Industry Committee on March 25th, 2021

[The Chair, Liberal, Sherry Romanado]

Good morning everyone. I now call the meeting to order.

Welcome to meeting number 25 of the House of Commons Standing Committee on Industry, Science and Technology.

Today's meeting is taking place in a hybrid format, pursuant 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 choice.

For members participating in person, proceed as you usually would when the whole committee is meeting in person in a committee room. Keep in mind the directives from the Board of Internal Economy regarding masking and health protocols.

Before speaking, please wait until I recognize you by name. If you are on the Zoom video conference, please click on the microphone icon to unmute yourself. For those in the room, you're microphone will be controlled as it normally is by the proceedings and verification officer.

A reminder that all comments by members and witnesses should be addressed through the chair. When you are not speaking, please make sure your microphone is off.

With regard to the speaking list, the committee clerk and I will maintain the order of speaking for all members whenever they are participating virtually or in person. For the sake of the interpreters, I ask you that you please do not speak over each other so that the interpreters can do their work.

If you do not have a headset with a boom and you are using a microphone that is on the wire, please make sure the wire is close to your mouth when you are speaking.

The most important rule is this. As is my normal practice, I will hold up a yellow card when you have 30 seconds left in your intervention. I will hold up a red card when your time for questions has expired. As we have a very full agenda today, I ask that you respect the cards and keep an eye out for them so that I don't cut you off.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on November 5, 2020, the committee is meeting today to continue its study on the development and support of the aerospace industry.

I'd like to now welcome our witnesses.

With us today from AirShare, Inc. we have Rick Whittaker, chief executive officer.

From Bell Textron Canada Ltd, we have Steeve Lavoie, president.

We also welcome Mr. Marc Bigaouette, director, CH-146 Griffon Fleet.

From the Canadian Air Traffic Control Association, we have Doug Best, president and CEO.

From the Canadian Association of Defence and Security Industries, we have Christyn Cianfarani, president and chief executive officer.

We also have with us Mr. Gilles Labbé, executive chairman of the board of directors of Héroux-Devtek.

From Nav Canada, we have Ray Bohn, president and CEO; Jonathan Bagg, director, stakeholder and industry relations; and Ben Girard, vice-president and chief of operations.

From NorthStar Earth & Space, we have Mr. Stewart Bain, chief executive officer and co-founder.

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

With that, we will begin with AirShare Inc. and Mr. Whittaker.

You have the floor for five minutes, sir.

[Rick Whittaker, Chief Executive Officer, AirShare Inc]

Thank you, Chairperson.

Thank you to the committee for inviting me to participate in this important study on the aerospace sector. It truly is a privilege to share my perspectives as an aerospace manufacturer and as a proud Canadian.

By way of background, I am the co-founder and CEO of AirShare, Inc., a Canadian company headquartered here in Ottawa that makes safe and cost-effective systems to help manage airspace and small aerial drones as they become increasingly part of our daily lives. Our systems are used in aerospace, commercial and defence applications.

Our company has developed an airborne rocket-powered robot that is used to safely intercept drones that may have gone off course, or which may have nefarious intent.

Our Prime Minister helped coin our tagline in a meeting we had in 2019, as we described our interceptor as the world's friendliest guided missile, something that could only have originated in Canada. So I feel the study and this undertaking that this committee is engaging in is vitally important to Canada and near and dear to my heart.

The input to the study I share today comes from the perspective of a small innovative manufacturer of equipment in the aerospace sector.

It will come as no surprise that the aerospace sector has been hit particularly hard by the pandemic, from reductions in air travel to disruptions in global supply chains. For our segment of the industry, drones and drone safety, there are no concerts, no large public gatherings, tournaments or events that would typically use drones and require drone safety systems as a routine business.

Suppliers of specialized components used in these systems have reduced their production, increased their cost, or have ceased operations altogether. The impact has been broad-reaching throughout the sector.

As a small company, we have had to react quickly, first by working with our key suppliers to develop alternative approaches to maintain product continuity. We then focused on the segments of the customer base that were still in business, and finally we developed new technology and capabilities for a post-pandemic reality.

We were grateful for the support we have received from the Canadian government thus far, utilizing the work-sharing program, for instance for our production staff, while our company funded the supplier, customer and technology changes that were necessary to our ongoing survival.

