One of Québec’s defining characteristics is the presence of not just one but four OEMs: Bombardier, CAE, Pratt & Whitney Canada (P&WC) and Bell Helicopter Textron Canada. Each focused on different areas, these prime contractors drive Québec’s aerospace ecosystem and provide strong bridges to the international markets for many of their suppliers. “We are the only province in Canada with OEMs,” highlighted Suzanne M. Benoît, president at Aéro Montréal. “They play a vital role in investing in innovation and stimulating research projects and inspiring talent in our universities.”

Bombardier takes top spot as Canada’s biggest aeronautics company and the global leader in airplanes and trains, posting revenues of C$16.3 billion in 2016. The company’s commercial aircraft segment has been marked by the production ramp-up and revenue-generation phase of the C Series aircraft, the first all-new clean-sheet designed family of single-aisle aircraft in the 100- to 150-seat segment in nearly 30 years. Following the CS100’s entry-into-service with SWISS and the CS300 with airBaltic, in conjunction with significant orders from Air Canada and Delta, the aircraft backlog was increased to over 350. In 2017, the CS100 aircraft completed a non-stop transatlantic flight from London City Airport to New York’s John F. Kennedy Airport and was awarded steep approach certifications, enabling SWISS to start operating the aircraft at London City Airport on August 8, 2017. “The performance and reliability of the aircraft have been outstanding so far, with more than 1.5 million passengers flown on more than 100 routes and airBaltic operating the aircraft up to 17 hours per day,” highlighted Olivier Marcil, Bombardier’s vice president of external relations. “Following this successful entry-into-service in Europe, the C Series will make its Asian debut later in 2017 with Korean Air.”

On the business jet side, the Global 7000 and Global 8000 aircraft have set the standard for a new category of large business jets. The Global 7000 aircraft is the first and only clean-sheet business jet with four living spaces.

It should come as no surprise that the impact of the OEM on the region is significant. “While Canada represents less than 10% of Bombardier’s revenues, we have a strong footprint here with over 21,000 employees, including more than 15,000 in Québec, and several production and engineering sites,” noted Marcil. “This reflects our 75-year history and our strong commitment to this country. It also enables us to leverage Canada’s competitive strengths, such as strong R&D capabilities, world-class engineering talent and high-value manufacturing.”

For the C Series, the final assembly, systems integration and pre-flight operations all take place at Bombardier’s Mirabel site, while the carbon-fiber fuselage and cockpit are built at the site in St. Laurent. “Québec suppliers are also part of the effort,” highlighted Marcil, referencing Pratt & Whitney Canada and CAE as suppliers of the engines and pilot-training simulator respectively. “So, while the C Series aircraft relies on a truly global supply chain, Québec ingenuity played a central role in its success.”

Just around the corner from Bombardier’s main Mirabel site is Bell Helicopter Textron Canada, a subsidiary of U.S.-based Textron. Bell Helicopter’s Mirabel facility focuses on commercial helicopters, currently the Bell 505, Bell 439, Bell 412 and Bell 407 programs. In March 2017, Bell Helicopter also unveiled its FCX-001 concept aircraft, which includes a plethora of innovative features, including a rotorless tailboom and an electric motor as part of a hybridized propulsion system. Stepping further into the future, the rotorcraft company announced a partnership with Uber for the development of air taxis.

Reaching its 90^th year of operation in 2018, Pratt & Whitney Canada (P&WC) is Québec’s aircraft engine manufacturer and a global leader. Having produced its 100,000^th engine in April 2017, the company today has upwards of 65,000 engines in service on 13 different families of aircraft. Exporting 90% of its products, P&WC is nevertheless a strong driving force behind a lot of innovation that takes place in Québec. “We are very involved in all aspects of our community and the Canadian ecosystem,” commented Maria Della Posta, P&WC’s Senior Vice President. “We have more than 23 ongoing university agreements in Canada and major ongoing projects with CARIC, CRIAQ and GARDN which connect us with all kinds of SMEs, universities and colleges to develop our technologies with. We run 10 of the 13 Natural Sciences and Engineering Research Council of Canada (NSERC) chairs… With the support of the Canadian government, we are also working with the aerospace cluster to create a consortium with themes related to advanced manufacturing and digitization. Additionally, we work with more than 1,300 suppliers in Canada. In collaboration with the federal government, we have put in place a program to help suppliers gain aerospace accreditation. We derive a lot of value from these collaborations, and we try to give as much back to the community as possible.”

P&WC’s focus on innovation is apparent in that almost 8,000 of the engines in service have full engine health management and communication capabilities. “We also have a new Oil Analysis Technology, which gives high visibility into the health and efficient operations of the engine without intrusive inspection,” expanded Della Posta. “These technologies allow us to be more proactive with our customers, while helping them move toward more fully planned maintenance environments and providing insights to pass on to our engineering organization to develop better next-generation products. We are immersed in how to transform our business model and bring more customized solutions to serve the diverse missions and needs of our customers. Other areas of great investment are product lifecycle management (PLM) and other systems and technologies that position us well for the future.”

With its mission, “Performance. Personal. Guaranteed.”, in mind, P&WC is now working on the next large PT6 for general aviation and is currently modernizing and digitizing all its early engines.

