Mr. Speaker, I move that the fifth report of the Standing Committee on Industry and Technology, presented on June 16, 2022, be concurred in.
I am honoured to rise in the House to promote and defend the aerospace industry, especially Quebec's. As we know, it is a leading industry. I have been waiting for this moment for years now. This matter has already been debated and studied at the Standing Committee on Industry and Technology in a previous Parliament. I want to especially thank my colleagues at the time, who contributed to this debate.
I am therefore taking this opportunity today to have a frank discussion with my colleagues in the House about support for the aerospace sector. I will be sharing my time with my colleague, the Bloc member from , and I would like to recognize his leadership and initiative in promoting the development of the aerospace industry.
Air carriers were hit hard during the pandemic and are slowly recovering. However, there are still many challenges and the federal government is not treating them fairly. This has to stop. I devoted several hours to this study. Many testimonials from across the country have helped identify challenges and lay out the vision needed to support the industry’s development. I would like to acknowledge the contribution of the International Association of Machinists and Aerospace Workers, the IAMAW, and in particular that of David Chartrand and Éric Rancourt.
What is a national aerospace strategy?
It is a table at which all stakeholders, including workers, companies and the Quebec government, gather to share their reality and their needs, much like what Ottawa does for the auto industry. These are specific programs adapted to the sector's reality. They provide predictable, long-term support that enables stakeholders to engage in more long-term projects. Let me emphasize the word “predictable”. It is a global vision that includes every link in the chain, a military procurement policy that takes into account benefits for the industry, a long-term commitment that strengthens the entire cluster. Risk sharing is a fundamental aspect of the industry, especially when it comes to the risks associated with larger projects. It is a review of research and development support programs to ensure they respond better. It is also credit for buyers who purchase Canadian aircraft.
There is currently a shortage of 6,000 aircraft worldwide. Airlines are renewing their fleets, and other markets are growing. Quebec can play a major role here. What is the federal government doing right now? It has just now done the opposite of what the industry has been saying over and over. We need a strong signal. We could do better, and the government knows it. It knows it because the Bloc Québécois has reminded it many times of the needs expressed by the aerospace industry. The report of the Standing Committee on Industry and Technology is clear.
What is the aerospace industry in Quebec?
It is an industry that, thanks to the Quebec government, benefits from the presence of a dynamic industrial cluster that brings together businesses, research centres and post-secondary institutions. This concentration of expertise and resources fosters innovation and competitiveness in the industry. It is an industry that plays a key role and that generates about $16 billion in revenues annually. Quebec’s aerospace industry employs over 40,000 people directly and over 20,000 others indirectly, which represents about 45% of the entire Canadian aerospace industry. That is something.
The main stakeholders in Quebec’s aerospace industry include Bombardier, Pratt & Whitney Canada, CAE, Bell Textron Canada and Héroux-Devtek. Many of these companies took part in the study. They manufacture airplanes, helicopters, engines, pilot training systems, and aircraft simulation and maintenance systems, and are involved in aircraft recycling. In fact, Quebec could play a major role in the circular economy by recycling retired aircraft.
Quebec has several post-secondary institutions that offer aerospace training programs, which helps provide a highly skilled workforce. World-class innovation zones support a cutting-edge high-tech industrial ecosystem and the capacity to work on long-term projects. Quebec is a major research and development hub for the aerospace industry, with research programs supported by universities and research centres like the Consortium for Research and Innovation in Aerospace in Quebec, or CRIAQ, and the Innovative Vehicle Institute, or IVI.
In short, Quebec’s aviation industry is an important pillar of the province’s economy. It creates jobs and promotes economic growth, while offering innovative solutions to meet aerospace challenges.
Quebec’s aerospace strategy puts the emphasis on the latest technological developments and new trends in the industry, such as the reduction of greenhouse gas emissions, enhanced security and safety, digitization and connectivity. It is essential that we improve the efficiency and adaptability of the aerospace supply chain, which is complex and comprises many players, such as parts suppliers, aircraft manufacturers, airlines and maintenance companies.
To ensure optimal management of the supply chain, we are considering the benefits for the future of all industries, such as artificial intelligence, automatic learning and connected automation. These can play a crucial role and support production predictability, improve delivery performance and make it possible to respond quickly to minimize production interruptions. Connected automation allows for voluntary transparency between businesses and the supply chain and can be used to connect the various players and allow for real-time collaboration and visibility for the entire chain.
IoT sensors can also be used to track and monitor the condition of products, which allows for better production and delivery planning. Order processing can also be automated to reduce errors and delays.
This shows the whole potential of what can be developed, but that would take a federal aerospace strategy in Canada. It is fair to say that the formally committed to fund the strategic innovation fund as part of his government mandate to stimulate innovation and R and D in Canada.
However, as I have showed this morning, the industry’s needs are far greater. The government needs to take real action if we are to truly improve the competitiveness of our aerospace industry. Some stakeholders in the industry have criticized the lack of funding and inadequate government support to implement the strategy’s initiatives. They also point out that the strategy does not address important issues such as foreign competition, regulations and sustainable development. It is clear that the implementation and long-term effectiveness of the federal initiatives we have seen so far remain a concern.
With respect to Quebec’s innovations in the aerospace sector, one of the most remarkable is Héroux-Devtek’s development of a new electric landing gear system for aircraft.
To get back to the report of the Standing Committee on Industry and Technology, we received a response from the government, and I think it is important to address certain aspects. One of the most important recommendations made by the committee and supported by the people in the industry is the whole question of a national aerospace policy. Predictability and long-term vision are extremely important. Investing in an airplane means investing over 10 or 20 years, or even longer, in research and technology. These are major investments in risk capital.
These major companies are jewels of Quebec’s economy. We know that the federal government has provided little support so far. When it withdrew from the pharmaceutical industry, we lost some of the leaders of Quebec’s economy. That is why a Canadian aerospace strategy is essential. I welcome the leadership of the minister, who could make this vision a reality and give our industries the predictability they need to innovate. If we want green aircraft to take flight, we need to give these companies predictability and substantial risk capital.
The minister's response to this recommendation acknowledges that this is needed. He stated the following: “By no means exhaustive, these actions are the pillars of the Government's pandemic response and its strategic plan for the recovery of Canada's aerospace sector.” Those are fine words, but that acknowledgement should be accompanied by funding to protect these long-term investments.
The committee made recommendations in the context of COVID-19. Now that the pandemic is behind us, we have to be able to implement strategies.
Allow me to touch on another problem affecting regional air travel. It is a basic need, but it is not working right now. Air Canada cancels almost one in five flights without notice. This is a problem throughout Abitibi-Témiscamingue and in every region.
How could we provide better support for companies in the aerospace industry? Air Canada may not be the key player anymore. Maybe we should rely more on regional airlines, like Propair or Air Creebec in Quebec.
There is also Transport Canada's remote air services program, which is in place but could be enhanced to ensure a better vision.
The last thing I want to mention is that the government promised investments of around $400 million on July 15, 2021, during the election campaign. That is substantial, but it does not meet the industry's needs when it comes to everything we could be developing to maintain Quebec's competitiveness in the aerospace sector.
Mr. Speaker, I am truly pleased to rise in the House today and say a few words about the aerospace report that was tabled by the Standing Committee on Industry and Technology. I should say “finally” tabled, considering that we have been calling for a study of this key sector for years.
Since I was elected about three and a half years ago, I have often risen here in the House to ask that Canada develop a promising, coherent strategy that would allow our industry to reach its full potential.
Better late than never, I guess. Not long ago, when I brought the matter to the attention of my colleagues opposite, I was told that air sector support programs had been launched. This was the response I often got during the pandemic. I am delighted to see that some progress has been made. At least they know what aerospace means now. Someone got out a dictionary and looked up “aerospace”. If nothing else, it is a start. That is worth celebrating.
I remember one time when I was replacing my colleague from at the Standing Committee on Finance, which was hearing witnesses from the aerospace sector. The government officials asking questions said they had wanted to help Air Canada. The only problem is that Air Canada is not part of the aerospace sector. That is a different cluster, a different sector. At least someone opened a dictionary—I am not sure which—and now they understand what it is.