In terms of recovery, the pandemic has created a great upheaval on a scale we have never seen. While it's hard to see a silver lining, this does present an opportunity for Canada's aerospace sector, and in particular for autonomous aerial vehicles and government to work together on recovering and reinventing.

There are many measures that this committee may wish to consider, however, I'll just mention two in my opening remarks.

The first one is innovation. In a changing world, supporting innovation is even more critical. I have been honoured to see Canada's innovation system grow and adapt over the past 25 years.

We are now seeing a spectrum of support for innovation, starting from the lab and all the way up to market entry. There is lots to build on, and now more than ever, a lot more to do.

Countries like the U.S. have created a system that uses government needs as the market pull. We are now seeing that emerging in Canada with programs like Innovative Solutions Canada and IDEaS.

The U.S. innovation system, and in particular the small business innovation research program, SBIR, focuses heavily on government as the end-user and even funds early-stage projects intended to secure our government user as a first customer, creating memoranda of understanding, matching funding with the private sector investors, leveraging departmental funding and importantly, creating a pathway to large-scale procurement, up to $250 million using other transaction authorities. This program provides continuity with multi-year, multi-stage involvement as the technology, company and customers progress. It would seem that some of these techniques could be applied to Canada's aerospace sector.

The second point is regulation. Government can play a big role by creating sandboxes for the aerospace development and testing that do not require complex regulatory approvals that are typically associated with commercial products' introduction. It goes hand in hand with the innovation emphasis I mentioned previously.

For Canada's aerospace sector to recover, it must reinvent.

From the perspective of our autonomous aerial vehicles manufacturing, this means testing new approaches safely and efficiently, and revisiting regulations in this regard would be most beneficial. We struggled with this aspect, having to fly across the country to get a few days of testing at an approved test site. We eventually purchased our own private test range, which is not sustainable for this sector, and which could have been solved with some regulatory innovation.

I could touch on many more topics, however I'll stop here with my gratitude to the committee for allowing me the time to share my passion for this sector.

Thank you.

[The Chair, Liberal, Sherry Romanado]

That's perfect timing, Mr. Whittaker. You're ready for QP.

Our next round goes to Bell Textron. You have the floor for five minutes.

[Steeve Lavoie, President, Bell Textron Canada Limited]

Madam Chair, members of the committee, on behalf of Bell Textron Canada, a leader in vertical takeoff technology and Canada's only helicopter manufacturer, thank you for hosting us today.

I am pleased to share with you our vision for creating opportunities for our industry and well-paid jobs for women and men across the country.

In Canada, the Bell journey began almost 60 years ago with the sale of the first commercial helicopter. In 1979, Bell left its first industrial footprint in Canada with the establishment of its Canadian service centre in Calgary, which, among other things, supplies and supports the Department of National Defence's largest fleet of aircraft.

This year, Bell celebrates the 35th anniversary of the establishment of our integrated commercial helicopter manufacturing centre in Mirabel, Quebec, where we have built more than 5,200 aircraft. To this day, our Mirabel facility is the only one in Canada where commercial helicopters are designed, developed, assembled, tested and certified. This means our facility has a key industrial capability unique in Canada.

Our successes are built on a highly skilled workforce and a supply chain of 550 suppliers from the Atlantic provinces to British Columbia. Our support services are also recognized as the best in the world. Bell directly employs more than 1,300 women and men in Canada and supports more than 6,200 other jobs across the country. Last year, Bell contributed nearly $800 million to the gross domestic product and invested more than $44 million in research and development, working with universities, colleges, technical schools and research centres across the country.

Since the beginning of this study, witnesses have reminded you of the importance of our industry and of having a focused and integrated industrial strategy, as well as a skilled workforce and government organizations such as the Canadian Commercial Corporation, or CCC, Export Development Canada, or EDC, the National Research Council, or NRC, Innovation, Science and Economic Development Canada, Transport Canada and the Trade Commissioner Service. Indeed, Canada must act quickly and decisively if it wishes to continue to compete against its international competitors.

