F-35's benefits to Canadian industry questioned
Potential for diminishing benefits could be politically damaging for Conservatives
The Canadian Press
Posted: Dec 10, 2012 5:23 PM ET
Last Updated: Dec 10, 2012 7:17 PM ET
The federal government will release some key documents this week as it updates its seven-point plan to buy new fighter jets, including reports on the cost and economic benefits of the F-35 stealth fighter jet. (Samuel King Jr./US Air Force/Canadian Press)
Related
Related Stories
In depth: The F-35 cost controversy
- CHARTS: Competing cost estimates add to F-35 confusion
- TIMELINE: F-35 fighter jet cost questions date back to 2010
- MILEWSKI: Honey, I shrunk the F-35 cost estimates
- STEWART: Rethink the F-35s? Let's rethink the entire process
- STEWART: The F-35 fiasco and Ottawa's culture of secrecy
- F-35's exorbitant cost clouds its future
- 5 of Canada's biggest military deals
- The F-35 Lightning II
Amid the avalanche of figures, statistics, estimates and soothing political assurances coming this week on the Conservative government's troubled stealth fighter program, one report will warn about the lagging benefit for Canada's aerospace sector.
And it could prove more damaging in the long run than the bruising debate about the eye-popping cost of the multi-role fighter, say some experts.
"What we're talking about here is pork," said Winslow Wheeler, a U.S. aviation expert and long-standing critic of the F-35.
"The government has been promising the world, but that's going to be very different than what's in hand."
When the Harper government announced its intention to buy the Lockheed Martin-built F-35 Lightning II in 2010, government ministers trumpeted the benefits to Canadian aerospace companies.
The air force's research, largely based on information from the U.S. manufacturer, suggested Canadian industry would be in line for as much as $12 billion US in manufacturing or spare parts contracts over the lifetime of the project.
Industry Canada quietly lowered those expectations last spring, to $9.85 billion US, following a blistering report from the auditor general on how the program has been managed.
Government sources say a benefits analysis coming this week as part of a Public Works agency report to Parliament suggests Canadian companies will struggle to reach the $9 billion US mark, thanks to stiff competition from other nations whose participation in the F-35's development has given them preferential access to the U.S. manufacturer's supply chain.
Work for 70 Canadian firms, so far
The F-35 project is unlike traditional military procurements, in which the winning contractor is required to spend the equivalent of the contract value in Canada, either directly through subsidiaries, or by placing work elsewhere in the economy.
The system established for the F-35 sees countries that participated in the development given the chance to bid on supply and sustainment contracts without any guarantee, thereby bypassing the regular system.
To date, 70 Canadian companies have secured more than $435 million US in contracts on the development and initial production of the fighter.
But retired air force colonel Paul Maillet, who worked on the acquisition of the current CF-18 fleet, said reaping only $9 billion from the expenditure of more than $40 billion in public funds could come back to haunt the government.
"The way they structured the industrial benefits package, it wasn't to our benefit," Maillet said. "I think in the long run we wouldn't realize what we think we would, or what Mr. Harper thinks we would."
The ongoing financial crisis in the U.S. also has industrial implications the government likely hasn't considered, he added.
"I think most of this stuff is going back to the United States. They're going to reap the big benefit on this one."
'Zero' guarantees, Opposition says
After days of leaks and simmering speculation, both opposition parties opened up with both barrels on the Conservatives during question period Monday, dredging up a laundry list of quotes from Prime Minister Stephen Harper and Defence Minister Peter MacKay about the economic advantages of the deal.
"This is the largest procurement contract for the air force since the Second World War," said NDP Leader Tom Mulcair.
"Contrary to every other major military contract, where we obtained guarantees for regional economic and industrial benefits, there are none here. Zero dollars. Zero cents. They can talk all they want about no money spent on acquisition, the reality is this has been a fiasco and a debacle from Day 1."
Mulcair, who hails from Montreal, demanded the government call for open bids to replace the current fighters, which are entering their fourth decade of service.
Harper was quick to correct Mulcair.
"Canada has been involved in the development of new fighter aircraft; Canadian companies, actually based in his city, actually have hundreds of millions of dollars in contracts for that work," Harper said during a heated exchange in the House of Commons.
