Evidence of meeting #26 for National Defence in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was aircraft.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Bill Matthews  Vice-President Marketing, Magellan Aerospace Corporation
Nathalie Bourque  Vice-President, Public Affairs and Global Communications, CAE
Major-General  Retired) Richard Bastien (Vice-President, Business Development, L-3 Communications MAS Inc.
Daniel Verreault  Country Director for Canada , GE Aviation, Military Systems Operation, General Electric Canada Inc.
Bruce Lennie  Vice-President, Business Development and Government Affairs, Rolls-Royce

5:10 p.m.

Vice-President, Business Development and Government Affairs, Rolls-Royce

Bruce Lennie

That's a very good question.

I'd have to say from our position maybe that's a good idea.

5:10 p.m.

Conservative

The Chair Conservative Maxime Bernier

Thank you.

Thank you.

I'll now give the floor to Mr. Harris.

5:10 p.m.

NDP

Jack Harris NDP St. John's East, NL

Thank you, Mr. Chairman.

It's a very interesting presentation. First of all, I was wondering why, if the savings of $20 billion for a competitive choice that you're suggesting are so large...the people with the most to gain would be the Americans. Why would we, a kind of one-fiftieth partner in this project, have any leverage with the Americans? Wouldn't they use their own common sense? Why are you here? Why aren't you in Washington?

5:10 p.m.

Country Director for Canada , GE Aviation, Military Systems Operation, General Electric Canada Inc.

Daniel Verreault

We have colleagues who are in Washington as we have colleagues in all the eight partner countries. It's obviously a U.S. budgetary issue. There are obviously political discussions at play. There are clearly short-term fiscal imperatives that the government is attempting to choose.

5:10 p.m.

NDP

Jack Harris NDP St. John's East, NL

But it's their issue, not ours particularly.

5:10 p.m.

Country Director for Canada , GE Aviation, Military Systems Operation, General Electric Canada Inc.

Daniel Verreault

That is correct. I am talking of the Washington scene. Yes, there are differences in position between the DOD and the U.S. Congress, and it's an ever-evolving process.

5:10 p.m.

NDP

Jack Harris NDP St. John's East, NL

I was also intrigued, and it seems to me, and maybe I'm learning as time goes on here perhaps.... Whether we have an engine choice or not, it seems to me that what you're suggesting, Mr. Lennie, is that if we have an engine choice and Canada does go with the F-35, we'll be in a situation where both engine manufacturers would come to Canada and say we'd like you to buy our engines, here's our price, and here are the industrial benefits that we would spread around Canada as our bid for your piece of the action. That's a totally separate issue and has nothing to do with this mega F-35 international competition. Basically you'll come to Canada and say use the F136 and here's the deal.

You talked about this Connecticut company that has an office in Montreal. You tell us they have a piece of the action in the F-35, regardless, presumably, of who buys it.

Is it the same with the F136, that you would come to Canada and say, here's what we offer in terms of industrial benefits for Canada; if you buy our planes, this percent is going to be manufactured in Canada and this percent of the sustainment or maintenance contract will be here as well?

5:10 p.m.

Vice-President, Business Development and Government Affairs, Rolls-Royce

Bruce Lennie

The industrial participation is based on global best value. I think you've heard that from some of the others. We've already been very active, not only through Industry Canada and DND. We have quite a substantial Canadian industrial participation plan already established for the F136 engine.

So the answer to your question is absolutely. We're already well down that road.

5:10 p.m.

NDP

Jack Harris NDP St. John's East, NL

Because engines are not like planes, you can ship them pretty easily around the world. You do it all the time. Would the Canadian participation be part of the global sustainment or are we just talking about Canada's piece of the action?

5:10 p.m.

Country Director for Canada , GE Aviation, Military Systems Operation, General Electric Canada Inc.

Daniel Verreault

The engine is government-furnished material. The cost of the engine will be determined by the joint project office and the price will be given to the Department of National Defence. I'd like to make this distinction.

Regarding competition, absolutely. There are other issues that we would compete on, including industrial participation, including the overall cost of ownership. If your engine stays on the wing twice as long, it's half as expensive to maintain.

