February 8, 2021 | Local, Aerospace, C4ISR, Security
By: Aaron Mehta
WASHINGTON — With defense budgets around the globe expected to fall, simulation and training firm CAE is moving to diversify its defense and security portfolio, with an emphasis on space and cyber capabilities.
Dan Gelston, who took over CAE's defense and security business unit in August 2020, told Defense News that his team is also looking to partner with defense primes during the early stages of new competitions, a shift which could require CAE investing in research and engineering efforts.
Over the last two decades, CAE was “very focused” on traditional platforms, particularly planes and unmanned aerial vehicles, Gelston said. Now, he expects the future of the company to involve “a real focus on space and cyber, not only for that customer, but also for CAE. And those are areas that we need to augment our capabilities to make sure that we're providing the best product, the best service to help our customers.”
The full interview will air as part of CAE's OneWorld event Feb. 9.
CAE reported just over $1 billion in defense revenues in 2019, which made it the highest-ranked Canadian company on the annual Defense News Top 100 list. Currently, Gelston's unit makes up about 40 percent of the company's overall business, but he sees a chance to hit a “much larger” market going forward.
Gelston's plan includes increasing the “security” part of the company's “defense and security” portfolio by aggressively pursuing contracts for government agencies such as the Department of Homeland Security and Transportation Security Administration. This would competing for what he describes as a “multi-hundred-million dollar opportunity with TSA here in the next few months” for training security forces for airports.
“With space assets ability to target, with cyber assets ability to attack anywhere and everywhere, it's not just the Pentagon, it's critical infrastructure, it's a lot of what we traditionally have separated into DHS. So that security element is crucial,” he said.
“We could really bring a lot of our research and development, our capabilities in machine learning and AI and virtual reality and augmented learning management systems” to DHS, which “you could categorize a little more of a traditional time phased approach to training.”
As the company seeks to expand into the non-defense security realm, Gelston said the company is keeping an eye out for potential merger and acquisition options, saying “I certainly would like to think in the next 18 to 24 months a property would come along, that's particularly attractive to me.”
2020 was a rocky year for CAE, which was hit particularly hard given its ties to the commercial aviation space. But the company worked quickly to shave costs, and toward the end of the year issued a public offering, with the goal of raising roughly $2 billion Canadian ($1.56 bn American). The plan, as Gelston said, was to have enough “dry powder to make sure that we're coming out leaning forward out of the COVID crisis. We don't want to be hunkering down just trying to survive. We want to take advantage of this.”
While not discussing specifics, Gelston emphasized that “I'd love to get a little more robust training capability in the cyber realm... that's an area that that I can certainly see augmenting with potential acquisition here in the next 18 to 24 months if the right property comes along, I think we would be positioned to potentially pursue that.”
Teaming with defense manufacturers
That focus on new areas doesn't mean the company is turning away from traditional defense projects, but it does come with a greater focus on teaming up with prime contractors early in the process to offer the DoD and other customers a package solution from the start, as opposed to bidding on training and simulation contracts after a design has been selected.
He pointed to the surprise rapid test-flight of the Next Generation Air Dominance (NGAD) demonstrator from last September as an example of how defense acquisition is speeding up.
“Our defense acquisition officials are really looking for skin in the game from industry” early on, he said. “We don't have the time for the classic cost-plus development work, years and years and multiple phases” of a project.
“No company, even the big OEMs, have unlimited research and development budgets. No company, even Lockheed Martin, has unlimited engineering assets,” he continued. “So if I can partner with these OEMs on these major next generation platforms now and start co developing as they develop the platform, I'm codeveloping the training in the simulation experience, and sharing some of that burden, adding skin into the game for research and development engineering — It's not just money, it's also time, and time, arguably right now is our is our biggest enemy — I can really help those OEMs and give them a true discriminator in their offering.”
“And certainly at the end, that international or us customer is going to be much better off as they've got a fully baked, fully integrated training and simulation solution with that new platform.”
