Vanguard Magazine

by Industry Canada IRBs I succeed in the global marketplace Helping industry T he environment in which Canadian firms do business is ever-changing. Companies are facing increasing compe- tition to improve production and invest in innovation. Canada's Industrial and Regional Benefits (IRB) policy assists Canadian industry in meeting these challenges and helps them succeed in the global marketplace. Most other countries of Canada's size and position in the de- fence and security marketplace have similar requirements for in- dustrial participation, referred to as "offsets." Canada's approach to industrial benefits is focused on providing business opportunities for Canadian firms. Businesses, many of them small and medium-sized enterprises (SME), want to grow and become globally competitive. Government defence and se- curity procurement typically obligates contractors to engage in activities with Canadian industry to promote domestic capabili- ties and competitiveness. The IRB policy requires contractors to place business activities with Canadian firms of equal value to the purchase contract. Over the past decade, more than $20 billion of new govern- ment defence and security contracts have included IRB obligations. These large commitments facilitate competitive opportunities for Canadian firms and encourage partnerships with defence contrac- tors. With planned new procurements for navy projects in particu- lar, the IRB portfolio could double in the next several years. The IRB policy approach's key characteristics are: • Market-driven. Defence contractors are encouraged to find business relationships that make sense for both sides – the con- tractor and the Canadian firm receiving the work. In this way, the industrial benefits can be long-term, sustainable and found- ed on sound business principles. • Promotes value-added activities with Canadian firms. The policy, through its focus on innovation, encourages defence contractors, to provide valuable supply chain and export op- portunities to a Canadian firm. • SME focused. Over 300 SMEs across Canada have received IRB work, representing about one third of total recipient firms. Defence contractors are required to submit plans on how they will work with SMEs when bidding on government contracts. Those plans then become part of the contract for the winning defence contractor. This approach is intended to open new busi- ness opportunities for Canadian firms, which can translate into long-term supply arrangements. • Regional focus. To balance work across Canada, the policy encourages capabilities that exist in various regions across the country to be reflected in the business activities. For example, large amounts of aerospace activity take place in Ontario and Québec, as well as across the West and Atlantic Canada. • Successful in having defence contractors fulfill their obli- gations. More than 75 percent of the required business activity (by value) has occurred or is underway and the balance is being identified. Canadian companies are reaping the broad economic benefits of the policy's approach that focuses on sustainable, long-term outcomes. This level of business activity also reflects the capabilities of Canadian industry to provide goods and ser- vices that are globally competitive. As the aerospace and defence industry evolved over the years, so too did their needs. The IRB policy has adapted to meet these changing dynamics. In 2009, the government announced en- hancements to the policy to encourage more strategic investments and higher quality outcomes. New measures also provided con- tractors with the time, flexibility and incentives to develop these types of activities. For example, the policy encourages defence contractors to make investments into the creation of public/pri- vate consortia for research development through incentives. Canada's IRB policy is focused on supporting industry, ensur- ing it continues to adapt to the changing nature of the defence sector, while promoting long-term economic benefit for Cana- dian companies. This article was written by Industry Canada's Industrial and Regional Benefits Branch. www.vanguardcanada.com OCTOBER/NOVEMBER 2012 37

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