Doing business with Canada’s Defence Sector

Präsentation zum Thema: "Doing business with Canada’s Defence Sector"—  Präsentation transkript:

1 Doing business with Canada’s Defence Sector
A presentation to: Düsseldorf, Germany November 30, 2011 A.N. Cooligan Senior Trade Commissioner and Commercial Counsellor Embassy of Canada, Berlin

2 ~10 Millionen Quadratkilometer
Muttersprache: * English (57.8%) * French (22.1%) * Chinese (3.3%) * Deutsch (1.5%) Einwohner: * 34,3 Millionen * 90% wohnen innerhalb km von der USA Grenze ~10 Millionen Quadratkilometer British Columbia (BC) Alberta (AB) Saskatchewan (SK) Manitoba (MB) Ontario (ON) Québec (QC) New Brunswick (NB) Nova Scotia (NS) Prince Edward Island (PEI) Newfoundland and Labrador (NL) Yukon Territory (YT) North West Territories (NWT) Nunavut (NU) Over 40 countries are participating in the International Security Assistance Force (ISAF), a NATO-led formation that operates in Afghanistan under the authority of the United Nations. Canada is ending its NATO-led combat mission in Kandahar province and beginning a non-combat, Kabul-centered training role (Operation ATTENTION) that will continue until 2014. 158 deaths as of Oct 31

3 Current Federal Government
Prime Minister Stephen Harper (Calgary Southwest, AB) Minister for Defence Peter MacKay (Central Nova, NS) Minister for Foreign Affairs John Baird (Ottawa West, ON) Minister for International Trade Edward Fast (Abbotsford, BC) TOTAL NUMBER OF FEDERAL SEATS 308 Conservative Party 166 New Democratic Party 103 Liberal Party 34 Bloc Québécois 4 Green Party 1

4 Aktuelle Regierung Prioritäten: Arbeitsplatzbeschaffung & Wirtschaftswachstum Kontinuierliche Senkung der Unternehmenssteuer (ab 2012 die geringste der G7 Staaten) Abschluss des Freihandelsabkommens mit EU (2012) & Indien (2013) Eliminate manufacturing tariffs by 2015 to become 1st country in G20 that is tariff-free zone for manufacturers Expand Canada Excellence Research Chairs Program at Canadian universities & increase funding Support Clean Energy initiatives

5 Wirtschaft 2010 BIP: 1,12€ Billionen Exporte Importe Dollar
Ungefähr 30% des BIP aus Exporten Exporte USA 75% GB 4,1%, China 3,3%, Japan 2,3%, Mexiko 1,3% Importe USA: 50% China 11%, Mexiko 5,5%, Japan 3,3%, Deutschland 2,8% Dollar Nov 2011: 1$ CAN = 0,97$ USD Nov 2011: 1$ CAN = 0,72€ Arbeitslosenrate: 7,3% (October, 2011) Bruttoinlandproduct (BIP) *Basierend auf Wechselkurs von 1,4

6 Fastest growing economy in G7
Canada 1.7% U.S. 1.5% U.K. France 1.2% Germany 0.5% Japan Italy 0.2% On average, Canada’s economy grew 3x faster over the last decade than Germany’s Source: Statistics Canada and other national data sources.

7 Handel und Investitionen
Kanada – Deutschland Gesamtwert der bilateralen wirtschaftlichen Beziehungen ~ € 27 Milliarden Handel und Investitionen *based on exchange rate of 1.4

8 Wert der bilateralen wirtschaftlichen Beziehungen
Kanada – Deutschland Wert der bilateralen wirtschaftlichen Beziehungen Kanadische Exporte nach Deutschland (2010) € 2,7 Milliarden Deutsche Exporte nach Kanada (2010) € 7,8 Milliarden Deutsche Direktinvestitionen in Kanada (2009) € 9,7 Milliarden Kanadische Direktinvestitionen in Deutschland (2009) € 6,7 Milliarden *Zahlen basieren auf Wechselkurs von 1,4 Source: Statistics Canada ~ 27€ Milliarden

