CAE president John Caldwell says that the group is preparing to take a leading position in Europe's military-simulator sector as sales boom over the next five years, and will also consider re-entering the USA once an exclusion agreement signed with Hughes Electronics expires.
Europe's military-simulator market is expected to double over the next "four to five years" with the emergence of next-generation platforms such as the multi-nation Eurofighter EF2000 and NH Industries NH90, in addition to mid-life updates for the Panavia Tornado.
"We're positioning ourselves to be the major player," says Caldwell, adding that the group is in "various phases" of looking at bids and teaming arrangements for all of the prospective contracts.
He admits that until recently CAE has been "selectively involved" in Europe, but "without astounding success". He says that the "big breakthrough" came in March with CAE's selection to provide six simulators for the Royal Air Force's medium-support helicopter fleet. The contract is worth C$625 million ($455 million), of which CAE's portion will be C$150 million for the equipment and up to 30%of the services work.
"We had doubts about whether we should bid for the contract, because we weren't sure that the playing field was flat," says Caldwell. He says he believes that the group is now well-positioned to win further contracts on projects such as the EF2000 from its bases in Germany and the UK.
CAE has had an established base in Germany for more than 30 years and built the majority of military simulators in that country. The UKCAE Invertron operation at Burgess Hill, acquired from Alvis two years ago, has also been growing rapidly. Its specialisation is in army land-based systems, but is increasingly supporting UK flight-simulator work, including the helicopter contracts for the RAF and Royal Navy. The UK workforce has grown from 80 to around 200 with a "reasonable chance" of doubling again, says Caldwell.
Despite the growing European capabilities, the political realities are likely to mean the need for teaming arrangements, including Eurofighter nations such as Italy and Spain. "We could be a single-source supplier, but the reality is probably that we will need teaming arrangements," he says.
CAE is also considering a return to the US military simulator market, which it left after the sale of its Link subsidiary to Hughes in March 1995 following persistent losses. Under the terms of the sale, CAE agreed not to compete for US military business, but that clause expires in 18 months time.
The US market has been heavily depressed, with the bulk of business centring on upgrade work, but Caldwell says that CAE would like to return as sales begin to pick up. Helicopter systems are being tipped as one early target for the Canadian group.
Caldwell concedes that the acquisition of Link in the late 1980s was a mistake, and that next time around CAE will hope to serve the USA from its base in Canada. "We have a better, more-efficient company in Montreal than we ever had in the USA," he says, adding that manufacturers in the heavily depressed US military-simulator market would find it difficult to match CAE's costs and technology.
Helped by recovery in the airline market, the overall flight-simulator market has been recovering strongly. Caldwell points out that business so far this year has already outstripped the 20 sales posted in 1996. "We expect the industry to get up to 30-35 units per annum over the next few years," he says.
Source: Flight International
