Industry Canada

Industry Canada

April 02, 2007 14:57 ET

Canada's New Government Announces New Strategic Aerospace and Defence Initiative

MONTREAL, QUEBEC--(CCNMatthews - April 2, 2007) - The Honourable Maxime Bernier, Minister of Industry, and the Honourable Michael Fortier, Minister of Public Works and Government Services and Minister Responsible for Montreal, today announced the launch of a new transparent and fully accountable research and development (R&D) initiative to promote excellence and accelerate innovation in Canada's aerospace, defence, security and space (A&D) industries. The Strategic Aerospace and Defence Initiative (SADI) will support strategic research and development that result in new products, processes and services for the benefit of Canadians.

"This new cross-Canada initiative includes strong transparency and accountability requirements, and faster repayment features," said Minister Bernier. "Since our government took office, transparency, accountability and value for money have been among our highest priorities and are the norm for new initiatives. SADI will support innovation by Canadian players which is critical to accelerating new technologies so they can continue to be at the leading edge of the knowledge-based economy."

"This collaboration between Canada's New Government and the aerospace and defence industries through the Strategic Aerospace and Defence Initiative will ensure that leading edge research and development activities are undertaken in Canada and Canadians continue to reap the benefits," said Minister Fortier.

SADI, a repayable contribution program, will be administered by Industry Canada's Industrial Technologies Office (ITO), a Special Operating Agency, which is subject to regular internal and external reviews. New transparency and accountability measures include providing Canadians with such information as project assessment criteria, the assessment process, contribution recipients, as well as regular updates on project results, program performance, and program accomplishments.

"This new initiative strengthens the business case for investment and scientific innovation here at home," said Don Campbell, Chairman of the Aerospace Industries Association of Canada. "Aerospace is a major contributor to wealth and job creation. Government partnerships with industry serve a valuable purpose in stimulating technology development which would not otherwise occur."

"Canada's aerospace and defence industries are among the world's best, and they are important economic drivers in all regions of the country," said Minister Bernier. "All Canadians will benefit from the economic growth and technological advancements developed under this new initiative."

Canadian A&D industries are knowledge-intensive and major contributors to Canada's economy. The aerospace sector alone had sales of $21.8 billion, exports of $18.5 billion, and employed 75,000 highly skilled-and-paid Canadians in 2005.

SADI is expected to invest nearly $900 million over the next 5 years, with funding to reach a maximum of $225 million per year, in support of Canada's aerospace, defence, security and space industries. ITO will begin accepting project applications for SADI funding today.

More information about the Strategic Aerospace and Defence Initiative can be found on ITO's website at www.ito.gc.ca.

FOR BROADCAST USE:

Today, the Honourable Maxime Bernier, Minister of Industry, and the Honourable Michael Fortier, Minister of Public Works and Government Services and Minister Responsible for Montreal, announced the Strategic Aerospace and Defence Initiative, a repayable contributions program that will support research and development in the aerospace, defence, space and security (A&D) industries. This initiative will foster innovation and promote excellence in A&D for the benefit of all Canadians.

Backgrounder

The Strategic Aerospace and Defence Initiative (SADI)

The Government of Canada has created the Strategic Aerospace and Defence Initiative (SADI) to support strategic industrial and pre-competitive development (R&D) projects in aerospace, defence, space and security (A&D) industries.

This new initiative has been developed with three key objectives in mind: 1) to encourage strategic R&D that will result in innovation and excellence in new products and services; 2) to provide enhanced opportunities for Canadian A&D industries; and 3) to foster collaboration between research institutes, universities, colleges and the private sector.

By investing in strategic R&D projects, SADI will concentrate its resources on projects that involve the development of technologies that focus on next generation products or services, build on Canadian strengths, enable Canadian companies to participate in major platforms and assist in meeting Canada's international obligations.

SADI will be administered by Industry Canada's Industrial Technologies Office (ITO) using high standards of transparency and accountability The ITO will also feature a clear assessment process and a robust repayment structure.

Project applications will be reviewed through a rigorous process with published assessment criteria, including the company's capability to achieve the stated objectives; technology benefits; and social and economic benefits. All project applications will undergo extensive evaluation, including a due diligence review, to verify they meet SADI's requirements.

SADI's repayment structure will be formula-based and standardized, further strengthening accountability and transparency and making repayments more predictable. Repayments on contributions will be based on gross business revenues of a recipient company, or its relevant division which lowers the risk to the crown. The repayment will start regardless of the success of the technology developed. On average, repayment periods will be limited to 15 years with repayments starting shortly after the completion of the R&D phase. All of these features will allow for more money being repaid earlier to the government.

All Canadians will receive value from SADI's contributions through the technological and economic benefits that will come from the supported R&D projects. These benefits include spin-offs in diverse sectors of the economy such as nanotechnology and information technologies, as well as the development of collaborative partnerships with universities, colleges and research institutions, creating opportunities for Canada's youth. Contributions made through SADI in R&D will also contribute to high quality employment opportunities, strengthen Canada's workforce with talented scientists, engineers and researchers, and leverage private sector investments in R&D.