With these important recommendations in mind, please remember that Canada needs a national procurement strategy to support its aerospace sector, which is currently lacking. The recommendations of the Emerson and Jenkins reports have never been acted upon. The Government of Canada must make domestic procurement a priority if it is to meet its needs for national security and defence products and services. Canada must implement a Canadian content-based procurement strategy and support its industrial capacity as all other countries do. This committee is looking for solutions to support our industry. We believe this is one and that Canada could implement it now, given the impending Air Force flight training program, which is being selected.

I am joined today by Mr. Bigaouette, Bell's director of the Canadian Armed Forces' Griffon helicopter fleet maintenance program. Prior to joining our company, Mr. Bigaouette served 37 years in our Canadian Armed Forces, including positions as project director for a major acquisition, commander of the Canadian Air Force helicopter team in Afghanistan, director of pilot training for the North Atlantic Treaty Organization, or NATO, in Canada, and most recently, Air Force advisor at the Canadian High Commission in the United Kingdom in London. From 2013 to 2017, he closely observed how European countries, including the United Kingdom, prioritize their domestic industry by focusing on key industrial capacity for defence and security procurement. Mr. Bigaouette is able to explain and illustrate how a close ally of Canada's is able to combine the prosperity side with the defence and security sides, by transposing an $8-$12-billion Canadian procurement project, the Flying Training project.

In closing, I would add that the aerospace industry needs a focused strategy to keep this industrial capability alive, as well as an acquisition policy, like Buy Canadian.

Thank you for your attention.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Lavoie.

The next presentation is by the Canadian Air Traffic Control Association.

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

[Doug Best, President and Chief Executive Officer, Canadian Air Traffic Control Association]

Thank you, Madam Chair and honourable members. On behalf of the Canadian Air Traffic Control Association, we truly appreciate the invitation and opportunity to appear before your committee this morning.

CATCA is a Unifor local trade union representing now less than 1,800 air traffic controllers in Canada. Our number one mission is aviation safety and ensuring responsible working conditions for our members.

Before the pandemic hit, our members were responsible for the safety of three million flights flights per year and more than 162 million passengers who arrived, departed and overflew Canada.

This morning I want to bring to the committee's attention some significant information and very alarming statistics regarding the safety and economic recovery for the industry.

Pre-pandemic, we were short-staffed by 13%. Last year, through early retirement incentives, Nav Canada shed 94 more air traffic controllers. Today we are 18% short-staffed to our pre-pandemic numbers. To make things even worse, an additional 104 controllers have received either surplus letters or letters of vulnerability, which, if executed, will leave us more than 20% short-staffed based on pre-pandemic numbers.

In 2019 the transport minister recognized that safety was being compromised and ordered Nav Canada to overhaul its fatigue risk management system, mainly due to short-staffing and staffing policies that included almost $100 million in overtime. On September 22 of last year, Nav Canada terminated 170 air traffic controller trainees. Today we have a handful in our system—a system that takes up to, and sometimes more than, two years to train an air traffic controller at a significant cost.

We understand that Nav Canada has seen a swift drop in revenue due to the pandemic and it needs to find efficiencies. However, this cannot come at the cost of safety for the air transportation industry. As you may have seen in the media earlier today, our union and our members have raised critical concerns over air navigation safety. We commissioned a survey of our members, and 1,400 of the almost 1,800 air navigation safety experts responded. That's an astounding 78%.

Just over 40% of controllers said the looming cuts pose a high risk to public safety, while an additional 40% indicated there would be a moderate safety risk if the cuts go ahead. Notably, only 2% of those surveyed said there is no safety risk. Before the decline in air traffic as a result of the pandemic, more than 71% were concerned or very concerned about staffing, fatigue and the use of overtime by Nav Canada. A full 92% of air traffic controllers surveyed said that Nav Canada's workforce adjustments, including layoff notices, have resulted in increased stress levels—this to one of the already most stressful jobs in the world. Finally, only little more than 6% of those surveyed said they trust Nav Canada management to put public safety first when making decisions about closures and cuts, while more than 83% of controllers said they do not trust management to put public safety first. This is simply staggering. It is a clear warning that there is serious problem.

