National Defence Committee on Oct. 19th, 2010

[Geoff Regan, Liberal, Halifax West, NS]

When I asked you where in the MOU it is stated that a competition would force Canada to withdraw from the MOU and which article states this, you said 7.6, which says nothing of the kind.

[Dan Ross]

It's two things--

[Geoff Regan, Liberal, Halifax West, NS]

Well, it's not that.

[Dan Ross]

Absolutely, it is, sir.

[Geoff Regan, Liberal, Halifax West, NS]

Sorry for interrupting.

[Dan Ross]

It is.

Let's say you bought joint strike fighters commercially. You got the price from the U.S. government, $6 billion or whatever it is, and you bought them from Lockheed Martin. You would want to get IRBs from Lockheed Martin because you are not getting the industrial participation within the PMOU anymore. It's shut off. It's stopped.

[Geoff Regan, Liberal, Halifax West, NS]

It doesn't say that here.

[Dan Ross]

No, the reality is that it's stopped. You would want to be able to have negotiations--

[Geoff Regan, Liberal, Halifax West, NS]

When I asked you where in the MOU it says that, this doesn't say that.

Thank you. My time is up.

[The Chair, Conservative, Maxime Bernier]

Mr. Ross, can you answer that in 15 seconds?

[Dan Ross]

I think I already have, sir.

[The Chair, Conservative, Maxime Bernier]

Perfect.

I will give the floor to Mr. Payne.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Mr. Chair.

If I have any time left, I will share that with Mr. Hawn.

I have a couple of questions, through you, Mr. Chair, to Mr. Ross. In your opening remarks you talked about the only fifth-generation fighter and you talked about the F-22. Obviously, that's not available to us. I believe there were comments from Mr. Harris regarding the Russian aircraft.

Would there be any opportunity for Canada to buy Russian aircraft, and how would that work if in fact we bought one of those stealth fighters? How would we be able to work that with our partners?

[Dan Ross]

We are not familiar with the technical capabilities at this point of the Russian fighter. Perhaps my intelligence community is more familiar with it.

It makes it virtually impossible to be interoperable within NATO and NORAD. The supply chain of maintaining those aircraft from a Russian supply base would be extremely difficult. I just don't think it's feasible.

[LaVar Payne, Conservative, Medicine Hat, AB]

Therefore, we wouldn't have the technical information to actually determine whether this is a superior fighter or not?

[Dan Ross]

I think if you expressed a specific interest to the Russian government, you would probably get access to some information.

[LaVar Payne, Conservative, Medicine Hat, AB]

You referred to a letter that was recently sent out to members of Parliament from the industry in terms of the benefits for Canada. I'm wondering if you can tell us if you have talked to the various industry people who have bid or who have received contracts and the technologies they will acquire through this process.

[Dan Ross]

In fact, I talked to Mr. Lajeunesse yesterday. He is the president of the Aerospace Industries Association of Canada. They are very excited. They are very committed and hopeful--I was going to say the word “confident”--that they are going to be able to be successful going forward here in many of these technologies.

Canada's aerospace sector is, I believe, the third or fourth biggest in the world. They don't build big platforms, but they produce components and high-technology pieces for a lot of platforms around the world. Héroux-Devtek, I've mentioned before, builds landing gear for virtually everything in the world and has a huge stake in the joint strike fighter, as does Pratt & Whitney Montreal, Magellan Aerospace, and so on. Those companies really feel this leverage is access to technology for a long time in the future.

Their view, as Claude told me yesterday, is not just about the joint strike fighter; it's about technology and it's about other projects, other aircraft, and being competitive with high technology in those other programs.

[LaVar Payne, Conservative, Medicine Hat, AB]

So the question is, if in fact we got out of the MOU, would these contractors be able to have access to that kind of technology to develop and make our Canadian aerospace industry competitive worldwide?

[Dan Ross]

I don't think we could be emphatic or specific and say they would never have any. Canadian companies have some technology niches that are very good. Perhaps some joint strike fighter multinationals would still come to Canadian companies for some work.

Most of the current contracts would probably peter out, and there would be far fewer going forward; nevertheless, there are several components on a joint strike fighter for which Canada is virtually the only source of supply. But what is the magnitude of that? It's certainly much lower than it would be if we remained in the MOU.

[LaVar Payne, Conservative, Medicine Hat, AB]

So if we got out of the MOU, our ability would only go as far as the 65 joint strike fighters. What about the other 3,000-odd opportunities?

[Dan Ross]

Sir, if the classical IRB policy applies, it is based on the actual contract value only for our 65 fighters. Almost all of that would be direct Canadian content, and the remainder would be made up from indirect offsets provided by, in this case, Lockheed Martin and its partners.

The alternative is, obviously, making those components, those spares and replacements, as well as repair and overhaul for the worldwide fleet of 3,000 to 5,000 fighters over many years.

My sense is that for Industry Canada there are several orders of magnitude of difference there in economic effect back in Canada.

[The Chair, Conservative, Maxime Bernier]

Merci. Thank you very much.

I will give the floor to Ms. Gallant.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

Do I have the full five minutes?

[The Chair, Conservative, Maxime Bernier]

Yes.