Simulation
Robert Brown was named president and chief executive of Montreal-based simulation and training specialist CAE in 2004, having previously been the chief executive of Bombardier. He has restructured the company, which was burdened with debt from its rapid expansion into the civil pilot training market.
CAE has just turned 60 years old. How do you rate its health?
We have worked hard to diversify the company. It is now half military and half civil, half products and half services. The military market is stable, and moving forward in a modest fashion. The civil side is in an extended up-cycle.
How long will that that cycle last?
There are large order backlogs at Airbus and Boeing, and new markets in India and China. It is not like the last cycle. There are new products like the A350 and 787, and possibly new A320 and 737 platforms, all of which bodes well for the future. Business aviation is strong too, with a forecast 6,000-6,400 aircraft to be delivered within five years versus 6,000 commercial aircraft.
Is CAE positioned to take advantage of the market?
We have finished restructuring and are positioned with a good cost structure, a good technology base and improved product support. First we had to fix the balance sheet, to reduce our debt and provide flexibility. Second we had to get our cost base right, which meant consolidating manufacturing facilities and reducing training centres, while expanding in the north-east USA and in the UK, China and India. Third was to make sure we did not lose our global lead in technology. We had to invest in people and technology.
Is government support for research and development an important enabler?
We are investing in a mix of technologies. A lot of it relates to the defence side, in areas such as visuals. We don't have the domestic market [that other countries do] and if we develop technologies for the military, we can transition them to the civil side. We hope there will be a renewed effort by the government to support aerospace.
Is that not an unfair advantage for Canadian industry?
We need to understand the context. Canadian industry had to find a way to get support to compete with companies in countries with a large military base for R&D. The Canadian approach is to help industry develop R&D capabilities to compete for military customers and to develop civil products. It is hard for Canadian companies to be the final integrator of products going to the Department of National Defence. We have to ensure we have those capabilities.
Is government support the key to success for CAE?
It takes several things. First, do you have the assets to be a global company? Montreal is second to none in providing people, and Toronto is similarly well supported. Second, do you have an industry that is export-oriented? Eighty to ninety per cent of Canada's aerospace and defence products are exported, so we have to think globally - CAE is in 19 different countries. Third, do you have the right technology base? We have the support of universities and laboratories. And then, fourth, do you have an environment that allows you to improve your products and technology base? And that means tax structure, R&D support and export financing support. It is not just one thing, but a whole series that needs to be in place for global leadership.
Source: Flight International