CDIB and Competitiveness
Binyam Solomon
Centre for Operational Research and Analysis (CORA)-DRDC
February 27, 2012
NEW PARADIGMS FOR DEFENCE PROCUREMENT
AND INDUSTRIAL POLICY?
Queens University
The views expressed in this presentation /paper are the
views of the speaker and do not necessarily reflect
the views or policies of the Canadian Forces or the
Department of National Defence.
OUTLINE
•
Background
– Past Literature
– Recent Developments
•
CDIB (The Scope and definition)
– Scope in the study
– Rationale and Discussing Differences
•
Selected Characteristics
– General Profile
– International Comparison
– Research and Development
– Economic Significance
1
CDIB Studies in the Past
• Rosenbluth, G. (1967)
• The CSDRM/RMC work
– Treddenick (1982) until Caron (1994) and Deschênes (1998)
• Grover (1997)
• Solomon (2000) Stone and Solomon (2005) and Solomon (2009)

Current Situation
Tzeferakos (2010)


2
Industry Census conducted using 2007 data
Defence Economics in Canada

Macro-economy on defence

Defence on macro economy

Industrial Preparedness
Scope- Quadrant
High
Low
Military
Use
Why these quadrants
are important
High
Defence/To
tal Revenue
%
Low
3
Statistics Canada Census of CDIB
Sales
Aerospace Defence Marine
%
Atlantic Canada
2
3 NA
Quebec
68
14
Ontario
17
66
Prairies Provinces and Northern Canada 8
12
British Columbia
4
5
Canada
100%
100%
Region
Count
Aerospace
Defence
Marine
Security
523
471
257
172
Security
3
20
61
10
6
100%
Note that the remaining
are not necessarily foreign
Canadian Export
US
64%
77%
66%
54%
64%
43%
56%
52%
Aerospace Defence Marine
Engineers, Scientists and/or Researchers
Technicians and/or Technologists
Production Workers
38%
41%
26%
37%
Security
19%
12%
9%
20%
14%
40%
16%
40%
10%
58%
17%
31%
27%
32%
22%
33%
All Other Employees (including Management,
Administration, Marketing etc.)
4
CDIB NAICS 2007 Based
Industry code (NAICS 2007) and description / Code de
l'industrie (SCIAN 2007) et description
3329 - Other fabricated metal product manufacturing /
Fabrication d'autres produits métalliques
Year /
Année
Total assets /
Total de l'actif
($000) / (000$)
Operating
revenue /
Total des
revenus
d'exploitation
($000) / (000$)
Operating
profit/loss /
Bénéfices
d'exploitation/p Data quality /
erte
Qualité des
($000) / (000$)
données
2009
41%
46%
64%
B
3339 - Other general-purpose machinery manufacturing /
Fabrication d'autres machines d'usage général
2009
24%
21%
25%
B
3345 - Navigational, Measuring, Medical and Control
Instruments Manufacturing / Fabrication d'instruments de
navigation, de mesure et de commande et d'instruments
médicaux
2009
68%
61%
74%
B
3364 - Aerospace Product and Parts Manufacturing /
Fabrication de produits aérospatiaux et de leurs pièces
2009
29%
38%
63%
3366 - Ship and Boat Building / Construction de navires et
d'embarcations
2009
22%
21% N.A.
5413 - Architectural, Engineering and Related Services /
Architecture, génie et services connexes
2009
14%
17%
18%
B
5419 - Other Professional, Scientific and Technical Services /
Autres services professionnels, scientifiques et techniques
2009
21%
14%
14%
B
5
Foreign por
actually los
B
B
CDIB NAICS 2007 and Census 2006
All Industry
Education Level
Total Labour Force
Percentages of Total
No certificate, diploma or degree
High school certificate or equivalent