Now, thanks to the work of the Bloc—and, more specifically, our representative on the Standing Committee on Industry and Technology, the member for —we can say this matter was addressed in a study. Finally, the sector was able to make itself heard. Finally, there is an official report that advocates for an aerospace strategy. I urge the government to follow its recommendations so that Canada is no longer the only country with a major aerospace industry without a strategy to support its development. I would even go as far as to beg the government to take that step.
Our efforts are paying off here. In fact, they are probably behind the 2021 announcement that the referred to a few minutes ago. Indeed, it is an excellent announcement that we welcomed. We are not opposed to virtue. However, without our constant demands, would the have gone to Quebec to announce that Ottawa was going to invest up to $440 million to support innovative projects in the aerospace industry? I have my doubts. I must point out that he knew he would call the election a few months later, but that is another story.
Just in passing, Quebec has had an aerospace policy for 20 years now. These investments that have been announced are significant, and we welcomed them, but it is not a strategic policy or a comprehensive vision. Despite this progress, for now, Canada still lags behind, unfortunately. However, there is an important hub in Canada. It is the third-largest aerospace hub in the world, after Seattle and Toulouse. Indeed, greater Montreal is one of the rare locations able to design and supply all components of an aircraft from A to Z, in addition to making it fly and certifying it.
When he was the federal industry minister, Jean Lapierre said, “the aerospace industry is to Quebec what the automobile industry is to Ontario”, and that is true. It is even rooted in our history. The first glider to take flight in Canada was designed and piloted in Montreal by a 14-year-old teenager, Lawrence Lesh.
In 1907, he achieved what was then the longest gliding flight in the history of aviation. In 1911, 112 years ago, the first airplane designed in Quebec was developed by Percival Reid in a garage on Sainte-Catherine Street, in Montreal.
Today, Quebec's aerospace industry represents $18 billion in sales. That is 12% of our manufacturing exports. The sector represents 40,000 direct and 100,000 indirect jobs. It includes 220 companies, of which 200 are small and medium-sized businesses. My colleague from asked a question earlier, and said that these were not only large companies. Indeed, there are also small and medium-sized businesses. When we consider things in purely numerical terms, instead of by weight, 200 out of the 220 companies in Quebec are small and medium-sized businesses.
These companies are a source of great pride; they are innovative success stories at the forefront of research. In all, 70% of the sector's research and development in Canada is done in Quebec. Need I remind the House that the greenest commercial aircraft in the world, the Airbus A220, was created in Quebec? Unfortunately, it has been sold, but the plane was created in Quebec.
As I was pointing out, this sector certainly does not owe its success to the vision of Ottawa and successive governments.
In fact, since this report was produced and the subsequent announcement made, the government has squandered several opportunities to demonstrate that it is serious about supporting this industry. Apart from a pre-election announcement, nothing has happened. There have been endless missed opportunities since then.
Let us not forget that we are still waiting to see Ottawa take action to help position Quebec as a leader in aircraft recycling. We have been asking. The machinists' union sent a press release about this in the fall of 2021. The election was over, and it fell on deaf ears. The Bloc Québécois relayed the request because we supported it.
Our efforts and the times that the various aerospace groups have tried to engage with the government must not be in vain. North America has the largest aircraft graveyards in the world, and there is a market there. According to the specialized firm Cirium, more than 21,600 commercial aircraft will be permanently retired by 2039. This is an incredible economic and environmental opportunity that we must take advantage of.
Quebec has the expertise to become one of the main North American hubs for aircraft storage and recycling. It is home to the only two companies in Canada that specialize in that area. The development of such centres in Quebec would be perfectly in line with the necessary transition to a green economy, not only in terms of the reuse of used parts, which is very important, but also in terms of preventing soil contamination with toxic fluids and metals from the aircraft. The government needs to walk the talk.
The government has turned a deaf ear to the industry's calls to change the luxury tax. We saw that in the budget we voted on yesterday. That decision will cost 2,000 good jobs in Quebec and will have a major negative impact, especially when our manufacturers are already dealing with cancelled orders because our competitors do not have to deal with this type of tax. Worse yet, there are a number of states that are even offering incentives while our government is imposing punitive measures with respect to our aircraft. By stubbornly insisting on going forward with this tax, the government is encouraging buyers to purchase aircraft from non-Canadian, non-Quebec sellers and to even register the aircraft and have their maintenance done outside Quebec. Meanwhile they continue flying in Canadian airspace.
Anyone who read today's La Presse is aware of this scandal: Canada is currently considering purchasing a fleet of military surveillance aircraft, specifically 16 P‑8 Poseidon aircraft and related equipment from U.S. giant Boeing, without a call for tenders. A contract worth at least $5 billion is at stake. Bombardier had, however, expressed interest in providing its own aircraft as a potential replacement for the Auroras and had made a number of representations before various ministers, in vain.
Let us talk about Boeing's P‑8A Poseidon aircraft, which Canada is looking at purchasing. A report from the U.S. government revealed that the aircraft has failed in recent years due to sitting too long in a workshop. The Poseidon availability rate, which corresponds to the percentage of aircraft that are capable of performing missions, fluctuated between 53% and 70% between October 2018 and March 2020, which is quite low compared to the U.S. military requirement of 80% performance.
Such a scenario would be an absolute betrayal of the aerospace industry in Quebec. Offering that kind of untendered contract to an American company for planes that would fail to meet maintenance standards when we have a local company just asking for a chance to promote its planes, which are built in this country, by participating in an open competition is outrageous.
Therefore, I am pleased that the report has been tabled, and hope it will help wake some people up.
Mr. Speaker, I am extremely pleased to rise in the House to speak to this important report from the Standing Committee on Industry and Technology on the key sector of aerospace and aviation.
We know how important it is for Canada as a whole, for western Canada and Manitoba, and obviously for Quebec. This sector creates and maintains thousands of jobs in Quebec, including 40,000 direct jobs and maybe 100,000 indirect jobs, with an entire supply chain made up of hundreds of small businesses. I will come back to that.
This is a major economic sector that supports thousands of families with good jobs. As the report indicates, these jobs pay on average 10% more than the average salary in Canada. These are good jobs that are often unionized and represented by the machinists' union, Unifor, CSN and FTQ.
I want to use this opportunity to talk about the importance of good union jobs and support the union movement in general. Right now, federal public service employees are on strike. These are good jobs, but not as good as they used to be, which is making it harder to attract and retain federal employees. This is partly why 155,000 workers have been striking since yesterday. The government has to stay competitive on the labour market and offer working conditions that enable workers to cope with the rising cost of living resulting from the last two years of inflation. I want the workers to know they have our full support.
From the start, the NDP has always been a party that promotes the cause of workers and acknowledges their right to seek a balance of power and exert pressure. It is part of the party's DNA. Workers can count on us. We will always be there for them. I think their demands are legitimate and reasonable.
Once again, I ask Treasury Board to speed up negotiations to get good, well-paying jobs for federal employees who in turn can provide good services to citizens, Quebeckers and Canadians.
Let us come back to the aerospace and aviation industry. It is fitting that I am able to rise in the House today to talk about this industry because, just a few minutes ago, I introduced a private member's bill affecting airport workers.
Since I have a little more time now, I will take this opportunity to talk about the importance of that bill, which fixes a problem with and closes a loophole in section 47.3 of the Canada Labour Code. Unfortunately, because of that section, there is no continuity in airport subcontractors' collective agreements and work contracts.
That is called contract flipping. Every time there is a tendering process, the lowest bidder gets a new service provider contract, and those contracts can vary a lot. This can affect workers who do maintenance, those who bring food to the planes for passengers, those who fill the planes with fuel before departure and so on.
Every time there is a call for tenders and a new company is awarded a contract by bidding extremely low, the pre-existing labour contract disappears. This leads to a new attempt to renegotiate the contract. In practical terms, what that means for these workers is that, unlike workers in almost every other sector in society, their wages, working conditions, insurance and benefits get worse every time there is a call for tenders.
Right now, 600 workers at the Montreal airport are affected by this issue. Two contracts have been put out to tender, one by Swissport, if I remember correctly. Some 600 people in Montreal are currently affected by this contract flipping.
This has a very real impact. That anomaly, that loophole, is virtually unique in the Canada Labour Code. There is no other federally regulated unionized worker in the same boat.
