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16 janvier 2018 | Local, Aérospatial

Report could renew Canadian debate over U.S. missile defence system: defence analyst

A European report forecasting a surge in billions of dollars worth of missile and missile defence sales worldwide over the next 10 years could renew Canadian debate over signing on to the U.S. missile defence system, a defence analyst says.

The forecasting agency based in Amsterdam is offering a market report on missile systems to global defence production companies that forecasts a rise in the value of sales to $93 billion for 2027 — compared to $55 billion in 2018 — for a total of $725 billion in sales over the decade.

In the summary of its industry report, ASDMedia BV says the main driver for missile production, including all types of missiles from ballistic to short range and air-to-air missiles, is an increase in “territorial conflicts.”

“The market for missile defence systems is anticipated to be the largest category primarily due to the ongoing procurement of missile systems by countries of the Asia Pacific, North American and European regions,” the report says.

The report was published recently, during the escalation of tension over North Korean nuclear missile launches, but prior to the missile attack scare from a false alarm in Hawaii on Saturday.

The missile spending forecast could also be of interest to participants in an international conference the Canadian government is hosting in Vancouver this week on the North Korean standoff.

Senior analyst with the Canadian Global Affairs Institute, David Perry, says the market forecast of missile sales reflects a concern the Department of National Defence included about missile proliferation in the Liberal government's first national defence policy earlier this year, which at the same time included no specific plans for a response to the problem.

Although the Liberal strategy included references to ballistic missile defence and modernizing northern defence warnings systems along with the U.S., it did not take a position on the long-sensitive question of whether Canada should sign on to the U.S. ballistic missile defence system.

“It was one of those strange bits of the policy where there was an identification of an increased concern and a threat, but then not really any specific itemization of what was going to be done about it,” said Perry.

Perry, who took part in closed-door consultations with experts in the lead-up to the review, said the market forecasts, along with the ongoing North Korea crisis, indicate ballistic missile defence should be renewed in Canadian defence discussions, following a short-lived flirtation with the idea by the last Liberal government in 2005.

This past August, Prime Minister Justin Trudeau appeared to almost rule out any chance of discussions with the U.S. over ballistic missile defence, but in September said Canada was not considering the idea “for the time being.”

“Based on the comments by the Prime Minister, I'm not expecting any urgent movement on ballistic missiles,” said Perry, who argued for Canadian involvement in missile defence during the policy consultations.

“I'm curious in a strategic sense, international market observers are saying there's a growing market for this technology because the potential threat of missiles is proliferating, and you've got that (ambiguous) language reflected in the defence policy,” he told iPolitics.

The head of Ottawa's Rideau Institute, founded as an advocate for the rule of international law and disarmament, said Perry's desire to renew ballistic missile defence discussions is a reflection of the defence industry's views.

“In my view, there isn't actually a debate,” said Rideau Institute president Peggy Mason.

“The defence industry lobby keeps raising it, but I think it's absolutely clear that this government, the Liberal government, the Justin Trudeau government, has no interest in reviewing this issue, so long as President Trump is President,” said Mason.

“There are so many good reasons not to review it,”Mason told iPolitics, “but just the difficulty of trying to sell this, getting closer to the U.S. on a very controversial and very costly area while President Trump is in office...”

https://ipolitics.ca/2018/01/16/report-renew-canadian-debate-u-s-missile-defence-system-defence-analyst/

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  • Opinion: After Major Mergers, What’s Next For Defense Market?

    25 septembre 2019 | Local, Aérospatial, Naval, Terrestre, C4ISR, Sécurité

    Opinion: After Major Mergers, What’s Next For Defense Market?

    By Byron Callan This year has shaped up as a record one in terms of the volume of major defense transactions so far announced. Considering deals of $100 million or more in announced value where defense is the primary factor, the 2019 total exceeds $61 billion. Of course, the largest single example is the Raytheon-United Technologies Corp. (UTC) merger. There are reasons to expect heightened activity in 2019 and 2020. Some reasons are known and others can be assessed, but one that does not appear to be affecting market expectations is the Raytheon-UTC deal. Since it was announced on June 9, the companies' share prices have declined from the June 7, close: Raytheon's by 4% and UTC's by 5.7%. The S&P 500 has been flat. However, share prices of peers have risen—General Dynamics is up 5.4%, L3Harris Technologies has increased 6.2%, Lockheed Martin and Leidos have climbed 7% and Northrop Grumman is up 14.4%. These price moves may be attributable to safe-haven seeking by investors who were spooked by global economic concerns and trade wars, but the budget deal reached by Congress also was a factor, as were July earnings reports. The price reactions, however, do not suggest that investors are particularly concerned about the impact of the competitive strength of the Raytheon-UTC union and its ability to take market share away from peers. Nor do they suggest that the deal will trigger a rush by defense-focused companies to merge with commercial ones. Were the latter to be the case, the price reactions may have been similar to Raytheon and United Technologies'. There have been other known developments that raise the question of what is next. Kaman Corp. sold its industrial distribution business for $700 million and will seek to redeploy that capital into engineering products businesses, some of which could involve defense. L3Harris signaled in June that it is undertaking a portfolio cleanup after the completion of the merger, and so there should be divestitures from that company. Textron announced in August that it was reviewing “strategic alternatives” for Kautex, which makes blow-molded fuel systems and other parts primarily for the automotive industry. Presuming that it leads to a sale of that business, Textron will have cash, some of which might be spent on defense. There are general factors as well that could spawn sector merger and acquisition activity in 2019-20. One of the biggest is the potential uncertainty surrounding the outcome of the 2020 U.S. elections. Buyers and sellers have to weigh a number of variables. If the current administration is reelected and control of Congress remains split at least through 2022, then it may be safe to assume that the status quo will continue. One variable within the status quo is how contractor portfolios could be affected by the ongoing efforts of the Pentagon to better align its programs with the National Defense Strategy. Like the Army's “night court” process, this may yet spawn a reassessment of specific programs and their future growth outlook. But if the status quo does not prevail, defense contractors could face a wall of uncertainties in 2020 and may choose to act before rather than after these uncertainties are clarified. First, they will have to assess which Democratic candidate could win the primary cycle and then the nomination. If it is a centrist candidate, the Defense Department spending outlook might not change all that much, although exports to some countries might be curtailed and there could be changes in some Pentagon budget priorities, particularly for nuclear forces modernization. A more progressive-leaning candidate might raise the risk of a more subdued defense budget outlook, particularly if fiscal resources are instead directed toward health care, infrastructure, student debt and other nondefense priorities. Second, there will have to be an assessment of whether a Democratic win of the White House could also flip control of the Senate to the Democrats. If there is a Democrat in the White House but a Republican majority in the Senate, the Senate could still check budgets or policies that may be detrimental to defense. It might also block efforts to roll back changes to tax laws made in 2017. A third variable to be assessed is the attitude of a new administration toward defense mergers and acquisitions, contractor financing and risk. A more progressive administration could look very differently at the structure and financial status of contractors. All these variables will lead to different analyses of current and future value in defense. Is it a good time to hunker down and wait to see what happens or to act in the time that remains in 2019-20 before investors and creditors draw their own conclusions? These uncertainties alone suggest that some will act in anticipation of a change rather than just wait and see. https://aviationweek.com/defense/opinion-after-major-mergers-what-s-next-defense-market

