Ottawa, Quebec back $2-billion investment in aerospace industry

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The Canadian and Quebec governments are trying to breathe new life into Canada’s bruised aerospace sector by backing new investments worth $2-billion, as the country tries to preserve its stature as a global aviation hub by developing new emissions-lowering technologies.

The two levels of government will together provide as much as $685-million to fund new technology projects to be carried out by engine maker Pratt & Whitney Canada, helicopter manufacturer Bell Textron Canada and flight training company CAE Inc., Prime Minister Justin Trudeau announced Thursday during a news conference in Montreal attended by several ministers and executives.

The public backing represents 34 per cent of the value of the projects, Quebec Finance Minister Eric Girard said.

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Federal Industry Minister François-Philippe Champagne said the Canadian government’s $440-million pledge to the three companies is part of its $2-billion commitment to aerospace outlined in the federal budget in April. He said the government is talking to other companies including Bombardier Inc. about additional projects that could be announced in the future.

“What we’re doing here today is providing the spark plug in an accelerated transformation toward sustainable aviation,” Mr. Champagne said. “This isn’t about adding 100,000 square feet in a factory. It’s about looking ahead 20, 30 years and seeing where we need to invest to ensure lasting jobs and a lasting industry in this country.”

The investment announcement was made in the lead-up to a federal election expected this year.

Aerospace companies and governments around the world are jostling to develop the next generation of cleaner aircraft and cutting-edge technology that could revolutionize an industry battered by both near and longer-term challenges. While the COVID-19 pandemic has forced airlines to park planes and seek billions in bailouts, the sector also faces more enduring pressure as protest groups such as Extinction Rebellion and Greenpeace highlight aviation’s role in global warming.

Law and policy makers in Canada, meanwhile, are struggling to figure out how to hold onto the country’s position as one of the world’s top five centres for plane-making, particularly with the downsizing of homegrown champion Bombardier. The company’s former regional jet business once dominated high-value industrial exports from Canada, but the manufacturer is now a shadow of its former self.

Canada’s aerospace sector is anchored in Quebec and generates high-skilled, high-paying jobs. Successive governments going back decades have tried to hold onto that expertise in aerospace design and manufacturing – which requires big companies, big taxpayer-funded support and a clear policy vision. In that sense, Thursday’s announcement falls short on many counts, said Mehran Ebrahimi, an aerospace specialist at the University of Quebec at Montreal.

“We’re not going to develop the green airplane of the future with $600-million,” even if we should applaud the funding, Prof. Ebrahimi said. It will take a broader strategy, a national plan for aerospace with precise roles for different provinces, and far greater taxpayer support, he said. “This is a flash of what’s needed. The real question is what’s next?”

Pratt & Whitney Canada, a unit of Raytheon Technologies Corp., said it would invest $163-million to continue its push toward the development of hybrid-electric propulsion technology and flight demonstrator program. It is working with De Havilland Aircraft of Canada Ltd. to integrate the technology into one of its Dash 8-100 turboprop planes, targeting a 30-per-cent reduction in fuel burn and carbon dioxide emissions. The two levels of government are pledging $69.5-million in loans to the company to fund the endeavour.

Bell Textron Canada, which like all three companies is based in Greater Montreal, said it will move forward with an $825-million project that aims to develop and commercialize environmentally friendly aviation technology. The company recently designed and tested a new electrically distributed torque system for helicopter tails that delivered several benefits, including lower noise reduction, company president Steeve Lavoie said. The two levels of government are pledging $275-million in financial aid to the company for the project.

CAE said it will launch a $1-billion, five-year research and development program to develop future aviation technologies in an effort it called Project Resilience. The company, known chiefly as a maker of flight simulators and a pilot training provider, said it will use the money in part to expand into advanced air mobility, green0light aircraft technologies and next-generation health care equipment and services. The federal and Quebec governments are committing $340-million to CAE.

Ottawa said it would provide an additional $250-million over three years in more targeted support for small and medium-sized aerospace companies and subcontractors.

In all, the Canadian government is funding $440-million and Quebec $245-million to the three big aerospace companies with the firms funding the balance themselves. The investments will result in 1,000 new jobs in Quebec and co-op placements for more than 6,200 students, the politicians said.

For Quebec, securing federal funding or aerospace helps Premier François Legault’s larger goal of closing what he perceives as an unacceptable wealth gap between Quebec and its neighbours by generating employment paying more than $80,000 a year. Gross domestic product per capita was $54,149 in Quebec in 2019 versus Ontario’s $61,315, according to federal statistics, but the gap has narrowed since.

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