9 Kanada – Deutschland Wechselseitige Arbeitsplatzbeschaffung durch Kapitalanlagen
450 Deutsche Firmen in Kanada 60,000 Angestellte 100 Kanadische Firmen in Deutschland 22,000 Angestellte Source: Canadian Embassy, Berlin 9

10 Global Defence Context
Global defence sales exceeded US $1.5 Trillion in 2009 Defence expenditures are 2.7% of World’s GDP Top 10 largest military spenders account for 74% of the world’s military spending Canada’s $19.8 Billion (2009) military expenditures ranks Canada in 6th place among NATO countries (15 Milliarden €) Defence is “managed trade” Canada spends 1.5% of GDP on defence US represents 43% of the world’s spending, 4% GDP Stats are from Stockholm International Peace Research Institute (SIPRI) and NATO based on 2009 data. Canada is not in the top 10 military spenders, but is ranked in 6th placed among NATO member, surpassing Spain in Defence expenditures increased by 6% between 2008 and 2009. Managed trade means that governments impose various rules and regulations that limit where technology can be created and sold through various mechanisms such as ITAR (limits access to US technologies), export control regimes, and offset programs. As defence procurements tend to be large in dollar volume but somewhat low in quantities and high providers of jobs, there is now more political emphasis on keeping the production within each country, thus restricting access to foreign buyers. Canada has maintained an opposite policy of allowing anyone to bid and win, as long as they follow the rules. The current Canadian defence expenditures are high by historical standards as our military capabilities have not been upgraded for decades, which has limited our ability to respond to international crisis and to play less meaningful roles with our allies. This has now changed with the introduction of the Canada First Defence Policy launched in June 2008.

11 Canadian Defence Context
Canada First Defence Policy – € 370 Milliarden bis zum 2028 Pillar Amount (CAD B) % Comments Personnel $250 51% 70,000 troops and 30,000 reservists by 2028 Equipment $60 12% Land vehicles, aircraft, ships, weapons, communications, etc. Infrastructure $40 8% Rebuilding & maintaining Readiness $140 29% Spares, maintenance, training Total 20 years CAD $490

12 Canada’s Defence and Security Industrial Base
The Canadian defence and security sector is a highly skilled, knowledge based industry Comprises over 1,000 companies Employs more than 90,000 people Generates revenues in excess of $10 billion in annual sales. Approximately 85% of these firms are small and medium enterprises (SMEs). Exports account for about half the annual turnover, or $5 billion per year Approximately 85% destined for the US market.

13 Business Drivers - Defence
Canadian defence industrial base Government R&D programs: Strategic Aerospace Defence Initiative (SADI) Defence Research and Development Canada (DRDC) Scientific Research and Experimental Development (SRED) Defence Procurement Environment: IRB and ITAR Industrial Regional Benefits (IRB) International Traffic in Arms Regulations (ITAR) FDI in Canada and beyond: Potential for Growth Global product mandate Potential for export – G2G sales Export Development Corporation (EDC) Canadian Commercial Corporation (CCC) In the defence business, the in-country defence programs are what attracts the primes. Boeing has supplied C-17 strategic airlift and Chinook helicopters; Lockheed Martin has supplied C-130J aircraft and is involved in the Halifax Class frigate life extension program. There are 7 international military vehicle vendors bidding on the TAPV program. At this point, with international defence expenditures declining in the industrialized world, Canada’s modest TAPV vehicle purchase and planned acquisition of up to 1,500 logistical vehicles (trucks) has the attention of international primes. In some cases, international firms have acquired Canadian defence firms for their technology and existing business for both Canadian and international markets, or to respond to requirements in other countries where they need additional capabilities. For example, GM Defence was acquired by GDLS, and has evolved the LAV product for sales to both DND and internationally. CoorsTek, America’s largest ceramics company, acquired DEW Engineering as a means to sell their ceramic armour to DND, and now internationally via DEW. Many of the foreign-based primes interviewed pointed to Canada’s defence R&D as being among the best in the World. This, combined with SRED tax credits and low corporate taxation levels and ease of profit repatriation are positive elements. Many firms have provided their Canadian entities with global product mandates. A case in point: Kongsberg move to locate their remote weapons station business in London (close to their customer, GDLS) ensures that their turret systems are the ones that get developed, engineered and built to meet the requirements of GDLS global customer base, most of which is in the United States.

