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The Canadian Aerospace and Defence Industry
April 2002
Innovation Profile
The Industry
- The Canadian aerospace industry produces complete aircraft, engines, structural components, satellites, flight simulators and electronic systems.
- Defence production in Canada includes light armoured vehicles and defence electronics, including radios and communication devices.
- Canada also has strong capabilities in the maintenance, repair and overhaul market.
- For statistical purposes, the industry is described according to the North American Industry Classification System as 3364, Aerospace Products and Parts, unless otherwise indicated. Statistics for the Aerospace products and parts industry are more detailed and provide the most comprehensive picture of innovation activities under way in the aerospace and defence industry.
- While firm data for the defence industry are not available, total aerospace and defence sales in 2000 were estimated by Statistics Canada to be $20.5 billion1, of which 80% were related to civilian or commercial activities.
- Aerospace products and parts industry shipments for 2000 were $13.2 billion, up 16.4% from $11.4 billion in 1999.
- Canadian exports of aerospace products and parts were slightly over $11 billion in 2000. Imports, which have increased as dramatically as exports, were $9.4 billion. The aerospace products and parts industry had a trade surplus of $1.6 billion in 2000.
- By province, Québec accounts for 54% of national aerospace and defence output. Ontario is second at 30.7%, followed by the Atlantic provinces 4.6%, Manitoba 4.4%, British Columbia 4.2%, and Alberta and Saskatchewan 2.1%.
- The aerospace products and parts industry employed approximately 46,100 workers in 200 establishments in 2000. It should be noted that total aerospace and defence employment, including maintenance, repair and overhaul, has been estimated at 92,000.
- Aerospace and defence industry workers generally receive higher compensation than the manufacturing average. Non-manufacturing salaries for aerospace products and parts employees averaged $65,000 in 1999, compared with the manufacturing average of $54,800. For production workers, aerospace products and parts workers had annual salaries averaging $44,900, which was 20% higher than the manufacturing average.
- Between 1990 and 1999, aerospace products and parts manufacturing value-added doubled to $6.3 billion. Labour productivity, as measured by aerospace products and parts manufacturing value-added over number of production workers, had a 10-year average annual growth rate of 7%. In comparison, the labour productivity growth rate for all manufacturing was 4.6% over the same 10-year period.
- Industry investment in new plant and equipment was $1.08 billion2 in 2000, according to a Statistics Canada's survey of Canadian aerospace and defence firms.
- Foreign direct investment in the aerospace products and parts industry from the United States and European Union has grown steadily to $2 billion in 1999, an increase of 23% from $1.6 billion in 1995.
Innovation
According to Statistics Canada, the aerospace products and parts industry represents 12% of all Canadian industrial research and development (R&D;). This works out to $1.33 billion in 2000, and is projected to grow to $1.5 billion in 2001. R&D; represents 9.6% of total company revenues for those firms performing R&D.;
- Québec (55%) and Ontario (44%) account for nearly all of Canada's aerospace and parts R&D.; R&D; conducted in other provinces and territories is negligible.
- The federal government accounts for 14% of aerospace and defence industry R&D;, more than any other industrial sector. 76% of firms performing research are Canadian-controlled.
- Approximately 5,000 or 11% of aerospace products and parts industry workers perform R&D.; Professionals represent 49.6% of the sector's R&D; workers. The distribution of the educational attainments of these workers is as follows: bachelor's degree 76%, master's degree 20% and doctoral degree 4%. Technicians account for a further 30% of aerospace R&D; workers.
- The 1996 census identified approximately 5,000 aerospace engineers working in Canada, a 22% increase from 4,090 in the 1991 census. Additional engineers from electrical, computer and mechanical engineering also work in the aerospace and defence industry. Competition to attract engineers from these fields to the aerospace sector is extremely high.
- Eleven universities in Canada offer advanced degrees in aerospace, nine of which offer doctoral and master's degrees in aerospace engineering.
- While highly qualified professionals remain in high demand, demand for workers with trade skills remains a priority for aerospace and defence firms. Production workers and technicians account for 68% of the aerospace work force. Nineteen technical and vocational colleges from across Canada offer aerospace-related programs focussed on trade/technical skills, primarily in aircraft and engine maintenance programs.
- The National Research Council's Institute for Aerospace Research (IAR) conducts industrial research in collaboration with the aerospace industry. The IAR employs over 250 researchers. A new $35 million aerospace manufacturing technologies institute is being established in Montréal. IAR research is conducted for and in collaboration with aerospace and defence firms and governments from around the world.
- Defence R&D; Canada operates research facilities in Nova Scotia, Québec, Ontario (Ottawa and Toronto), Alberta and British Columbia. There are over 1,000 civilian researcher workers at Defence R&D; Canada, of which 40% are defence scientists and engineers.
- Statistics Canada's Survey of Aerospace and Defence Firms indicates that the industry spent $47 million3 on worker training in 2000.
- Technology Partnerships Canada (TPC) is a technology investment fund created in 1996 to encourage research, development and innovation investment in the private sector. TPC has invested over $1 billion in 82 aerospace and defence projects since 1996, which accounts for 62% of TPC's program funding.
- In 2000, TPC introduced the Aerospace and Defence Supplier Development Initiative for small and medium-sized firms in response to globalization challenges. The initiative, with a budget of $30 million, assists small and medium-sized firms in funding R&D; and encourages mentoring relationships between Tier 1 and Tier 2 firms and the small and medium-sized firms.
- Data from Statistics Canada's 2000 Innovation Survey show that the aerospace products and parts industry is among the highest users of government support programs. Some 61% of firms use government support for training, and 56% use R&D; tax credits. Federal government research grants for R&D; are widely used (90.3% of firms), as are technology support and assistance programs (93.6% of firms). The majority of aerospace products and parts firms rely on both provincial and federal support programs.
- The Office of Collaborative Technology Development is a partnership between the National Research Council and the Aerospace Industries Association of Canada. It provides leadership in defining technology development projects for the sector. Aerospace firms, university researchers, government laboratories and not-for-profit research organizations are eligible to participate.
Contact:
Patrick Hum
(613) 941-3460
hum.patrick@ic.gc.ca
1 2000 Aerospace and Defence Industry Survey conducted by Statistics Canada
2 2000 Aerospace and Defence Industry Survey conducted by Statistics Canada
3 2000 Aerospace and Defence Industry Survey conducted by Statistics Canada
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