The Ploughshares Monitor Winter 2003 Volume 24 Issue 4
The ten largest Canadian-based military contractors together generated more than $3.5-billion in sales during 2002. The Department of National Defence and the US Pentagon were the largest customers, but the companies and their subsidiaries were successful in other markets, too.
The March 2003 purchase of General Motors Defense by US corporate giant General Dynamics again confirmed GM Defense as Canada’s largest military contractor. A General Dynamics release at the time of the sale revealed that GM Defense had revenues of $1.4-billion for 2002. This placed the company incontrovertibly at the top of the latest ranking of the largest Canadian-based companies involved in military production and services (see Table 1), a position which it has held for more than half a decade. During 2002 GM Defense shipped armoured vehicles from London, Ontario to the Department of National Defence, Australia, Saudi Arabia, and the US. The export to the US Army of “Stryker” armoured vehicles were early shipments of the new rapid deployment vehicle under a multi-year $6-billion contract it shares with its new parent corporation. The company’s subsidiaries in the US, Switzerland, and Australia also sold armoured vehicles and other military equipment to domestic and export markets.
CAE Inc. of Montreal remained the largest Canadian-owned military contractor in 2002. With far fewer sales than GM Defense, but with sufficient revenue for it also to be ranked by the Stockholm International Peace Research Institute as one of the 100 largest military industries worldwide, CAE experienced a slight decline in military sales from 2001. The company reported sales or deliveries of Canadian-built military simulators and naval monitoring systems to the armed forces of Canada, the US, the UK, Germany, France, Greece, Finland, Malaysia, Oman, and South Korea.
Bombardier Inc., another Canadian-owned company with headquarters in Montreal, retained its third-place position in the ranking for 2002. Like CAE and GM Defense, Bombardier has been a persistent member of the top tier of military manufacturers and during 2002 the three companies together generated over $2-billion in military sales, more than twice the combined total of the other seven companies of the table. The majority of Bombardier’s military business in 2002 was with Canadian and NATO forces – especially the provision of pilot training in Canada – but the company also sold services and aerospace equipment to Singapore and Australia.
The SNC TEC division of the Montreal engineering firm SNC-Lavalin Group reported over $200-million in sales of military explosives and ammunition. Traditionally dependent on orders from the Department of National Defence, SNC military export sales surpassed domestic sales for the first time in 2002 due in part to the acquisition of Expro Chemical Products of St-Timothée. The exports include sales to the US Army of 120mm mortars and propellant for 155mm howitzer shells.
General Dynamics Canada signed almost $50-million in contracts with the Pentagon during 2002, as reported by the Canadian Commercial Corporation which acted as a broker for the deals. Combined with military sales to Canadian forces and annual deliveries for the large UK Bowman military communications project, the estimated value of the company’s defence sales also surpassed $200-million.
The remaining five members in the group of Canada’s largest military manufacturers are aerospace companies headquartered in the Toronto and Montreal areas. Although three derive more than one-fifth of their total sales from military production, all five companies are dependent on sales to commercial markets. As such, these companies are representative of the Canadian military industry as a whole – primarily aerospace or electronics manufacturers based in central Canada with sales to both military and civilian customers.
Pratt & Whitney Canada produces engines for trainer and business aircraft and for helicopters. Deliveries in 2002 included engines for military trainer aircraft of the US, Greek, and South Korean forces, as well as for helicopters sold to the Mexican Navy.
Magellan Aerospace reported that more than one-third of its 2002 sales were to military customers, largely through the supply of military aircraft engine upgrades and components to Canada, the US, and Sweden by its subsidiaries Bristol Aerospace in Winnipeg and Orenda Aerospace in Mississauga.
Bell Helicopter Textron Canada, a subsidiary of US-based Textron Inc, produces a range of dual-purpose helicopters, that is, helicopters sold to both military and civilian users. During 2002 its helicopters were exported for military end-use in Saudi Arabia, Thailand, the UK, and the US. These included Bell 412EP helicopters sold to a civilian company for British armed forces training.
Northstar Aerospace Inc. of Toronto, formerly Derlan Aerospace, reported defence sales of $111-million for 2002, and appears in the upper echelon of Canada’s military contractors for the first time. The company reported a high percentage of export sales, which include shipments of components for British Lynx and US Apache military helicopters.
The final company of the table, Héroux-Devtek Inc, is the result of a merger between Quebec-based Héroux Inc. and Ontario-based Devtek Corp. Both companies have a lengthy history of military contracting. In 2002 Héroux again reported major sales of military landing gear components to the US Air Force, and Diemaco Inc. of Kitchener, a subsidiary of Devtek, reported further supplies of automatic firearms to Canadian and other NATO forces.
|Company head office/main plant||A||B||C||D||E||F||G||H||I|
|General Motors Defense, London||1||1||17||2||U||U||U||T||1,400|
|CAE Inc, Montreal||2||2||12||U||U||E||565|
|Bombardier Inc, Montreal||3||3||5||18||U||A||441|
|SNC-Lavalin Group, Montreal||4||5||2||4||R||227*|
|General Dynamics Canada, Nepean||5||4||1||3||U||U||U||E||210|
|Pratt & Whitney Canada Corp, Montreal||6||7||9||U||U||A||170|
|Magellan Aerospace Corp, Mississauga||7||6||6||U||A||166|
|Bell Helicopter Textron Canada Ltd, Mirabel||8||9||U||U||A||163|
|Northstar Aerospace Inc, Toronto||9||–||U||U||A||111*|
|Héroux-Devtek Inc, Longueuil||10||10||1||U||A||105*|
A Ranking within largest 10 Canadian military contractors using company financial period closest to calendar year 2002.
B Ranking for financial period closest to calendar year 2001 (see Monitor, Winter 2002).
C Ranking within largest 20 Canadian Department of National Defence prime contractors for fiscal year 2002-2003.
D Ranking within largest 20 military export prime contractors for fiscal year 2002-2003 as brokered by the Canadian Commercial Corporation(1) (CCC).
E Estimated or reported military sales greater than 20 per cent of total company sales.
F Reported military sales or deliveries from Canada to one or more Third World countries during 2002.
G Foreign-owned or controlled.
H Commodity-classification of major military products (A – Aerospace, E – Electronics, T – Transportation, R – Armaments).
I Estimated total value of military sales in millions of Canadian dollars for 2002 or closest financial period, compiled from Canadian Military Industry Database data and files. (2) For Canadian-owned companies this includes military sales of foreign subsidiaries (*indicates the company reported a value for its military sales).
1 The Canadian Commercial Corporation (CCC) is an Ottawa-based crown corporation which assists Canadian companies with export sales to foreign governments and international organizations. Typically, over 60 per cent of CCC-brokered sales are purchased by military agencies.
2 It is possible that other Canadian companies have generated sufficient military sales in 2002 to be included in the table. However, the lack of public disclosure of financial information precludes the reporting or estimation of military sales by some privately-owned companies like CMC Electronics or IMP Group which have appeared in earlier editions of the table.