I've provided you with staffing numbers and painted quite a bleak picture when it comes to safety. We have not discussed recovery. Decisions to reduce staffing in a system that was already understaffed will have an impact on service delivery as well, which will also have an impact on the economic recovery. Reducing staff numbers and control centres and closing towers will necessarily create significant delays for airlines and other customers by creating bottlenecks in the navigation system. The company is weakening the ability of the system to respond to demand, even at present levels. By laying off nearly all the trainees, the company has also damaged the ability of the navigation system to provide service in the future, as there are no additional people to meet the rising traffic demands during recovery and no replacement for current controllers who will retire.

Delayed service, restrictions and lost capacity will have a direct negative impact on the overall economic recovery, given the central role that air transportation and the aerospace industry play in Canada for both passengers and cargo. Nav Canada is making decisions that will seriously impair the delivery of service for years to come in response to short-term financial pressures.

While Nav Canada is technically a private entity, it's in a unique position in that they are the only civil air navigation service provider in Canada. Their monopoly status allows them to raise fees, utilize government programs and petition the government for additional financial support to ultimately promote a sector recovery. We're asking this committee for a recommendation to government to provide Nav Canada with whatever financial support is required in the form of a grant to help them weather this temporary downturn.

In addition, a moratorium on layoffs is required. This company cannot afford to lose highly skilled professionals to other service providers around the world that are in high demand. We all need to reassure the travelling public that their safety will not be compromised, and know that we will be there as pent-up travel demand increases.

With fewer air traffic controllers and other industry professionals, any economic recovery will be jeopardized.

Thank you. I would be happy to answer any questions.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Best.

We now go to CADSI.

You have the floor, Christyn, for five minutes.

[Christyn Cianfarani, President and Chief Executive Officer, Canadian Association of Defence and Security Industries]

Good morning.

My name is Christyn Cianfarani, president and CEO of the Canadian Association of Defence and Security Industries, CADSI for short.

Our association represents several hundred firms across Canada that produce defence and security-related goods and services for both domestic and foreign markets. We have included the statistics for our sector on a supplemental handout.

A significant fraction of our membership is in the military and defence aerospace sector. For example, our members work in aircraft fabrication, structures and components; and military aircraft maintenance, repair and overhaul; and simulation systems.

As you’ve heard from other witnesses, the Canadian aerospace industry is going through a difficult time. This is particularly the case on the commercial aviation side. The defence side of Canadian aerospace has held up somewhat better through the pandemic. Defence departments around the world, including Canada’s, have not curtailed capital and maintenance spending significantly, at least not yet.

I have one key message that I would like to leave you with today, namely, that there is an important opportunity in front of us to provide further support to this industry through the defence procurement function of government. This would constitute both smart procurement and, as I have referred to it elsewhere, cheap stimulus to help Canada’s economy rebound.

As you know, four years ago the government published a new defence policy titled “Strong, Secure, Engaged”, SSE. This policy committed to historically large budget increases to DND over 20 years, a significant fraction of which is devoted to recapitalization of the forces.

The government committed to growing the defence budget from $18.9 billion to $32.7 billion over 10 years, an increase of over 70%. This is not a trivial sum of money.

These funds were booked into the fiscal framework of the government pre-pandemic, and therefore they have no impact on the deficit. Let me be abundantly clear here: contrary to what you may have heard from other witnesses, this is not an ask for new money.

In conjunction with SSE, the government also published a document called the “Defence Capabilities Blueprint”. A cursory examination of this document reveals at least 40 aerospace procurements of various sizes and scopes, with cost estimates and timelines provided.

We all know about the future fighter capability project, but this is by no means the only significant project the Royal Canadian Air Force has in its plans. I’ll give you a few more examples. There are also the Canadian multi-mission aircraft, at over $5 billion; future fighter lead-in training, at $1 billion to $5 billion; and the CH-149 Cormorant mid-life upgrade, at $1 billion to $5 billion, and I could go on. There are planned procurements involving new equipment; upgrades to existing equipment, operations and maintenance; and in-service support. Canada’s aerospace industry can and should play a major role in these acquisitions because it has the capabilities to do so.

As for recommendations for your consideration, we proposed to the government months ago in CADSI’s four-part plan, “Partners in Economic Restart”, that defence procurements, in which Canadian industry has demonstrated capability, should be prioritized and pulled forward in the acquisition schedule.

