Arctic Creating New Opportunities for Canada’s Defence Industry
Increasing demands related to exploitation of Arctic resources are leading to new opportunities for Canada’s defence industry.
Although the Arctic is not the only region on Earth affected by environmental change, it poses special problems and concerns. Recent northern summers have experienced dramatic losses in sea ice cover. In 2007, the ice sheet shrank to 4.1 million square kilometres. This represents a reduction of nearly 40 per cent when compared to the 2000 average of 6.7 million square kilometres.
Given easier access, other countries are also now engaged in efforts to assert their sovereign rights over seabed areas in the central Arctic Ocean, provoking concerns that competing claims to lead to disputes and conflict.
Although the likelihood of armed conflict appears remote, at least for the near future, military activities are certainly on the rise, underpinning the need for enhanced capabilities among the Arctic littoral nations of Canada, Denmark, Norway, Russia and the United States. Under the United Nations Convention Law of the Sea (UNCLOS), maritime nations have the potential to claim “extended underwater territory”. A proven location could increase territorial coverage by 350 nautical miles. There is currently a rush underway to gather scientific evidence (seabed mapping, etc.) to support submissions to UNCLOS.
The United States Geological Survey recently estimated that the Arctic could hold massive oil reserves (estimates range from 160 to 300 billion barrels of oil). The exploration of other resources such as protein (fish stocks are migrating north in search of cooler waters and feeding grounds), minerals and knowledge are also driving increased international interest in the Arctic.
As far as Canada is concerned, past governments have expressed interest in protecting Canada’s Arctic sovereignty, but the rhetoric has not usually been followed by action – until now.
Prime Minister Harper’s Conservative government has set in motion plans to protect the north, which draws on land, sea, air and space assets from various government departments and agencies, including Transport Canada, the Canadian Coast Guard and the Department of National Defence.
The government intends to invest C$50 billion in new equipment over the next 20 years. Planned acquisitions include 16 CH-47 helicopters, more autonomous vehicles, three Joint Support Ships (JSS) and six to eight Polar Class 5 Arctic Offshore Patrol Vessels (AOPVs). The government’s Canada First Defence Strategy (CFDS) also outlines longer-term plans to purchase 15 new surface warships, 17 fixed-wing search-and-rescue aircraft, 65 next-generation fighters, 10-12 maritime patrol aircraft and new land combat vehicles.
The CFDS provides the Department of National Defence with long-term funding commitments by promising defence budget increases of two per cent per year starting in 2011-12. The government also promises that the CFDS “will be implemented in concert with a new long-term procurement strategy designed to benefit Canadian industry while building commercial capacity in relevant knowledge and technology industries”.
In response, Canadian-based companies are expanding their operations. Raytheon, which already has three plants in Ontario and one in Alberta, is opening a new facility in Halifax, Nova Scotia, to handle a long-term support contract for the navy’s SPS-49 long-range surveillance radar. General Dynamics Canada, which is the mission systems integrator for the new CH-148 Cyclone maritime helicopter being acquired from Sikorsky, is also opening a new facility in Halifax to provide in-service support to that aircraft.
At the same time, takeovers by major international corporations have resulted in new opportunities in foreign markets. In the last 5 years, many of Canada’s major defence companies have been acquired by US-based corporations. L-3 Communications has taken over Spar Aerospace, Bombardier’s Military Aviation Services, CAE’s Marine Controls unit and Wescam; General Dynamics bought General Motors Defense; Curtiss-Wright took over Indal Technologies – the maker of shipboard helicopter landing systems; and Esterline bought CMC Electronics.
All of these developments have contributed to new opportunities for growth in the Canadian defence industry – including emerging opportunities for Marport’s underwater sensing, communications and positioning technologies and products.
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