Quebec and its economic centre Montreal are at the centre of Canadian aerospace. Can their innovative approach to research be a template for other countries?
Proud Quebeckers delight in pointing out that Montreal is the only place in the world where all the parts needed to make an aircraft are manufactured within a 30km radius. Other Canadians salute Montreal's status as the third largest aerospace cluster after Toulouse and Seattle, but are envious of the support it receives from the Quebec government - and from federal politicians wary of the French-speaking province's separatist inclinations.
Quebec is the powerhouse of Canadian aerospace and ranks sixth in the world for sales, accounting for just over 60% of the industry's total in 2005. The province is also home to half the industry's workforce - 40,000 employees in 240 companies. In Quebec, one in every 190 people works in aerospace in metropolitan Montreal it is one in 95. Not surprisingly, Quebec is at the forefront of moves to build a stronger Canadian aerospace industry.
Montreal is the first in Canada to form an official cluster to promote and consolidate the industry it is the birthplace of an innovative approach to bringing companies large and small together with universities for pre-competitive research and the Quebec government is increasingly proactive in providing financial support for aerospace, from the four major original equipment manufacturers based in Montreal to the hundreds of small and medium-sized enterprises in the province.
Aéro Montreal, the aerospace cluster of metropolitan Montreal, was launched in May last year as an industry-driven, non-profit organisation charged with uniting all the stakeholders in Quebec aerospace around shared objectives and concerted actions. "We met the provincial Quebec industry minister two years ago to seek more concerted action on aerospace," says Aéro Montreal general manager Suzanne Benoit. "The government was so enthusiastic - provincial, municipal, even federal - they agreed to finance Aéro Montreal for three years."
Industry cluster
Benoit emphasises the cluster was created by industry, not government. "The private sector financed a feasibility study on the model, how it should operate. A recommendation was presented to the three levels of government, who decided to finance the initiative," she says. "It is a public-private partnership: 75% of the financing comes from the public sector and 25% from the private sector."
With the mission of bringing together industry, universities, training schools, research organisations and unions, Aéro Montreal has identified five areas of strategic focus for the next three years. "We have launched two of the five: promotion and innovation," says Benoit. A third, supply-chain development, will be launched in June, followed by human resources development and performance measurement.
The cluster's first task, Benoit says, is to counter the perception within Canada that the aerospace industry is subsidised. "Often this is associated with Bombardier, which has not received public funding since 1999," she says, while acknowledging that both the federal and provincial governments have committed to provide substantial support for development of the CSeries airliner if and when it is launched.
Part of the perception problem is the historical rivalries between the heavily industrialised east and the western provinces. "Billions of dollars have been invested by the government in the automobile industry, which is concentrated in Ontario," Benoit says. "We have to understand that Canadian aerospace is Canadian."
Aéro Montreal plans a pan-Canadian survey of the perceptions of the aerospace industry among groups ranging from students and workers to politicians and civil servants. The results will be used to develop an action plan to change negative perceptions. Within Quebec, the cluster also has to tackle a belief the aerospace industry is too cyclical for a secure career.
The perception within schools and universities is of a boom or bust industry. This is making it harder to attract skilled workers to aerospace in Montreal's already tight job market. "There is a big problem in recruiting people as students are not enrolling in aerospace courses," she says.
The supply-chain initiative to be launched in June has the dual mission of both developing and consolidating SMEs. "Airbus, Bombardier and Pratt & Whitney Canada are drastically reducing their number of suppliers and need more integrators," says Benoit. "Our SMEs have to work together or get bigger to survive."
Networking advantage
In addition to training smaller companies in the new supply-chain dynamics, Aéro Montreal will provide a forum to develop relationships between the SMEs and OEMs. "A big part of the group is the networking advantage," says Louis Desjardins, director business development for embedded software specialist CS Canada, the 35-strong Montreal-based subsidiary of French company CS Communications et Systemes. "While Bombardier is not an obvious target for us, we need to target the Tier 1 suppliers working with the OEMs."
The cluster will also help smaller companies find the financing they need to develop their capabilities. "The larger firms know where to find the money," says Benoit. "There is a lot of financing in Quebec, but smaller firms do not have the time to explore what is available."