In addition to looking into NGAD, Gelston said the company plans to pursue nearer-term contracts related to the F-35 joint strike fighter, MQ-9B drone, and the Army's Future Vertical Lift competition, while also continuing ongoing efforts like its C-130H business, which was awarded in 2018.
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EDMONTON, March 6, 2019 /CNW/ - From pioneering satellite communications technologies to building the "Canadarm" and space-based radar systems, Canada has been making key contributions to space science and technology for over six decades. Investing in science, innovation and research unlocks new opportunities for economic growth, creates thousands of jobs for hard-working Canadians, and helps us understand the world we live in and our place in it. Today, the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, announced a national space strategy that recognizes the strategic value of space and space exploration for Canada. Canada's commitment to participating in theLunar Gatewayforms the cornerstone of Exploration, Imagination, Innovation: A New Space Strategy for Canada, which aims to leverage Canadian strengths like robotics, while advancing science and innovation in exciting areas like AI and biomedical technologies. Furthermore, to help prepare the next generation for the jobs of the future, the Junior Astronaut initiative will capitalize on the inspirational power of space to engage youth in science, technology, engineering and mathematics, among the wide range of space-related skills and activities. The Strategy describes how the Government will position Canada's space industry to take full advantage of the growing global space economy while ensuring that Canada keeps pace. It will also support innovative space firms through a dedicated investment so that they can scale up and thrive both in Canada and abroad. The Strategy also places priority on harnessing space science and technology to solve important challenges on Earth, including: investing in satellite communications technologies for broadband, including connectivity in rural and remote regions; exploring how the delivery of healthcare services in isolated communities can be improved through lessons learned in space; funding the development and demonstration of lunar science and technologies in fields that include AI, robotics and health; and leveraging the unique data collected from Canada's space-based assets to grow businesses and conduct cutting-edge science, including about the impact of climate change on Earth's atmosphere. Space exploration increases our knowledge of our planet and universe, encourages research and discoveries, and creates new business opportunities here in Canada to improve our daily lives. Through the Strategy, the Government of Canada is supporting future generations of innovators and explorers and ensuring that Canadians are ready to take advantage of the jobs and industries of tomorrow. Quick facts The Strategy is informed by the views and perspectives gathered by Canada's Space Advisory Board. On February 28, 2019, the Government of Canada announced an investment of $1.9 billion over 24 years for the next generation of smart, AI-powered space robotics for the U.S.-led Lunar Gateway. The government is also providing $150 million over 5 years for the Lunar Exploration Accelerator Program (LEAP). LEAP will fund the development and demonstration of lunar science and technologies in fields that include AI, robotics and health. The Junior Astronaut initiative includes space activities and a competition to train at CSA headquarters in Saint-Hubert, Quebec, with real astronauts. Canada's space sector currently employs 10,000 highly skilled workers, generates $5.5 billion in Canada's economy annually, and averages $2 billion in export sales. Space generates lucrative commercial opportunities for our companies. Morgan Stanley expects the global space market to triple in size to US$1.1 trillion by 2040. The Government of Canada has invested more than $2.5 billion since 2015 in Canada's space sector, extending our participation in the International Space Station, providing funding to the Canadian Space Agency to test technologies in space, and helping Canadian companies scale up through the Strategic Innovation Fund. "By aiming for the moon, we allow our children to reach for the stars. Space represents limitless possibilities and endless discoveries. For every astronaut we send to space, there are thousands of Canadians who are part of the journey. Canada's space strategy will foster our next generation of astronauts, engineers and scientists and will ensure Canadians and Canadian businesses benefit from the growing opportunities in the space economy." The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development Links Canada's Space Strategy (pdf) Lunar Gateway Junior Astronauts Space Advisory Board Strategic Innovation Fund Website: http://asc-csa.gc.ca Email:ASC.Medias-Media.CSA@canada.ca Follow us on Social Media SOURCE Canadian Space Agency https://www.newswire.ca/news-releases/launching-canada-s-space-strategy-government-releases-plan-for-future-space-exploration-space-science-and-jobs-840773359.html