That is why I am bringing this private member's bill to the government's notice. This is something that it can look to as an example and use to try to end this unacceptable and wholly disrespectful situation. I have already spoken to previous labour ministers about this. I hope that the current will be sensitive to this reality. I have already told him about it, and I hope that he will be open to listening to these people.
With respect to the aviation industry, I asked my colleague a question a few minutes ago about this. This seems to be just a news item, but I also want to highlight the fact that the Liberal government seems to be considering awarding a sole-source contract to Boeing for the purchase of surveillance aircraft, the P-8 Poseidon, even though there are Canadian and Quebec companies, that is, Bombardier, but others, too, that may be interested in offering their services for the construction and sale of surveillance aircraft for National Defence. Why is the government favouring an American company for something that could be done in Canada? Instead of having a free and transparent competition, why is it giving a gift to a foreign company, when there will be no positive economic impact or spinoffs for Canada?
We have companies that could build the plane and sell it. In addition, the P-8 Poseidon is a last-generation place that is on its way out. No one buys them anymore, not when there are new models from a new generation, with new technologies, that perform better and that could be considered by National Defence and the Liberal government.
It seems like there is some sort of backroom deal going on. The government just awarded three huge contracts to Lockheed Martin for the purchase of a large number of F-35s, so it almost seems like it is trying to make it up to Boeing by promising to purchase the P-8 Poseidon. This plane is not a good plane, the manufacturing will have no economic spinoffs in Canada, and there are Canadian companies that could build better aircraft with greater economic benefits for Canada.
I am not demanding a full-on “buy Canada” policy, but can we at least prioritize Canadian companies, Canadian jobs and Canadian technology so that we get a better plane that also meets our future needs?
Speaking of the future, for years, the Liberal government has had no vision for the aerospace industry. As was stated several times this morning, Canada is one of the few countries in the world where it is possible to build an aircraft from start to finish. We are fully independent. That is amazing.
This sector provides 235,000 direct and indirect jobs at hundreds of companies, ranging from huge corporations to small but capable companies. I remember visiting companies in Drummondville's industrial park that are able to engineer parts for aircraft that are unique in the world and that have special capabilities, with machines that I could not begin to understand. Clients send them plans for a part that has never been made and tell them what they need, and these companies are able to digitize it, model it, put it into the computer and then manufacture multiple copies. They are among the best in the world at this work. That is happening in Drummondville, and it is high-calibre work. I see my colleague from nodding, so I assume he agrees with what I am saying. I thought this work was fascinating and very impressive. That is just one example of companies that are capable of making parts for seats and engines.
I am also thinking of Longueuil. These people are capable of building extremely precise high-tech, high value-added components. These are very good jobs. These people are capable of ensuring that the aircraft built here are among the best in the world.
Let us come back to the matter of the Liberal government's lack of vision. Canada is at the back of the pack globally in terms of strategy, because we do not have one. It does not exist. We have no strategy. We do not have an overall vision for one of the economic sectors that we excel in. It is astounding.
France, Brazil and the United States take care of their aerospace and aviation sectors. They have a vision that melds civil aviation, defence, space, research and development, and worker training, by bringing all the partners to the table.
Here at home, the opposite is true. Things are done piecemeal, ad hoc, by chance. We have ad hoc programs that respond to a small need for help here, a bit of innovation there. The government might put a bit of money into a project or grant a loan if construction is involved, but there is no regularity, predictability or overall vision.
The NDP, along with several other parties, is calling on the Liberal government to sit down and finally develop a national aerospace and aviation strategy, because we need one. We also need more R and D investments to ensure that we have the best technology so we can be at the forefront. As we know, many other countries around the world, including China and India, invest heavily in R and D. If we do not do the same, if the sector is not there to support the industries so they can be the best in the world, we will fall behind. We will no longer be among the best. We will no longer be the international leader in aviation and aerospace.
A massive effort is needed, particularly regarding the energy transition. We know that civil aviation, air travel, is a major contributor to greenhouse gas emissions. That is one of the concerns of the NDP. We want to see that industry reduce its carbon footprint. I think everyone would agree that it is important for that sector to do so, although perhaps not as important as it is for the trucking sector, for example, or the energy sector, like the oil and gas sector. We all agree on that.
I read recently on the news website Courrier international that, in terms of greenhouse gases, the civil aviation sector is the equivalent of landfills, of waste management, which represents between 3% and 4% of total emissions. That is not insignificant, but it is not the worst problem either. However, there is room for improvement. Interesting things can be done for the future.
We hear a lot about the electrification of private and public transportation. However, looking ahead, there are many possibilities for the future of air transport thanks to electrification based on several models. I am not an engineer, but we are not yet at the point of having electric planes, although we already have electric buses, trains and cars. I am very pleased to have a fully electric car. I can participate in the green movement, although it is better to use a bike if possible.
We are a long way from electric aircraft for a host of reasons, in particular because they require tremendous amount of energy. Given the size of battery it would take to generate the necessary energy, the plane would be too heavy to take off. We are not there yet. Perhaps green hydrogen will be a promising fuel option. The hydrogen must be produced with renewable energy. Having a plane run on hydrogen produced with natural gas is not necessarily the best option. There would not be much benefit to such a change. However, the federal government has a role to play in the electrification of transport, and it could ensure that the industry is able to propose promising and productive innovations for the future.
Once again, we must not get left behind by foreign competitors. If we fall asleep at the wheel, others are going to get ahead of us, which would be a great pity for our industry and its future.
Speaking of the future, I mentioned the importance of professional training earlier. The unions, including the machinists' union, are talking about the next generation of workers. It takes time to train new workers, because these are often skilled jobs that require specialized knowledge and have a learning curve. It is sort of like the apprentice system from the Middle Ages. Experienced workers coach trainees and show them the ropes. Currently, little is being done in our high schools and trade schools to steer our youth to the aerospace industry, even though it is an industry that is here to stay, an industry with a future.
It is an industry that has good, often unionized jobs with numerous benefits. As mentioned earlier, the industry pays its employees 10% more on average than other Quebec or Canadian workers. I think it would be a good idea to partner with the provincial governments to attract youth to training and employment opportunities in aerospace and aviation. At present, there are no partnerships. Things are done almost randomly, and the current system is essentially word of mouth. This is concerning in terms of maintaining our capabilities, especially considering the labour shortages and stiff competition we are facing.
I would also like to address the matter of creating an aircraft recycling program. No provision is made for what happens to aircraft at the end of their life cycle, when they are longer able to fly and need to be replaced. We basically have gigantic scrap yards full of aircraft all over North America. There is usable material in them. There are parts that could be reused. There are some things that could be melted down and recycled. There is no system for recycling aircraft. That is too bad, because we are losing a lot of natural resources and parts that could be repurposed.
We have recycling systems for many things in our lives, in daily life, in our municipalities and in our departments, but it seems nothing has been planned for the aviation industry and its aircraft. That is a concern for us. I think the federal government has a lot of work to do on a range of issues relating to the aerospace industry. I am pleased to see that this report includes four solid recommendations.
I think we could go further than those recommendations, but they are a good place to start. We need to make sure that Canada and Quebec continue to be centres of excellence in aircraft manufacturing. Together, let us keep making sure that tens of thousands of families can count on a good job and a good income in order to foster our shared prosperity. Let us keep good jobs in Quebec and in all parts of the country.
Mr. Speaker, I want to begin by saying that I will be sharing my time with my colleague from . He told me that his was the most beautiful riding in Canada. I am sorry to tell him that mine is the most beautiful. Sadly for him he represents the second most beautiful riding.
This morning I have the pleasure to rise to speak to the report of the Standing Committee on Industry and Technology that was tabled on June 16, 2022. This report, entitled “Development and Support of the Aerospace Industry”, has three chapters.
Chapter one reiterates that the aerospace industry was one of the hardest hit by the COVID‑19 pandemic. The second chapter is an overview of the different points of view on the implementation of support measures for the aerospace industry. The third chapter presents recommendations to the committee on the industry's recovery.
We all know that this industry experienced serious problems during the pandemic. Everyone was affected—the entire industry, not just in Quebec, but across Canada. It is important to emphasize that. It is also important to mention that Quebec is a true leader in the field of aerospace. It is truly world-class.
