The aerospace and defense industry is one of the few sectors in manufacturing that is currently not only surviving but thriving amid the recession, despite the grim predictions  for job losses and bankruptcies among other Canadian manufacturers, plummeting oil prices, and the ever fluctuating CDN dollar. Employment rates and revenue are even continually on the rise.

In the past year, Bombardier Aerospace introduced their much anticipated line of CSeries jets.  Magellan Aerospace and Pratt & Whitney Canada invested big time in their Montreal and Winnipeg operations.

According to the AIAC (Aerospace Industries Association of Canada), based in Ottawa, the aerospace sector directly employed 82,000 Canadians in 2007.  This is a significant increase from the 79,000 employees working in the industry just a year prior.  Aerospace revenue increased by half a billion to $22.7B.

Aircraft parts, components, and planes, jets, etc. account for 55% of  the overall revenues for the aerospace sector, the majority of which is generated by exports, especially to the US and European countries. Military sales increased by $5 billion last year, a rise of 18% from 2006.

Helping to fuel the exponential growth of the aerospace sector (no pun intended) is the increase in commercial air travel. The Current Market Outlook for 2007-2008, released by Boeing, predicted that air passenger travel will increase 5% per year, and cargo travel by 5.8%. The forecast extends these numbers for the next two decades.

Quote for April 22nd, 2009:

“The modern airplane creates a new geographical dimension. A navigable ocean of air blankets the whole surface of the globe. There are no distant places any longer: the world is small, and the world is one.”
- Wendell Willkie

[ Image courtesy of the Toronto Star ]

During the Leaders’ english debate on October the 3rd, one issue that was broached was the federal SRED (Scientific Research and Experimental Development) business incentive program. Under the existing federal SR&ED program, non-profitable corporations with large revenues may receive research and development tax credits that cannot be applied.  Liberal leader Stephane Dion and Bloc Québécois leader Gilles Duceppe both proposed that these tax credits be partially refundable.

“A Liberal Government will encourage all companies to innovate, even if their innovation does not lead to immediate profitability, by making the SR&ED Tax Credit partially refundable. This change is vital at a time when many companies are struggling to become or stay profitable.  Every company that puts money into R&D should be rewarded for innovating.” [ Source ]

Large corporations can sometimes receive millions of dollars in tax credits through the SR&ED program.  I think that this measure, if implemented, will increase the cashflows of these large corporations drastically!

Due to the economic downturn, many traditional industries are in peril because resources are no longer in demand, consumers are scrimping instead of spending, and the financial institutions are in disarray.  To survive as a business, it’s paramount that now, more than ever, businesses need to innovate.  We’re on the cusp of a new economy and only the way to turn a profit will be to cater to consumers changing needs.

Financing from banks will no longer be easy to come by.  In turn, consumers will no longer be willing to accumulate loads of debt.  Therefore, conservation will soon become a common theme.  Concepts such as “green living” will soon become synonymous with “sustainable lifestyles,” “affordability,” and “living within your means.”  If this is what it means to “be green,” then so be it- consumers will want to live greener lives, and companies should adapt accordingly.

Economists claim that invest in energy efficiency and renewable-energy strategies could create 2 million US jobs in the next 2 years. And as many as 1 out of 4 workers in the US will be working in the renewable energy and energy efficiency industries by 2030, according to a separate recent report from the American Solar Energy Society.

The big question is: will Canadian businesses follow suit?