Apprenticeship or trades certificate or diploma
College, CEGEP or other non-university certificate or diploma
University certificate or diploma below bachelor level
Bachelor's degree
University certificate or diploma above bachelor level
Degree in medicine, dentistry, veterinary medicine or optometry
Master's degree
Earned doctorate
Field of Study (Classification of Instructional Programs, 2000)
Total Labour Force
Percentages of Total
No postsecondary certificate, diploma or degree
Education
Visual and performing arts, and communications technologies
Humanities
Social and behavioural sciences and law
Business, management and public administration
Physical and life sciences and technologies
Mathematics, computer and information sciences
Architecture, engineering, and related technologies
Agriculture, natural resources and conservation
Health, parks, recreation and fitness
Personal, protective and transportation services
Other fields of study
Income (annual, full time)
Average Employment Income ($)
Median Employment Income ($)
6
3329 Other
fabricated metal
product
manufacturing
3339 Other
general-purpose
machinery
manufacturing
3345 Navigational, 3364 Aerospace 3366 Ship and
measuring,
product and parts boat building
medical and
manufacturing
control
instruments
manufacturing
5413
Architectural,
engineering and
related services
5419 Other
professional,
scientific and
technical services
16861185
22425
31095
23655
51030
11630
209045
86295
15%
26%
12%
20%
5%
14%
2%
1%
4%
1%
18%
29%
20%
19%
4%
7%
1%
0%
1%
0%
12%
24%
22%
24%
4%
11%
1%
0%
2%
0%
8%
19%
9%
26%
5%
21%
3%
0%
8%
2%
6%
19%
20%
28%
6%
14%
2%
0%
5%
1%
20%
23%
29%
18%
3%
5%
1%
0%
1%
0%
3%
13%
7%
24%
5%
31%
4%
0%
12%
2%
6%
20%
5%
23%
5%
21%
3%
7%
8%
2%
16861185
22425
31095
23655
51030
11635
209040
86295
41%
4%
2%
3%
6%
13%
2%
3%
13%
1%
8%
4%
0%
47%
0%
1%
2%
2%
9%
1%
2%
32%
1%
1%
2%
0%
36%
0%
1%
1%
2%
9%
1%
2%
45%
1%
1%
2%
0%
27%
1%
1%
2%
3%
12%
4%
5%
40%
1%
3%
2%
0%
24%
0%
1%
1%
2%
12%
2%
3%
49%
1%
1%
4%
0%
43%
1%
1%
1%
2%
6%
0%
1%
40%
1%
1%
3%
0%
16%
1%
2%
2%
4%
8%
5%
2%
56%
2%
2%
1%
0%
26%
2%
7%
10%
9%
13%
4%
3%
6%
3%
17%
1%
0%
51221
41401
50394
42656
57183
48388
62931
50794
63823
59523
44875
39215
67978
53408
48157
35907
Census 2006 Continued, Government Sector
91 Public
administration
7
911 Federal
9111 Defence
government public services
administration
9112 Other
912 Provincial and
federal
territorial public
government public administration
administration
(9112 to 9119)
913 Local,
municipal and
regional public
administration
919 International
and other extraterritorial public
administration
978615
396545
105850
290695
263235
286350
2815
6%
23%
8%
26%
6%
21%
2%
0%
7%
1%
4%
25%
8%
22%
5%
23%
3%
0%
8%
2%
7%
34%
15%
20%
4%
14%
1%
0%
4%
1%
2%
21%
5%
23%
6%
27%
3%
0%
9%
2%
3%
19%
6%
27%
7%
25%
3%
0%
9%
1%
8%
25%
11%
30%
6%
15%
2%
0%
3%
0%
3%
11%
5%
13%
9%
33%
6%
0%
18%
3%
978615
396545
105855
290695
263230
286350
2815
28%
2%
1%
4%
12%
19%
3%
4%
11%
3%
4%
7%
0%
29%
2%
1%
5%
13%
19%
5%
5%
11%
2%
4%
5%
0%
42%
1%
1%
3%
6%
9%
2%
3%
21%
1%
4%
7%
0%
24%
3%
1%
5%
16%
23%
5%
5%
7%
2%
4%
4%
0%
22%
3%
1%
4%
16%
24%
3%
5%
8%
4%
4%
6%
0%
32%
2%
1%
3%
9%
15%
2%
2%
15%
3%
6%
11%
0%
14%
4%
1%
10%
24%
24%
3%
4%
11%
0%
2%
2%
0%
59400
55800
63192
59120
60299
58062
64219
59901
57238
51992
57658
54367
58897
50034
Herfindahl-Hirschman Index (HHI) Index