We know that many large companies have developed in Quebec over the years. Today, Quebec is home to a number of large companies, such as Bell Helicopter, Bombardier Aviation, Textron, CAE, and Pratt & Whitney Canada, as well as many equipment manufacturers and an extremely strong network of subcontractors. Some subcontractors are in my riding of Montmagny—L'Islet—Kamouraska—Rivière-du-Loup and I am proud of that.
We know that, when building an aircraft, safety is obviously the most important thing and all the parts that make up that aircraft must be made with extreme diligence and precision. I am very pleased to know that several companies in my riding contribute to this sector in Canada and Quebec.
Most companies in this industry are located in the greater Montreal area, but Quebec has over 200 aerospace companies and about 20 research centres for which it is renowned. It is renowned for the entire network surrounding aerospace: the university network, research centres, college centres for the transfer of technology, or CCTTs. Incidentally, there are three CCTTs in my hometown, La Pocatière. They are all organizations that, directly or indirectly, contribute to the quality of this industry. The industry generates revenues in excess of $34 billion, representing a contribution of $20 billion to $28 billion to the GDP. Over $700 million is invested each year in research and development. That is a lot of money.
Montreal is one of the world's three aerospace capitals, with Seattle in the United States and Toulouse in France. In Canada, 50% of aerospace production takes place in Quebec. It is a Canada-wide industry, but aerospace is to Quebec what the automotive industry is to Ontario, just as British Columbia has the best vines in Canada. Every Canadian province thus strives to highlight their entire industry, which also explains why Canada is so diverse in the production of all these elements. Our universities and technical colleges, including Montreal's École polytechnique, train over 4,500 students every year, who join a highly skilled workforce. It should be noted that there are 200,000 people working in aerospace in Canada.
This report was prepared by the Standing Committee on Industry and Technology. Before the final report and recommendations were presented, 33 witnesses had appeared. On November 2, 2020, the committee undertook a study of the issues related to the development and support of the aerospace industry. Four meetings were held and, as I said, 33 witnesses appeared.
The testimony highlighted the fact that, even before the COVID‑19 pandemic, the industry was already experiencing difficulties. We have to put this in context: There were significant labour shortages, just as there are in many Canadian and Quebec sectors at present. It was already a reality in the industry. Canada had started to lose highly skilled workers to other countries, and training centres had difficulty providing new workers. This was a very important aspect of all the speeches that were made before the committee. Witnesses came to talk to us about it.
We are in competition with the rest of the world and, obviously, we must have the best training centre and we must be able to integrate the people who arrive in Canada as quickly as possible based on the training that they already have. The same is true for the medical and health care sectors, among others. We must have the best employees in the world in the industry, and we must be ready to welcome them.
The industry was hard hit by the pandemic, and the airlines basically stopped operating. The entire commercial aircraft production chain was broken. Collectively, Canadian companies in the industry lost 40% of their revenue, and more than half of them had to lay off workers. Commercial flights have since resumed, but the aerospace industry is still suffering.
Support for the industry was one of the issues that was raised as part of the study that led to the report. Most of the witnesses that we heard from said that they were in favour of the idea of federal support for the aerospace industry. Many organizations indicated that the industry has been doing a lot of research and development that benefits other industries and Canada's economic growth. Of course, the research in this sector is very important and has an impact on other sectors of the Canadian industry.
Witnesses recommended actions rooted in four main areas: direct funding; research, development and training; procurement; and strategy and regulation. After hearing from all witnesses, the committee made some recommendations, the most important of which I am going to share.
We know that this government is extremely wasteful. That is nothing new; we have seen huge deficits for the last eight years. As a Conservative, it would be rather ill-advised of me to ask the government to spend even more and loosen the purse strings even more. At the same time, there are concrete solutions, incentives and measures that the government could put in place to help the aerospace industry while remaining fiscally prudent.
Here is the first recommendation:
That the Government of Canada ensure that a Center of Excellence on Aeronautics 4.0 be created and that it can bring together university- and college-level expertise in this field, and that this Center increase research capacities and development in this sector.
I spoke earlier about the college centres for the transfer of technology, the university network and the government of Canada's research centres. Earlier, I heard members talking about airplanes that could become electric. If we got all these people to the same table, we would be working together. As recently as yesterday, I saw a report about the first airplane with an electric motor, a small aircraft that is now authorized to fly in Canada. We need to continue to do research in that field.
Here is the second recommendation:
That the Government of Canada ensure that significant financial incentives be put in place for basic research, including to develop a greener aircraft...
This is what I just talked about.
This same recommendation requests the following:
That the Government of Canada promote a circular economy approach in order to establish a policy for recycling aircraft that are taken out of service.
We are currently conducting another study on plastics and battery recycling. All of these elements must be integrated with one another. Of course, we did not think about it as much when we started talking about electric vehicles. This will be another very important aspect in terms of pollution. It is one thing to collect all the raw materials to make batteries, but it is quite another to dispose of them after they have been used, and recycle them to make other batteries that can be used in other sectors, or even in the auto sector. It will be the same with aircraft, and we have to start thinking about it now.
I will read another of the recommendations, which I think is one of the most important ones:
That the Government of Canada...develop a national strategy for its aerospace sector.
A national strategy would essentially bring together all the players, not only in Quebec, but across Canada, to push us even further in terms of what we can achieve in this industry. Obviously, we are talking about airplanes, but aerospace is much broader than that. It includes a whole sector of activity, essentially anything related to the sky.
I think we need to do better and do more for the aerospace industry and more for Quebec. We know that aerospace is especially important in Quebec, just like the auto industry is important in Ontario, as I was saying earlier, and vineyards are important in British Columbia. I am sure my colleague will get into that. We have everything to gain as a country from developing this industry even better and regulating it even better.
Mr. Speaker, I am pleased to rise today to share a few comments on the report entitled “Development and Support of the Aerospace Industry”, tabled by the Standing Committee on Industry and Technology of which I am a part. However, I will note that I did not participate actively in this study. That said, I cannot outline enough how important the aerospace industry is to the Fraser Valley, my riding of Mission—Matsqui—Fraser Canyon, the neighbouring riding of Abbotsford and all other areas in British Columbia.
We are in a changing global context where the needs of the Canadian military are expanding, both for national security and for natural disasters. In the Fraser Valley, when the great floods came in the last couple of years, we had to rely on the Royal Canadian Air Force to help our constituents and to fly in supplies. Helicopters from Vancouver Island based out of Esquimalt came to rescue people in my riding. Also, the threats that Canada faces from Russia in our far north are growing. Just recently, two spy balloons that originated from China came into Canadian aerospace. The need for the government to act and do more is essential at this stage right now.
I will note three particular recommendations that came out of this report that are worth mentioning today.
The first one, recommendation 3, is “That the Government of Canada accommodate the needs of the various air fleets, particularly with regard to the maintenance of their aircraft, and support the development of companies specializing in the maintenance of these aircraft.”
Second, recommendation 5 in the report, is “That the Government of Canada, following consultation with industrial partners and labour representatives, develop a national strategy for its aerospace sector.”
Third, recommendation 7, is “That the Government of Canada collaborate with provinces and territories to fund post-secondary training across all sectors of the aerospace industry adequately accessible over all of Canada.”
In British Columbia, there are a number of big companies that have a national and global impact. We could talk about KF Aerospace in Kelowna, Conair in Abbotsford and Cascade Aerospace, which employs hundreds of people in my constituency. It is an operating unit of IMP Aerospace & Defence, which was ranked Canada's number one defence company in 2017.
The IMP group is one of Canada's best-managed companies and it has its head office located in Halifax. Its aerospace defence and aviation sectors provide comprehensive in-service support, repair and engineering. It accounts for over 3,500 jobs across Canada. There are approximately 550 of those jobs in Abbotsford at this time.
The division of IMP in Cascade Aerospace is approved by Transport Canada for maintenance, manufacturing, training and design. It is an FAA-approved company and is accredited with the Department of National Defence for maintenance, material support and technical organizations. It is one of only two Lockheed Martin-approved C-130J heavy maintenance centres and one of 13 approved C-130 service centres. To say that this company has a lot of specialties is an understatement.