The Industrial Technologies Office is a Special Operating Agency of Industry Canada, which has a mandate to advance leading edge R&D by Canadian industries.

Backgrounder

An Overview of Canada's Aerospace and Defence Industries

Canada's aerospace and defence (A&D) industries, made up of firms specializing in aerospace, defence, space and security technologies, are recognized around the world for producing leading edge products and services.

Domestically, the industries are important economic drivers in all regions of the country and collectively, are a significant player in the development of Canada's knowledge-based economy.

Among the world leaders, Canada's A&D industries offer competitive and innovative solutions and are backed by a highly skilled workforce of about 75 000 Canadians. Internationally, however, the A&D industries are faced with unique challenges and opportunities.

Challenges Encountered by A&D Industries

To maintain productivity and competitiveness, A&D firms have to invest in the research and development (R&D) of advanced products and services. Industry characteristics for R&D such as high development costs, long development lead times and long payback periods, combined with the cyclical nature of the industry and the fact that projects are high risk and international in scope, make it difficult for the private sector to entirely fund an R&D project.

A&D industries play a role in supporting national security and sovereignty. For this reason, national governments around the globe support their industries through various funding mechanisms (e.g. technology development support, military contracts).

Opportunities for Canada's A&D Industries

Strengthening R&D and the pre-commercialization of new technologies will help the Canadian A&D industries to remain competitive. R&D forms the basis for the development of new products designed to serve the needs of A&D markets, and also enables firms to establish new processes that lower costs and increase productivity.

In addition, R&D investment in A&D promotes technology development within the Canadian economy, not only in the A&D industries and their supplier base, but also through spin-offs in electronics, nanotechnology and information technology, among others. Previous spin-offs from A&D technologies have been used in medical equipment and automotive applications.

Supporting R&D in the industry also enables Canada to attract global A&D firms and first class scientific and engineering talent. Among the leading industrial investors in R&D in Canada, A&D has the capability and the opportunity to build on Canadian strengths to remain one of the foremost players in the global market.

Specialties of Canada's A&D industries

Products and services of the Canadian aerospace, defence, space and security industries include:

- Regional and business aircraft

- Small gas turbine engines

- Flight simulators

- Aerostructures

- Landing gear systems

- Helicopters

- Armoured vehicles

- Military ships

- Space-based robotics and telecommunications

- Remote sensing systems and satellites

- Command and control systems (including secured communications equipment)

- Aircraft and defence electronics

- Environmental systems for aircraft and military vehicles

- Avionic and mission systems

- Maintenance, repair and overhaul services

Backgrounder

SADI's Transparency Standards

The new Strategic Aerospace and Defence Initiative (SADI) will maintain high standards of transparency as it delivers support to strategic industrial and pre-competitive development in the aerospace, defence, space and security industries. These strong transparency measures will ensure increased accountability and company compliance, helping to protect the interests of Canadian taxpayers.

Information on SADI's objectives and performance results, as well as information on contribution recipients, will be published on the website of the Industrial Technologies Office (ITO). The ITO will keep the public informed about the status and the impact of SADI's contributions by publishing an annual report that will include project results, as they relate to program objectives and accomplishments.

SADI will also increase transparency by publishing on ITO's website the project selection process and a set of clear assessment criteria that project proposals will be measured against. Each project proposal submitted will be assessed against the following criteria:

- technology benefits;

- social and economic benefits; and

- company capability to achieve the stated objectives.

In addition, the new standard SADI contribution agreement will include provisions to hold recipient companies accountable for their contractual obligations by giving the government sufficient leverage to act on behalf of the taxpayer should a breach of the contribution agreement occur. The Minister of Industry will be able to publicly identify a company that defaults on its obligations under the SADI contribution agreement, and make public any remedies exercised by him against the company.

To further increase transparency and accountability, the contribution agreement will also allow the Minister to publish the amount of repayments received from recipient companies twice annually on ITO's website.

The SADI contribution agreement will also require companies to comply with the Lobbyists' Registration Act, holding them accountable for any lobbying activities they may undertake. Lobbying activities will include external consultants lobbying on behalf of a company or company representatives who directly undertake lobbying activities.

Recipient companies will be required to recertify their compliance with the terms of their contribution agreement, including those relating to lobbyists, on a regular basis when submitting claims for payment.

The Strategic Aerospace and Defence Initiative is administered through Industry Canada's Industrial Technologies Office, which has a mandate to advance leading edge research and development by Canadian industries.

Contact Information

  • Office of the Honourable Maxime Bernier
    Minister of Industry
    Isabelle Fontaine
    613-995-9001
    or
    Industry Canada
    Media Relations
    613-943-2502