By Ken Epps

Domestic military orders were the largest source of business for Canada's top prime military contractors again in fiscal year 1994-95, the latest contractor ranking from Project Ploughshares' Canadian Military Industry Database shows. Although some companies obtained foreign contracts large enough to place them within the top 20 list, the overwhelming majority of the largest contractors were dependent on Canadian Department of National Defence procurement for most of their military production. Thus, in spite of persistent government and industry efforts to expand military export sales, the latest ranking reflects the post-Cold War realities of highly competitive foreign markets.

The distribution of prime military contracts remained concentrated within the largest 20 companies. Almost $1.6-billion of prime contracts awarded during 1994-95 went to the top 20 companies, close to two-thirds of the $2.5-billion total. As in earlier years, most top contractors were based in central Canada, with only five companies based elsewhere (Halifax, Winnipeg, and Edmonton). Similarly, the majority of the largest companies operated mainly in the aerospace or electronics sectors: just six of the top 20 were based in other economic sectors, and of these, only one was primarily involved in the production of armaments.

Reflective of the spending constraints that have come even to the Department of National Defence, several of the year's largest DND contracts were not for the acquisition of new equipment but for repair, overhaul, maintenance, or upgrading of existing military materiel. This was apparent in the large 1994-95 contracts awarded to Bombardier's Canadair Division, Bristol Aerospace, CAE Aviation, and IMP Group to maintain or modernize CF-18 Hornet, CF-5, C-130 Hercules, and CP-140 Aurora aircraft respectively. Similarly, Hawker Siddeley Canada was engaged to maintain DND military aircraft engines and Boeing Canada to repair CH-113 Labrador helicopters.

The year's largest contract ($255-million) was awarded to Edmonton's Frontec Logistics Corp, which in partnership with Pan Arctic Inuit Logistics Corp of Yellowknife will operate and maintain 47 short- and long-range radar sites within the North Warning System. SNC Industrial Technologies received orders for ammunition from the Canadian army worth $170-million, and SHL Systemhouse, an Ottawa-based information technology firm, was given a $150-million contract to upgrade the Canadian Forces supply system.

Export and major equipment orders were central to a few of the year's largest military contractors. General Motor's second place ranking was due entirely to contracts to produce light armoured vehicles for Saudi Arabia and Australia totalling $219-million and $14-million respectively. Bristol Aerospace won $20 million in orders for target helicopters from the US Army, and Heroux received $28-million in US Air Force contracts to produce military aircraft landing gears.

Table 1:
Top 20 Canadian Military Prime Contractors FY 1994-95

*Department of National Defence contract for $255-million jointly held with Pan Arctic Inuit Logistics Corp., Yellowknife.

Legend

A Ranking within top 25 Department of National Defence prime contract recipients in Canada for the period, fiscal year 1994-95.

B Ranking within top 25 US Department of Defense prime contract recipients in Canada for the period.

C Ranking within top 25 Defence Industry Productivity Program recipients for the period.

D Estimated or reported military sales greater than 50% of total sales.

E Estimated or reported export sales greater than 50% of total sales.

F Reported military sales or deliveries to one or more Third World countries during the period.

G Foreign-owned or controlled.

H Commodity-classification of major military products. (1-Aerospace; 2-Electronics; 3-Marine; 4-Transportation; 5-Armaments; 6-Industrial; 7-Data Processing; 8-Research and Development; 9-Miscellaneous).

I Total value of reported prime contracts during the period in $millions. Note: The figures here may be less than total military sales (see Methodology note below).

Methodology

The Table was compiled from information contained in Project Ploughshares' Canadian Military Industry Database and its background company files. Rankings are based on public-domain listings of unclassified prime contracts. These are contracts awarded by the Department of National Defence, military export contracts arranged by the Canadian Commercial Corporation on behalf of foreign governments, and Pentagon contracts placed directly with Canadian companies. Together they are equivalent to approximately 85 per cent of all Canadian military production. Defence Industry Productivity Program information was obtained from Industry Canada.

Prime contracts are contracts between Canadian companies and governments. In general, they represent agreements rather than deliveries (which tend to be represented by sales) and may call for several years' production. The table does not include company sales that arose from prime contracts awarded during earlier periods. Subcontract information (that is, contracts awarded to Canadian companies by military prime contractors) is not included in the table for two reasons. First, domestic subcontract figures are included in Department of National Defence (DND) prime contract awards. Second, and more significantly, because Ottawa does not fully disclose military export details, information on subcontracts placed with Canadian companies by foreign military contractors is not available. Hence, major military subcontractors are not ranked even though their sales may be within the range of the table.

The Canadian Commercial Corporation (CCC) defines military equipment contracts for which it is responsible as contracts between Canadian equipment suppliers and military customers. This definition (which Project Ploughshares generally supports) differs from the definition of "military goods" used by the Department of Foreign Affairs. The latter is based on a list of technically defined equipment that is determined independently of the user. As a result, some export contracts (most notably the sale of helicopters to military customers) defined as military by the Canadian Commercial Corporation are classed as civilian by the Foreign Affairs Department. The table thus may include CCC contracts that are not reflected in the Department's annual report on the export of Canadian military goods.