14 [edit] Royal Canadian Navy
Royal Canadian Navy: 3 Bases Royal Canadian Air Force: 13 bases Canadian Army:10 bases Canadian Army CFB Edmonton, Alberta , CFB Gagetown, New Brunswick , CFB Kingston, Ontario , CFB Montreal, Quebec , CFB Petawawa, Ontario , CFB St. Hubert, Quebec , CFB Shilo, Manitoba , CFB Suffield, Alberta , CFB Valcartier, Quebec , CFB Wainwright, Alberta [edit] Royal Canadian Navy Note: Primary Lodger Units at the Naval Bases are individual commissioned ships of the Royal Canadian Navy. CFB Esquimalt, British Columbia , CFB Halifax, Nova Scotia , CFS St. John's, Newfoundland [edit] Royal Canadian Air Force Note: Primary Lodger Units at Air Force Bases are Wings. CFB Bagotville (3 Wing), Quebec , CFB Borden (16 Wing), Ontario , CFB Comox (19 Wing), British Columbia , CFB Cold Lake (4 Wing), Alberta , CFB Gander (9 Wing), Newfoundland , CFB Goose Bay (5 Wing), Labrador , CFB Greenwood (14 Wing), Nova Scotia , CFB Kingston (1 Wing), Ontario , CFB Moose Jaw (15 Wing), Saskatchewan , CFB North Bay (22 Wing), Ontario CFB Shearwater (12 Wing), Nova Scotia (Detachment of CFB Halifax) . CFB Trenton (8 Wing), Ontario , CFD Mountain View, Ontario (Detachment of CFB Trenton) , CFB Winnipeg (17 Wing), Manitoba . DRDC Atlantic has world-leading expertise in antisubmarine warfare, mine and torpedo defence, air and naval platform technology, the modelling and simulation of ship and combat systems, shipboard command and control, maritime information and knowledge management, emerging materials, power sources, and signature management. DRDC Suffield offers expertise in military engineering, autonomous intelligent systems, and defence against chemical and biological (CB) agents. Key research areas include explosives threat assessment and blast effects, detection of landmines, neutralization of landmines and unexploded ordnance, bulk explosives detection, novel energetic materials, CB detection and identification, medical countermeasures and toxicology, CB hazard assessment, and physical protection against CB agents. DRDC Toronto is Canada's centre of excellence for human effectiveness science and technology in the defence and national security environment. Using a systems-based approach, the centre covers all aspects of human performance and effectiveness, including individual and team performance, human-machine interaction, and the influence of culture on operational effectiveness. DRDC Ottawa is the Department of National Defence's lead authority and centre of expertise for radiofrequency communications, sensing, electronic warfare, network security and information operations technologies and systems, radiation effects, space systems, synthetic environments and modelling and simulation. DRDC CORA provides scientific rigour to decision support and option analysis to the Department of National Defence, the Canadian Forces, and Canadian security partners. DRDC CORA scientists deliver options, recommendations, and potential outcomes to key decision makers using a variety of tools and methodologies. DRDC CORA's scientific expertise is drawn from the academic domains of mathematics, physics, engineering, sociology, anthropology, history, and political scien Centre for Security Science - DRDC CSS is a joint endeavour with Public Safety Canada. It provides science and technology services and support to address national public safety and security objectives. The centre's capabilities lie in leading and administering research, development, testing and evaluation of technologies, identifying future trends and threats, as well as a network of national and international science and technology partners within the public safety and security commun Valcartier - DRDC Valcartier has world-leading expertise in optronic systems, information systems, and combat systems. The scope of activities includes spectral and geospatial exploitation, tactical surveillance and reconnaissance, command and control decision support systems, intelligence and information, systems of systems, energetic materials, precision weapons, weapons effects and protection, and electro-optical warfare. These research activities result in innovative applications and meaningful impact in the defence and security environment. Seaspan – 8Billion non-combat

