14 juin 2018 | Local, Aérospatial, Naval, Terrestre

Trade dispute could leave U.S. firms out of the running to sell military equipment to Canada

U.S. President Donald Trump's tirade against Canada and threats to punish the country could undermine efforts by American firms trying to sell fighter jets and other military equipment to the Canadian Forces, warn defence and industry analysts.

One European firm, Airbus, has already been talking with Canadian officials to pitch its plan to build fighter jets in Quebec as it positions itself to win the $16-billion deal to replace CF-18 aircraft.

An Italian aerospace firm, Leonardo, is looking at building helicopters in Nova Scotia as it moves towards negotiations for a search-and-rescue aircraft modernization project the Department of National Defence says will be worth between $1 billion and $5 billion.

Trump has hit Canadian aluminum and steel with tariffs, claiming their import is a threat to national security. After the weekend G7 meeting and Prime Minister Justin Trudeau's reaffirming that Canada would reciprocate with tariffs on specific U.S. products, Trump vowed more economic grief that will “cost a lot of money for the people of Canada.”

Trump's move comes at a time when European firms are courting the Canadian government, particularly on big-ticket defence items such as aircraft and warships. Billions of dollars in new purchases are potentially at stake and European firms had a strong presence at the recent CANSEC military equipment trade show in Ottawa.

“Trump certainly isn't helping U.S. defence companies who want to sell to Canada,” said Martin Shadwick, a defence analyst in Toronto. “It would be very difficult at this point from a political optics point of view for the government to announce awarding contracts to any American firm.”

Shadwick said whether that situation will continue for the next several years, when for instance the decision on new fighter jets is supposed to be made, would depend on any further actions by the president. Two U.S. aircraft, the Boeing Super Hornet and the Lockheed Martin F-35, are among the top contenders in that jet competition. The other three aircraft are from European companies.

An earlier trade dispute with Canada has already backfired on Boeing and the Trump administration, costing the U.S. billions in fighter jet sales. Last year Boeing complained to the U.S. Commerce Department that Canadian subsidies for Quebec-based Bombardier allowed it to sell its civilian passenger aircraft in the U.S. at cut-rate prices. As a result, the Trump administration brought in a tariff of almost 300 per cent against Bombardier aircraft sold in the U.S.

In retaliation, Canada decided against buying 18 new Super Hornet fighter jets from Boeing. That deal would have been worth more than US$5 billion.

Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries, said it is too early to determine the impact of the U.S. tariffs on the domestic defence industry. “Tariffs are never good for trade or business,” she added.

“CADSI is monitoring the issue and consulting our members to better understand the potential impact to Canadian firms, both in terms of the direct impact of any tariffs and the more indirect, long term impact on supply chains and market access,” she said.

There is growing concern that Canadian aviation firms could be hurt by Trump's aluminum tariffs. The Aerospace Industries Association of Canada did not respond to a request for comment. But its counterpart in the U.S. has voiced concern that American aerospace companies could feel pain.

In March, the U.S. Aerospace Industries Association noted it was deeply concerned about Trump's tariffs on steel and aluminum as it “will raise costs and disrupt the supply chain, putting U.S. global competitiveness at risk.”

“There is also a significant threat for retaliation from other countries towards American made products,” the association noted in a statement.

Canada is the largest exporter of aluminum and steel to the U.S.

http://nationalpost.com/news/politics/trade-dispute-could-leave-u-s-firms-out-of-the-running-to-sell-military-equipment-to-canada

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  • Government launches CF-188 replacement program with interim Hornet buy

