The economic downturn may be curtailing defence budgets in most Western countries, but 2012 still promises to be an intriguing year of transition and investment in the Canada Forces as it continues to re-capitalize equipment and infrastructure. Vanguard invited executives from across the defence industry, which is undergoing a transition of its own, to share their thoughts on issues most likely to play a prominent role in 2012. Here are a few.
Keeping content Canadian
The U.S. defence market is larger than the next 20 largest defence spending countries combined and is the outlet for much of the production of defence-related products and services in Canada. Therefore, we are all watching with great interest and some anxiety the downward trend in the U.S. Department of Defense budget, especially in the investment accounts that fund acquisitions and R&D. We see similar downward pressures in the rest of the world driven by the global economic situation and other geo-political considerations. However, there are a few exceptions to this downward trend: Brazil, Saudi Arabia, and India continue to show annual increases in defence outlays and represent new markets for Canadian companies.

It is safe to say that Canada is a bit of an exception too. The long-term plan for equipping the Canadian Forces, as reflected in the Canada First Defence Strategy, looks quite robust, provided the economy remains in good shape. We can expect some downward adjustments as a result of the end of the combat mission in Afghanistan; however, in general, the budget is stable. This is attracting a large number of foreign companies to the Canadian market and increasing the competition for local firms. This is not necessarily bad, provided that homegrown companies get to participate on a level playing field, which is an issue of significant industrial and economic concern.

Recently, the government has spent a great deal of money buying major systems outside the country and for good reason – we don’t build things such as C-17 and C-130 aircraft or CH-47 helicopters. But we do recognize that this outflow of defence procurement dollars is creating jobs and fuelling the technology engines of foreign companies with limited, if any, real benefits flowing back into Canada and our economy. Currently, the Canadian defence industry is undergoing major restructuring, which may result in a lot of lost jobs. Ironically, at the same time, we are seeing unprecedented expenditures on new procurements and upgrades of existing systems.

Arguably, this ironic result is a failure of public policy; this has not always been the case. There are many historical examples in avionics, communications, armoured vehicles, mission systems – I could go on – where sound procurement strategies, including focused offset and industrial strategies, led to world-class capabilities for the men and women in our own military, and were then exported to other allies around the world. In fact, we have been a beneficiary of such policies and decisions in government in the past. In particular, this policy framework provided for collaborative government and industry investment in the area of sophisticated communications for the Navy, eventually leading to a world-class capability that is now deployed on Canadian Navy ships and sold to navies in the U.S., Australia, Korea and Japan, to name a few.

In the near future, we will hear a lot more on this topic of filling the gap between the CFDS, which in my view is an excellent policy framework, and where the rubber meets the road in actual procurements. Filling this gap should help ensure that the Canadian national industrial and economic interests are not lost in the process.

— Dave Stapley is corporate senior vice president of International Business Development and Government Relations for DRS Technologies

Room for growth in volatile times
U.S. government plans to cut defence funds by 10 percent came as little surprise, with many Western nations spending less on security and defence. Despite continued volatility in the global economy, the Canadian defence industry has potential for growth this year.

For starters, the federal government’s rollout of its $33-billion National Shipbuilding Procurement Strategy is a major investment that will create jobs for the production and long-term logistical support of Canada’s marine fleet. Contracts to upgrade the country’s Tactical Armoured Patrol Vehicles – a program worth around $1.3-billion – are also expected to be awarded in 2012.

Beyond our borders, emerging economies are leading the market for defence. India is expected to spend US$180-billion by 2020. Brazil is poised to invest heavily in security as host of both the 2014 FIFA World Cup and the 2016 Olympic Summer Games. Breaking into emerging markets like Brazil, India and China is not without risk; it requires a nuanced understanding of local regulations and culture, protection of intellectual property and knowledge of the procurement system. These offshore markets, however, provide rich opportunity for long-term growth.

At a time when many defence companies have cash on the balance sheet, mergers and acquisitions also provide avenues to increase their footprint and expand the supply chain. While deals like the US$18.4-billion acquisition of Goodrich by United Technology Corp. are rare, there is an appetite in the Canadian market for smaller acquisitions.

The defence sector in Canada is moving into a period of moderate growth. The impact of large-scale domestic projects will be tempered by decreasing defence budgets internationally, and particularly in the U.S.

In the face of leaner spending, and fierce international competition, it is critical for Canadian companies to be agile, to remain at the forefront of innovation and respond quickly to new opportunities in this truly global market.

— Grant McDonald is office managing partner (Ottawa) and national aerospace and defence leader for KPMG in Canada

Arctic fusion of surveillance data
As Prime Minister Stephen Harper has said: “Canada has a choice when it comes to defending our sovereignty over the Arctic. We either use it or lose it.” Canada’s overall objectives in the Arctic span sovereignty, security and economic benefits. In all cases, critical to meeting these objectives are good surveillance and intelligence.
The only feasible method of monitoring the Arctic on a regular basis in all weather is using space-based radar surveillance. Today, RADARSAT-1 and RADARSAT-2 provide this, and in the future, the RADARSAT Constellation Mission (RCM) will provide reliable, wide-area coverage in the Arctic.

