Emerging markets put heat on Canada’s aerospace sector
Customers are asking us to look at opening a division or partnering with someone in an emerging market to reduce costs.” Meeting the challenge of aggressive new rivals, especially in the so-called BRIC countries of Brazil, Russia, India and China, is an issue that more and more Canadian aerospace companies have to grapple with, according to a new study.
Emerging markets put heat on Canada’s aerospace sector
bertrand marotte MONTREAL— From Tuesday's Globe and Mail Published Monday, Dec. 19, 2011 9:55AM EST Last updated Monday, Dec. 19, 2011 6:54PM EST
Montreal aerospace parts supplier Alta Precision Inc. feels the heat from new competitors in emerging markets.
“It’s a big concern for us,” says Giovanni Bevilacqua, vice-president of business development at the manufacturer of landing-gear components.
“We feel threatened by it. Customers are asking us to look at opening a division or partnering with someone in an emerging market to reduce costs.”
Meeting the challenge of aggressive new rivals, especially in the so-called BRIC countries of Brazil, Russia, India and China, is an issue that more and more Canadian aerospace companies have to grapple with, according to a new study.
Some have already taken steps.
Canadian giant Bombardier Inc. recently announced plans to build a facility in low-cost Morocco and has been present in Mexico for several years. Longueuil, Que.-based parts manufacturer Héroux-Devtek Inc. has followed Bombardier – a major customer – to Mexico.
Canada’s aerospace manufacturers must increasingly plan for this new threat from companies in developing countries that are eager to participate in the next big wave of aircraft orders around the world, says a Conference Board of Canada report.
“The Canadian industry is facing growing and fierce competition as new players enter the market. For example, China and India are building their own aircraft, with the strong financial and regulatory support of the their national governments,” says Lin Ai, an economist at the think tank and author of the fall industrial outlook for aerospace in Canada.
“What Canadian companies need to do is invest a lot in R&D and equip themselves with the most advanced technologies and also try and secure more customers outside North America,” she said.
The Asia-Pacific market will be the largest market for aircraft over the next 20 years, says the report. COMAC of China is developing the C-919, a direct competitor to Bombardier’s all-new, fuel-efficient single-aisle C Series jet, it warns.
Russia is developing the Sukhoi Superjet, which will go head-to-head against Bombardier’s CRJ regional jets as well as Brazilian rival Embraer SA’s E-Jets, it adds.
The study cautions, however, that uncertainty remains over when several of these new aircraft will become available and how well they will do in terms of performance and sales.
U.S. aviation consultant Richard Aboulafia remains skeptical over the extent to which these new aerospace players represent a true threat.
“India is a non-player. China is a disaster so far. Russia is trying to get back to where they were and Brazil has been a competitive threat to Canada for decades,” he said.
On the regional-jet front, the real threat to Bombardier, for example, has been from Embraer and French-Italian firm ATR, he says. |