    13 décembre 2017 | Local, Aérospatial

    Government launches CF-188 replacement program with interim Hornet buy

    Canada will acquire 18 F/A-18 Hornets and associated spare parts from the Royal Australian Air Force (RAAF) to augment its fleet of CF-188 fighter jets until a replacement is selected and brought into service in 2025. Government ministers and senior officials confirmed the widely anticipated plan to buy 30-year-old F/A-18A/B legacy Hornets at a press conference on Dec. 12, putting to rest a previous proposal to acquire 18 F/A-18E/F Super Hornets. The Liberal government had announced in November 2016 a plan to buy the Boeing-built Super Hornets as an interim measure to address an urgent capability gap in the fighter fleet. Although the possible sale was approved by the U.S. State Department in September, the government ceased all discussions with Boeing after the company issued a trade complaint against Montreal-based Bombardier over the sale of the C Series jetliner to Delta Air Lines. “We have received a formal offer for sale of F-18 aircraft from the government of Australia, which we intend to pursue. And we have received an offer of Super Hornets from the U.S. government, which we intend to let expire,” said Carla Qualtrough, Minister of Public Services and Procurement. At the same time, the government officially launched a $15 to $19 billion competition to procure 88 aircraft to replace the entire fleet of Royal Canadian Air Force (RCAF) legacy Hornets by inviting interested governments and manufacturers to join a suppliers list. Qualtrough said the list would allow the government to identify and “share sensitive information” with eligible governments, manufacturers and suppliers able to meet Canada's needs. “All suppliers are welcome to participate in the process. No firm is excluded,” she said. Engagement with industry, which has been ongoing since 2012, is expected to lead to a request for proposals by the spring of 2019, followed by a contract award in 2022. Delivery of the first aircraft would begin in 2025. While ministers and senior officials stressed an “open and transparent” competition, the government also introduced a new criterion in the evaluation of company's bid: Its impact on Canadian economic interests, a measure journalists quickly dubbed the “Boeing clause.” “This new assessment is an incentive for all bidders to contribute positively to Canada's economy,” said Qualtrough. “When bids are assessed this will mean that bidders responsible for harming Canada's economic interests will be at a distinct disadvantage compared to bidders who aren't engaged in detrimental behaviour.” A government official, speaking on background, acknowledged that “many of the suppliers we deal with on defence procurements have several business lines and global reach. We are seeking to leverage (these) procurements to incentivize favourable economic conduct towards Canada and discourage detrimental actions by commercial suppliers.” Qualtrough said the assessment, which will be used in future procurements, would be developed through consultations with industry. “All proposals will be subject to the same evaluation criteria. “The assessment of economic impact will be done at the time of the assessment of the bids,” she added, an indication that much could change between the government and Boeing by 2019. The eventual CF-188 replacement program will include aircraft, sustainment, infrastructure, and aircrew and maintenance training, and will generate billions for Canadian industry in industrial and technological benefits, said Navdeep Bains, Minister of Innovation, Science and Economic Development, noting that the industrial and technological benefits (ITB) policy has already generated over $40 billion in economic investment. “If you think that sounds impressive, the economic benefits of these new fighter jets will add significantly to those ITB numbers. This is an enormous investment in a very important sector for us. That's why our government feels it's important to do business with trusted partners.” MINDING THE GAP The Liberal government has faced pointed criticism on a number of fronts for claiming a capability gap. During Question Period on Tuesday, Conservative Member of Parliament Tony Clement suggested the capability gap does not exist. “It's a fairy tale created by Liberals to justify their political decisions,” he said. Gen Jonathan Vance, Chief of the Defence Staff, countered that criticism during the press conference, claiming the RCAF cannot generate enough mission-ready aircraft to meet North Atlantic Treaty Organization (NATO) and North American Aerospace Defense Command (NORAD) commitments simultaneously. “The RCAF cannot concurrently meet those obligations now without some form of supplemental capability until a future fighter fleet is in place,” he said. “The acquisition of Australian F-18s is a logical choice.” Senior officials with the RCAF and Department of National Defence (DND) said the Australian Hornets would “integrate seamlessly” with the CF-188s. Both fleets have similar operating requirements and share comparable training systems, all of which can be supported by existing supply chains and frontline maintainers. Both countries have cooperated on fleet management and system upgrades, and shared test data, “so we know the jets well,” said the DND official. “We know the state of their aircraft and what modifications may be needed to operate them until the [new] fleet is in place.” Montreal-based L3 MAS, responsible for maintaining Canada's CF-188s since they first entered service in the 1980s, has also performed centre barrel replacements on a number of Australian jets as part of a fuselage life extension program. However, Canada recently began additional structural modifications to ensure the Hornets can operate through 2025, and the Australian F-18s will need to be modified to a similar standard. The government must still negotiate the final price tag for the 18 jets, modifications and spare parts, but a senior official estimated it would be about one-tenth the cost of 18 Super Hornets and associated mission and weapon systems and support, which the U.S. State Department estimated at US$5.23 billion. “Specific dollar amounts will be available once we have finalized an agreement with Australia,” he said. If an agreement is reached, the first Australian Hornets would begin arriving in 2019 and the capability gap would be closed by the end of 2021, two years faster than the planned delivery of the Super Hornets, officials said. The RCAF had planned to deploy the Super Hornets as a standalone squadron at 4 Wing Cold Lake, Alta. The senior Air Force official said the force structure had not yet been finalized, but would likely involve aircraft being placed across the operational and training squadrons at 4 Wing and 3 Wing Bagotville, Que. He also acknowledged that more aircraft would mean a need for more pilots and technicians, and that “retention and recruitment efforts were underway to meet this requirement.” https://www.skiesmag.com/news/government-launches-cf-188-replacement-program-interim-hornet-buy/