The government should systematically and aggressively use its existing policy instruments—such as the industrial and technological benefits program and value propositions, the Canadian content policy, national security exceptions, mandatory carve-outs and so on—to drive Canadian defence industry growth and jobs and, more specifically for your purposes, aerospace growth and jobs.

Critics of this approach will label it as protectionist. So be it, though I would point out that defence trade is exempt from most international trade agreements, and that all of our NATO allies are far more aggressive in favouring their domestic defence industries.

We’re proposing what I’ve called smart procurement combined with cheap stimulus as a way to drive employment and investment in the defence aerospace business with projects that were already on the government’s books and budgeted for pre-COVID.

It's a no-brainer. It's one key way to help the struggling Canadian defence aerospace industry and the aerospace industry.

Thank you. I look forward to your questions.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We now turn to the representative from Héroux-Devtek.

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

[Gilles Labbé, Executive Chairman of the Board, Héroux-Devtek Inc.]

Thank you, Madam Chair.

Thank you for letting me speak this morning about Héroux-Devtek, and also my view on what the government can do to help our aerospace industry. With the pandemic, of course, things are very difficult.

First, let me say a few words on Héroux-Devtek. We're a public company. We're traded on the Toronto exchange. We have close to 2,000 people around the world. We have factories in Quebec, Ontario, the States, Spain and the United Kingdom. Let me just say a few words about me and my team.

I've been in this business for 35 years. I have seen all sorts of things in this business. I acquired Héroux back in 1985. As a very small business, I did this with a partner. At that time Héroux was doing about $10 million to $12 million a year. Today, we're number three in the world in the landing-gear business. We do $600 million in business. I will point out a few things later on. I think it's important to know that, because there was a partnership with the Government of Canada, it did help Héroux to become what we are today—not only Héroux, but many other companies in the aerospace business in Canada.

You met with the AIAC board leader and also Aéro Montréal. As you may know, I'm on the board of AIAC, of course. I've been chairman of Aéro Montréal—actually, I was one of the founders of Aéro Montréal.

Our industry in Canada is coast to coast. It's from the west to the east, so it's not only a Quebec industry, it's also really an industry across Canada. Our industry is the third-largest exporter of Canada, and we export “brain”—that's what we do for a living. We have 235,000 people. We contribute $28 billion of revenue a year to Canada. The people we employ are very well paid, over the average by about 10%.

I want to speak about the partnership that did exist with the Government of Canada for a long time. As you may know, there was the DIPP back then. It was replaced by the TPC, then this was replaced by SADI. These programs had a big impact on our industry over the last 40 years.

Take an example of Héroux-Devtek. Back in 1985 it was $10 million to $12 million, and we were at the time mainly repairing C-130 landing gear for our Canadian Air Force. We were building the CL-215 for Canadair—the water bomber—and the nose landing gear for the Twin Otter.

Today, I will just mention only airplanes that we design, build and repair in the fleet in Canada: the C-130 Hercules, the Chinook, the Cormorant, the Kingfisher, the Hawk, the Twin Otter, the Aurora and the Cyclone. None of this was there when I purchased the business. I can go on and on like this, because we have also a commercial program such as the 777. We build the 777 for Boeing directly.

On the competition for the fighter—guess what?—we build the F-18 landing gear and the E/F main gear. We build complete Gripen landing gear for Saab, and we have many products on the F-35.

My point is that that partnership has been broken. There is no more DIPP, there is no more TPC and there's no more SADI program. I think if we really want to help the aerospace industry in a tough time we need to go back to basics. What we need is very simple. We need a sectorial program for the aerospace like we had in the past. If we have that, then we can develop technology—green technology, of course—more and more. We know that our planes have to be green, and we need to develop some technology to reduce the amount of CO2 and all of this, and design products that will meet climate change.

I think that's the point. The point is very simple: You have helped us to build our industry. Look at the impact of these programs on my business going from $12 million to $600 million and more, so that's my message.

Thank you all for your time.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Labbé.

We'll now turn to Nav Canada.

You have the floor for five minutes.

[Ray Bohn, President and Chief Executive Officer, Nav Canada]

Good morning. I'd like to start by thanking the chair, vice-chairs and members of the Standing Committee on Industry, Science and Technology for the invitation to appear here today. I am Ray Bohn, president and CEO of Nav Canada. I am joined today by Ben Girard, VP and chief of operations, and Jonathan Bagg, director, stakeholder and industry relations.