"This government has no intention of ripping up those contracts. If he does, he can go explain that to the workers of Montreal."
The Aerospace Industries Association of Canada said it was reluctant to comment until the industrial analysis is released.
The latest political meltdown over the F-35 comes at time of general uncertainty in the once-vibrant aerospace sector.
A review of the country's aerospace industry recently called for drastic improvements and suggested that Toronto become the hub of a re-developed sector.
Share Tools
'Fighting Foreign Corruption' on House agenda as wild week wraps up by Kady O'Malley May. 24, 2013 7:58 AM Also today: Liberal MP John McKay gets his first crack at convincing his colleagues to back his latest attempt to force transparency on Canadian overseas mining operations
Top News Headlines
- Rob Ford councillors set to take over if mayor steps down
- Members of Rob Ford's executive committee say they are prepared to take over the day-to-day running of the city of the Toronto mayor is no longer able to perform his duties amid a scandal involving allegations he was caught on video smoking crack cocaine.
more »
- Greg Weston: Senate scandal may be Harper's worst hour
- The widening Senate scandal that the prime minister flippantly tried to dismiss as a 'distraction' just days ago has instead become arguably Stephen Harper's worst hour. more »
- Washington state bridge collapse injures 3
- A Washington state bridge over a river collapsed last night, dumping two vehicles into the water and sparking a rescue effort by boats and divers who searched the chilly waterway north of Seattle. more »
- 3D printers give rise to 'desktop manufacturing'
- Customizable objects from plastic dollhouse furniture to medical prosthetics can now be designed and printed out by almost anyone at the press of a button, and is going to lead to an 'explosion of new stuff,' predicts author Chris Anderson. more »
- Rob Ford fired chief of staff for telling mayor to 'get help'
- CBC News has learned the details of what precipitated the firing of Mark Towhey as Toronto Mayor Rob Ford's chief of staff — and it was advice from Towhey that Ford needs to 'get help.' more »
Must Watch
Latest Politics News Headlines
- Federal Court won't remove MPs over robocall allegations
- The Federal Court says it won't throw six MPs out of their seats over allegations of widespread vote suppression through automated robocalls in the 2011 federal election. But Judge Richard Mosley did find that fraud occurred in the election. more »
- Greg Weston: Senate scandal may be Harper's worst hour
- The widening Senate scandal that the prime minister flippantly tried to dismiss as a 'distraction' just days ago has instead become arguably Stephen Harper's worst hour. more »
- Mike Duffy says he wants to give Canadians 'the whole story'
- Senator Mike Duffy says he wants a "full and open" inquiry so Canadians can get all the facts about the scandal that has rocked the Senate and the Prime Minister's Office and that he has no plans to resign. more »
- PMO denies Senate appointments on hold pending reform
- A Conservative MP said Thursday the prime minister will not appoint new senators until there is "substantial reform" to the Senate — but a spokesman for Stephen Harper swiftly contradicted the claim. more »
- Duffy expense claims reveal more about campaign travel
- Election spending records show additional days Senator Mike Duffy spent on the campaign trail in the 2011 election, including days he told the Senate he was on business, and days on which Deloitte auditors couldn't track him. more »
The National
The House
- Questions mount for Harper and chief of staff Nigel Wright in Senate scandal May. 18, 2013 1:15 PM This week on The House, with Senators Wallin and Duffy now out of the Conservative caucus, we get reaction from NDP Ethics critic Charlie Angus. We also hear directly from Senator Patrick Brazeau who says the Conservatives have thrown him under the bus. Plus we speak with B.C. Premier Christy Clark after her stunning victory.
- Rob Ford fired chief of staff for telling mayor to 'get help'
- Washington state bridge collapse injures 3
- Alleged Ford crack video seller not responding to calls
- Montreal lifts boil-water advisory
- Pickup truck backs up over mother, 2 children in tent
- Mike Duffy says he wants to give Canadians 'the whole story'
- Vancouver man abandons Porsche on B.C. ferry
- Toronto Mayor Rob Ford fires chief of staff
- Canada Post campaigns against 'no flyers' mailbox signs


