CANADA'S AEROSPACE industry is warning that up to 75% of its 20,000 research-and-development (R&D) jobs may be in jeopardy if the Government goes ahead with plans to kill the Defence Industry Productivity Programme (DIPP).
Industry minister John Manley revealed after the 27 February federal budget that DIPP funding would be cut, to C$21.6 million ($15.2 million), from C$144 million within three years. He also served notice that the programme itself is "under review".
The DIPP is a key source of R&D funding for numerous aerospace firms. Among the biggest recipients of these repayable loans are Pratt & Whitney Canada, Canadair and Spar Aerospace.
Peter Smith, president of the Aerospace Industries Association of Canada warns: "The Government is underestimating the ramifications of a cut this size. This will certainly result in a switch of R&D to the USA".
Many of Canada's aerospace firms are owned by US parents which have access to assistance provided by their own government, such as P&WC, which is a United Technologies subsidiary.
Dennis Reilley, manager of P&WC services, says that his company spends about C$220 million annually on R&D and that the DIPP typically adds another 15-20% in the form of repayable loans.
These loans are used to finance the early development costs of next-generation engines, but are repaid as sales feed through. The company signed an agreement in 1994 guaranteeing repayments but this only runs until March 1996.
Reilley warns: "If DIPP disappears, it may make more sense, for our company to do its research and development in the US. We are very concerned."
Canadian-owned firms such as Canadair are less concerned about losing scientists and engineers to the USA, but worry about their ability to compete when other countries offer generous assistance to their aerospace industries.
Source: Flight International