(Revenue Based)
Industry code (NAICS 2007) and description, year / Code de l'industrie
(SCIAN 2007) et description, année
8
3329 - Other fabricated metal product manufacturing / Fabrication
d'autres produits métalliques
2009
3339 - Other general-purpose machinery manufacturing / Fabrication
d'autres machines d'usage général
2009
3345 - Navigational, Measuring, Medical and Control Instruments
Manufacturing / Fabrication d'instruments de navigation, de mesure et
de commande et d'instruments médicaux
2009
3364 - Aerospace Product and Parts Manufacturing / Fabrication de
produits aérospatiaux et de leurs pièces
2009
3366 - Ship and Boat Building / Construction de navires et
d'embarcations
2009
5413 - Architectural, Engineering and Related Services / Architecture,
génie et services connexes
2009
5419 - Other Professional, Scientific and Technical Services / Autres
services professionnels, scientifiques et techniques
2009
Data
quality /
Qualité
HHI revenue /
des
HHI revenu
données
255
B
234
B
365
B
2472
A
821
B
225
B
27
B
International Comparisons
• Niche Players
– Remote Sensing, Simulators
– Space Application
• SIPRI Top 100
– Only Three Firms over the last 15 years
– Bombardier, CAE, GM Disel (GD Land Systems)
9
R&D Highlights
Rank2010 Rank2009 Name
6
7 pratt & Whitney canada corp. (fs)
10
14
19
18
34
38
99
98
65
58
38
45
13.6 aerospace
bombardier Inc.* ++
1.1 aerospace
cae Inc.
7.7 aerospace
honeywell canada (fs)
5.9 aerospace
heroux-devtek Inc.
4 aerospace
snc-Lavalin Group Inc.
0.4 engineering services
macdonald, dettwiler and associates Ltd. 8.7 software & computer services
Industry
Communications/Telecom Equipment (12)
Pharmaceuticals/Biotechnology (26)
Telecommunications Services (4)
$1.5T
Software & Computer Services (11)
Aerospace (5)
Energy/Oil & Gas/Electric Power (10)
Transportation (4)
10
RD/Revenue
R&D Spending (% of Total)
26
16
12
11
8
6
6
Input-Output Simulations #1
Defence Spending in FY 2008-09
Expenditures PP
$
7,090
Indirect Imports
$
1,510
Final Domestic PP $
5,580
Direct Impact PP
$
5,433
Indirect Impact PP
$
13,823
Direct GDP (Basic prices)
$
2,906
Total GDP
$
6,893
Note also induced impacts due to
consumption is estimated to
generate 326 jobs
Jobs
11
Repair Construction
Fabricated Metal Product Manufacturing
Aerospace Product and Parts Manufacturing
Ship and Boat Building
Wholesale Trade
Retail Trade
Publishing Industries, Information Services and Data Processing Services
Legal, Accounting and Architectural, Engineering and Related Services
Computer Systems Design and Other Professional, Scientific and Technical Services
Administrative and Support Services
Arts, Entertainment and Recreation
Accommodation and Food Services
Repair and Maintenance
3,317
1,229
1,307
230
1,356
3,447
1,198
7,675
1,855
12,705
1,081
2,356
1,299
4,125
1,649
1,631
762
2,045
4,779
1,617
8,658
2,990
14,040
2,836
3,885
2,506
Total:
46,337
103,502
Input-Output Simulations #2
Revenue and GDP Multiplier
12
Implications
•
Informed Discussions on Policy
– Requires reliable data
– Industry Census is a huge step
– Scoping the sector equally important
•
CDIB Characteristics
– Niche Player
– No primes or large system integrators
– Export Oriented (Competitive?)
•
Economic Significance
– I-O Simulations and Limitations
– Fiscal Implications
– Premium
13
Questions
14
15
16