Nav Canada is responsible for the safe and efficient movement of aircraft in all Canadian-controlled airspace. Nav Canada's safety mandate is achieved primarily through the delivery of air traffic control and flight information services; the maintenance, update and publishing of aeronautical information products; the reliable provision of communications, navigation and surveillance infrastructure; and the 24/7 availability of advanced air traffic management systems.

We are responsible for more than 18 million square kilometres of airspace from coast to coast to coast and reaching halfway across the North Atlantic. Thanks to the work of our more than 4,400 employees operating out of more than 100 operational facilities throughout the country, Canada boasts one of the best air traffic management safety records in the world.

Since Nav Canada assumed responsibility for the Canadian air navigation system in 1996, we have invested more than $2.7 billion to modernize our systems and our infrastructure to enhance service delivery. Many of the air traffic systems we use today are deployed in-house by our skilled and innovative workforce and deployed to facilities across the country as well as internationally.

We are a founding partner of Aireon, which has deployed space-based surveillance on a constellation of 60 satellites to provide global surveillance coverage and thus the ability to track flights anywhere in the world. This satellite-based technology provides radar-like coverage to places where the deployment of ground infrastructure, such as over the oceans or mountainous terrain, was not previously possible. Today it is being used over the North Atlantic and domestically to enable more direct routings, resulting in enhanced situational awareness, significant fuel savings for operators and reductions of greenhouse gas emissions.

We have also invested in Ottawa-based Searidge Technologies and their intelligent aviation camera technology that can fill line-of-sight gaps and is now featured in remote towers in several countries.

The result of our investments and our employees' efforts is an air navigation service that is a global leader in operational safety and efficiency, an air navigation service that has been able to both develop and integrate emerging technologies and an air navigation service that has helped reduce the environmental impacts of the industry.

Even today, as we weather the severe consequences that COVID-19 has brought on the industry, we have an eye to the future. This is because many of the platforms we will be using in the near future are precisely those that will provide for increased resiliency and sustainability, while allowing us to deploy services more flexibly and cost effectively in response to changes in demand and regional needs. For example, digital hub concepts will greatly reduce the costs of delivering the same or an enhanced level of service to our customers and communities and support Nav Canada in ensuring equal or better safety.

Financial assistance and investment from government for the industry as a whole, and for aviation infrastructure in particular, will certainly assist the aviation sector in its recovery and its future resiliency and also support a broader economic recovery.

Nav Canada is also supportive of policies that support a safe restart. A responsible recovery of traffic will have the greatest positive effect on the entire supply chain and limit future burden on airlines and the air travellers they serve. Nav Canada is currently working to ensure that it has the right workforce providing the right services in the right places to position the sector well for recovery. Every decision we make as an organization is made first in the context of safety. As part of the process for change, we have been listening to all stakeholders that directly and indirectly utilize our services and that pay our service charges. We're very encouraged by the light at the end of the tunnel made possible by modern science through vaccination.

We also know that, despite a potential surge in demand for air travel due to pent-up demand, a full recovery to 2019 air traffic levels is likely going to take several years to achieve. As a result, it is critical that the industry and government work together in lockstep to chart a course to the sector's recovery but also for Canada's position in the global marketplace now and in the future.

In this context, Nav Canada appreciates the opportunity to share our views as the committee undertakes its important study on the development and support of the aerospace industry.

Thank you, Madam Chair, and I welcome questions from members of the committee.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our last presentation is by NorthStar Earth and Space.

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

[Stewart Bain, Chief Executive Officer and Co-Founder , NorthStar Earth and Space]

Thank you, Madam Chair.

Honourable committee members, my name is Stewart Bain. I am the chief executive officer and co-founder of Montreal-based NorthStar Earth and Space.

I will be speaking to you today about a topic that may at first seem remote from the daily lives of Canadians, but is critical to our telecommunications, financial transactions, weather forecasting, automotive positioning, national security and our ability to combat climate change: protecting our space environment.

At a time of unprecedented climate emergency on earth, our planet's orbit is also in a precarious state, and traffic must be managed quickly and sustainably to avoid collisions that threaten the satellites providing the critical services I just mentioned.

Space is essential to our planet and our economy.

