Atlantic Insight

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Atlantic Insight, by southeast New Brunswick's W.E.(Bill) Belliveau who analyzes and comments on matters of public policy and the social and economic decisions taken, by all levels of government from local to global. Atlantic Insight Blog is a commentary on current affairs and changes in the marketplaces and/or in the business world. The impact of policy, decisions and changes are explored for their impact on the citizens of Atlantic Canada. You are invited to add your comments.


Sunday, January 07, 2007

View Military Spending as Canada's Economic Development Opportunity

It was reported this week that Canada’s Department of National Defense (DND) is set to purchase $3 billion in search and rescue aircraft from the Italian manufacturer Spartan.

They will replace the De Havilland Canada CC-115 Buffalo and free up the U.S. manufactured Hercules for regular transport work.

The Buffalo was first acquired by the RCAF in 1967 as a search & rescue aircraft used in tactical transport. The Lockheed-Martin C-130 Hercules tactical transport has arguably been the most successful military transport aircraft in the history of aviation.

It’s considered one of the most versatile of transport planes and is used to airlift troops, equipment and cargo, in search and rescue (SAR) operations and in air-to-air refueling of fighter-jets. The Hercules can be loaded and unloaded quickly, with little equipment, and is especially useful in delivering supplies because it does not need a lot of room to land.

The intended purchase of the C-27J Spartan is not an isolated purchase. Last year, DND purchased four Boeing manufactured C-17 cargo airplanes for $3.4 billion and 17 new C130J Hercules transport planes for $5 billion and 16 Chinook helicopters for $2.7 billion.

The Boeing (formerly McDonnell Douglas Corp.) manufactured C-17 aircraft is capable of rapid strategic delivery of troops and all types of cargo to main operating bases in war zones or directly to forward bases in a war zone. The C-17 can carry virtually all of the Canadian Army's air-transportable combat equipment.

The design of this aircraft lets it operate on small airfields and can take off and land on runways as short as 3,000 feet and as narrow as 90 feet wide.

The new and improved Lockheed Martin C-130J is used by the US Air Force as its principle tactical cargo and personnel transport aircraft. The C-130J is the latest model Hercules, featuring digital avionics and a new propulsion system. As reported, the improvements enhance the performance of the aircraft in terms of range, cruise ceiling, time to climb, cruise speed and airfield requirements.

It’s a new generation of tactical military transport that reduces operating costs and crew size while offering significant performance improvements. It’s built to meet requirements for combat delivery, aerial refueling, weather reconnaissance, search and rescue and electronic combat.

I offer these facts to provide context for discussion of some serious issues:

It would appear that Canada is quietly buying military aircraft for combat deployment.

Theoretically, we are in Afghanistan as peace-keepers and builders, not as military combatants. That has been our military role in the world for decades. I have no quibble with the idea of equipping our military with the latest and best equipment but I worry that we may be moving towards the George W. Bush model of peacekeeping.

My second concern relates to purchase of the Italian Spartan C-27J aircraft as search and rescue aircraft. We have a Canadian aircraft manufacturer (Bombardier) that is more than capable of building search and rescue aircraft. They build the Dash 8 aircraft which grew out of the original CC-115 Buffalo aircraft. They make passenger jets and executive jets. They build trains and subway cars. They certainly have the capability to build military and/or search & rescue aircraft.

One would assume that Bombardier’s Dash 8-300 could be modified to provide search and rescue capabilities. It doesn’t have a rear military loading/off-loading ramp but surely that would be a doable alteration.

To be fair to the Italians, the Dash 8-300 take-off weight is only about two thirds of the Spartan’s take-off weight and its cruise speed is 532 km/h versus the C-271 Spartan at 602 km/h. Perhaps more significantly, the Italians offer an aircraft with a range of up to 5900 km while the Dash 8-300 maxes at 1,625 km.

One of DND’s specifications for its search and rescue aircraft is that it must have the ability to fly quickly from a base in southern Canada, conduct a search and rescue in the Arctic and return to base. The Italian advantage in speed and range seems obvious.

However, with all due respect to the Italian advantage, we’re talking here about the purchase of some 90 aircraft and a twenty year service contract. $3 billion - that’s a lot of jobs. Surely Bombardier could meet the speed and range specifications if given a little time. De Havilland Canada (part of Bombardier) was a pioneer in the development of STOL (short Take-Off and Landing) search and rescue aircraft. It should be encouraged to continue its tradition of innovation.

My other concern is with the collective expenditure amounts. The 2006/07 federal budget assumes revenues of $227 billion and expenses of $223 billion. After debt payments of $3 billion, that leaves a surplus of little over a billion dollars. DND equipment expenditures for the fiscal year will be in the order of $14 billion. That’s 6% of our budget, no where near the American ratio of defense expenditures but possibly setting us on the road to deficit.

The Harper Government has directed the purchase of some $11.1 billion in military aircraft to the United States in the last six or eight months. Now they want to ship another $3 billion to the Italians. Worse, the selection process has excluded all but the Italians from bidding. What is wrong with these people?

In my opinion, the Department of National Defense should not be buying offshore if it could be buying Canadian. That is not to suggest that the Department buy inferior products. It is only to suggest that Canadians be given the opportunity to sell to their government.

As I understand it, the Italian purchase still has to be approved by Cabinet. Members of the Cabinet would be well advised to move cautiously on this matter.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com

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