Profile of the Aerospace Industry
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PROFILE OF THE AEROSPACE INDUSTRY | Table of contents > SUMMARY 2 01 02 0403 05 06 A PORTRAIT OF INDUSTRY WORKFORCE AEROSPACE OPERATING TAXATION AND THE INDUSTRY LEADERS AND TRAINING RESEARCH COSTS INCENTIVES 1.1 Highest Aerospace GDP 2.1 Prime Contractors – 3.1 Extensive Expertise 44 ORGANIZATIONS, 5.1 Among North America’s Most 6.1 Corporate Taxes: 1st in in Canada 6 The Heart of the Aerospace Advantageous Aerospace North America 76 Industry 24 3.2 A World-Renowned ASSOCIATIONS Operating Costs 68 1.2 Revenue Growth 6 Educational System 45 6.2 Highly Competitive 2.2 OEMs, Integrators and AND CONSORTIA 5.2 Competitive Labour Costs Incentives 79 1.3 A Critical Mass of Aerospace MROs –Tier One Suppliers 27 3.3 Canada’s University 58 70 Jobs and Companies 8 Research Capital 48 6.2.1 Fiscal Incentives 79 2.3 Subcontractors and 5.3 Clean, Reliable and 1.4 Canada’s Aerospace Suppliers of Specialized 3.4 A Workforce Ready to Meet Affordable Energy 73 6.2.2 Financial Incentives 80 Export Capital 10 Products and Services – the Industry’s Skill Pillars of the Industry 30 Requirements 48 1.5 Canada’s Aerospace Innovation Hub 13 1.6 A Very Favourable Investment Climate 14 1.7 A Strong Presence of Foreign Subsidiaries 19 > APPENDIX A Methodological Notes 88 B Sources 89 About Aéro Montréal 90 About Montréal International 91 BOMBARDIER AEROSPACE 02 | Summary 6. A POSITIVE RESEARCH This profile of Québec and Greater AND DEVELOPMENT (R&D) ENVIRONMENT Montréal’s aerospace industry is the result 4. FOR COMPANIES of a collaborative effort between Aéro GROWING SALES Research and development is fundamental to the aerospace In spite of the recession and Montréal and Montréal International (MI) industry’s success. Companies the Canadian dollar’s increased invest billions of dollars in R&D value against its American and is intended to highlight the sector’s main annually and their innovations counterpart, Québec’s often have an impact on other aerospace industry’s sales grew enterprises and performance indicators. sectors of the economy. To by an annual average rate of 8. stimulate the technology 1 around 6% between 1990 and Greater Montréal’s aerospace industry represents: sector, Greater Montréal has A FAVOURABLE TAX 2011. They grew by almost 7% at its disposal, among other STRUCTURE AND in 2011 over 2010 and reached Moreover, Québec and things, a significant network HIGHLY COMPETITIVE 1. 2. $11.7 billion. Greater Montréal have a larger of aerospace-related research INCENTIVES WITH SEATTLE AND THE HOME OF 98% OF aerospace sector concentration organizations, associations and TOULOUSE, ONE OF THE QUÉBEC’S AEROSPACE of specialized labour than both 5. consortia. Year after year, Greater WORLD’S FOREMOST INDUSTRY AND A HIGHLY in Canada and the United AN EXPORT CAPITAL Montréal’s aerospace States. In 2010, approximately companies remain competitive AEROSPACE HUBS SPECIALIZED CENTRE IN one out of every 192 workers Greater Montréal’s strategic 7. and profitable due notably Over the years, Greater NORTH AMERICA was employed in the Québec geographical location in AMONG THE MOST to one of the world’s most aerospace industry. In the Greater North America combined favourable total corporate tax Montréal has emerged When viewed in the context COMPETITIVE OPERATING Montréal area, the number was with its extremely competitive burdens. According to KPMG as a premier aerospace of Canada’s entire aerospace COSTS IN NORTH one in every 92. Canadian and transportation infrastructure (2010), the tax bill for R&D development centre because of industry, Québec represents AMERICA American ratios were four and allows Québec’s aerospace companies located in Greater a high concentration of prime approximately contractors, OEMs2, integrators, three times lower than Greater industry to export over 80% of According to KPMG (2012), Montréal can be up to seven MROs3 and subcontractors Montréal’s: one in 389 and one in its production, thereby making it Greater Montréal’s total times lower than the average and suppliers of specialized 70% of all R&D 269 jobs respectively. the province’s leading exporter. operating costs are the second for those based in other large products and services. The 60% of GDP lowest among North America’s North American metro areas metro area has developed 60% of exports largest metropolitan areas specializing in aerospace. 55% of sales 3. specializing in aerospace. Greater Montréal ranks first an international expertise in A POOL OF HIGHLY a variety of fields such as 50% of the workforce When a company locates in in North America and second engineering and development, QUALIFIED WORKERS Greater Montréal, it can count worldwide in this regard. This on significant savings on labour, cost advantage is due in great business jet landing gear Some 212 aerospace companies energy and rental/lease costs. measure to the availability of and interior design, aircraft employ over 42,000 well-qualified qualification and certification highly competitive incentives individuals who received training 1 Because of the nature of the available data, this is primarily a such as the R&D tax credits and flight-testing. in an educational system statistical portrait of the entire province’s aerospace industry. However, since 98% of all of Québec aerospace activities are offered by the governments of that collaborates closely with concentrated in Greater Montréal, it is also an apt description of Canada and Québec. the private sector by offering the metropolitan region. 