Chief of the Defence Staff announces Canadian Armed Forces General and Flag Officer senior appointments, promotions, and retirements

On the same subject

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  July 9, 2018 | Local, Land

  What is 'the backbone' of the Canadian Army doing in a junk yard?

  Colin Butler Even an expert in armoured fighting vehicles thinks it's a strange place to find what the Canadian Army calls "the backbone" of its combat vehicle fleet. "I'm surprised that vehicles of this importance and significance are being stored in a conventional steel breaker's yard," said Jon Hawkes, the Land Management Editor for military information publisher Jane's Information Group. "Typically they'd be in a military facility of some kind, even if it's sort of, you know, popped out in the back out of the way in the contractors own facility." "For them to be in this breaker's yard is not where I would expect them to be." "Them," in this case are the LAV III, the workhorse of the Canadian Army. You've likely seen them on television, either helping Canadians stricken by some natural disaster, such as the 2013 floods in Alberta, last year's floods in Quebec, or, maybe overseas, carrying our troops into hot zones in such places as Afghanistan and more recently Mali. What are these LAV IIIs doing in a junk yard? So what on Earth are they doing in the back lot of a junk yard? "I think it's interesting," John Hawke said. "You could read that two ways." "On one hand, these things are being quasi-dumped in a corner somewhere to be dealt with later and perhaps that's not caring for them in the best possible way. Although as I say, they're very hardy vehicles. I wouldn't necessarily fear for their status." "Alternatively you could say that someone somewhere is actually being quite smart in finding a very cost-effective solution for storing them for a period of time. I'd imagine it's not hugely expensive to put them wherever this is." Secretive contractors Except, no one working with these LAVs is willing to talk. CBC News first attempted to visit the site in person, but was told to leave the property by staff at the scrap yard. When contacted by phone, Matt Zubick, a member of the family that owns John Zubick's Limited said "I can't talk about that" before he hung up. Steph Bryson, a spokeswoman for General Dynamics Land Systems Canada, declined to comment, referring the question to the Department of National Defence. So why all the secrecy? No secret at all "I find that a bit amusing," said Daniel Le Bouthillier, the head of media relations for the Department of National Defence. "From our perspective, the work is hardly a secret." It turns out the work inside John Zubick's Limited has been happening for the better part of a decade. After Canadian troops deployed in Afghanistan, they quickly realized the army's fleet of LAV IIIs, which they've had since 1997, needed a few tweaks to give soldiers better protection against the Taliban insurgency. Those tweaks involved better armour, blast absorbing seats and other upgrades. However, the LAV IIIs were never designed to handle the extra weight, according to Le Bouthillier. "This additional weight meant more wear and tear and affected the vehicles' what they call 'full mobility potential.' So these upgrades that are happening now address all those issues." The upgrades are being done by London, Ont.-based military manufacturer General Dynamics Land Systems Canada as part of a $1.8 billion refitting and refurbishment program with the Canadian Armed Forces called LAVIIIUP, a deal that was first struck in 2010. The program will see all 550 Canadian-made LAV IIIs, getting new armour and new hulls in order to extend the life of the vehicles until the year 2035. "As part of that process, LAV III hulls, which were not designed to support the weight of upgrades are being sent to a scrap yard, taken apart and melted and this is done because these are considered controlled goods," Le Bouthillier said. "So what you're seeing in that scrap yard are parts that are not being harvested for the upgrades," he said. "These are not drive-in, drive-out full capability vehicles. These are just parts of them. They might look like full vehicles because they're so big. Especially when you look at them from above." The first batch of upgraded LAV IIIs were delivered to the military in 2012, with the delivery of the final batch expected next December. https://www.cbc.ca/news/canada/london/london-ontario-lav-1.4734920

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  August 14, 2019 | Local, Aerospace

