Significant Industrial Benefits Investments in Ontario

OTTAWA, ONTARIO,(Marketwire), Jan. 25, 2008) - The Honourable Jim Prentice, Minister of Industry, along with his colleague, the Honourable John Baird, Minister of the Environment, today welcomed the news that Boeing and Lockheed Martin are providing contracts in Ontario with a Canadian content value of more than $341 million, as part of their industrial benefits commitments to Canada.

"These significant investments are a sign of confidence in the talent and abilities of our region's businesses, which have demonstrated that they have what it takes to become part of Boeing's and Lockheed Martin's global supply chains," said Minister Baird.

All of these contracts and investments are the result of the government's purchase of strategic and tactical airlift capabilities for the Canadian Forces. Under Canada's industrial benefits policy, major government procurements carry with them the guarantee that prime contractors will invest 100 percent of their contract values in the Canadian economy. Contractors are free to engage in commercial activities that make good business sense to them, thereby enabling them to build long-lasting business relationships.

The purchase and support of four C-17 aircraft from Boeing will see that company undertake approximately $1.5 billion in economic activity in Canada. In another contract for the recently announced procurement of 17 C-130J Hercules aircraft, Lockheed Martin has agreed to an $842-million investment, with further in-service support commitments to be negotiated over the next year.

"These investments are today's snapshot of the economic activity that has begun to flow from the strategic and tactical airlift procurement," said the Honourable Jim Prentice, Minister of Industry. "They represent just the beginning of the significant industrial benefits to be realized in the coming years."

Given the extensive capacity of Canadian industry, businesses from all regions of the country are benefiting from these two major procurements, and are likewise expected to benefit further from the government's overall "Canada First" initiative. More projects, each with a guaranteed dollar-for-dollar return on investment, are expected in the future.

BACKGROUNDER

Industrial Economic Benefits for Canadians

Canada's Industrial Benefits Policy

Industrial benefits are a significant part of all major defence procurements, including strategic and tactical airlift projects.

The Government of Canada is working to ensure that these procurements deliver maximum, high-quality economic benefits to Canadians, and that Canadian firms are well positioned to play significant roles as these projects progress.

Canada's industrial benefits policy provides the framework for using specific federal procurements to create long-term industrial development. Under the policy, contractors must undertake quality economic activities in advanced technology sectors of the Canadian economy. These activities must be an amount equal to 100 percent of the contract value. At least 60 percent of the proposed activities must be identified before contracts are awarded, with the balance specified during the life of the project.

The policy provides significant long-term benefits to Canadians by:

- increasing Canadian industrial competitiveness, market access, commercialization and investment in high-technology sectors

- placing Canadian firms in the global supply chains of major international corporations

- providing the incentive for contractors to partner with Canadian companies as team players or as subcontractors

- developing and maintaining a capacity in Canada to deliver long-term equipment support to the Canadian Forces

- promoting growth of Canada's small and medium-sized enterprises and the development of regional industrial capacity

Industrial benefits commitments are a legally binding part of the contract, and their administration and verification are Industry Canada's responsibility, with the assistance of regional development agencies. The Department also works closely with the Department of National Defence and PWGSC, from the early stages of the project through to completion.

More information on the policy can be found at the following website: irb-rir.gc.ca.

Industrial Benefits from "Canada First" Procurements

As is always the case with major government procurements, the prime contractors involved in "Canada First" procurements are undertaking quality economic activities in advanced technology sectors of the Canadian economy at an amount equal to 100 percent of their contract values.

Moreover, in the case of "Canada First" procurements, contractors must realize a minimum of 50 percent of their industrial benefits in the aerospace and defence sector, as well as a minimum of 30 percent in identified key technologies and a minimum of 15 percent in small and medium-sized businesses.

The government has collaborated with the Aerospace Industries Association of Canada and the Canadian Association of Defence and Security Industries to establish a series of nine key technologies. For aerospace-related projects, Canadian benefits must not only be of high value and high technology, but at least 30 percent of them must be targeted to those technologies that are key to the success of the industry over the next decades. This will allow our industry to get the best possible benefit now and well into the future from these procurements.

The nine technologies, all of which are high tech, are as follows:

- advanced manufacturing and emerging materials

- avionics and missions systems

- communications and control

- propulsion and power management

- security and protection

- sensors

- simulation, training and synthetic environment

- space

- unmanned vehicle systems

FACT SHEET

Government of Canada's Strategic and Tactical Airlift Procurements

Strategic Airlift Procurement

On February 2, 2007, the Government of Canada announced a $750-million agreement with Boeing for the acquisition of four C-17 aircraft.

Boeing also signed a related agreement to provide in-service support for the equipment. The value of that contract is also $750 million

Under Canada's industrial benefits policy, Boeing has an obligation to generate economic activity in Canada at an amount equivalent to the total value of those contracts ($1.5 billion).

The company has already identified $795 million in industrial benefit transactions throughout Canada.

Today, we are welcoming the announcement of those transactions in this region.

Tactical Airlift Procurement

On January 16, 2008, the Government of Canada announced a $1.4-billion contract with Lockheed Martin for the acquisition of 17 C-130J aircraft.

Under Canada's industrial benefits policy, Lockheed Martin has an obligation to generate economic activity in Canada at an amount equivalent to the contract ($1.4 billion).

The company has already identified $842 million in industrial benefit transactions throughout Canada.