Perhaps the biggest financier of aerospace is Investment Quebec, a state-owned financial institution. IQ mostly provides loans for projects that may be too risky for regular banks. It also provides loan guarantees and financing for export sales. Its mandate includes providing investment to attract industry to Quebec.
Recent repayable loans have included C$115 million ($99 million) to match the federal government's investment in Bell Helicopter's light-helicopter development programme C$75 million to P&WC for engine R&D and C$31.5 million for CAE's Project Phoenix simulation research. Other key deals have included a C$1.9 million interest-free loan to France's Lisi Aerospace to build a fastener plant in Montreal and C$1.6 million towards the expansion of Messier-Dowty's Mirabel landing-gear plant. IQ has also invested more than C$2 million in GE Canada's expansion of its Bromont compressor-aerofoil plant.
Solidarity Fund QFL, a workers savings fund established by labour unions in 1983 during a depression in Quebec, also has more than C$76 million of equity invested in aerospace. Its biggest investments include C$50 million in Mecachrome, a Montreal precision engineering firm in the automotive and aerospace sectors with ambitions of becoming an integrator.
The fund also participated in the 2002 management buyout of Avcorp Industries' Quebec aerostructures plants, to form Avior and the 2003 purchase of bankrupt wing machining specialist NMF Canada by Belgium's Sonaca. Last month, it made a C$11 million investment in Paris-based FCPR AeroFund, which invests in mergers and acquisitions within the French aerospace industry. The Solidarity Fund hopes this will help Quebec-based firms forge links with Airbus suppliers in Europe.
Aéro Montreal's innovation initiative is intended to improve collaboration and avoid duplication in R&D between industry, university and government. Playing a key role in this is the non-profit Consortium for Research and Innovation in Aerospace in Quebec (CRIAQ), established in 2002 and funded mainly by the Quebec government. "It was created by industry and the universities," says president and chief executive André Bazergui. "Industry needed to do pre-competitive research and the universities were keen to get connected to industry."
Quebec's ministry for economic development funds CRIAQ to the tune of C$2.5 million a year, but this creates the equivalent of C$10 million a year in research work because of the way the programme works. Industry must contribute at least 25% of the cost of a research project, Canada's National Sciences and Engineering Research Council then puts in 50% and CRIAQ provides the balance.
"The projects are industry-driven. We do not accept university proposals," says Bazergui. The research must be pre-competitive and the rules require the involvement of at least two companies in each project. "We then force at least two research units to join forces - two universities, or a university and a national laboratory," he says. Research is focused on technology readiness levels 1-5: "When it exceeds that level it becomes competitive."
The multiplier effect of this arrangement is particularly important for small firms with limited R&D resources. "It allows a lot of SMEs to come on board, because the cost is extremely low - they can pay just 2-3% of the cost of a project," says Bazergui. Instead of an SME trying to sell a technology to an OEM, they can join CRIAQ and try it out, he says.
An example was the now-completed project to design and build a bonded composite wing box using resin transfer moulding, which brought together Bell Helicopter and specialist firm Delastek, with federal funding from Technology Partnerships Canada and the National Research Council. The project was successful and Bell, with Delastek as a supplier, has taken over the technology for further development.
CRIAQ's success has led to a proposal to make it a Canadian programme - CRIAC. "It is evolving, doing well, and Industry Canada likes the model," says Bazergui. The argument now is whether CRIAC should have its head office in Quebec. "It is the Canadian federation system we are always arguing - Quebec versus Alberta - like a family business. We should get something going in the next six months," he says.
CRIAQ, meanwhile, is expanding its model to international R&D collaboration. The consortium planned to launch two projects with India in March, involving P&WC. The model requires the Canadian company to have an international subsidiary. CRIAQ then manages the Quebec side while the Indian company has its own relationships with local universities and laboratories. "We use the company as the bridge," says Bazergui.
"The next step is to get involved in demonstrators and testbeds. There is nothing to stop us extending into competitive research," he says. "The strength of CRIAQ is industry. Bell is convinced it is the way to access the best brains." With other countries not looking at the CRIAQ model, Quebec could find itself becoming an international leader in aerospace R&D.
Source: Flight International