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    18 mai 2023 | Local, Aérospatial

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  • Bidding criteria for Canada's $19B fighter jet competition will emphasize strategic attack and ground-strike capabilities — seeming to favour the F-35

    11 juin 2019 | Local, Aérospatial, Sécurité

    Bidding criteria for Canada's $19B fighter jet competition will emphasize strategic attack and ground-strike capabilities — seeming to favour the F-35

    David Pugliese The criteria that will govern the selection of the winning bid to provide Canada's next fleet of fighter jets will prioritize strategic attack and foreign ground-strike capabilities, according to government documents obtained by Postmedia — guidelines that are seen to favour Lockheed Martin's controversial F-35. In 2010 the Conservative government under Prime Minister Stephen Harper selected the F-35 to replace the Canadian Forces' aging CF-18s, but later abandoned the plan after concerns about the technology used for the plane and its growing cost. During the 2015 election campaign Justin Trudeau promised that a Liberal government would not purchase the F-35, at the same time vowing to hold an open competition for the purchase of the country's new jet. Once in office, however, the Liberals backed away from their promise to freeze out the F-35 and the aircraft is now seen as a front-runner in the upcoming competition, with many supporters in the Royal Canadian Air Force. Though the Liberal government has highlighted the need to buy new jets to protect Canadian airspace and meet the country's commitments to NORAD, the procurement criteria obtained by Postmedia, currently in draft form, indicate the bidding process will assign additional weight to aircraft that excel at ground attack for overseas operations. Those criteria are seen to favour Lockheed Martin's F-35 stealth jet, say industry representatives allied with Lockheed's rivals in the upcoming $19-billion competition. The evaluation criteria also place less emphasis on sustainability — something else that may play to the advantage of the F-35, which has been dogged by high maintenance bills. But Pat Finn, the Department of National Defence's procurement chief, says there is such a wide variety of requirements to meet in the competition that while some aircraft might be seen to do well in some areas, they may not excel in others. “Somebody may be better in a high-end scenario but they're worst for cost,” Finn explained. “That's why we say it's the whole piece” that will be considered in the competition. At this point four aircraft are expected to be considered: two U.S.-built aircraft, the F-35, and the Super Hornet, and two European planes, the Eurofighter Typhoon and the Gripen. Finn said bidding companies must meet mandatory requirements when it comes to long-term sustainment of the planes. But industry representatives, both from Lockheed Martin rivals and those not directly involved in the competition, point out that beyond the mandatory requirements there is little emphasis on the important area of long-term maintenance and sutainability. So a company with an aircraft that costs relatively little to maintain won't get that recognition in the competition, they claimed. Finn said discussions are still ongoing with various companies and their feedback is being assessed. The request for proposals, which will outlined the final requirements for the aircraft, is expected to be released around mid-July, he added. Royal Canadian Air force commander Lt.-Gen. Al Meinzinger said key capabilities for a new plane are survivability and having an operational advantage. “We are very confident we are actually meeting the requirements of NATO and NORAD,” he said, pointing to the requirements for the new aircraft. “Both of those missions are well represented.” Canada already changed some of the industrial benefits criteria of the competition in May to satisfy concerns from the U.S. government that the F-35 would be penalized or couldn't be considered because of how that program was set up. U.S. officials had warned that the F-35 development agreement Canada signed years ago prohibits partner nations from imposing requirements for industrial benefits. Under the F-35 agreement, partner nations such as Canada are prohibited from demanding domestic companies receive contracts for work on the fighter jet, those companies instead having to compete for work. Over the last 12 years, Canadian firms have earned more than $1.3 billion in contracts to build F-35 parts. The changes made in May would now allow some of those F-35 contracts to be considered when weighing the industrial benefits offered by the planes. The winning bidder will build 88 jets for Canada, and the first delivery is expected in the mid-2020s with the full capability available in the early 2030s, according to documents produced by the Department of National Defence. https://nationalpost.com/news/bidding-criteria-for-canadas-19b-fighter-jet-competition-will-emphasize-strategic-attack-and-ground-strike-capabilities-seeming-to-favour-the-f-35

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