15 DRDC Centres DRDC Suffield DRDC Valcartier DRDC Ottawa
Weapons Effects Vehicles Autonomous Systems Military Engineering Chemical & Biological Defence DRDC Valcartier Electro-optics Combat Systems Command & Control Information Management Systems of Systems DRDC Ottawa Radar, EW Space Systems Information Operations Communications Synthetic Environment Centre for Operational Research and Analysis Operational Research Scientific and Technical Intelligence DRDC Atlantic Underwater Sensing Materials Air Vehicles Marine Vehicles Signature Management DRDC Toronto Human Factors Decision Support Command Effectiveness Operational Medicine Simulation & Modeling Centre for Security Science Military Personnel Research and Analysis

16 € 25 Milliarden Canadian Army
CFB Edmonton, Alberta , CFB Gagetown, New Brunswick , CFB Kingston, Ontario , CFB Montreal, Quebec , CFB Petawawa, Ontario , CFB St. Hubert, Quebec , CFB Shilo, Manitoba , CFB Suffield, Alberta , CFB Valcartier, Quebec , CFB Wainwright, Alberta [edit] Royal Canadian Navy Note: Primary Lodger Units at the Naval Bases are individual commissioned ships of the Royal Canadian Navy. CFB Esquimalt, British Columbia , CFB Halifax, Nova Scotia , CFS St. John's, Newfoundland [edit] Royal Canadian Air Force Note: Primary Lodger Units at Air Force Bases are Wings. CFB Bagotville (3 Wing), Quebec , CFB Borden (16 Wing), Ontario , CFB Comox (19 Wing), British Columbia , CFB Cold Lake (4 Wing), Alberta , CFB Gander (9 Wing), Newfoundland , CFB Goose Bay (5 Wing), Labrador , CFB Greenwood (14 Wing), Nova Scotia , CFB Kingston (1 Wing), Ontario , CFB Moose Jaw (15 Wing), Saskatchewan , CFB North Bay (22 Wing), Ontario CFB Shearwater (12 Wing), Nova Scotia (Detachment of CFB Halifax) . CFB Trenton (8 Wing), Ontario , CFD Mountain View, Ontario (Detachment of CFB Trenton) , CFB Winnipeg (17 Wing), Manitoba . DRDC Atlantic has world-leading expertise in antisubmarine warfare, mine and torpedo defence, air and naval platform technology, the modelling and simulation of ship and combat systems, shipboard command and control, maritime information and knowledge management, emerging materials, power sources, and signature management. DRDC Suffield offers expertise in military engineering, autonomous intelligent systems, and defence against chemical and biological (CB) agents. Key research areas include explosives threat assessment and blast effects, detection of landmines, neutralization of landmines and unexploded ordnance, bulk explosives detection, novel energetic materials, CB detection and identification, medical countermeasures and toxicology, CB hazard assessment, and physical protection against CB agents. DRDC Toronto is Canada's centre of excellence for human effectiveness science and technology in the defence and national security environment. Using a systems-based approach, the centre covers all aspects of human performance and effectiveness, including individual and team performance, human-machine interaction, and the influence of culture on operational effectiveness. DRDC Ottawa is the Department of National Defence's lead authority and centre of expertise for radiofrequency communications, sensing, electronic warfare, network security and information operations technologies and systems, radiation effects, space systems, synthetic environments and modelling and simulation. DRDC CORA provides scientific rigour to decision support and option analysis to the Department of National Defence, the Canadian Forces, and Canadian security partners. DRDC CORA scientists deliver options, recommendations, and potential outcomes to key decision makers using a variety of tools and methodologies. DRDC CORA's scientific expertise is drawn from the academic domains of mathematics, physics, engineering, sociology, anthropology, history, and political scien Centre for Security Science - DRDC CSS is a joint endeavour with Public Safety Canada. It provides science and technology services and support to address national public safety and security objectives. The centre's capabilities lie in leading and administering research, development, testing and evaluation of technologies, identifying future trends and threats, as well as a network of national and international science and technology partners within the public safety and security commun Valcartier - DRDC Valcartier has world-leading expertise in optronic systems, information systems, and combat systems. The scope of activities includes spectral and geospatial exploitation, tactical surveillance and reconnaissance, command and control decision support systems, intelligence and information, systems of systems, energetic materials, precision weapons, weapons effects and protection, and electro-optical warfare. These research activities result in innovative applications and meaningful impact in the defence and security environment. Seaspan – 8Billion non-combat

