The Ploughshares Monitor Spring 2005 Volume 26 Issue 1
Canada’s ten largest military contractors sold almost $2.5-billion in military equipment and services during 2003, according to the latest data compiled by Project Ploughshares. Military sales for the year ranged from an estimated $546-million for the largest contractor, CAE Inc of Montreal, to a reported $86-million by the tenth largest contractor, Héroux-Devtek Inc of Longueuil, Quebec (see Table 1). The combined total is a significant drop from the $3.5-billion sales total estimated for the top 10 contractors of 2002. This is largely due to a reduction in company size of the previous largest military contractor – General Motors Defence of London, Ontario – resulting from its sale to General Dynamics Land Systems of the US.
As in earlier years, the latest table of largest military contractors is virtually identical to that of the previous year, with some changes in relative position on the list and one change in name (from GM Defence to GDLS Canada). Although, like its counterparts in other industrialized nations, the Canadian military industry has undergone restructuring, the upper level has remained extremely stable and a handful of companies continue to obtain the largest military orders. It is possible that some privately owned Canadian companies, such as CMC Electronics of Montreal or IMP Group of Halifax, undertook sufficient military work in 2003 to be included in the ranking. However, the limited transparency of these private companies’ financial reports precluded estimation of their military sales for the year.
The top contractors represent the nature and location of military production in Canada. Many companies in the military industry are aerospace companies based in greater Montreal or Toronto, manufacturing equipment for both civilian and military markets. CAE Inc, the largest 2003 military contractor, provides simulation technologies to train pilots to land Airbus passenger aircraft or to operate machine guns from Blackhawk attack helicopters. Bombardier Inc and Bell Helicopter Textron Canada Ltd manufacture aircraft and helicopters respectively, mostly for commercial customers, but also regularly for military end-users. Similarly, Pratt & Whitney Canada Corp produces civil-certified turboshaft and turboprop engines for aircraft that are shipped to commercial and military end-users worldwide. During 2003 customers included the armed forces of Brazil, India, Ireland, Jordan, Poland, South Korea, Spain, and the US.
A ground transportation equipment supplier, GDLS Canada, is one of a very few Canadian military contractors that are almost entirely dependent on sales to military end-users. In 2003 GDLS Canada shipped armoured vehicles to the armies of Australia, Saudi Arabia, and the US, and also manufactured light armoured vehicles for the Canadian Department of National Defence. SNC TEC, a subsidiary of SNC-Lavalin Group, has for many years sold the bulk of its small and large calibre munitions to the Canadian forces. In 2003, for the first time, its international sales surpassed domestic sales.
As part of more than half-a-century of unregulated cross-border military trade and extensive integration with the US industry, most Canadian military contractors are subcontractors to US military prime contractors. For example, Magellan Aerospace and Northstar Aerospace are both prime contractors with the Department of National Defence and the Pentagon, among other military customers, and also manufacture components for larger military aerospace contractors in the US. Table 2 illustrates the extent of subcontracting within Canada’s largest military companies – and indeed the extent of the integration of Canadian military production with US industry. It is important to note that the table may not reflect the full subcontracting picture among the 20 companies because not all subcontracts between US military corporations and Canadian companies are made public.
The latest ranking of Canada’s largest contractors extends the picture of a stable, concentrated military industry. An analysis of reported and estimated sales figures shows that shipments of Canadian-produced goods and services for military end-use remain a significant component of Canada’s industrial and technological landscape.