  Red Arrows rock Gatineau-Ottawa

  by Eric Dumigan Under blue skies, the team wowed thousands in a special one-day edition of Aero Gatineau-Ottawa. The Red Arrows, who last performed in North America more than a decade ago, are conducting an 11-week North American tour that “aims to promote the best of British and deepen partnerships with close friends and allies.” The contingent includes 108 people, 12 Red Arrows Hawk T1 aircraft and one Atlas A400M RAF transport aircraft. In their 55th season, the Red Arrows will travel coast to coast across North America, conducting aerobatic displays, flypasts and ground engagements. The Red Arrows use a mix of red, white and blue smoke during their performances to enhance visual presentation. Eric Dumigan Photo The team's leader, Martin Pert, leads the nine-plane formation in a series of manoeuvres with formations that salute the 50th anniversary of the Apollo mission; the Concorde, the world's only supersonic commercial aircraft; the Second World War Lancaster bomber; and the Tornado, a multi-roll strike aircraft that was retired from the RAF in 2019. The team uses red, white and blue smoke to enhance its visual presentation. The Red Arrows were formed in 1965 and have performed over 5,000 displays in 57 countries around the world. The Folland Gnat was replaced in 1980 with their current aircraft, the BAE Systems Hawk T1 trainer. The Hawk is a standard military two-seat advanced trainer with a tweaked engine to allow for faster response times. The Red Arrows performed a flypast in Halifax this past weekend and will perform in Toronto on Labour Day weekend, and in Victoria and Vancouver between September 24 and 27. Aero Gatineau-Ottawa will host a full airshow from Sept. 6 to 8, featuring the U.S. Air Force F-35 Lightning II Demo Team. https://www.skiesmag.com/news/red-arrows-rock-gatineau-ottawa/

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  June 29, 2020 | Local, Aerospace