17 Current Canadian Defence Programs
Medium Support Vehicle System – 1,500 trucks Light Armoured Vehicles III Upgrade Tactical Armoured Patrol Vehicle (500) & Close Combat Vehicle (108) Joint Support Ships Joint Strike Fighter – F-35 Fighter Arctic & Offshore ships >$15-$20 billion in new programs These are new programs either under consideration or actively in procurement. A key driver of FDI is the type and value of Canadian defence programs, the IRB component, and the competitive landscape. Medium Support Vehicles – the medium sized vehicle system program includes the acquisition of MilCOTS (military off the shelf) and SMP (standard military pattern)trucks. While the MilCOTS tender was awarded to Navistar in 2009 to deliver 1,300 vehicles for $274 million, the SMP trucks are expected to be tendered in 2011. LAV III Upgrade program – increase in vehicle fleet size and armour by 2015, and upgrading existing LAVs – final quantity to be determined. Improvements to the LAV are in protection, seats, spall liners, mobility, lethality, blast protection, etc. Strategic airlift – DND has taken delivery on all 4 Boeing C-17s at a cost of $1.6 billion, and an additional $1.6 billion has been set aside for a 20 year in-service support program. Tactical airlift – the government signed an agreement with Lockheed Martin in 2007 to acquire 17 new Hercules C-130J aircraft. The first delivery occurred in Trenton in June The acquisition was valued at US $1.4 billion, with an additional award to Lockheed Martin worth $723 million for a 6 year in-service support contract. (Through June 201). Medium/heavy lift helicopters – Boeing to supply 15 new Chinooks helicopters in a $2 billion contract award, plus an estimated $2.7 billion for a 20 year in-service support award. First deliveries to begin in 2013. Arctic/offshore patrol ships – this project is currently in the definition phase, and is part of the government’s recently announced NSPS program. Acquisition costs for the 6-8 vessels are expected to be $3.1 billion, with a 25 year in-service support package worth $4.3 billion. The build program is expected in the timeframe. Halifax Class Modernization/Frigate Life Extension – maintenance and upgrades for these frigates (built in the timeframe) began in 2010 and are to be completed by In March 2008, the government awarded two contracts for ongoing maintenance and repairs: $549 million to Halifax Shipyard (Irving Shipbuilding) and $351 million to Victoria Shipyards (Washington Marine Group). In November 2008, Lockheed Martin was awarded a $2 billion contract for the installation, integration and long term in-service support for a new combat system for the 12 Halifax class frigates. Joint Support Ships (JSS) – The original tender was cancelled by PWGSC after submitted proposals for a “one ship does all” approach resulted in bid price submissions far in excess of the government’s budget. With the announcement of the NSPS came a renewed commitment to the JSS program – this time, with a focus on a fuel replenishment capability to replace an aging Canadian vessel. An ACAN (advance contract award notice) was awarded to Thyssenkrupp Marine Systems Canada and Navantia SA of Madrid, Spain in October 2010 to determine how the Thyssenkrupp Berlin Class and the Navantia Cantabria Class oilers could be adapted for a build in a Canadian shipyard – one would be selected for such a build program. Canada has committed to buying 3 JSS support vessels at an estimated budget of $2.3 billion. Selection of the F-35 JSF Strike Fighter Aircraft – In October 2010, the Harper government announced the sole source selection of Lockheed Martin to provide 65 new F-35 jet strike fighters starting in 2016 under an all-encompassing program worth upwards of $9 billion. Leading up to this procurement announcement, the government had invested approximately $170 million in its development, and 19 Canadian companies won over $350 million in contracts during the development phase. Internationally, with major program cuts among industrialized nations’ defence procurements, Canada is now getting the attention because we are maintaining our investment in modernization. The procurement process is currently underway for Tactical Armoured Patrol Vehicle (500 vehicles plus another 100 option), the close combat vehicle (108 vehicles), LAV III upgrades (GDLS-C), with the MSVS program beginning shortly. On the JSS front, two European companies have been awarded feasibility studies to have their designs built in Canadian shipyards. MSVS = Medium Support Vehicle System LAV III = Light Armoured Vehicle III TAPV = Tactical Armoured Patrol Vehicle CCV = Close Combat Vehicle JSF = Joint Strike Fighter 17

