Federal supercluster fund snub seen as ‘wake-up’ call for industry
Long-term vision needed for future growth
TORONTO • Canada’s aerospace industry got dealt a reality check when the federal government didn’t select it for the supercluster initiative, a $950-million investment into five sectors Ottawa is betting on for future growth, says Jean Charest, the former Quebec premier and current aerospace industry champion.
Even though the aerospace industry contributed 190,000 jobs and $25 billion to Canada’s economy in 2017, according to industry statistics, it fell off the government’s radar at a time that it wants support to compete against both established players and developing countries, including China.
“It’s fair to say the supercluster episode for the industry was a wake-up call,” Charest said in an interview Monday at an Aerospace Industries Association of Canada (AIAC) event in Toronto.
“All of a sudden there’s a realization that maybe we took for granted that people recognize what the industry is and what it does.”
As such, the industry is making a plan to win public support and get back on the government’s agenda. The industry association hired Charest, currently a partner at McCarthy Tétrault, to lead an initiative to develop a longterm strategy for the sector’s future with industry, governments, educational institutes and other players. The association intends to present this plan before the 2019 election.
As it stands, Canada is one of the top five global players in the aerospace industry. But if it wants to stay there, it needs to define a long-term vision and then determine what needs to be done to get there, Charest said. Options include re-training workers for the aerospace industry, in which the average worker is 54-years-old, according to AIAC president Jim Quick.
“We cannot assume that we’re going to remain a major player in this industry if things remain the way they are,” Charest said in a discussion with Quick moderated by The Logic editor-in-chief David Skok.
The industry became a powerhouse in the first place because of government support, particularly after the Second World War. But other industries have been in the spotlight recently, namely the automotive sector. The aerospace industry wants to avoid a scenario such as the pending closure of the General Motors Co. plant in Oshawa, Ont., where the disappearance of high-paying jobs is blamed on a lack of adaptation to future demand.
“Part of the argument we have to make to the Government of Canada is we don’t have to wait till Oshawa happens in the aeronautical industry,” Charest said.
This can be a tough sell given the public perception of the aerospace industry in general and Bombardier in particular as a vehicle for public subsidies. Charest argues the money invested has most often been from repayable loans that have been reimbursed.
The industry doesn’t have a specific ask for politicians — yet — as it hasn’t finalized its vision. But Charest argued “every single country” provides “better and more” government support to their aerospace industries than Canada does.
There’s a lot of business at stake, given the aviation industry expects it will need to double its fleet in the next 15 years, Quick said. That means $10 trillion in work to build 40,000 new aircraft is up for grabs, he said.
Much of the demand for travel will come from China and Asia as more people join the middle class, Charest said. It will be critical for Canada to engage in trade with Asia if it wants to benefit from that growth, especially given the current U.S. administration’s attitude towards trade, he added.
“We need to diversify, we need to go to other markets and Asia is part of that story,” he said.
“I don’t know what the consequence of the Huawei incident will be, but we do know we have to figure out what our relationship with Asia will be. It’s not optional.”