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Canada’s Aerospace Product Industry: Industrial Outlook Autumn 2012

The Conference Board of Canada, 9 pages, December 2012
Report by Maxim Armstrong
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This report examines the short-and medium-term economic and profitability outlook for Canada’s Aerospace Product Manufacturing Industry .

Document Highlights

  • Business Jets—Demand for business jets is recovering. A recent purchase by NetJets was the biggest purchase of private jets ever made.
  • Global Economy—The economy is struggling in many regions, but most notably in Europe. This reduces trade levels and limits growth in emerging countries that are dependent on exports.
  • New Orders—Last year’s upward trend in new orders came to a halt early this year, reducing the short-term prospects for output and revenues growth.

Reviews

Jody Grywul -  January 22, 2013
 
Luc Chartrand -  January 11, 2013
 
Saam Bandari -  January 4, 2013
 
Andre Beltempo -  December 17, 2012
A good, sober overview, however, three major issues:
1. Credibility is reduced when facts are incorrect. The statement that only the Challenger 605 is assembled in Canada (P.3), as opposed to the Challenger 300 (of which the majority of the NetJets order consisted) is false. The 300 is also assembled in Montreal. A false statement such as this leads to the loss of credibility for other facts in the report.
2. Although the RJ market is due to become more competitive, with new entrants (Russia, China and Japan) as discussed in the report, this market is relatively small, and is of fixed or marginally increasing size. As a result, it should be strongly highlighted that the forecast is extremely sensitive to the future sales of the CSeries. Should this aircraft 'fail', that is, not successfully earn income in the medium term, the projected numbers in the forecast will be below those shown.
3. R&D spending in this industry as listed is entirely a false construct. 'R&D' spend is always highest during an aircraft development cycle, but is not focussed on longer term 'R', rather is on relatively short term 'D'. This is true for Canada, the US and EU as well (i.e. Boeing 'R&D' spend spiked in 2006-2011 during 787 development). Theferfore, productivity measures in the short term are not illustrative, and it should be more explicitly stated that the 'R&D' numbers are essentially linked to product development, not 'longer term' research. If possible, some way to disaggregate these two would be significantly more informative.

Conference Board of Canada -


  • Thank you for pointing  out the issue with assembly of the Challenger 300, a correction has been made in the report.

  • As per comment 2, a big part of the expected recovery in the industry is tied to the outlook for business jets. The thin order book for the CSeries at publication means that it has a limited impact on the current outlook.

  • The R&D data is discussed as it is reported by Statistics Canada, a breakdown between research and development is not available.
 

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Canada’s Aerospace Product Industry: Industrial Outlook Autumn 2012Rating:3.750000 out of5based on4 reviews.