18 Government R&D Programs: Strategic Aerospace and Defence Initiative (SADI)
SADI Program Objectives: Encourage strategic R&D that will result in innovation and excellence in new products and services Enhance the competitiveness of Canadian aerospace and defence companies; and Foster collaboration between research institutes, universities, colleges, and the private sector SADI was launched April 2, 2007. Typically contributes 30 percent of a project's eligible costs Conditionally repayable contributions, rather than loans Eligible costs relate to direct labour, material, and equipment expenditures. Has so far funded 21 projects SADI is expected to invest nearly $1.1 billion (€.8 Milliarden), with funding to reach a maximum of $ million per year (€ 225 Millionen pro Jahr) from

19 Government R&D Programs: Defence Research and Development Canada (DRDC)
DRDC is an agency of the Canadian Department of National Defence (DND) which provides science and technology (S&T) to the Canadian Forces. Operates seven research centres across Canada, each with a unique combination of expertise and facilities to carry out world class science and technology research. Research capabilities are grouped into 3 main domains: Physical, Human and Infrastructure, with 11 core areas. Applied Research Program (ARP) – typically 5 year project period and range from $3 to $6 million. Defence Industrial Research Program (DIR) : supports transition projects from the laboratory to the experimental phase, proof of concept 50% funding level Technology Demonstration Program (TDP): Demonstrates the military utility of emerging concepts and technologies Current portfolio comprises more than 40 active projects with an average of $10 million per project

20 DRDC - Partnerships Collaborative partnerships with both the private and public sectors. Partnerships include: Contributions in-kind towards a common objective; Joint applications for external funding from national and international granting agencies; Shared cost initiatives in pursuing a common science and technology objective; and Exchanges of personnel at the cost of the parent employer

21 DRDC – Partnerships Partnerships with Germany
Interaction between radiological contamination and surfaces and the effects on decontamination - Bundeswehr Research Institute for Protective Technologies and NBC-Protection – WIS Münster and DRCD-Ottawa ( ) Propagation effects and background clutter in the littoral – Wehrtechnische Dienstelle für Schiffe und Marinewaffen, Maritime Technologie und Forschung, Eckernforde and DRDC Atlantic ( ); Underwater Gated Viewing System 3D imaging and scene reconstruction – Fraunhofer IOSB, Ettlingen, und Wehrtechnische Dienstelle für Schiffe und Marinewaffen, Maritime Technologie und Forschung, Eckernforde and DRDC Valcartier ( ) Investigations into the mechanism of action of Chemical Warfare Agents and medical counter measures – Ministry of Defence Medical Staff 1, Bonn and Bundeswehr of Pharmacology and Toxicology, Munich and DRDC Suffield ( ) Advanced Magnetic Fields (Wehrtechnische Dienstelle für Schiffe und Marinewaffen, Maritime Technologie und Forschung, Eckernforde and DRDC Atlantic NBC=Nuclear, Biological. Chemical WIS - Wehrwissenschaftliches Institut für Schutztechnologien =- Wehrwissenschaftliches Institut für Schutztechnologien – ABC-Schutz (WIS) Humboldtstrasse 100, Munster, Germany; Phone , Fax , Fraunhofer Institute of Optronics, System Technologies and Image Exploitation.