2 OEM: Original Equipment Manufacturer programs that meet its most 3 MRO: Maintenance, Repair and Overhaul up-to-date requirements. A PoRTRAIT OF 1THE INDUSTRY PRATT & WHITNEY CANADA 06 | A Portrait of the Industry 1.1 H IGHEST AEROSPACE GDP IN CANADA In 2010, Québec’s aerospace industry’s 1 4 5 1 real GDP was close to $4 billion. This ANNU AL AEROSPACE SaLEs (IN $BILLION) represents 60% of the total Canadian PROVINCE OF QUÉBEC, 1990-2011 CHART industry’s real GDP, which, in that same year, was over $6.7 billion.6 14 12 2008 recession 10 Impact of 09/11/2001 8 6 1.2 4 TESTIMONIAL R EVENUE 2 GROWTH 0 Bombardier Aerospace – A Québec’s Industrial Sales in Québec’s aerospace industry Leader among the Top 3 World’s Largest Civil have grown consistently since the 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 beginning of the 1990s. Between 1990 and 2011, they rose at an annual Aircraft Manufacturers average rate of around 6% and, in spite of recessions and the recent rise of the Bombardier’s Aerospace Division began with the acquisition “It is heartening to see that strong ties unite the sector’s various Canadian dollar, Québec’s industry has of Canadair in 1986. Today, it is Canada’s largest aerospace actors, educational institutions and research centres and that continued to lead the country in sales company. competition does not exclude cooperation. Aéro Montréal with over 55% of the market.7 In 2011, not only connects the major players, but strives to support it rang up total revenue of $11.7 billion, ‘‘Every three seconds, a Bombardier aircraft is either taking SMEs. I believe that the depth of the talent pool that we have a 6.8% increase over 2010 ($10.9 off or landing somewhere in the world’’ says Ms. HÉLÈNE B. succeeded in developing over the years and the partnership billion).8 Overall, aerospace was the only GAGNON, Vice President, Public Affairs, Communications that we have established with the unions represent two of our 4 Because of the nature of the available data, this is primarily a segment of Québec’s manufacturing statistical portrait of the entire province’s aerospace industry. and Corporate Social Responsibility. cluster’s major strengths and factors of attraction,” added sector to have experienced continued However, since 98% of all of Québec aerospace activities are Ms. Gagnon. revenue growth.9 concentrated in Greater Montréal, it is also an apt description of The world’s third largest civil aircraft manufacturer, Bombardier the metropolitan region. Aerospace is a leader in the design and manufacture of 5 Source: Ministère du développement économique, de The world’s only manufacturer of both planes and trains, l’Innovation et de l’Exportation (MDEIE or Ministry of Economic innovative aviation products for the business (Learjet, Bombardier is present in more than 60 countries, with 70,000 Development, Innovation and Export Trade), 2012. Unless Challenger and Global aircraft families), commercial (new employees working in 76 production and engineering facilities. otherwise indicated, “dollar” ($) refers to Canadian dollars. CSeries program, CRJ Series and Q-Series aircraft families), 6 Source: Statistics Canada, 2011 In 2012, the World Luxury Association listed Bombardier amphibious (Bombardier 415 and Bombardier 415 MP aircraft) 7 Source: MDEIE, 2012 among the Top 100 world’s most valuable luxury brands. 8 Source : MDEIE, 2012 and specialized aircraft markets. Over 15,000 of its 33,600 9 Source: The Conference Board of Canada, 2011 employees are located in Greater Montréal facilities in which the company is currently investing significant resources on expansion and modernization. 08 | A Portrait of the Industry 1.3 A CRITICAL MASS 1 3 AEROSP ACE EMPLOYMENT BY SUBSECTOr (%) OF AEROSPACE JOBS HART C AND COMPANIES PROVINCE OF QUÉBEC, 2011 In 2011, 212 companies employed nearly 42,000 specialized workers. This represents 50% of the industry’s entire Canadian labour force.10 Québec ranks 21 % 18 % sixth, behind the United States, France, Germany, the United Kingdom and Italy In 2011, prime contractors employed in terms of the number of aerospace 62% of all aerospace workers, workers. subcontractors and suppliers of The 57% increase in the number specialized products and services 21% of aerospace workers in Québec and OEMs, integrators or MROs 18%.12 between 1990 and 2011 represents Over and above the raw numbers, 62 % an annual average growth rate C&D ZODIAC Québec and Greater Montréal have a of over 2%.