By Ken Epps

In contrast to the consolidation of the military industry in Europe and especially the US, where post-Cold War mergers and acquisitions have produced fewer, larger military conglomerates, the list of the largest Canadian military contractors in 1997 looked much like those of earlier rankings.¹ Although recent changes have occurred within the Canadian arms industry, many have resulted from the restructuring of foreign owners and most have exerted little to no influence on the upper echelons of Canada=s military manufacturers. All of 1997's top military companies are established manufacturers that have appeared frequently in earlier industry rankings. The sole exception is Magellan Aerospace Corporation, a new company which became the ninth largest military Canadian contractor in 1997 as a result of its purchase of Bristol Aerospace of Winnipeg and Orenda Aerospace (formerly Hawker-Siddeley Canada) of Mississauga, two companies which in the past have been regular members of Canada=s largest military contractors.

The latest ranking again portrays the long-standing sectoral and geographical concentration of the military industry in Canada. As in the past, 1997 saw most of the largest companies operate from bases in Ontario or Quebec to produce aerospace or electronic products. Indeed, in 1997 all ten largest contractors were based in the two central provinces, with six based in the Montreal area alone. At the same time, all but two of the companies manufactured aerospace or electronics products as their major military goods. Some sectors previously prominent in top contractor rankings were absent from the 1997 table: naval equipment manufacturers in particular saw fewer sales as Canada=s major patrol frigate, destroyer upgrade, and maritime patrol vessel programs wound down. (Canadian exports of naval goods have been insignificant for many years.)

Again in 1997, domestic military contracts were central to a number of the largest contractors. Close to $200 million in General Motors of Canada military sales stemmed from Department of National Defence orders for reconnaissance vehicles and armoured personnel carriers. Computing Devices Canada continued its work as prime contractor for the Canadian Army=s IRIS tactical radio communications system valued at more than $1.3 billion. SNC-Lavalin=s production, through its SNC Industrial Technologies subsidiary, of ammunition for the Canadian armed forces was worth about $150 million in 1997. This, together with prime contractor responsibility for the Maritime Coastal Defence Vessel program via another subsidiary (Fenco MacLaren), generated the bulk of SNC=s military sales last year. And an estimated $180 million of Bell Helicopter Textron Canada=s income came from its manufacture of Griffin tactical utility helicopters for the Canadian Army.

Sales of military equipment outside of Canada also contributed to top contractor income in 1997. All but one of the companies were dependent on export sales for half or more of total (military and non-military) sales. GM Canada, the largest recipient of Canadian Commercial Corporation-brokered² military export contracts in fiscal year 1997-98, received a total of almost $292 million in light armoured vehicle contracts from Australia, the United States and Saudi Arabia. The second largest CCC-brokered export contractor, Bell Helicopter, was awarded a $57 million contract to supply helicopters to the Thailand armed forces. This was in addition to sales based on earlier military helicopter orders from the US, the UK, and Croatia.³ At least seven of the top ten contractors reported military exports to nations of the South in 1997, including Botswana, China, Jordan, South Africa, South Korea, and Venezuela.

1 See Ploughshares Monitor, December 1996, and earlier editions.

2 The Canadian Commercial Corporation (CCC) is an Ottawa-based crown corporation that assists Canadian companies with export sales to foreign governments and international organizations. Typically, over 60 per cent of CCC-brokered sales are purchased by military customers.

3 It is important to note that the export sales to Thailand and Croatia, which involve Bell Helicopter shipping helicopters to each country for use by the military, are not considered military exports by the Canadian government. Because the helicopters have received civilian certification from Transport Canada, the Department of Foreign Affairs classes them civilian goods that do not require export permits regardless of the end user. Project Ploughshares considers capital equipment sold for military end-use to be military and includes such equipment in military sales tallies.

Table 1: Top 10 Canadian Military Contractors 1997

Legend

A Ranking within largest recipients of military export contracts for fiscal year 1997-98 as brokered by the Canadian Commercial Corporation (CCC). (See endnote on the CCC.)

B Estimated or reported military sales greater than 20 per cent of total company sales.

C Estimated or reported export sales greater than 50 per cent of total company sales.

D Reported military sales or deliveries from Canada to one or more Third World countries during 1997.

E Foreign-owned or controlled.

F Commodity-classification of major military products (1-Aerospace; 2-Electronics; 3-Marine; 4-Transportation; 5-Armaments).

G Estimated total value of military sales in millions of Canadian dollars for 1997 or closest fiscal year, compiled from Canadian Military Industry Database data and files. For Canadian-owned companies this includes military sales of foreign subsidiaries. (* indicates the company reported a value for its military sales.)