22 Government R&D Programs: Scientific Research and Experimental Development (SRED) Program
Canada offers one of the most favourable tax treatments for R&D among the G7. Canada provides a system of tax credits and accelerated tax deductions for a wide-variety of R&D expenditures. Eligible costs include: salaries, overhead, capital equipment, and materials. These tax-based incentives permit firms to significantly reduce R&D costs through direct investment or sub-contracting in Canada. Foreign companies qualify for the Canadian SR&ED tax benefits Through a Canadian subsidiary of a foreign parent Through a Canadian-controlled private corporation Federal tax credits are complemented with additional provincial R&D tax credits. Combined federal and provincial tax credits range: For large Public or Foreign-controlled Corporation from 20% to 36% For Small Canadian-controlled Private Corporations from 35% to 60%

23 Canadian Defence Procurement Environment: Industrial Regional Benefits (IRB).
Canadian government does not have a ‘buy domestic’ policy preference and seeks out more competition from foreign firms to maximize return on expenditures. IRB Policy provides the framework for using federal government procurement to lever long-term industrial and regional development. An IRB is a contractual commitment by prime contractor to place work in Canada as a result of successfully bidding on a Canadian defence program. (100% of contract value) IRBs are mandatory for projects over $100 million (usually Major Crown Projects), discretionary in the $2-100 million range, and are not applied to small projects.

24 Canadian Defence Procurement Environment: International Traffic in Arms Regulations (ITAR).
ITAR is a set of U.S. government regulations controlling the export and import of defence-related goods and services on the United States Munitions List. ITAR regulations dictate that information and material pertaining to defence and military related technologies may only be shared with U.S. citizens unless authorization from the US Department of State is received or a special exemption is used. Article Canada enjoys exemptions for certain less sensitive goods controlled under ITAR, meaning these items can be exported to Canada licence free provided certain requirements are met. Canada enjoys “an exemption for temporary imports of defence articles originating in Canada for use in the United States, an exemption for temporary and permanent exports of defence articles to Canada, and a limited defence service exemption”.

25 FDI in Canada - Global Product Mandates
Growing a defence business in Canada means exports Domestic base is small Key benefits exporting from Canada Linkages with the US as largest export (85%) Role of the CCC in government to government Possible EDC coverage & buyer financing Growing with the prime/integrator Supplying to the prime who then exports Providing the prime with Canadian kit for IRB credit Difficult to grow a defence business in Canada – no “buy Canadian” policies, small requirements, complex procurement system, etc. Thus, firms must have an international product mandate in mind (services, though, are different). Exporting from Canada to the United States is far more successful from Canada than other countries in the defence business – plus we have 60 years of defence capabilities integration and common relationships and interoperability. Defence production sharing between Canada and the USA is also legislated – this is where the role of the CCC, when understood and used properly, makes the most sense. While the US contracts only a tiny portion of its defence requirements from foreign sources, Canada gets more than it fair share – in excess of $1 billion in contracts are negotiated annually through the CCC to US DoD. EDC is also more open to get involved in some transactions where their services are required by the foreign government. Many sub suppliers to Tier 1 primes are developing their investment plans in Canada based on the outcomes of upcoming defence procurement program winners. In the case of vehicle programs, it is not likely the whole foreign-built vehicles purchased will be built in Canada from scratch, therefore IRB obligations could entail having components built in Canada to meet Canadian requirements (i.e. placed on the vehicle) and then “indirect” benefits could be obtained by building the same parts in Canada for the prime’s other foreign business for similar vehicles. Primes and their supply chain specialists interested in putting in a bid on these programs means visits with Canadianj suppliers to qualify for subcontracting such their bid win. Thus, supplier and sub suppliers to primes have to identify how their products could be built in Canada in order to help the OEM/prime develop the winning proposal and win the business.