Founded in 1947, CAE Inc. is a Canadian manufacturer of simulation technologies, modelling technologies and training services and a leader in training pilots, offering cadet to captain training solutions. With the increase in expected passenger trips and number of flights, CAE stands in good stead to capitalize on the expected demand growth for its services. “Over the next 10 years, IATA forecasts that passenger trips will grow by more than 4% yearly, meaning the commercial aviation industry will double over the next 20 years,” outlined Marc Parent, CAE’s president and CEO. “Airlines will need more pilots. In fact, at the Paris Air Show, we introduced our first-ever CAE Airline Pilot Demand Outlook to the market. It indicates that more than 255,000 pilots will be needed in the next 10 years and that over 50% of them have not yet started to train.”

As with its other OEM peers, CAE places a heavy focus on R&D, investing more than C$1.3 billion over the past 10 years.

Selecting suppliers

The industry is currently transitioning from a bullish market, where huge orders were secured for new aircraft in development, to a bearish one in which OEMs are focused on ramping up production at an unprecedented scale to meet order books, rather than on new aircraft sales. As a result, OEMs are experiencing pressures on their margins, translating into cost pressures across the entire supply chain. “OEMs have spent heavily on developing their current programs and there are no new ones in development, so they have reached a period of the business cycle where they are not selling many new planes,” commented Sylvain Boisvert, general manager at Safran Engineering Services. “For this reason, they are focusing on productivity, which translates to cost reductions. Safran Engineering Services has therefore received a lot of demand from Tier 1s for assistance with improving profitability through weight reduction and identifying other cost saving measures.”

Concurrently, in recent years, OEMs have shown a clear preference for long-term contracts rolled out to fewer, often larger suppliers that can offer integrated services due to the efficiency gains that can be secured. “Our priority is finding suppliers that are very cost-competitive and agile in meeting market demands,” emphasized Cynthia Garneau, president at Bell Helicopter. “Proximity is also important for us.”

In today’s globalized environment, there is often a better business case for establishing supply chains closer to the export market or in lower-cost jurisdictions. “We transferred the build of all of our cabins and wire harnesses to our facility in Chihuahua, Mexico, a few years ago, transferring our supply chain along with it,” added Garneau. “We now have much more of a Mexico-focused supply chain in these areas. Similarly in Québec, as we look towards the next generation of helicopter and next commercial program, we will be building a strong Canadian supply chain, looking for companies that can match us in innovation and follow us where we are heading in terms of technology.”

The presence of major OEMs elevates Québec’s aerospace industry on a global scale; many local suppliers have used these relationships as stepping stones to the international markets. “We invest in our suppliers by developing them and providing them with green belt training sessions,” explained Parent. “We use the Aéro Montréal MACH program for supplier development in order to increase competencies and the ability to drive joint cost-reduction initiatives.”

Citing quality as the most important factor in selecting a supplier followed by cost, Parent continued: “Thirdly, we look for suppliers that can deliver subassemblies involving mechanical parts, electrical wiring and electronic equipment. Fourth, as a signatory to the UN Global Compact, we are taking steps to ensure responsible procurement…Social and environmental factors are considered alongside financial factors when making procurement decisions and are detailed among the criteria used for supplier selection. Finally, supplier innovation is captured through appropriate partnerships with relevant subcontractors.”

In order to compete in today’s environment, suppliers must meet global standards and measure up against international players on aspects such as quality, cost and delivery time. The government and key organizations such as Aéro Montréal are therefore focused on increasing the competitiveness of regional players through initiatives such as Aéro Montréal’s MACH program. The MACH initiative aims to strengthen the supply chain structure by creating special collaboration links among customers and suppliers. Initially deployed in 2011 over five years under Bombardier’s mentorship, in December 2016, Aéro Montréal received C$2 million in financial support for the initiative.

Government support

The government plays a key role in supporting the industry, recently investing US$1 billion into Bombardier’s C Series, for example. Whilst some have criticized the move, the government’s 49.5% stake in the company indicates the commitment to the program’s development as an investment that will benefit the entire region. The government also recently invested C$200 million in support of the space sector, in a project led by MDA.

In great part due to significant government investment, Québec’s aerospace sector has become a key economic driver for the region. “The aerospace industry is recognized for creating high quality jobs, generating steady R&D investments and stimulating exports,” underscored Marcil. “This results in significant economic benefits for both governments and society. In fact, since Bombardier entered the aerospace sector in 1986, the company and its employees have been the source of almost C$18 billion in government revenue through direct program repayments and taxes paid. This is why a growing number of countries compete to grow their local aerospace industry and attract foreign aerospace investments.”

Government support is widely accepted as essential for a thriving industry and has played a part in attracting new business to the region as well as supporting its existing ecosystem. For example, Bell Helicopter Textron recently decided to locate its Bell 505 operations in Québec over Louisiana, United States. “The first consideration is the expertise developed within the region through the years, and the access to talent we have in Canada… Second is the support offered by the government here in Québec and Canada at large,” noted Cynthia Garneau, president at Bell Helicopter Textron Canada. “We get more attention here than companies in the United States because the sector’s economic impact is proportionally much greater.”

Supported by the broader ecosystem with an increasing emphasis on collaboration, Québec’s OEMs continue to drive the region’s aerospace industry through economic impact and access to global markets. Government provisions will continue to play an important role in the success of Québec’s aerospace industry and, reflecting the growing importance of SMEs as a source of innovation, there will be a more equal focus on smaller companies going forward. In an increasingly global industry, continuing to foster a competitive supply chain in Québec will be key in ensuring heightened economic return from the region’s OEMs.