National Defence Committee on Nov. 16th, 2010

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Is it realistic? There's been some talk about the previous ADM Materiel and his opinions on the subject, but is it realistic to expect that we would participate in the industrial participation plans of this program to any extent if we weren't actually acquiring aircraft?

[Timothy I. Page]

Well, my understanding is that the ability of Canada to participate is tied to our support of the program. Now there may be opportunities, but they would certainly not be first-tier, second-tier, or third-tier ones. I think the clear advantage for Canada, as a member of the partnership group, is to be pre-positioning Canadian industry, as it has been doing for a great many years now, to succeed not only at the concept phase through to development and production, but also right through the sustainment phase of this program.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Along that line, would it be fair to say there has been a lot of knowledge and awareness of the joint strike fighter/F-35 program in relation to our military needs since we got into the program in 1997, or since the Canada First defence strategy was articulated in 2008? Is it fair to say there was information out there that people should have been aware of?

[Timothy I. Page]

As I said in our opening, it's fair to say that the issue has become a subject of keen political interest. Our encouragement to the government is to do its level-headed best to share the opportunities that Canada has been able to win and to work aggressively to pursue other opportunities for Canadian industry, both at the production and the sustainment phases. I think F-35 is a known issue across the country.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

It probably has been, since Canadian industry, as you said, has had 13 years, since 1997, to ramp up that program, and certainly two years since the Canada First defence strategy was articulated.

Canadian industry has in fact done a very good job of getting out front and preparing for this program. Is that a fair statement?

[Timothy I. Page]

I would suggest, sir, that Canadian industry has done as well as it has to date in part because of the collaborative approach it has taken with the government. The secret to long-term optimizing of taxpayers' return on investment is to see this practice carried forward, not just into the F-35 program but to any other defence procurement the Government of Canada has on its list of priorities.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Along that line, and as a segue to my next question, the Canada First defence strategy was articulated about two years ago. That's not a defence industrial strategy, but it is a defence strategy.

How do you see that morphing into a defence industrial strategy? How do you see that moving forward--and I agree, we need an overall defence industrial strategy. What do you see as the next steps to that?

[Timothy I. Page]

Thank you, sir, for your endorsement of a defence industrial strategy.

Our view is that there needs to be an industrial strategy aligned to the Canada First defence strategy and to international market opportunities. Some of the characteristics of that strategy are as we've identified: articulation of Canadian capabilities that hold a strategic and/or economic value for the country; an investment in those capabilities through R and D support, both government and industry; support to marketing efforts to include Canadian industry into the supply chain of major contractors; and the promotion of Canadian capability through our defence attachés and Department of Foreign Affairs, so that we are not just looking for foreign solutions as we try to meet our military requirements, but we are promoting world-class Canadian capability abroad.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Thank you.

[The Chair, Conservative, Maxime Bernier]

Thank you very much.

We'll give the floor to Mr. Dryden.

[Ken Dryden, Liberal, York Centre, ON]

Thank you.

I have a couple of questions as a follow-up to statements you made and answers you gave.

You started your remarks by saying you fully appreciate the political environment within which the program is being discussed. What did you mean by that?

[Timothy I. Page]

Our focus, as an organization, is in ensuring that when the government spends a dollar on defence, it is doing so to the maximum benefit of the military and optimal return on investment to Canadian workers. Our observation is that the issue around F-35 has focused less around jobs and economic opportunity and more around issues that are not relevant to that question.

[Ken Dryden, Liberal, York Centre, ON]

You would describe that as the political environment.

[Timothy I. Page]

That is what I'm suggesting, sir, yes.

[Ken Dryden, Liberal, York Centre, ON]

You talk about--I think this is what you said--how the F-35 process has several elements, many elements, of a defence industrial strategy. What elements are missing?

[Timothy I. Page]

Sir, I'm reflecting because I'm trying to remember what we wrote in our report that we submitted to government back in April of this year. It includes early engagement. It includes R and D. It includes supply chain. It includes international marketing efforts.

I guess the piece we have not seen yet is the sustainment piece. As we suggested in our opening remarks, that's a piece that is on the table and it is being developed.

[Ken Dryden, Liberal, York Centre, ON]

One of the other things I wasn't quite clear on...and the question was asked, but I wasn't sure whether you answered it. You talked about the opportunities that exist within the F-35 process.

I think the question had to do with guarantees as opposed to, or in addition to, opportunities. As an element of a defence industrial strategy, in your mind, is it a matter of opportunities and also of guarantees?

[Timothy I. Page]

Sir, what we were trying to point out in our presentation to you this afternoon is the importance of identifying early on what industrial activity or industrial objectives the government has as it moves forward and spends a dollar on defence. We believe that time was spent early on in the F-35 debate within the Department of National Defence, within Industry Canada, perhaps even within the Department of Foreign Affairs and International Trade, so there were articulated industrial objectives early on in that project. While among our 860 members there may be discussion around whether they're the right ones or the not complete ones, that's a subject for our 860 members to debate. What I'm suggesting is that a key characteristic of an industrial strategy is to figure out what the country needs from an industrial base perspective in order to be sovereign, secure, and strong economically, and this model went down that road.

[Ken Dryden, Liberal, York Centre, ON]

I'm not quite sure that you answered my question. Again, you say there are 860 different members, but you represent them, and you're representing them today, and you're talking about a defence industrial strategy. You talked about those things that should be part of a defensive industrial strategy and how important that is. So I'm asking you directly, is it your opinion that one of the elements of a defence industrial strategy should be not only opportunities but also guarantees?

[Timothy I. Page]

We haven't considered that as an organization, but I suggest to you that if you've got a plan and you're effective at executing your plan, then you should get the return you're looking for.

I'm sure I'm not answering the question the way you would like me to answer it, but--

[Ken Dryden, Liberal, York Centre, ON]

I'm simply looking for an answer; I'm not--

[Timothy I. Page]

If you flip that on its head and say by the nature of the way Canada has been investing in defence for the last 10 years, and it's working off a COTS and a MOTS model, where it's using IRBs, the question could ask how strategic has the return on investment been from those IRBs. For us, we're kind of stepping one step above the question that you're asking, sir, which is to say, let's have a plan; let's figure out what's important to the country and then let's execute that to achieve that outcome.

[The Chair, Conservative, Maxime Bernier]

Thank you very much, Mr. Page.

I will give the floor to Mr. Braid. You're going to share your time--

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Yes, with Ms. Gallant.

Thank you, Mr. Chair.

Through you to Mr. Page, thank you very much for being here, sir.

As you probably know, we've had a number of witnesses appear before our committee on this particular topic. One was Bill Matthews, who of course is the vice-president of Magellan, and he spoke very categorically about his belief that Canadian aerospace companies can compete with the best in the world and that Canadian aerospace companies can continue to be very confident in terms of their ability to win contracts. Do you have any reason to doubt that level of confidence?

[Timothy I. Page]

No, and I would add that as with defence industry players the world over, their success is in part driven by their own innovation, their own marketing expertise, and what it is they're offering in terms of what a customer is looking for, either a good technology or service. It's connected to the willingness of the host government to be working collaboratively with those companies in order to optimize opportunities that companies like Magellan have in the domestic market and in markets around the world.