BUILD FIGHTER JETS TO BOOST ECONOMY, INDUSTRY SAYS
AEROSPACE FIRMS TOUT JOB CREATION, GDP BUMPS
Industry is urging the federal government to prioritize its $19-billion plans to buy a new fleet of stealth fighter jets, saying the massive procurement contract would provide crucial economic stimulus following a year of COVID-19 lockdowns.
Their comments come after Finance Minister Chrystia Freeland last year announced plans to roll out up to $100 billion in stimulus spending over the next three years, aimed at giving the economy a post-pandemic jolt.
Aerospace companies vying to build Canada's next generation fighter jets have emphasized in recent months the economic benefits associated with their proposals, touting job creation and GDP bumps.
“In terms of COVID-19, there's no doubt that aerospace is a strategically important sector that can play a significant role in contributing to Canada's overall economic recovery,” said Mike Mueller, interim CEO of the Aerospace Industries Association of Canada.
“This is a message we have been stressing in our discussions with government,” he said in a statement.
Industry boosters point out that the estimated $19-billion needed for Canada's Joint Strike Fighter (JSF) program has already been set aside, offering meaningful stimulus without requiring government to take on new debts. The three foreign companies bidding to build the jets — Sweden's Saab AB and the U.S.'s Lockheed Martin and Boeing — would use Canadian parts makers and software developers for much of their supply, largely due to the need to meet socalled industrial and technological benefit (ITB) policies laid out by Ottawa.
Boeing, which makes the Super Hornet fighter jet, said in August that its proposal would inject $16.9 billion into the Canadian economy, creating hundreds of thousands of jobs. That was followed days later by an announcement from Lockheed Martin, which manufactures the F-35A, that it would generate $61 billion for the Canadian economy over the 40-year life of the program.
All three bidders have promised a range of other investments and agreements to sweeten the deal, like offering long-term contracts to Canadian parts suppliers on major procurements outside of Canada.
Saab, which makes the Gripen E jet, has laid out plans to build a new research and development facility in Montreal focused on artificial intelligence and other areas, as well as a sensor facility in British Columbia.
“A procurement of this size provides a generational impact to the economy,” Patrick Palmer, vice-president at Saab Canada, said in an interview.
Still, Canada's past military procurement efforts have been consistently plagued by cost overruns and delays, said David Perry, vice-president of the Canadian Global Affairs Institute, leaving little room for optimism that Ottawa will meet its deadline on the JSF program.
The government plans to make a final decision on the bids in 2022, with first aircraft being completed in the mid-2020s.
Meeting or exceeding that first deadline would provide crucial support after pandemic lockdowns decimated demand across the aerospace industry, observers said.
“One thing that makes the stimulus aspect of it is that the aircraft industry, both in Canada and around the world, is in crisis right now,” Perry said.
“Spending money on this would have a much more consequential effect in the next few years than it would have just a few years ago.”
The Auditor General on Thursday offered fresh reasons for pessimism in government's ability to meet deadlines under the JSF program, after it tabled a report detailing years-long delays in Canada's national shipbuilding strategy.
The first of 15 frigates purchased by the government will now arrive in 2030 at the earliest, the report said, five years later than the initial target. Costs for the frigates grew from an initial estimate of $14 billion to $26 billion by 2008.
Defence experts in Canada have said for years that Canada needs to begin procuring next-generation fighter jets, particularly as Russia expands its Arctic military capabilities. The latest models of fighter jets have much more power and sophisticated radar than Canada's current F-18s, increasing their patrol capabilities.
Fighter jet procurement has also been tinged politically ever since the Harper government signalled its intention to sole-source the procurement of 65 F-35s from Lockheed Martin, setting off a political uproar. Those plans were later shelved after reports from the Parliamentary Budget Officer and auditor general found that the likely price tag was well higher than expectations in part due to a lack of competition in the bid.
Prime Minister Justin Trudeau had been heavily critical of the procurement early in his tenure, saying in the House of Commons in 2016 that the previous government had sought to purchase an F-35 that, he claimed, “does not work and is far from working.”
“Canadians know full well that for 10 years, the Conservatives completely missed the boat when it came to delivering to Canadians and their armed forces the equipment they needed,” Trudeau said.
The federal procurement office is now reviewing the three proposals, after bidding closed July 31, 2020.