Vanguard Magazine

I INSIDE INDUSTRY The value of a defence dollar In late September, the federal government appointed Tom Jen- kins as a special advisor to the Minister of Public Works and Government Services, Rona Am- brose, to help improve Canada's defence procurement process. That same day, CADSI gave him some ammunition with a study conducted by KPMG on the economic impact of the de- fence and security sectors in Canada. According to Jenkins, the chief strategy officer of OpenText and the former chair of a government panel on R&D and innovation, his role will be to engage industry stakeholders "to develop criteria and a supporting process to inform the selection of key industrial capa- bilities." He has invited MGen (Ret'd) David Fraser, Peter Nicholson, former president of the Canadian Council of Academies, Ray Castelli, CEO of Weatherhaven, and Christyn Cianfarani, director of government programs and R&D with CAE, to assist him. CADSI's report should make that job much easier. The KPMG study found a sizeable defence and security sector of about 2000 Canadi- an companies, almost half of which are CADSI members. The report, which captures a snapshot of defence and security activity in 2011, shows $7.9 billion of government spending in the Canadian sector and about $12.6 billion in revenue across the 2000 firms. Approximately half of that revenue (49%) came from domestic activity and the rest was from the export market. "This sector, when it gets a buck at home, will generate a buck of export business," said Mike Greenley, vice president international for General Dynamics C4 Systems and chair of CADSI's board of directors. "That is key to the crux of the value of this sector." Greenley said that for every dollar invested in defence activity, 70 cents contributes to the gross domestic product, about $9 billion in 2011, and supports 109,000 direct and indirect jobs. Companies and their employees pay about $3 billion in taxes. "When you take that and look forward...for every billion dollars we spend on Canadian industrial defence and security performers, we're going to get $710 million in gross domestic product created; we're go- ing to cause another billion dollars in business from export; we're go- ing to create or sustain 18,000 jobs; and based on the taxes from the domestic and export activity, we're going to kick back $428 million in government revenues. It's a pretty powerful story." He added: "We'd like to shift that so that someday [when] we get a dollar of business at home, we'll get two dollars of exports because we are increasingly working with government...to get that export upside." In 2011, about 50 percent of defence spending was in land opera- tions. In terms of GDP contributions, the two largest sectors were in- service support and C4ISR. Armoured vehicles, a key component of modernizing the army, were third. Greenley called the study a marker that will be repeated and im- proved "so that we can then measure what the impact and changes are to the defence and security sector overtime. Hopefully, as a result of doing this, we can assist the government on their drive toward a defence procurement strategy." 8 OCTOBER/NOVEMBER 2012 www.vanguardcanada.com Army capability modernization Much of the media attention for army procurement has focused on new vehicles. But as LCol Greg Burton told an industry audience during a conference hosted by the London Economic Development Corporation in September, the army equipment program is so much more. New vehicles such as the Tactical Armoured Patrol Vehicle, the Close Combat Vehicle and the Medium Support Vehicle System remain promi- nent; some are progressing smoothly while others have hit road bumps. But the major projects list goes well beyond vehicle fleets. Burton gave a partial list of projects either near approval or in the options analysis phase, including: Combat Net Radio; Medium Range Radar; Integrated Soldier System Project, which is in test and evaluation; Small Arms Mod- ernization, Urban Operations Training System; and the Land Vehicle Crew Training System. Looking further out, he highlighted projects that will be coming online soon, including a vehicle for enhanced recovery capability, a midlife upgrade to the WES system, secure waveform optimized radio for the dismounted soldier, 3D dismounted training system, armoured combat support vehicle replacement as well as modernization of capabilities such as joint intelligence, joint signal regiment, bridge and gap crossing, indirect fire, tactical parachute system and night vision system. "We have a very active program and we are actively seeking the fund- ing and the expenditure authority as quickly as we can," Burton said. Industry will undoubtedly be watching closely. Mike Greenley

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