Right now, Cascade is providing military support not only to the RCAF and the USAF, but it also provides support to Mexico, Tunisia, Thailand, Taiwan, Bangladesh, Indonesia, UPS, WestJet, Alaska Airlines, Southwest Airlines and Longview Aviation. Cascade has that specialization in IMP for maintenance repair and the overhaul of aircraft as an accredited manufacturing facility for a various suite of aircraft types. To put it bluntly, as I mentioned earlier, in the changing global landscape that we find ourselves today, facilities like Cascade Aerospace are not only good for our economy, they are essential to Canada's national interest to maintain a robust aviation sector both for commercial and defence purposes.
That said, in conversations with employees and the executive team at Cascade Aerospace, there are ways we can improve its ability to do business, to serve the Canadian and U.S. militaries, in particular, and to provide the types of jobs that Canadians want, which are high-skilled jobs in the trades that are very technical and specialized.
In the conversations with those at Cascade, they mentioned that Transport Canada could do a better job of responding to applications for design-approval delegation. It could also do better with certifications to make sure there is a more consistent approach. They mentioned that there are regulatory gaps in certification authority for military export. Design audits, in their minds, are sometimes ineffective, and regulations, in some cases, are very dated. One specific example is that the training book for new technicians still includes a section on cloth aircraft. We are working with a company that deals with the most modern technology in the 21st century, but we are still training young technicians on the repair of cloth aircraft.
One of the big regulatory gaps that Cascade Aerospace outlined is the need to recognize foreign credentials. As I mentioned earlier, Cascade Aerospace serves the United States Air Force, the Mexican air force and the Bangladesh Air Force. Sometimes technicians from those countries might even immigrate to Canada, but Transport Canada regulations would prohibit an aircraft technician trained in Mexico from necessarily being able to work right away in the same capacity as a technician trained in Canada, even though they were working on the very same aircraft in their home country.
I would encourage Transport Canada to continue working closely with Cascade Aerospace and the entire aerospace sector, across Canada, to make sure that our regulations are up to date. Right now, as has been told to me by the national association, Canada lags behind the FAA regulations. If there is one country that we want to be aligned with, both for businesses and military strategic purposes, it is the United States of America. My plea today to the government is to get those regulations updated as soon as possible.
The second big area that needs to be addressed, which is reflected in the three points I raised at the beginning of my speech, is the challenges we face in the labour market. Cascade Aerospace has been innovative in its approach to not only retain but also train the best Canadian workers possible. It is interested in hiring more indigenous people from our local first nations and more women to the trade sector. It has made lots of investments and has taken many steps to ensure that it has an in-house training program to make sure its technicians are the most competent and capable to compete at the global level for defence and other contracts.
Right now, though, the Province of British Columbia has to work more closely with companies such as Cascade Aerospace to ensure that their competency-based, hands-on training programs recognize the needs of the sector and are aligned with labour market regulations and certification programs, both through the Red Seal and labour programs at the provincial and federal levels.
To conclude, we have a lot of work to do in the aerospace sector. I am very proud to live in a community where there are hundreds of people employed in high-paying jobs in the aerospace sector. We need to work with these companies to not only meet the global challenges we are facing today, but also meet the labour challenges we are facing in communities across our country.
Mr. Speaker, the real shameful stuff is going to come up, I can assure the member, in regard to the Conservative Party, but the Bloc is sitting a little too close. I was just wondering if the member wants to shoo over a little bit more. I agree. I would do that too.
They are starting to have a negative influence on the Bloc. Today, we were supposed to be debating Bill , and we know how important it is to our constituencies that we provide security in the privacy of information on the Internet. We all recognize how important that issue is. The Bloc do not want to discuss that today, even though we have attempted to have it passed through the House. I understand it supports the legislation, which is a good thing. However, it wants to talk about the aerospace industry by bringing through concurrence of a report to use up government time. This is not the first time. We are used to the Conservative Party doing it.
Having said that, I am happy to talk about the aerospace industry. When I think of the aerospace industry, I think of John Diefenbaker. Do members remember John Diefenbaker? John Diefenbaker was a prime minister of Canada.
Canada, at the time, was leading the world, virtually, in the development of a first-class interceptor, a plane that was incredibly fast. We have to remember that this was after the world war, when there was a need for development and an enrichment of our aerospace industry. The prime minister at the time, John Diefenbaker, destroyed Canada's aerospace industry by cancelling the Avro Arrow.
That was a high-altitude plane. It was ahead of its time. I want members to imagine that plane program not having been cancelled. Avro employed hundreds of people at the time, possibly over 1,000, but I will say hundreds for now. They all worked in the province of Ontario.
I think of the technology and the research that was done. They actually rolled one of the Avro planes out. It was recognized around the world as likely the leading candidate for the development of a plane that was like a rocket, going to altitudes of 40,000 and above.
John Diefenbaker cancelled the program. Back in the late fifties, he cancelled the program. It is the truth. As a result, Avro actually went broke and closed its doors. All of the equipment and, more important, all of the brains and skills were dispersed. Many of the individuals who developed the Avro ended up leaving Canada so they could get into and expand that particular industry. Canada lost out big time, and it is something which even today, 70 years later, we reflect on. What would our industry look like today?
Well, earlier today, I was asking questions of members of the Bloc. I am happy to say that it is the province of Quebec that leads our aerospace industry. I pointed out, in the question I posed earlier, that in the province of Quebec, one can build a plane from the very beginning, from the bolts to the polishing of the aircraft, the final product. That is fairly rare.
When we think of the aerospace industry in Canada, one is talking about tens of thousands of jobs, well over 100,000 jobs. Do members know the average salary of someone working in the aerospace industry in Manitoba? It is estimated, I believe, to be over $60,000 a year. These are good middle-class types of jobs with incredible skill sets. In Canada today, it is Quebec that leads.
With respect to jobs, I suspect that the province of Ontario lost the opportunity to play that leadership role as a direct result of a federal government's decision not to invest in the aerospace industry.
Let us fast forward a few decades. Today, we have a national government that does support our aerospace industry in a clear and tangible way, and we have done this from day one. We talked about Bill and how important it was that we ensure future contracts. We talked about how we could support the industry even though, at times, it meant there would be some give and take. That give and take is important to recognize. The world has changed.
I had a tour of Magellan in my home city of Winnipeg. I felt a sense of pride when I walked around the floor and saw an F-35 wing being manufactured. We have an absolutely incredible aerospace industry in Winnipeg, which contributes to the industry not only in Canada, but worldwide.
Those workers show their love and passion for the construction of very important components of the F-35. Imagine being a worker at Magellan who sees an F-35 on a news broadcast. He or she might reflect on whether that wing was manufactured in Winnipeg. Even in crating the wing, someone would need an engineering background to build the crate that houses the wing prior to its shipping.
The member before me talked about the importance of schools. Magellan has a classroom in which Red River College contributes to the education. It is very important to recognize that it is not only Ottawa that has the responsibility of supporting these industries, even though it feels we are alone in doing that at times. Many stakeholders have a role in ensuring that Canada continues to lead an industry that is so vitally important to the world. The best way to do that is to work with our partners and stakeholders.
When I was an MLA a number of years ago, and I hope the Manitoba legislature Hansard would show this, I spoke about the aerospace industry in the province of Manitoba. I said that the province needed to step up and support the industry. If the local entities and provincial governments are not at the table, it hurts the industry. It also hurts it if the industry itself is not at the table.
As much as I would love to talk about the province of Quebec, I think the similarities are striking between Manitoba and Quebec. We have aerospace industry umbrella organizations and those organizations are there for the health and the well-being of that industry.
This comes from Winnipeg's aerospace industry's umbrella agency. I will quote from its website so people can get a sense of what I am referring to when I talk about Manitoba's aerospace industry. It states:
Canada is a global leader in aerospace and Manitoba is home to Canada’s third largest aerospace industry. Our highly competitive aerospace sector produces world-class products for customers on six continents.
