for future prosperity and a continued high quality of life.

For the continued success of Canada's space sector and to position Canadian companies for the rapidly expanding global space economy, we need three things.

First, we need the Government of Canada to serve as an anchor customer to innovative space companies.

Second, we need continued investment in technology development and demonstration. There are a number of opportunities for Canada to do this for projects that could be active right now.

Third, we need a long-term space plan that outlines the government's planned investments in space as well as a modern regulatory framework. In these times of economic uncertainty, the space sector is a light on the horizon. With investments in space paying strong dividends now and over the long term, the sector is ready to play its part to help our country build back better.

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Now we will start our rounds of questions. We will start with MP Dreeshen.

You have the floor for six minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you, Madam Chair.

Thanks to all of our witnesses.

First of all, I would like to direct my first question to Ms. Van Vliet.

I would like to address the issue about the funding that has gone into regional routes and smaller airports in Alberta and some of the impacts that have taken place because of COVID-19.

First of all, can you tell me what assistance they have had so far?

Is there further assistance that is required?

[Kimberley Van Vliet]

Is there further assistance required? I would say, yes, there is need for further assistance.

As for what has been given, I do not have the exact numbers in front me. I would have to get back to you on that.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

You had some actions that had been presented. The actions included things like insuring that all the airports regardless of the ownership model were eligible for the support programs implemented to combat COVID-19 and suspension of federal excise and carbon taxes on jet fuel and gas.

Can you elaborate on some of those types of issues?

The Alberta Aviation Council signed a letter to the Prime Minister last May where all that was outlined.

Can you expand upon that?

[Kimberley Van Vliet]

I'm sorry, I can't at the moment. I'm not up to speed on that. I apologize.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Okay, that's fine.

Then let me address my next question to Mr. Mueller from Aerospace Industries Association of Canada.

Your organization recently noted, “If the Government partners with our industry, recognizing the strategic importance we bring to the table—215,000 jobs, over $25 billion in annual GDP, $1.4 Billion in R&D—we will be in a position to help Canada overcome its massive deficit.”

I wonder if you could expand on that.

What would be the best way for us to partner?

What steps does the government need to take, Mr. Mueller?

[Mike Mueller]

One of the real opportunities we see with the aerospace sector is exactly your point, Mr. Dreeshen, which is, how can we contribute to the economic recovery?

As I mentioned in my opening remarks, with over 80% of what we produce being export related, there's a real opportunity to do that.

One of the things we're really lacking is that sector-specific strategy. We have all of our international competitors around the world doubling down on innovative and high-paid industries, such as ours in the aerospace and space sector. There's a real opportunity there to help contribute to the economic recovery, but we really do need that sector-specific strategy. We're one of the only countries in the world without that.

On the space side, I would agree with Mr. Greenley, we need that long-term funded space plan in addition. The amount of money you put into the aerospace sector, you get dividends out of it. For example, on wages, we have 25% higher wages than the average manufacturing sector.

The other thing I would also mention that is very key is that in the aerospace sector we are in an absolutely fierce globally competitive marketplace. Once those work packages leave, they don't come back. As companies are looking as to where to invest overall, they are looking for that signal from government that they are there and they are supportive.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you.

I was fortunate enough a couple of years ago to go to the Paris Air Show. I had a chance to take a look at all of the innovation and the companies that are Canadian-based, and I had a chance to talk about our space economy. Again, I was surprised that there were so many companies from western Canada that were associated with this.

Mr. Greenley, could you explain what challenges stand in the way of our space economy to help us with this economic recovery for Canada's aerospace industry?

What actions could the federal government take to accelerate the recovery of the industry?

How should the federal government transition from helping the industry survive to helping it recover?

[Mike Greenley]

As I mentioned, right now in space we have a very strong current of growth. We're seeing the space economy grow from $380 billion to $400 billion a year today to over a trillion dollars in the next few years.

Canada, as the third country into space back 60 years ago after the U.S.S.R. and the United States, has ended up with a strong space industrial base in the country, so we're able to take advantage of that strong growth curve.

