Jet planes were always something that amazed me growing up. Taking a giant metal ship and make it soar through the sky at 1,000 km/h by burning dinosaur remains was undeniably cool. I was far from alone in this method of thinking; in Ontario aerospace is a big deal.
The Ontario aerospace sector, despite what you may have seen in the news headlines, is a strong and profitable industry segment. Ontario’s innovative workforce, regulatory environment, and R&D opportunities all contribute to the sustained success of aerospace manufacturers. This combination of advantages ensures Ontario companies will continue to remain globally competitive.
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The Current State of Ontario’s Aerospace Industry
Reports of Ontario’s aerospace industry declining have been greatly exaggerated. In reality, Ontario is still regarded as an aerospace leader and currently generates over $6 billion dollars in sales each year.
Ontario companies specialize in multiple areas including avionics, landing gear systems, space robotics, turbine engines, and unmanned aerial vehicle (UAV) platforms. Components manufactured in Ontario have been included in 80% of all commercial communication satellites ever launched, and supply each of the top ten aircraft programs in the world.
The industry is supported by over two-hundred companies producing a multitude of parts ranging from electronic systems, to engines, flight simulators, helicopters, and structural components. Key players in the aerospace industry are well aware of these statistics, and have carefully positioned themselves to take advantage of over 17,000 skilled aerospace workers in Ontario.
15 out of 20 global aerospace companies have large-scale operations in Ontario including Airbus, Bombardier, General Dynamics, Mitsubishi Heavy Industries, and Northrop Grumman.
Landing gear companies have flocked to Ontario in a similar manner, with four leading companies producing full/major components in the province. Further demonstrating aerospace’s growth, several Canadian companies have recently completed large-scale expansion projects, including the building of new facilities. Even more projects are breaking ground as early as this year in Cambridge, Fort Erie, Peterborough, and Waterloo.
3 Reasons Why Ontario is an Ideal Aerospace Cluster
Ontario is home to some of the world’s most prominent aerospace companies. This didn’t happen by mistake; it’s because Ontario is a magnet for aerospace activity. Manufacturers are making strategic investments in their provincial operations because of the following competitive factors:
1. A Highly Skilled and Educated Workforce
Ontario is able to offer companies one of the most educated workforces in the world. Post-secondary institutions currently run more than 40 aerospace and aviation-related programs. Over 67% of adults have completed post-secondary education from universities and colleges, of whom produce 40,000 graduates annually.
The Province of Ontario boasts one of the highest post-secondary graduation rates within the Organization for Economic Co-operation and Development (OECD), besting countries such as the United Kingdom, Germany, and Japan. This factor becomes even more attractive when businesses realize that Canada has the lowest labour cost out of all G7 member-countries. By comparison, Canadian labour is 10% cheaper than labour in the United States.
2. An Abundance of Research and Development Opportunities
Ontario businesses invest $462 million annually in aerospace research; this accounts for 30% of all aerospace R&D performed in Canada. On a national scale, Canadian aerospace companies invested 5X more into research and development than the average manufacturer and 20X more than businesses from all industries.
Aerospace research projects are fuelled through a highly educated workforce and maximized though partnerships with development, prototyping, and testing specialists.
An example of one such organization is the David Florida Laboratory (DFL), a world-class facility capable of accurately simulating the extreme temperatures and stresses of a rocket launch. The DFL is maintained by the Canadian Space Agency, and companies can partner with them for services including mass properties measurements, radio frequency testing, vibration, thermal balance, and thermal vacuum. In an effort to address user needs, the facility will be undergoing additional upgrades through 2018 including modifications to fire suppression systems, shielding, and the chamber’s absorbers.
3. Free-Trade Agreements
Canada is a nation heavily reliant on trade. Of all G7 nations, only Germany trades more than Canada does. Approximately 80% of Canada’s $6 billion in aerospace products are exported; most of these products flow to countries whom Canada maintains free trade agreements with. Current free trade agreements include the North American Free Trade Agreement (NAFTA) and the Canada-European Free Trade Agreement (CEFTA).
Canada is currently negotiating free trade agreements with several countries including India, Japan, and the Canada-Central American Free Trade Agreement block.
Aerospace companies can also take advantage of the Free and Secure Trade (FAST) program to make transitioning goods go as efficiently as possible with benefits such as dedicated lanes at the border, reduced delivery times, and minimal documentation requirements.
Ontario Government Funding to Support the Aerospace Industry
Members of the aerospace industry should also note that the federal and provincial governments administer a variety of grants and loans to increase the competitiveness of manufacturers. Small business funding programs exist to support a variety of strategic projects, and include:
- Hiring Grants that can be used to reduce the cost of hiring and mentoring recent post-secondary graduates. These grants may provide up to 50% of a new hire’s wages for a period of 4-12 months, to a maximum of $14,000-$20,000.
- Training Grants that can be leveraged to enrich the skills of a company’s workforce in any area from engineering, to leadership, to manufacturing, and even sales.
- Export Market Grants that can be used to reduce the cost of trade show participation, travel costs, and other market development expenses. Grants are also available for businesses forming international partnerships focused on the commercialization of new technologies.
- Capital Equipment Grants may be awarded to companies purchasing innovative equipment that increases productivity or energy efficiency, or enables new products to be manufactured.
- Research and Development Funding can be pursued to dramatically reduce costs of researching, developing, or commercializing innovative technology. This includes testing and validation, where small business grants can even be used to access facilities and researchers to assist with the project.
To learn more about Ontario business funding for the aerospace industry, please contact Mentor Works. Our team of Canadian Government Planners will be able to discuss your upcoming strategic initiatives and identify the top programs currently available.