From modest roots in small bush plane repair in the 1930′s, the Manitoba aerospace industry has grown to include sophisticated design, manufacturing, servicing, testing, certification and research and development capabilities. We are home to Canada’s largest aerospace composite manufacturing centre, as well as the world’s largest independent gas turbine engine repair and overhaul company. Also located in Manitoba are the internationally acclaimed Composites Innovation Centre and two of the world’s most advanced aircraft engine testing and certification centres developed by Rolls Royce, Pratt & Whitney and GE Aviation. Along with these global aerospace leaders, Manitoba has a network of SMBs that compete and supply into the global marketplace. This growing cluster is strengthened through the Competitive Edge Supplier Development initiative, an internationally recognized learner to world class supplier and supply chain development program.
This gives us a sense of the impact the aerospace industry in Manitoba has on the world. We could come up with even a stronger statement, in a different perspective coming from the province of Quebec.
I remember another occasion when I was in the Philippines. I talked to some military representatives, who talked about the Bell helicopter. They thought that the province of Quebec had a wonderful product in the Bell helicopter, that Quebec was a place they could look at. I asked a representative why he was looking at the province of Quebec in particular and what he thought about the manufactured helicopter. I did not expect, and the member commented on this, him to say that it was the fact that politicians in Quebec were so impressed with the makeup of the workforce in the construction of the helicopter, referring to the fact that people of Filipino heritage were in that industry.
With respect to our aerospace industry, one of the nice things is the diversity we see when we tour these plants, whether they are in Quebec, Manitoba, Ontario or British Columbia, “the big four”, as I would like to say. Hopefully Manitoba will even become higher and more prominent, but that is a personal bias. It is that diversification of the workforce and the skills they have.
That is why it is so critically important that Ottawa not only continues to support the aerospace industry, as it has prepandemic, during the pandemic and today, but that we also ensure, as much as possible, that those stakeholders are at the table as well. We want Red River College and the University of Manitoba at the table. We want those post-secondary facilities, whether they are in Manitoba, Quebec, Ontario, B.C., or any other jurisdiction, to be at the table to ensure we continue to invest in research and technology.
When we think of manufacturing in Canada, many would argue, especially many of my Ontario colleagues, that we lead in the automobile industry. After all, we can take a look at the hybrids, at the plants that are being announced, the thousands of jobs, the clean energy, and all these things. In a good part, it is coming out of Ontario, but when we take a look at the overall picture of the manufacturing industry, Canada's aerospace industry is recognized, within our bigger picture of the manufacturing industry, as one of the best, if not the best, in investing in research, technology and advancement. We are seeing that in the types of demands that are there for Canada.
Ottawa should continue to support the industry. As the indicated in a question about something he recently announced in the province of Quebec, I can make reference to things that recently have been announced in Manitoba. Whether it is through procurements and how the federal government supports the industry, or direct investments in the industry, or indirect things that are done through things such as trades and skills, my appeal would be that we look at what other stakeholders and jurisdictions can do that would complement the types of initiatives that the federal government is taking to advance a very important industry.
This industry employs thousands of people, with well-paying jobs. It contributes billions of dollars every year to our GDP, thereby enhancing our lifestyle. We can all take a sense of pride in how our aerospace industry has been able to do relatively well even during the pandemic. As we get through the pandemic and look at the potential to increase its demand in the years ahead, it is critically important we continue to look at ways to support our aerospace industry.
As much as I enjoy talking about the aerospace industry, I hope the Bloc and Conservatives will come onside and support Bill when it comes up for debate later today. It would be wonderful to see that legislation pass, which would make this debate that much better.
Madam Speaker, I rise today to speak to the report entitled “Development and Support of the Aerospace Industry”, which was tabled in the House of Commons on June 16, 2022.
Let me first say that I very much value the aerospace industry. The industry is critical to Canada.
Before I continue, I will be sharing my time with the member for .
As I was saying, I value the aerospace industry because it is critical to Canada. It is also critical to my own home province of Nova Scotia, where IMP Aerospace & Defence is located. It is a proud Canadian organization that employs over 2,400 people across Canada in all areas of aerospace and aviation. It employs over a thousand people in my province of Nova Scotia and close to 100 in my riding of Halifax West, so one can see the importance of that industry right in my backyard.
I want to underscore the importance of the aerospace sector. This sector provides jobs, draws talent and contributes significantly to the economy of Quebec, Canada and Nova Scotia.
The aerospace sector provides jobs and talent and contributes significantly to our economy.
I want to talk about the aerospace industry and the support the federal government has provided to this sector and these workers since taking office in 2015.
The Government of Canada appreciates the committee's work and welcomes the testimony and recommendations it received from the aerospace industry in March 2021, as reflected in the committee's report entitled “Development and Support of the Aerospace Industry”.
The aerospace industry in Quebec and Nova Scotia is a vital part of the economy, and the government recognizes the extraordinary contributions this sector has made. We recognize, of course, that this is one of the most innovative and export-driven industries in Canada.
The COVID-19 pandemic and subsequent decline in global air travel has had a significant and lasting impact on the industry. Indeed, the global decline in commercial and business air travel has resulted in significant reductions in demand.
The reduction has been in the demand for aircraft, for aircraft maintenance and for parts.
In fact, in 2021, the Canadian aerospace industry, comprising the aerospace manufacturing and maintenance, repair and overhaul sectors, contributed over $24 billion in gross domestic product to the Canadian economy and nearly 200,000 jobs. This is a decrease of $0.9 billion in GDP and 7,300 jobs since 2020, and a total decrease of $9.4 billion in GDP and 35,200 jobs since the prepandemic levels of 2019.
The global industry has been gradually recovering from the pandemic over the past year, and Canada's aerospace manufacturing revenues declined at a significantly slower rate in 2020-21 compared to 2019-20, and at an even slower rate in 2021-22.
Moreover, despite the challenges, Canada's aerospace industry continued to rank first in research and development among all Canadian manufacturing industries in 2021, with investments totalling $934 million, as well as in its position as a world leader. In the production of civil flight simulators, we were first in the world. For civil engines, we were third in the world, and we were fourth in the world for civil aircraft.
The Canadian aerospace industry is expected to be well positioned for the recovery due to its diverse product portfolio, including a strong focus on regional business aviation.
The government's response tabled in the House last year outlines the government measures designed to respond to the committee's recommendations. They are organized into four categories.
I look forward to speaking, during questions and answers, on those four categories.
The first category is financial support, both direct and for research and development. The second is support for skills development and training. The third is support through procurement and the fourth is support through strengthened regulations.
Under each category, the government response highlights which committee recommendation is being addressed and provides examples of programs and initiatives to support Canada’s aerospace sector.
I want to take the last little while to thank the aerospace industry and highlight the impact that the industry has had on my own province of Nova Scotia. At the beginning, I spoke about IMP Aerospace & Defence, a proud Canadian organization that really has great local roots in my own backyard in Nova Scotia.
Last year, a number of my Nova Scotian colleagues and I had the opportunity to tour the hangar at the Halifax Stanfield International Airport. We met with employees working, maintaining and upgrading planes and helicopters used in search and rescue operations to extend their lifespan. We spoke directly to them and to the executive there. These are great-paying, middle-class local jobs for people who live in our communities.
I will highlight one person in particular because he stuck out in my mind. I do not believe I ever met him before, but his name was Mr. Keith Toon. He recognized my name through one of my daughters who plays soccer. She started playing soccer before she was five years of age. He was a soccer coach for decades. My daughter grew up to be a competitive soccer player, ending up playing university soccer; she is now on the women's soccer team.
What I am saying is that this highlights the significance of these employees and others working in these good jobs in our own communities. They are doing great work by volunteering and giving back. Yes, the aerospace industry is very critical in our province and in our country.
Madam Speaker, I am pleased to address the issue of the aerospace and aviation industry. I grew up in Montreal, and my family and I were always aware of the existence of this industry, particularly when we went down what was then called Laurentien Boulevard in Cartierville. There was even an airport attached to the Canadair plant.
Now it has become a residential area, but it was very impressive to go by that plant. In fact, I believe that, today, it is by far the biggest manufacturing plant in Montreal. My father worked for Canadair after the war, in the 1950s, when Canadair specialized in manufacturing aircraft for putting out forest fires. I have always been aware of the aerospace industry.
However, I am rather confused as to why the decision was made to discuss this report now. If I am not mistaken, this report is over a year old and the government has already issued a response to it, as it is required to do when a committee report is tabled. It is my understanding that we are supposed to be debating Bill , which deals with some issues that are very important at present.