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  • Plan to split warship maintenance between Quebec and Nova Scotia shipyards prompts warnings of job losses

    9 octobre 2018 | Local, Naval

    Plan to split warship maintenance between Quebec and Nova Scotia shipyards prompts warnings of job losses

    David Pugliese, Ottawa Citizen Officials are concerned the Irving yard in Halifax won't be able to handle all the work as it will also be building the new Canadian Surface Combatant warships The federal government is looking at splitting up maintenance work on the Canadian navy's frigates between an east coast shipyard and one in Quebec, but is facing objections from Halifax workers and Irving Shipbuilding who warn the change will mean lost jobs in Nova Scotia. There are seven frigates that will need maintenance on the east coast over a five-year period. But military and Department of National Defence officials are concerned the Irving yard in Halifax won't be able to handle all the work as it will also be in the midst of building the new fleet of Canadian Surface Combatant warships. Each of the aging Halifax-class frigates will require about a year of maintenance work, and in 2020 the navy expects maintenance will be needed on two frigates at the same time. Irving won the original maintenance contract in 2011 but that deal is nearly expired.In order to keep the navy at sea, federal procurement officials are proposing splitting up the work between Irving and its rival, Davie Shipbuilding in Levis, Que. Pat Finn, assistant deputy minister of materiel at DND, said that while no final decision has been made, discussions are taking place about splitting up the work. “We have to do this maintenance,” he told Postmedia. “We've got a fair bit to do. We have to keep the navy operational.” Finn said the government's shipbuilding strategy is producing new vessels for both the navy and coast guard, all of which will have to be maintained in the future — a large task. “If we don't have two maintenance and repair facilities for the navy and the coast guard we're going to have a strategic problem,” he said. Union officials at the Halifax shipyard and, defence-industry sources say, Irving itself have been lobbying the Liberal government to stop the plan to send some work to Davie. Irving did not offer comment for this story, but Lana Payne, the Atlantic Regional Director for Unifor, the union representing around 900 employees at the Irving yard, said her organization is worried that as many as 300 staff could face layoffs if some of the work is transferred to Davie. “The Halifax-class has been historically (maintained) at the Halifax yard and the loss of that work will create a major problem for our membership,” she said. “Our understanding is that this is work they can easily do.” Unifor has brought its concerns to Nova Scotia Liberal MPs and other members of the Liberal government. The government will spend several hundred million dollars per frigate for each maintenance period. To date, Irving Shipbuilding Inc. has received more than $3.4-billion in contracts under the government's shipbuilding strategy. That includes contracts for the Arctic and Offshore Patrol Ships and initial work on the surface combatant program. That also includes more than $511 million for repair, refit and maintenance contracts, according to federal government figures. The surface combatant program will result in an estimated $30 billion in build contracts for Irving, with work continuing into the 2040s. Sources within the federal government told Postmedia they do not see widespread layoffs arising from any decision to split the work between the yards. The government is also examining a plan to fast-track some aspects of the surface combatant program so the Irving yard is working at high capacity. Irving raised similar concerns in August after Davie received a contract to refit and upgrade three medium-size icebreakers purchased by the federal government. At the time, Irving noted that it and Seaspan Shipyards in Vancouver had been selected to build Canada's future fleets. “We call upon the Federal Government to confirm to Irving Shipbuilding, our shipbuilders and their families, the Province of Nova Scotia, and all Atlantic Canadians that the National Shipbuilding Strategy remains intact and, therefore, construction of the ships for Canada's Navy and Coast Guard will be done exclusively by Irving Shipbuilding and Vancouver Shipyards,” it pointed out in its statement. Treasury Board President Scott Brison, a Nova Scotia MP, said at the time that Irving's role in the shipbuilding strategy is secure but it has always been the case that other shipyards can compete for maintenance and refit work. • Email: dpugliese@postmedia.com https://nationalpost.com/news/canada/plan-to-split-warship-maintenance-between-quebec-and-nova-scotia-shipyards-prompts-warnings-of-job-losses

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