This global challenge must be met, and it presents a unique opportunity for Canada and its space industry. Our innovative company is growing rapidly and is well positioned to compete in this new space economy. Our 40 employees, soon to be a few hundred, are developing a state-of-the-art infrastructure that will produce information services supporting the sustainable development of our terrestrial and space environment.

In a context where an unprecedented number of satellites are coming to occupy orbital space, NorthStar offers for the first time, from its headquarters in Montreal, the most complete and accurate space object commercial tracking service. This positions Canada to become the backbone of the global space traffic management system as space traffic grows exponentially.

To put this in perspective, at the beginning of this decade there were just over 2,300 operational satellites orbiting the earth. By the end of this decade there will be over 100,000 operational satellites flying amongst millions of fragments of debris.

NASA recently reported in January of this year that the most critical feature needed to preserve the near-space environment is accurate tracking of space objects. With the support of the governments of Quebec and Canada, NorthStar has already demonstrated world-leading technology here in Montreal to address this concern. We must seize this economic opportunity to put Canadian innovation to work to protect our satellites, our astronauts, and to keep space safe and sustainable for everyone.

We encourage the committee to view this situation as an opportunity to safeguard the space environment and ensure the competitiveness of our economy by creating Canadian jobs with a promising future.

NorthStar submits the following recommendation to the committee: make sustainable space development a priority, including building on the best space traffic management services developed here in Canada. This will support all satellite operators in Canada and make Canada a world leader in sustainable space governance, a challenge being addressed by many countries as well as the United Nations.

In this spirit, our recommendation also echoes the report of the Industry Strategy Council of Canada, led by Ms. Monique Leroux, which recommends that Canada set a goal of being the world leader in environmental, social and governance fields, or ESG. The Industry Strategy Council of Canada states that: “When the government is the first buyer of innovative technologies [...], it enables our firms to scale more quickly, create more jobs and adopt an export orientation.” By adopting this strategic vision, we can put homegrown innovation to work for our environmental imperatives and greener, more competitive, and more sustainable economic growth.

As the father of six children, I'm reminded every day of the responsibility we all share to provide hope and ensure a sustainable environment for all future generations to come.

At the dawn of a green and sustainable economic recovery, Canada has an opportunity to make an impact on saving space and preserving our global environment. Given the tools at our disposal, it is our duty to act and seize a unique opportunity for our country to generate greener growth that will create the jobs of tomorrow.

Thank you for your attention.

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We'll now start our round of questions.

In our first round of questions of six minutes, we will start with MP Dreeshen.

You have the floor for six minutes.

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

Thank you very much, Madam Chair.

Certainly, special thanks to all of the witnesses for joining us today. There are just so many interesting discussions that have been presented here.

I was fortunate enough to go to the Paris Air Show back in 2017 and I got a really good sense of the types of small businesses that we have here in Canada in the aerospace industry; that certainly opened up my eyes. When I was on public accounts, I had a look at the military procurement side of things as we discussed the fighter jet analysis and issues that many of the companies we've seen over the last few days would have had opportunities to be part of.

There are a lot of things that are there and I think a lot of Canadians don't understand just how the aerospace industry is incorporated into the fabric of this country.

My first question, though, I would like to address to Bell Textron Canada, as I know you have a presence in Calgary. I'm just wondering what the impact of government measures and the pandemic has been on your Calgary operations. I understand that facility is primarily responsible for sourcing materials for several Canadian Forces bases here in Canada and overseas. Have there been substantial reductions or staff layoffs? What is the general state for Bell Textron Canada in general?

[Marc Bigaouette, Director, CH-146 Griffon Fleet, Bell Textron Canada Limited]

MP Dreeshen, I would like to address your question.

Obviously, a lot of the activities that happen inside our Calgary centre belong to me, as I'm looking after the equipment piece of the Canadian Armed Forces.

Very interestingly, there hasn't been a single layoff yet. We have actually grown our capacity in Calgary during the pandemic as a result of demand by the Department of National Defence.

It's very important to understand that from the onset of the pandemic, one key worry of the Department of National Defence was supply security. My answer to them from the onset was that if the borders were closed completely, and if we continued to supply the fleet at its current rate, we would see no impact for a period of three months on our normal operations, and we could probably sustain that fleet, with very marginal impact, for the next nine months.