The purpose of this bill to modernize our privacy protection laws in a context where we are increasingly seeing the danger of the spread of disinformation. It is a growing and current challenge that threatens the very foundation of democracy. Bill C‑27 is timely. I think it addresses rather crucial issues for our society.
That being said, I would like to turn to the subject at hand, which is the aviation and aerospace industry.
In Montreal, this industry has a long and extraordinary history. It goes back nearly a century. Montreal in particular played a key role in the Second World War. I have before me an article from the Hamilton Spectator dated September 7, 1939. I will read a few paragraphs from this article. It will become clear that Canada and Quebec, but especially Montreal, were instrumental in the war effort in Europe. This article is from New York.
A sharp expansion in Canadian airplane manufacture is expected as a result of President Roosevelt’s proclamation of the United States Neutrality Act, the New York Herald-Tribune says today....
The neutrality proclamation has cut off for the time being at least the delivery of nearly half of the 600 warplanes ordered in the United States by France, Great Britain and Australia.
“The embargo proclamation, however, does not interfere with the manufacture of similar planes in Canada under licences already obtained by the Dominion's manufacturers from American firms,” the dispatch says.
Basically, what was happening was that the United States was not allowed to export fully built airplanes to Europe to help with the war effort, but it was not prohibited from sending parts to Canada and having Canadian manufacturers manufacture the planes and send them over to Europe.
There were two important manufacturers in Montreal that were doing this manufacturing for overseas markets. One was Vickers, which, as I understand, later became Canadair, and the other was Fairchild Aircraft, which I believe was located on the South Shore, in the riding of , which became, after that, United Aircraft, and then Pratt & Whitney.
Another Montreal company was involved in this wartime production, and that was the Canadian Car and Foundry Company. That company was founded in 1909. It was given a contract to produce Hurricane aircraft. By 1943, the company had a workforce of 4,500 people, half of them women, I might add, and had built 1,400 aircraft, about 10% of all the Hurricanes built worldwide.
I would like to take a moment to mention the company's chief engineer, a woman by the name of Elsie MacGill. Let me tell members a bit about Elsie MacGill. She was known as the “Queen of the Hurricanes”, and she was the world's first woman to earn an aeronautical engineering degree and the first woman in Canada to receive a bachelor's degree in electrical engineering. She worked as an aeronautical engineer during World War II and did much to make Canada a powerhouse of aircraft construction during her years at the Canadian Car and Foundry.
We can see, very clearly, that Montreal and Quebec and Canada played an extraordinarily large role in the development of aerospace and aeronautics. Montreal is the home of IATA, the International Air Transport Association, which governs procedures, rules and regulations around commercial transport in the world. It is an international organization.
I would also like to mention that Dorval Airport basically started as part of the war effort that saw planes built in Montreal and other parts of Canada and shipped over to Europe. Dorval Airport, now known as Pierre Elliott Trudeau International Airport, and I say that very proudly, was where the Ferry Command was based. The Ferry Command was a process by which planes would leave from Dorval and fly to England. These airplanes were being delivered to the air force over there.
Montreal has an extremely rich history, and throughout that history it has built up an industrial cluster or an industrial ecosystem.
Because next week is Tourism Week, I would also like to mention, in passing, that in my riding of Lac-Saint-Louis we have the Montreal Aviation Museum, which I invite members to visit because they will learn all about Montreal's and Canada's aviation history.
Madam Speaker, this is an exciting time for aerospace. Just this morning, we got to watch Starship, SpaceX's newest project, live in our office. Starship is twice as big as the Saturn V rockets, with 35 rocket engines. It blasted off this morning from Boca Chica, Texas. It went almost into space and unfortunately got caught in a spiral and kept going around and around before they had to hit the self-destruct button. It reminds me a bit of the Liberal government, but that is a story for another time. It is very exciting, because we are seeing private space companies in the U.S., and of course representing the whole world, involved in space travel.
With respect to another story, the Artemis II crew was announced a couple of weeks ago, including Canadian Space Agency astronaut and RCAF captain Jeremy Hansen. It is very exciting that we have a Canadian astronaut joining the U.S. on the Artemis missions as we go back to the moon. That is something we can be very proud of.
From the field of engineering that deals with the design, development, production and operation of vehicles and systems that operate in the earth's atmosphere or in space, Canada has a dynamic industry with aircraft, spacecraft, satellite and missile systems, which of course we call the aerospace sector. I know that many of our colleagues have talked about great companies that are operating here in Canada, including in Montreal and other parts of the country, all working on different systems in the aerospace sector.
Let us be clear on this, and this report is very clear: We need to get back to the basics. The Canadian aerospace sector is not broken, but the government's role is. In my last point, I am going to talk about what this report really spoke about and what we need to do.
Number one, we need to identify aerospace as a pillar of Canadian industrial policy again. We have seen it blanketed. We have a term that we hear from experts and from witnesses all the time when we are talking about the spectrum of industrial policy. It is that we spread the peanut butter too thin. In Canada, we seem to think that we are just going to give everything to everyone and that at the end of the day maybe that is going to be a really good strategy with which Canada evolves, but it is not. We seem to spread it all too thin. Aerospace is one of those industries in Canada that we can afford to put more into, and we are going to get more out of it. I am going to talk specifically about that.
Before I do that, I want to say that I am happily splitting my time today with the member for .
The second part is very important. When we talk about aerospace, it means that we put an emphasis on research and development and first-stage innovation. When we talk about other sectors in Canada where we need to succeed, it is about putting an emphasis on first-stage innovation, research and development, because when we put an emphasis on research and development, we are getting something out of that.
Something that we are also studying in the science and research committee right now is owning what we create or commercializing our IP. When we are looking at all these strategies, there is not just one thing we have to do. We have to do all these complex things at the same time, but we really need to commercialize IP and put more money into research, and then of course focus on aerospace as being one of those industries. Part of that is going to be deregulating the industry. Also, what is probably most important is establishing a national procurement strategy to support defence and the aerospace sector. I really want to focus on that last point first, because it is the most important.
The Washington Post had an article yesterday that was really concerning because it mentioned that the told NATO that Canada will never meet its spending goal. That is very concerning. Canada's widespread military deficiencies are harming ties with security partners and allies. These shortfalls lead the Canadian Armed Forces to not be able to participate fully across the world. We have had really big problems with not meeting our commitments with NATO and our commitments across the world.
The Americans are concerned about our ability to protect our Arctic against Russian and Chinese aggression. The Germans are concerned about whether Canada will continue to aid Ukraine. Turkey is disappointed by the Canadian military not being funded enough to support transport of humanitarian aid when it had an earthquake earlier last month. Haiti is frustrated by Ottawa's reluctance to lead a multinational security mission.
However, this is the biggest glaring hole in economic opportunity. Other nations, like Germany, the U.K., Australia and the U.S., have figured out how to make defence policy industrial policy, and have that policy create powerful paycheques to their citizens and proud, private enterprises that provide income to their countries. This is what Canada needs to do, and what it needs to do with defence when it relates to aerospace.
The key differential between our approach to defence policy and the British approach is that industry is included in the definition of defence policy from the outset. By the time the British defence and security policy is stable, most of the companies selected to deliver the products and services have already been identified as part of a defence strategy and then a procurement strategy.
In 2017, 56% of the U.K. procurement was sole-sourced with a large majority awarded to the British industry providing billions to the country's GDP. How does that relate to Canada and the aerospace industry? Well, let us look at our neighbour south of us and, of course, to the rocket launch this morning.
A really big stat is from NASA, which has a bigger budget than Canada's defence budget as a whole. When we look at SpaceX, a private industry, 85% of its budget comes from NASA. When we talk about that rocket this morning exploding, probably bad news for Elon Musk, but great news for the engineers and part of the product, because they are going to build a new rocket and try again. That is part of first-stage innovation with companies. They are going to put more of that money into those industries. The thousands of engineers, product designers and workers, as I alluded to earlier, who are part of that process is just astounding as well as the GDP that is put back from it.