26 Export Development Corporation (EDC)
Export Development Canada (EDC) is Canada's export credit agency, offering financing, insurance and risk management solutions to help Canadian exporters and investors expand their international business. EDC provides financing support for three types of investments. Greenfield Investment – development of a new facility or project Brownfield Investment with CAPEX (capital expenditures) – purchase of an existing business with plans to expand or modernize the facility Brownfield Investments without CAPEX (capital expenditures) – purchase of an existing business with no plans to expand or modernize the facility but where the foreign acquisition either prevents closure of an exporting business or allows for initiation of exports by the business

27 EDC – Cont’d Support for inbound foreign investment is provided where the investor is: - domiciled outside of Canada - invests at least 10% of the common equity in a greenfield development or purchasing at least 10% of the assets/equity of an existing Canadian entity - takes an active role in directing and/or managing the investment, including influencing either: (i) the initiation of exports to affiliates, or (ii) integrating the Canadian company's exports within an existing global supply chain or global sales network with unrelated entities In addition once a foreign company is operating and exporting from Canada, EDC can also offer support to the company’s foreign buyers through loans, guarantees and lines of credit.

28 Canadian Commercial Corporation (CCC)
CCC is the Government of Canada’s international contracting and procurement agency. In this capacity, CCC is involved as either: The Prime Contractor responsible to the international buyer for satisfying a contracts’ terms and conditions; or The Contracting Agent responsible to another Canadian Government Department or Agency - or to another international Government - for awarding contracts on their behalf. CCC’s activities are mainly within the following sectors: Contracting with the U.S. Department of Defense on behalf of Canadian suppliers; Contracting with International Buyers for Canadian Goods and/or Services within the Defence, Security and/or Infrastructure markets; Providing contracting services to other Governments, Canadian Government Departments or agencies; and Trade financing.

29 Case of the CCC and GDLS-C
General Dynamics Land Systems –Canada (GDLS –C) has a global product mandate to build LAVs in London, Ontario Sales of LAVs internationally are through the CCC CCC provides the US DoD with sovereign guarantee and has a 55+ year track record of performance GDLS-C sold $3.6 billion between Oct and December 2010 via the CCC Kongsberg makes Remote Weapons Stations for LAVs and announced a new facility in London General Dynamics Land Systems Canada is a Canadian subsidiary of GDLS Sterling Heights, Michigan. It bought out GM Defence in As a Canadian prime contractor selling to foreign governments (to US DoD), it takes advantage of the DPSA and other agreements through the CCC, which acts as the prime contractor to the US DoD, and then does a back-to-back domestic contract with GDLS-C. In essence, a legal sole source agreement. This is how GDLS-C sells internationally. It is interesting to note that Kongsberg, a Norwegian company that builds world-class Remore Weapons Stations for the LAVs, understands how this arrangement can work, and has recently opened an engineering/R&D office close to the GDLS-C plant in London, Ontario. Coincidence ?

30 Canadian Companies in Germany
AirBoss Defence (QB) CBRN, extreme cold weather L-3 MAPPS (QB), mission control system Weatherhaven (BC), custom shelters Rutter (NFLD), enhanced radar, waterside security, oil-spill detection, aboard Polastern 2 Research in Motion, Blackberry (ON) Thales (ON), “Autonomy” headset (via Kiel) CAE (QB), simulation devices AirBoss – partner with Blücher / clothing systems L3 – MASS with TKMS - mission control system, i.e Braunsweig, Korvette 130

31 Vielen Dank für Ihre Aufmerksamkeit!
Meet Canadian companies and Defence Personnel at Business Events and keep us in your network CANSEC (CADSI), May 30-31, 2012, Ottawa, Ontario Eurosatory, June 11-15, 2012, Paris, France SecureTech (CADSI), Oct 30-31, 2012 DSEi, Sept , 2013, London, England AND stay in touch: Trade Commissioners in Berlin, Düsseldorf and Munich Military Attaché in Berlin Public Works and Government Services Procurement office in Koblenz Vielen Dank für Ihre Aufmerksamkeit!