The reason I share that with you, sir, is because this is an important aspect of having an in-house, domestic capacity to support our military. We are able, through this facility, to de-risk the military operations and sometimes all the way to the deployed operations that we've had in Iraq and in Afghanistan, to both military and civilian lines of communication.

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

Thank you very much.

I'd like to go in a different direction.

We've heard testimony from the Canadian Federation of Independent Business that talked about the inefficiencies associated with regulation, and that it is somehow affecting businesses in being able to either create jobs or expand within the economy.

Again to Bell Textron, when we hear about regulatory concerns or regulatory issues that change the competitiveness that we have with other countries, is there a way of addressing that issue, or is it as significant as some people lead us to believe?

[Marc Bigaouette]

Yes, certainly there are things we can put in place, and I will speak here from the military procurement standpoint.

However, to understand those mechanisms, I would have to explain the difference between what our allies do and what we do in Canada. It is a very important distinction. We have to understand the key motivation of our allies, so if you would allow me, I will share some aspects of it with you.

As I occupied the position of air adviser at the Canadian High Commission in London between 2013 and 2017 I witnessed first-hand the way to go about it. This is about the domain of defence security, but I want to make it clear that the message we convey is not about defence. It is about prosperity and the way in which the U.K. leverages public procurement to create wealth.

I also wish to underscore that the monologue we share with you is not unique to the U.K. In Europe and elsewhere, defence and security is a means to an end and the reason is simple.

Defence is the largest user of public funds, and therefore it is a gold mine when it comes to leveraging the aerospace sector. I think that Christyn Cianfarani made that very clear earlier. Our allies have realized that, and they are capitalizing on this.

British defence and security policy is the result of a whole-of-government effort with the Department for International Trade occupying a place of choice. In Canada, similar responsibilities are split between ISED and Global Affairs Canada.

The key differentiator between our approach to defence policy and the British approach—and that of most European countries—is that industry is included in the definition of defence policy from the outset. By the time the British defence and security policy is stable, most of the companies selected to deliver the products and services have already been identified as part a defence industrial strategy.

In 2017, 56% of the U.K. procurements were sole-sourced with a large majority awarded to British industry. In their defence policy they have a stated objective of sole-sourcing a minimum of 50% of their defence procurement.

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

Thank you very much. I see the red card is up, so I will help the chair in that regard.

[The Chair, Liberal, Sherry Romanado]

Thank you, MP Dreeshen.

My apologies, Monsieur Bigaouette. I don't like cutting off our witnesses, but we have a very tight schedule today.

Our next round of questions goes to MP Jaczek for six minutes.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you very much, Madam Chair.

I also would like to thank all the witnesses. You have made very clear presentations and some important, interesting recommendations.

Monsieur Labbé from Héroux-Devtek, I was extremely interested in your desire for what you called a sectoral program. I would like you to elaborate on what exactly you mean by that, what the elements of this program are and what specifically is lacking in what is currently available to the sector.

[Gilles Labbé]

We're looking for a program that will help us develop new technology, new products like we had on SADI and like we had in the past with TPC. I'm sure you've had presentations from the AIAC and Aéro Montréal that gave you the details of these programs.

I want to share with you the landing gear project, for example. Typically when we tried to win a new landing gear program it was all about a new airplane, so we have to design first and develop a new product. The ticket normally, depending on the size of the airplane, is anywhere between U.S. $50 million to U.S. $70 million, and the cycle time to develop this is long. It takes five years.

I'll give you an example. We were selected in 2007 to develop the CH-53K helicopter landing gear, which is the largest helicopter that will be built in the western world. We started in 2007, and in 2020 we are starting now to produce the first production units. You can see that the development cycle is very long and financially very tough to support.

If we have no support from the Canadian government as we have had in the past, we will not win these programs, and these programs will go somewhere else.

When I started, do you know how many design engineers I had? Zero. Do you know how many I have today? I have 200. Do you know how many employees I had when I started? I had 200. Today I have 2,000. That is the impact of these programs that were in place back then.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Monsieur Labbé, it sounds like you're talking about increased government funding for R and D to a certain extent.

[Gilles Labbé]

Yes, a program that is similar to what we had in the past.