As global climate change modifies ice patterns and weather patterns in the Arctic, more transportation, resource exploration and other activities will grow. The ability to monitor this area broadly on a reliable basis is essential for Canada to observe the increasing activity.

Complementing and leveraging broad space-based surveillance are other technologies that Canada needs to continue to develop to maintain its knowledge of the Arctic. These include long-range, all-weather airborne surveillance, maritime surface surveillance and underwater surveillance. This layered, multi-platform, multi-sensor approach enables Canada to maintain a constant watch on Arctic activity and an ability to focus on areas of interest and/or threats.

With the increasing quantities of sophisticated surveillance information, the final piece of the surveillance and intelligence puzzle is the information fusion centre. Collecting, fusing, verifying, correlating, extrapolating and interpreting multiple sources of surveillance is a critical function that serves to present the resulting information in a form that can be more easily understood by key decision makers, leading to effective and efficient actions to maintain Canada’s sovereignty, security and economic benefits.

Without good surveillance and intelligence, Canada is essentially blind in the Arctic and, as Prime Minister Harper correctly suggested, runs the risk of losing our Arctic sovereignty.

— David Hargreaves is vice president and general manager of Surveillance and Intelligence for MacDonald, Dettwiler and Associates

The merger of acquisition with training
There is a transformation occurring in logistics and training across the Canadian Forces that is in part a result of the economic environment, but more so the way missions have evolved. Highly targeted and executed in diverse environments, Canadian warfighters need highly specialized equipment to be successful – and they need it immediately.

In many cases, the acquisition of new equipment moves directly from the manufacturing floor into the field where soldiers must operate, maintain and sustain the equipment without ever having worked on it before. In 2012 alone, major systems including the Victoria-class submarines will be online and operational; we will see Canada’s shipbuilding industry rise; and the reset of equipment returning from Afghanistan will be in full swing.

Traditionally, the procurement cycle and its related training/operational support have been two relatively disparate systems. What we are now recognizing is that the operational tempo requires the defence industry to merge the two by developing the right training and operational support for systems entering the field – and this must be done in tandem. This change, which ultimately merges two independent processes, is an evolution that needs to be addressed holistically and as part of the same equipment lifecycle to sufficiently address the needs of our soldiers.

Take, for example, the Canadian Army. It is acquiring approximately 2,200 field heaters to replace legacy models. It is near to impossible to provide training to each soldier on how to operate and maintain these heaters prior to their use in the field. So the Canadian Forces School of Electrical and Mechanical Engineering is taking advantage of simulation-based technology that will be deployed with the equipment to provide the information at the time of need in the field. This is an economical and highly distributable method of delivering training and operational support for any equipment entering the field and is expected to be the way forward as more systems move from the floor to the field without the opportunity for schoolhouse training.

This systemic approach has the inherent flexibility to accommodate operational and training requirements for the equipment reset after Afghanistan because it is highly deployable in nature and is delivered with the equipment. It also addresses the need to provide support for people completing infrequently performed tasks on highly modern systems. National Defence must examine how best to deliver and deploy equipment and simultaneously address the training and operational support requirements as part of a single procurement and sustainment process.

— Gabe Batstone is the chief operating officer of NGRAIN

Family planning for UAVs
This year, the Canadian Army is embarking on the first steps of procuring a family of UAVs. This is a laudable endeavour and clearly necessary for any 21st century fighting force. It will start with the procurement of a micro UAV, explicitly required to support the STANAG 4586 interoperability protocol, and will continue with procurement of a common STANAG 4586 control station solution for mounted operations.

This approach is certainly a good one and has a degree of foresight that addresses some of the army’s future as well as current needs. However, it could benefit from expanding the vision even more, recognizing that a family of UAVs is itself only a sub-set of the future soldier’s needs.

The reality is that shortly after these systems are fielded (if not before), the dismounted soldier will recognize the need for embedded unmanned solutions, controlled from tablet-like interfaces that are easily carried and operated by the soldiers themselves. In addition, the history of manned operations has demonstrated that the ability to combine air, land and sea operations greatly amplified the safety of the troops as well as the effect on the enemy. The requirement for unmanned systems to likewise team with each other and with manned operations is already being recognized and developed by our allies, so it only makes sense to reflect these needs in our own procurements as well.

The army is laying the groundwork for the future of unmanned systems in the Canadian Forces. Like any foundation, it is best to ensure that it is sufficiently strong to allow expansion even beyond the immediate intended structure. Expanding the vision for this future family to include both the eventual needs of the dismounted soldier and combined operations across domains only makes sense.

As any parent knows, family planning can be a daunting task but the reward in the end is when you see your children accomplish things that you never even imagined.

— Mike Meakin is president and co-founder of InnUVative Systems and vice-chair of the NIAG SG-157 effort to define a cross-domain unmanned system control station solution for NATO