  After The Shock: Implications For M&A In The Aerospace & Defense Market

  By Adil Khan, Jim Adams and Steve Beckey Forbes; KPMG Contributor Jun 23, 2020 The current economic disruption—coming on the heels of the 737MAX suspension—has varying impact across A&D segments. The impact on commercial aerospace has been immediate and extensive, while the defense sector has largely remained unscathed. However, it is hard to see how it will remain so, given the extensive fiscal measures being taken. What will this mean for M&A in A&D? Some trends are beginning to emerge that will affect the entire deal life-cycle (from deal strategy through integration and value creation). Yet, as in other times of economic disruption, new opportunities will emerge, which leads us to believe that the slowdown of M&A activity will be short-lived. As we enter this next phase, deal makers who adapt quickly to the realities of the new industry landscape could be well positioned to maximize value. Pre COVID-19 environment Not too long ago, commercial aerospace was booming, with year-over-year ramp ups in build rates and record backlogs. There were expectations of another golden decade — further extending the unprecedented 14-year “super up-cycle”, defying the long-standing cyclicality of the sector. However, in 2019, the historic correlation between GDP, air-traffic growth, carrier profitability, orders and build rates was suddenly disrupted. GDP and airline profitability levels remained relatively healthy, but new orders and build rates dropped as the industry grappled with the 737MAX shock, as well as a slowdown in the twin-aisle segment. Other undercurrents also emerged — slowdowns in world trade from escalating tariff tensions, weakness in high-growth geographic markets such as China and India, and declining consumer confidence. In contrast, U.S. defense spending was on the rise, averaging 4 percent1 annual growth over the past 5 fiscal years; the $738 billion FY2020 defense bill2 ensured this momentum would continue. The government services sector was also set to benefit from continued funding increases to modernize IT infrastructure and address evolving national security challenges. With general confidence in the long-term fundamentals of the sector and a favorable budgetary environment, players in certain A&D segments pursued M&A to build scale. Others “re-realized” that content matters and initiated vertical and horizontal integration strategies to capture more value and drive cost competitiveness, or acquired targeted niche capabilities and emerging technologies. We also saw the emergence of Super Tier I's through scale-driving consolidation aimed at broadening capabilities and potentially exerting greater influence on OEMs. Deal volume in the A&D sector reached record levels — almost doubling over the last 5 years and outpacing the broader M&A market by 40 percent.3 Valuations remained elevated on the strength of high bidder interest, limited supply of attractive assets, high A&D stock valuations (which outperformed the S&P 500 by 8 percent),4 as well as healthy balance sheets and strong cash positions. TEV/EBITDA multiples for A&D transactions averaged 11x,5 outpacing increases in the overall M&A market. Although, deal volumes moderated in the second half of 2019, amid elevated uncertainty about defense spending heading into a presidential election year, the overall outlook remained optimistic. COVID-19 impact COVID-19 caused a precipitous collapse in air traffic. With travel restrictions and stay-at-home orders, carriers around the globe made unprecedented cuts to capacity, idled fleets, and began deferring or canceling new aircraft deliveries. Also, the MRO (maintenance, repair, and overhaul) and aftermarket segments, which had benefited from the prolonged 737MAX grounding and high fleet utilization, suddenly faced stiff headwinds. Thus far, the defense industrial base has not experienced a COVID-19 demand shock. There is no noticeable disruption in appropriations or major delays and cancellation of military programs. However, as in the commercial sector, defense contractors are actively monitoring their supply base and taking steps to preserve liquidity, minimize supply chain disruption, and taking measures to comply with CDC and local government guidelines. The range of scenarios for defense spending is bookended by two scenarios: an elevated national security threat that would preserve or accelerate funding, or a reordering of budget priorities to fund social and other mandatory programs, resulting in sequestration-type measures, similar to 2011. With these developments, volatility in the financial markets, lack of access to financing, alternative more pressing liquidity needs by corporates and most importantly, uncertainty in the marketplace, deal flow in A&D has come to an immediate standstill. Several “in-flight” processes have been halted, new deals in the pipeline have been deferred, and even some announced transactions terminated. Access to the new public offering market is effectively closed. The gap in expected valuations between buyers and sellers has widened considerably, due to disparate perceptions of the extent of economic disruption caused by COVID-19; contrasting views on reopening of the economy and the pace of return to normal; and diverse perspectives on what the post-COVID-19 new reality looks like. This has rendered financial forecasts and pre-COVID-19 market perspectives obsolete. Further, the extent and nature of unusual and non-recurring events6 impacting financials, present considerable challenges for deal makers to form a credible view of normalized earnings and cash flows. With the lack of reliable projections, it is nearly impossible to form a credible view on valuations let alone bridge this gap. Additionally, although M&A teams have attempted to navigate through practical challenges with offsite due diligence, virtual facility tours, video conferences, etc., adapting to a virtual M&A environment, especially for cross-border deals, has been challenging. Developments to watch as economies reopen Given the health concerns, changes in social behaviors (some of which may be slow to reverse) and anticipated lead-time to an effective vaccine, a V-shape recovery in air traffic appears increasingly unlikely. As governments move from combating coronavirus to reopening economies, the pace and extent of the economic recovery is expected to vary significantly around the world. Further, some long-lasting or permanent developments may trigger some dramatic shifts in the sector: KPMG Implications for M&A trends and outlook KPMG Although we probably do not expect to see M&A activity return to the pre-crisis levels immediately, we expect M&A activity to drive realignment of the industry landscape in the post COVID-19 environment. Implications for M&A Capabilities As we enter the next phase, deal makers will need to adapt to the realities that impact how deals get done. Examples include: KPMG While the challenges are intimidating, the opportunities will be vast, and those who move quickly and decisively are likely to be rewarded for years to come. Those who take this unique opportunity to prepare and are ready to act will stand ready to reshape the A&D industry. 1. 2019 DoD Comptroller Data (Green Book) 2. Department of Defense 3. CapIQ, Institute for Mergers, Acquisitions, and Alliances 4. Year return, S&P A&D index vs S&P 500 5. Trailing 12-month average to June 2019 and avg. 16x for deals >$500M in value; CapIQ, Dacis Company reports and Press releases 6 Worker furloughs, facility shut-downs, loss of business or order cancellation, idled or underutilized facilities, CARES Act funding, changes to performance-based compensation structures or payouts, health and sanitization related measures, IT infrastructure investments to adapt to remote working environment, deferral of payroll taxes, carryback of NOLs, increased interest expense tax deduction, etc KPMG Contributor