The real things we can do to ensure that we're successful in that, as I mentioned, from a government support perspective is to ensure anchor programs. If you look at a program like Telesat's Lightspeed, providing support to that program and ensuring it's a success creates the whole supply chain of opportunity for Canadians.

Our Canadarm3 program at MDA is executing with the Canadian Space Agency to put the next generation of artificial intelligence-based robotics on lunar gateway, the new space station that will orbit the moon. That is another great example of government anchor programs that enable us and then facilitate the entire supply chain of hundreds of companies.

There are a number of additional opportunities to do that moving forward into the future. We've talked about our having a next generation earth observation satellite. We have demonstration 5G communications programs that are being conducted right now.

[The Chair, Liberal, Sherry Romanado]

My apologies, Mr. Greenley. We're over time on that round.

We now go to MP Lambropoulos.

You have the floor for six minutes.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you very much, Madam Chair.

I managed to fix my speaker, so we should be good.

As all the witnesses appearing today have pointed out, the pandemic has had many devastating impacts on the aerospace industry. It is therefore essential that the government find a way to assist the industry. As many of my Quebec colleagues can see, this is a very important industry for Quebec. It creates many excellent jobs, and we should therefore support it.

I have two questions. The first concerns the pandemic more specifically. You have clearly been hit very hard during this time. If you could choose a program that we could implement to assist your industry immediately, what would it be?

What aspects of that program could assist both aerospace businesses and the manufacturing businesses supporting that industry?

Go ahead, Ms. Benoît.

[Suzanne Benoît]

Thank you for your question.

We talk a lot about programs, and we talk a lot about projects as well, but it's important that the federal government start off with a comprehensive strategy for the aerospace industry. As you know, we're taking a major turn toward sustainable development and a green economy, and we're ready. We've already started up projects. We're asking the government to be a strategic partner, as is done in other countries, and to devote a program to aerospace so that, for example, we can acquire expert assistance.

You've heard about France, which has announced an enormous program to launch a hydrogen-powered aircraft by 2035 and has made massive investments for that purpose. It has made a public commitment to do so. The entire planet is aware of it.

We would like the Canadian government, with all the resources and know-how there are, to create a program like that, a mobilizing and structure-building program that involves the players of Canada's aerospace industry from east to west.

We already have an idea for a hybrid, electric or hydrogen propulsion project, involving more than 50 businesses from across Canada that have made a commitment. We have submitted it to the federal government, which has not yet made any commitment. It always seems to group us together under a program called the strategic innovation fund, which includes various sectors. It doesn't seem to be interested in the specific dynamic of the aeronautics sector, whereas that's what really helps a sector achieve local and international success.

In fact, what I'd like to say is that sustainable innovation has to be accelerated by means of the strategic aerospace industry program.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

I think I understand. Thank you very much.

I imagine you're talking about what's needed for the long term.

[Suzanne Benoît]

No, it's what's needed for the very short term. The danger we're facing is that the talent, investors, the large, small and medium-sized businesses and the tier 1 suppliers in the supply chains, among others, may leave the country.

These people have been involved in winning projects in recent years, but everything has stopped now as a result of the crisis. Aircraft aren't flying, and we're operating at 50% or 60% of our usual capacity. So there's a risk that the brains, the major talent, may go to other countries where governments are financially committed to supporting the industry. Some are even going to other industrial sectors less affected by the crisis.

So urgent action is required. Every minute counts. We would have thought the government might have acted last June, but we're in March now and absolutely nothing has been done. I can tell you that the sector has been hit, that it's eroding and that we're losing our talent on a day-to-day basis.

The situation is urgent, and we need to relaunch innovation in sustainable development in the aerospace sector.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you, Ms. Benoît.

Mr. Mueller, I believe you touched on similar points in your presentation. You spoke about having a long-term plan and a strategic partnership between aerospace and the government.

If there were a more specific program based specifically on aerospace, what would you want this program to include?