F-35 jet Canadian spinoffs expected

Ottawa's plan to buy 65 U.S.-built F-35 fighter planes is expected to benefit nearly 100 Canadian companies and support thousands of technology jobs.

Ottawa's plan to buy 65 U.S.-built F-35 fighter planes is expected to benefit nearly 100 Canadian companies and support thousands of technology jobs.

Nine countries, including Canada, funded development of the plane, called the Lightning II, or the Joint Strike Fighter.

Magellan Aerospace 3-month chart

Toronto-based Magellan Aerospace said Friday that Canada's participation in the aircraft's development has provided a series of "crucial stepping stones to securing greater roles in the current production and upcoming support phases."

The Toronto-based company designs and makes engines and structural parts.

"This application of new technologies and precision manufacturing processes will transform Magellan Aerospace and other Canadian companies, ensuring they remain confident and competitive leaders in future military and commercial applications," president James Butyniec said.

Analyst Cameron Doerksen of Versant Partners has estimated Magellan's revenue per aircraft could be $1 million.

Montreal-based Héroux-Devtek Inc. is also expected to benefit, by supplying parts for wings and landing-gear doors.

"This is a historic procurement for Canada and excellent news for the Quebec aerospace cluster and the entire Canadian aerospace industry," Héroux-Devtek president Gilles Labbé said.

Héroux-Devtek 3-month chart

Benoit Poirier of Desjardins Securities said the order bodes well for Héroux-Devtek. The company should generate $790,000 in revenue from each plane, which would represent about $50 million of revenues over the long term and boost its order backlog, he said.

Lockheed Martin Corp., a giant U.S. defence contractor based in Bethesda, Md., is building the new warplane.

The U.S. company is developing the F-35 with its principal industrial partners, U.S.-based Northrop Grumman and Britain's BAE Systems, and hundreds of other companies around the world.

The new stealth, multi-role fighter is meant to be the next-generation warplane for all NATO member air forces for the next several decades.

Australia, the Netherlands and Britain have so far only ordered test planes. 

"This is the first commitment to a full production batch by any of the member countries and that is very notable and it's a strong endorsement because the [Canadian air force] is small but prestigious," analyst Richard Aboulafia said in an interview. 

He described the Joint Strike Force program as a game-changer that is estimated to capture more than half of world fighter production by 2019. 

Aboulafia said the order is good news for Canadian companies because of the strong local content that "basically guarantees a high level of production work."

With files from The Canadian Press