One side note is that SpaceX is involved with Starlink, and that American company, funded, of course, by the defence policy and NASA, is actually providing Internet to Canadians. Hundreds of thousands of Canadians are getting Internet not from Canadian companies but from the U.S. company Starlink, from Elon Musk, which is a part again of this procurement policy that was started by NASA. NASA funds 85% of SpaceX and no doubt will be funding all new projects for space going forward.
We can see how defence spending ends up being a Canadian prosperity plan. It is good for Canadians and powerful paycheques, and it also can be, of course, a great industrial policy.
I want to go back to R and D and what we used to have.
We used to have a couple of programs with the Conservative government, prior to the Liberal government, like SADI and AIAC that were specific to the aerospace sector. Again, those specific programs went into research and development for the sector for certain companies.
We had a witness come to the committee from Héroux-Devtek Inc., Mr. Gilles Labbé, who talked about a landing gear process. This is a company in Quebec that had a landing gear project, and when he talked about the project, he talked about a ticket that normally costs between $50 million and $70 million U.S. with the process taking as long as five years. Through those SADI programs that we used to have from the government, that was almost entirely funded by the government. It helped that company save five years and evolve. That company went from having 200 employees to now over 2,000 employees. What happened with that R and D program is that the SADI was evolved into the SIF program. However, again, with that peanut butter spread too thin, the SIF program looks at many different industries and not aerospace specifically or targeted specifically. What has happened is that those companies are finding they are missing out on that first-stage innovation and the R and D.
When we look at R and D as a specific purpose of industrial policy, what we should be looking at are examples such as DARPA advanced manufacturing in the U.S. and, of course, looking at specific sectors. Again, to my point, aerospace needs to be a specific sector that we put R and D into, and when we look at procurement policies, we should certainly see it as a bright future and Canadian industrial policy, which is the only way we are going to help this industry succeed.
We have a lot of different issues that we need to look at across the defence spectrum, but certainly aerospace is going to be able to fulfill that. As Canadians, we certainly we need to reach for the stars and start looking at aerospace again as not just an industry but a major industry for industrial policy, research and development, procurement policy and, again, looking at investing in defence and linking that to the aerospace industry to ensure that Canada succeeds, those workers succeed and those companies succeed.
Madam Speaker, I am pleased to follow such a great speech from my colleague from .
I would remind those watching at home and my constituents what we are discussing today. Today we are discussing a report done by the Standing Committee on Industry and Technology of the House of Commons, entitled “Development and Support of the Aerospace Industry”. It was tabled in this Parliament in June 2022, but is actually a study that spans two Parliaments. It was started in the last Parliament before the last election when the now Conservative leader was the vice-chair of the committee and then continued in this Parliament after COVID. It is quite a span of time, but affects a lot of the tone and position of where the industry is.
I should start by saying that we are all mentioning aerospace companies within our regions or ridings. There is a company in my riding, the beautiful UNESCO heritage town called Lunenburg, which everyone may have heard of. The company is called Stelia North America, which makes parts for the Airbus 737 Max and the F-35 aircraft. Unfortunately, because of the dithering by the government on the purchasing of the aircraft that it said it was not going to buy and now has ended up buying, a lot of jobs were lost in that interim period in Lunenburg that it now has to try get back since the government is now going to buy the aircraft it said it was not going to buy.
It is important to understand what has happened to this industry. There is a really interesting section in this report, on page 6, that says, “Canada’s aerospace sector had fallen from the fifth-largest in the world in the 1980s to the ninth largest.” It goes on to say, “Canada was once the fourth-largest aircraft manufacturer but it has dropped to the 12th”. Recommendation 5 in the report has been mentioned before, which talks about having an aerospace strategy. There were aerospace strategies in previous governments that led us to be a much larger player in the world than we are now, but in the last eight years of the Liberal government, we have not had any strategies, and that is what this unanimous report points out in recommendation 5. I would point out that the Liberals agreed with this, too.
After eight years, what has been the Liberal strategy? The Liberal strategy was to bring in a luxury tax on aircraft. That was their strategy because they have never met a tax they did not like. In fact, the said, when she introduced it last year, that this would make the wealthy pay their fair share. However, the reality is that when we look at the numbers and the performance of the industry, the cost of this tax is actually being borne by the workers in the aerospace industry, not by the corporations. I will go through that in a few minutes.
There was a report done by an economist out of Montreal, Jacques Roy, who words for HEC, an economic think tank in Montreal. He talks about that tax, which was introduced on September 1, 2022, by the Liberals, and the impact it had. The tax revenues expected from the new aircraft tax he says are negligible. A May 2022 Parliamentary Budget Officer report estimated the tax on cars, planes and boats, which were all included in that tax, would raise $163 million in 2023-24, but only an insignificant $9 million of this total was expected to come from the aircraft tax. The PBO also projected an annual reduction in aircraft sales, as a result of that tax, of $30 million. Obviously, the impact is much greater on jobs and the economy than the tax benefits the government.
That tax also affects the reputation of our industry. The PBO cautioned that estimates were qualified by several uncertainties and unknown behavioural responses to the tax. There are always behavioural responses to taxes when they are brought in. This economist did a deeper dive into the impacts of that tax, and I will share with the House what the findings of that were.
It has a qualification that it has to be 90% business use in order to be exempted from the tax. That has proven to be unworkable because the jets that companies like Bombardier sell are not used by that company 100% of the time. Because of the way those jets are utilized, the qualification does not apply to the businesses. Commentators have noted that the 90% threshold is harsh in comparison with the primary use standard; in other countries that have done this, this is usually only 50%. This is commonly used in the United States and Europe as an alternative source of determining whether the tax applies to the jets.
The PBO's research expressed a concern about the narrowness of the exception. Although the tax targets aircraft sold to private individuals for nonbusiness use, it also applies in practice to situations involving mixed use; that is, for some business use and some personal use where it cannot be confidently determined that the 90% test has been met. In this regard, it is important to understand the unique practices of the aerospace sector. Buyers of business jets and helicopters usually outsource the management, servicing and maintenance of these aircraft to management and leasing companies. Even owners who acquire a jet principally for business purposes, and do not intend for it to be used for personal purposes, will face considerable difficulty in determining whether that 90% test applies. They will ask leasing companies to rent the aircraft out to other customers when they are not using them.
This is where the issue comes into play. Canadian-based leasing companies may rent these aircraft to U.S.-based charter brokers. They, in turn, may charter the aircraft for their own clients. The person who is subrenting or leasing it may use the aircraft for business or personal use. Very limited information, if any, is available to the owner regarding the other uses of the aircraft in these circumstances, partially because of privacy laws. It may therefore be quite challenging, if not impossible, to determine whether the purpose of the trips taken in such cases is business or personal. That makes the determination of whether the 90% test has been met especially difficult.
According to the PBO's interviews in doing this research, the introduction of the luxury tax has already had a huge impact. The negative reaction from clients has translated into lost sales for Canadian aerospace manufacturers and their supply chain. It is estimated that the business aircraft segment experienced a drop of 8% in sales in 2022 because of the tax. This represents roughly $480 million in lost sales. That figure is significantly higher than the $30 million projected by the Parliamentary Budget Officer. He estimated that this drop in sales would result in the loss of approximately 750 direct jobs in Canada. The estimate is based on the number of direct jobs required to produce the aircraft for which sales have been lost. Personal income taxes paid by just these individuals exceed the annual revenues expected by the government from the luxury tax.
For helicopters, research indicates that private individuals are likely to postpone or abandon the purchase of approximately five new helicopters per year or to buy a used model. This will result in the loss of 15 full-time jobs and lost annual salaries of approximately $1.3 million.
The impact of lost sales also ripples down through the aerospace industry and supply chain. For business jets alone, it is estimated that the loss of 750 direct jobs will cause the loss of an additional 1,200 jobs in the industry's Canadian supply chain. The PBO estimates that these workers' personal income taxes at the federal level alone will be approximately $14.3 million.
In my view, these figures are fairly conservative. They would be much higher if we were to add the figures for all of the indirect and induced job losses in the industry. These figures also underestimate the impact of the maintenance, repair and overhaul activities on other small and medium-sized enterprises not interviewed in the course of the research.
I am running out of time, so I will just say that the strategy called for in this report is a strategy to tax. That is the only one we have after eight years with the Liberal government. That is where the government goes to, and the result will be massive job and economic losses for our country.