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Report on Business Canadian aerospace industry needs federal funding as it loses global ground, report says

Canada’s aerospace industry is losing ground to foreign competition and needs substantial investment from Ottawa to recharge the sector, says a new report from the country’s key players, though a leading federal cabinet minister insisted Monday the industry remains “resilient."

Traditional aviation powers such as the United States and France and new entrants such as China and India are moving quickly to grab a piece of the world’s estimated $10-trillion aerospace sector, while Canada’s strategy stalls, according to the Aerospace Industries Association of Canada report, authored by former Quebec premier Jean Charest. Ottawa needs to articulate a new long-term vision and public policy for the sector that builds on past successes, the document says.

“We have reached a pivotal moment in the life of the Canadian aerospace industry, one that will decide its ultimate fate,” Mr. Charest says in the report, presented at the Paris Air Show on Monday. “We made the choice to be a leader. We have to make that choice again.”

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The report comes ahead of a federal election this fall and as Bombardier Inc., Canada’s biggest aircraft manufacturer for the past three decades, gets set to complete its exit from commercial aviation with the possible sale of its Canadair regional jet business to Japan’s Mitsubishi Heavy Industries Ltd. The two companies confirmed earlier this month they were in talks, but said a deal was not certain.

Bombardier’s move to focus on private jets – it has already unloaded its amphibious aircraft and turboprop businesses in addition to its former C Series flagship airliner – has rekindled criticism that Canada is ambivalent toward its support for aerospace. Plane making is dominated by international players that enjoy tens of billions of dollars in backing from their national governments, and although Bombardier has won taxpayer support over the years, Canada hasn’t committed that same level of support, says Mehran Ebrahimi, an aerospace specialist and professor at the University of Quebec at Montreal.

The aerospace industry in Canada employs 215,000 people and generates $25.5-billion in gross domestic product every year, Mr. Charest’s report states. Those numbers include major players such as simulator-manufacturer CAE Inc. and Héroux-Devtek Inc., a landing-gear maker, as well as smaller suppliers and units of international firms such as Pratt & Whitney Canada.

But while Canada still has one of the world’s biggest aerospace industries, its clout is in jeopardy, the report states. The sector’s manufacturing employment has dropped 5 per cent over the past seven years and its overall contribution to GDP has dropped as well. To get back on track, the report proposes six priorities, including boosting efforts to bring more workers into the industry and establishing a national defence procurement process that supports the development of Canadian companies. Quebec is calling on Ottawa to re-establish a fund specific to the sector, the report says.

Speaking on background, a federal official said the report is selective in its use of numbers and paints an overly negative picture. The industry is healthy and industry revenues are growing overall as strength in the aerospace maintenance, repair and overhaul segment is offsetting manufacturing declines, said the official, who was granted anonymity because he was not authorized to speak publicly on the matter.

Navdeep Bains, Canada’s Minister of Innovation, Science and Economic Development, did not dismiss the report, saying it raised several valid points including the need for more skills development and manpower that are consistent with the government’s agenda.

But he said the government remains committed to a sector that continues to punch above its weight globally. Among the government’s policies he highlighted is a strategic innovation fund being used by the industry, in which the government has invested $750-million since 2015.

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“We have a very resilient aerospace sector in Canada,” Mr. Bains said in an interview. “We have their back.”

France’s Airbus SE, which took over control of the C Series program and a factory in Mirabel, Que., from Bombardier last year, announced Monday an order for 50 of the airliners from Air Lease Corp. and said it will build them in Mirabel.

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