We believe we have a competitive advantage from a technology point of view because we started later, so our technology is younger and therefore our technology is more modern than the competitor. We would like an opportunity to show this to Canada and to compete head-on with the other company.

5:15 p.m.

NDP

Jack Harris NDP St. John's East, NL

Well, answer me this then. Suppose the F-35 goes ahead and Canada decides to buy airplanes from this Connecticut company you're talking about. Is there any work available in Canada for the F136 on any basis for the life of this project?

5:15 p.m.

Country Director for Canada , GE Aviation, Military Systems Operation, General Electric Canada Inc.

Daniel Verreault

Well, I could ask you the same question, but from a 180-degree--

5:15 p.m.

NDP

Jack Harris NDP St. John's East, NL

I'm only trying to understand how this contract works, because we're being told on the other hand that if we don't buy the F-35, Canadian companies don't get a piece of the action. I'm not sure I believe that, but that's what we're being told. I'm putting the same question to you. Is it your understanding that that's the way it works when it comes to engines?

5:15 p.m.

Country Director for Canada , GE Aviation, Military Systems Operation, General Electric Canada Inc.

Daniel Verreault

Yes. Well, we will then be sharpening our pencils and we will make a finer point than the competitor. So the answer is, it will depend on the terms that we will be offering Canada. We want to win, so we will play it very tightly to our vests, and then may the best win. We are keen to earn your business.

5:15 p.m.

NDP

Jack Harris NDP St. John's East, NL

I'm not sure you answered my question, but thank you very much for your attempt.

I think I'm finished, am I?

5:15 p.m.

Conservative

The Chair Conservative Maxime Bernier

One minute.

5:15 p.m.

NDP

Jack Harris NDP St. John's East, NL

Okay.

I understand that, but one of the arguments or discussions going on here is about participation in the F-35 program by Canada, whether or not Canadian companies will have an opportunity to bid, like CAE and the others that were here, on the worldwide program if Canada doesn't buy in. Does the same thing apply with the engines? That's the question.

5:15 p.m.

Country Director for Canada , GE Aviation, Military Systems Operation, General Electric Canada Inc.

Daniel Verreault

Well, the world of the engine is slightly different. We definitely have Canadian high-end, internationally competitive Canadian suppliers on the team now. They will likely remain on the team, although you know very well that the manner in which the program has been developed with the eight partner countries sharing some of the industrial pie...as the music stops and people start sitting, there may be shifts. Who knows? There may not be, but there could be, and it's still a work in progress.

5:15 p.m.

NDP

Jack Harris NDP St. John's East, NL

Thank you.

5:15 p.m.

Conservative

The Chair Conservative Maxime Bernier

Thank you very much.

Mr. Hawn, and after that I think you are sharing.

5:15 p.m.

Conservative

Laurie Hawn Conservative Edmonton Centre, AB

I'm going to share with Mr. Boughen.

Thank you, Chair, and thank you both for being here.

First of all, let me say that I've had a lot of time riding on General Electric engines and I appreciate your good work.

With regard to the choice of the F-35--because that's the bigger issue, obviously, than the choice of the engine--is it fair to say that without the F-35, there is no F135 engine and there is no F136 engine?

5:15 p.m.

Country Director for Canada , GE Aviation, Military Systems Operation, General Electric Canada Inc.

Daniel Verreault

That's absolutely correct.

5:15 p.m.

Conservative

Laurie Hawn Conservative Edmonton Centre, AB

Thank you.

With respect to the maintenance service support capabilities or opportunities for industry, the engine side of that is still covered under the MOU. Are you aware of that?

5:15 p.m.

Country Director for Canada , GE Aviation, Military Systems Operation, General Electric Canada Inc.

Daniel Verreault

That is correct.

5:15 p.m.

Conservative

Laurie Hawn Conservative Edmonton Centre, AB

So if we try to go outside of the MOU, basically we're not going to have the same access to opportunity that we do inside the MOU, whether it's with the aircraft, whether it's with the engines, whether it's with the in-service support, or anything else. Is that correct?