F-35 fighter jet suppliers cautiously optimistic by Ottawa's Throne Speech
A Lockheed Martin F-35 Joint Strike Fighter is shown in this undated Lockheed Martin photo.
Ross Marowits, The Canadian Press
Published Thursday, October 17, 2013 6:40PM EDT
Last Updated Thursday, October 17, 2013 8:17PM EDT
Canadian suppliers to the F-35 fighter jet program say they are "cautiously optimistic" by the government's commitment in the Throne Speech to replace the country's aging aircraft fleet, but warn that millions of dollars in jobs and opportunities are at risk if a decision drags on past this spring.
The federal government devoted just one line in Wednesday's speech to the controversial defence procurement, vowing to "complete our plan" to replace the planes.
Public Works Minister Diane Finley later told an aerospace conference in Ottawa that it will proceed as soon as possible.
"While this review is thorough, we want to make sure that it does not drag on and create uncertainty that makes it difficult for many of you to make important long-term business decisions," she said, according to a copy of the speech.
Gabe Batstone, whose 3D technology provider NGRAIN is one of 72 Canadian suppliers to the controversial program, said he's still anxious to see a specific timeline put in place.
"It's clearly on the radar and they're committed to their process and understand that we in industry need that process to be expeditious, so that's all encouraging," he said.
"It's already costing us access to the opportunities and that's going to mean that we're going to start losing money in the next few months because those opportunities would have been things that we would have bid on and won," Batstone added.
Ottawa is evaluating potential alternatives to its original plan to purchase 65 F-35 aircraft. A KPMG report late last year warned that the total bill, including service and support, could be as much as $45.8 billion over 42 years to replace the current stable of CF-18s, which are due to be retired in 2020.
The government stepped back from the planned purchase after the auditor general accused National Defence of hiding $10 billion in continuing costs for the fighter jets and Public Works of not doing enough homework to justify the purchase.
Ottawa responded with a seven-point action plan that took responsibility for the planes away from defence, giving it to a secretariat at Public Works.
Larry Glenesk of aerostructure manufacturer Avcorp. says that the evaluation process shouldn't take any longer than next March or April.
"If it's delayed for example -- horror of horrors -- until after the next election, then there will be an awful lot of impact on all of the companies currently involved," said Glenesk, the vice-president business development.
Avcorp has up to $60 million worth of current contracts to deliver outboard wing assemblies from Delta, B.C., directly to Lockheed Martin's production line in Fort Worth, Texas. But Glenesk said up to another $1.1 billion in opportunities is at risk if Ottawa choose another jet program.
Lockheed Martin has said it will honour $500 million worth of business already awarded to Canadian partners but that other work would be in jeopardy without a Canadian jet order. The U.S. defence giant estimates that the Canadian industry could potentially receive $11 billion of contracts over 25 to 40 years as its builds 3,000 planes for air forces around the world.
Although the Throne Speech didn't mention the F-35 by name, Scott McCrady, director of the Joint Strike Fighter program at Magellan Aerospace, said it was "great news for us to hear the government remains committed to moving ahead quickly on this."
He said Magellan has up to $2 billion in revenues over 20 years and some 200 jobs riding on the government's decision. The company supplies the horizontal tail for the conventional fighter and several components for the F-35 B variant.