Current Market Trends
Subsector Focus: Helicoptors
Population: 34.88 million
GDP USD: 34.88 million
Currency: Canadian Dollars
Language: French & English
Canada has the world’s fifth largest aerospace industry, with Montreal being one of the world’s three largest aerospace hubs, along with Toulouse and Seattle. The industry generates over USD 22 billion a year, of which 80% of its production sold internationally largely to the U.S and Europe.
Canada has a very mature and diverse aerospace industry, with production in almost every aerospace sub-sector. In 2011, the breakdown of Canada’s aerospace sub-sectors was: 42% of production was aircraft and aircraft components; 31% maintenance, repair and overhaul (MRO); 11% engines and engine parts; 7% avionics and electrical systems; 4% simulation and training; 4% other. As a whole, the Canadian aerospace industry invests USD 1.5 billion into R&D every year, the highest investment levels of any Canadian industry. Unlike the United States, Canada’s aerospace industry is predominantly civil aircraft manufacturing (77% of production). The aerospace industry is concentrated in the provinces of Quebec (68%) and Ontario (29%); secondary aerospace centers include Winnipeg and Halifax. The aerospace sector in Quebec is dominated by OEMs and Tier 3 and Tier 4 companies, with a small presence of Tier 1 / System Integrators. In contrast, the Ontario aerospace sector is comprised of a few OEMs, but possesses a great number of System Integrators, Tier 1 and Tier 2 companies.
The Canadian aerospace industry is dominated by a few large players; the top 19 companies account for 87% of the country’s production. The largest companies include Bombardier (aircraft), Pratt & Whitney Canada (engines), CAE (flight simulations), Magellan (aerostructures), Vector Aerospace (MRO), Héroux-Devtek (landing gears), Bell Helicopter Textron (helicopters), Northstar (components), Avcorp Industries (aircraft design & fabrication).
Canada is potentially the easiest market for U.S. aerospace exports in the world due to a plethora of bilateral agreements between Canada and the United States. These agreements include: the North American Free Trade Agreement (NAFTA), the North American Defense Production Sharing Agreement, Canada’s ITAR Exemption (Section 126), and a U.S.-Canada Bilateral Aviation Safety Agreement that streamlines regulatory requirements such as Canadian airworthiness approval for U.S. aircraft parts. Moreover, geographic proximity, and similar language and business culture have also played a large role in U.S. aerospace companies’ resounding success in this market. As a signatory to the WTO Agreement on Trade in Civil Aircraft, Canada is committed to free trade principles for civil aircraft and aircraft parts.
Current Market Trends
Continued Supply Chain Integration: Due to Canada’s aerospace market being predominantly civil aircraft manufacturing, Canadian aerospace companies are ahead of the curve in implementing lean manufacturing and supply chain principles to offset cyclical uncertainties in civil aviation. Canadian OEMs work with increasingly fewer suppliers, preferring to partner with large system integrators to offset risks and costly management of large aircraft platforms. These systems integrators work with the OEMs in providing support with design, delivering sub-assemblies, and managing complex supply chains. U.S. firms need to be mindful of this reality and seek opportunities at various levels of the supply chain.
Green Aviation: Canada’s support for research and development of new technologies is very strong. Some recent hot areas include: new materials (composites), de-icing technologies, engine capabilities in extreme weather, fuel efficiencies and noise reduction. U.S. companies with technologies lending themselves to these areas, including greener manufacturing processes such as additive manufacturing, should do well in Canada’s market.
Growing Need & Demand for Unmanned Aerial Vehicles: Another trend is Canada’s increased demand for unmanned aerial vehicles (UAVs) to survey its large territory. Canada will be a hot market for these technologies, and many Canadian companies are actively engaged in creating and testing these cutting edge technologies and products. Due to Transport Canada being a little further advanced than the FAA in approving the use of UAVs, many UAVs are already being used in Canada in everyday commercial applications (agriculture, transportation, safety and security) and law enforcement.
U.S. aerospace companies are welcome in Canada, and American technology is highly sought after. In general, most Canadian companies purchase over half of their supplies from American companies, and a vast majority of Canadian aerospace companies consider the United States as their number one partner and customer. Canada and the United States have highly integrated supply chains; an aircraft part crosses our common border approximately seven times before it is finally assembled on an aircraft.
According to Boeing’s Market Forecast (http://www.boeing.com/boeing/commercial/cmo/), the world’s increased demand for travel over the next 20 years will create a need for 34,000 more planes worth over USD 4.5 trillion. They also estimate that 68 percent of the aircraft needed will be single-aisle aircraft, precisely the same category of planes Canada holds a considerable global market share in. U.S. aerospace companies would do well to further integrate themselves into the Canadian supply chain.
U.S. companies entering this market will face competition from local Canadian, U.S. and European companies. While there are a number of other countries seeking to capture business opportunities in Canada such as Mexico and China, and their exports to Canada are growing rapidly, the U.S.’ share of total foreign exports to this market dwarfs all others by a substantial margin (over 40%). Nonetheless, U.S. companies need to demonstrate financial soundness, ability and willingness to take on risk, continuous improvement and innovation, persistence, competitive pricing and willingness to create and commit to long term partnerships with Canadian customers to do well.
Canada is a world leader in regional aircraft, flight simulators, small gas turbine engines, robotics and satellite technologies, aircraft maintenance, repair and overhaul, and landing gear systems. Best prospects include: aerostructures, aircraft & engine parts; maintenance, repair and overhaul; composite materials and green aircraft technologies; cyber & space technology; C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance); synthetic training & simulation for all civil and military aircraft; development of virtual battle space; electronic warfare.
Subsector Focus: Helicopters
Canada’s helicopter market is focused on the production of civil rotorcraft, and the maintenance of civil and military rotorcraft. The two helicopter-producing OEM companies in Canada are Bell Helicopter Textron Canada (BHTC) and Eurocopter Canada Ltd. (ECL). BHTC, headquartered in Mirabel, QC, designs, manufactures and provides after sales support for all Bell commercial models (except the Bell 525). ECL, headquartered in Fort Erie, provides a broad range of services; it performs completions for export markets, develops options and manufactures composite components for the EC group.
There are no barriers of entry for U.S. companies exporting aerospace goods to Canada.
U.S. Pavilion at DEFSEC Atlantic 2014
September 3-5, 2014 • Halifax, NS • http://www.defsecatlantic.ca
The Canadian Defense Security and Aerospcae Exhibition Atlantic
DEFSEC Atlantic being a dynamic tradeshow will provide the participants with a business platform so as to establish new contacts and networks that will beneficial for their business.
Canadian Aerospace Summit
November 18-19, 2014 • Ottawa, ON • http://www.aiac.ca/summit
With over 800 attendees and 100 exhibitors, the Canadian Aerospace Summit is Canada’s leading national aerospace event.
March 31-April 2, 2015 • Montreal, QC • http://www.bciaerospace.com/montreal
Aeromart provides business and partnership development opportunities in the North American aerospace market. By alternating between Toulouse, Tianjin and Montreal, it delivers a business platform for manufacturers, tier 1 suppliers, subcontractors, service providers and clusters from around the globe.
U.S. Commercial Service Contact Information:
Ms. Gina Bento
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