One of the companies vying to build the air force’s next generation of warplanes promises it can inject as much as $16.9 billion into the Canadian economy, even though its pitch to the Liberal government falls somewhat outside traditional boundaries.
Lockheed Martin Canada is offering the F-35, which has a controversial political history in this country, as a potential replacement for the military’s nearly 40-year-old fleet of CF-18 jet fighters.
Three bids in the often-delayed $19 billion competition were delivered Friday and the federal government expects to narrow the field to two by next spring, with the first fighters not scheduled for delivery until 2025.
The other contenders are Boeing, which is offering the latest version of its Super Hornet, and Saab with the updated version of its Gripen jet.
Under longstanding federal procurement policy, defence contractors are essentially expected to match the value of the contract and deliver an equal share of benefits to the Canadian economy.
The worldwide F-35 program is different in the sense that partnership in the program means Canadian companies are allowed to bid on fleetwide contracts and there is no dollar-for-dollar guarantee.
A Royal Australian Air Force F/A-18F Super Hornet drops flares as it performs during an air show in October 2016 in Townsville, Australia. Boeing is offering its latest version of the Super Hornet as part of the three-way competition. (Ian Hitchcock/Getty Images)
Lockheed’s pitch
In a slick video presentation Thursday, Lockheed Martin put on display its Canadian partner companies that are already working on the program, supplying a diverse range of parts and systems with testimonials from employees about how proud they are to be working on the F-35.
Steve Callaghan, Lockheed Martin’s vice-president of F-35 business development, said he is confident the company has delivered a solid pitch to the Canadian government despite the difference and the possible handicap it faces.
“We’re delighted to be part of this competition,” he said during a remote media availability on Thursday. “We understand the rules. We understand the way the competition is structured and the requirements.”
The company conducted an analysis on the impact of its program in Canada and estimates over the lifetime of the F-35, it will pour $16.9 billion into the gross domestic product and that there is the potential for more as sustainment contracts for the warplane eventually come on stream.
Lorraine Ben, the chief executive officer of Lockheed Martin Canada, said the fighter jet program is important to the country’s economic recovery from the pandemic because it delivers high-skilled, high-paying jobs.
Should Canada not choose the F-35, Callaghan said, the existing contracts, which are currently worth $2 billion, would be honoured for the duration of their commitment but might go elsewhere.
“Future contracting would likely be placed using industries and best value for those nations that are procuring the F-35,” he said. “Canadian industry is truly embedded in the global supply chain today and brings great value to the program and of course great value to Canada and Canadian industry. We really do look forward to Canadian industry continuing their contribution.”
Gripen, a Swedish fighter aircraft, performs on the second day of Aero India 2017 at Yelahanka air base in Bangalore, India, in February 2017. Saab offered the latest version of the fighter as part of its pitch to sell Canada a new fleet of fighter jets. (The Associated Press)
Controversial history
It has been a decade since the former Conservative government set off a political firestorm when it signalled it intended to sole-source the purchase of 65 F-35s.
After searing reports from both the auditor general and the Parliamentary Budget Office, which questioned the cost and how much homework the federal government had done in terms of competition, the plan was shelved.
The Liberals, prior to being elected in 2015, promised not to buy the F-35 and instead purchase a cheaper aircraft and plow the savings into the navy.
The Trudeau government eventually relented and allowed Lockheed Martin into the competition, and even bowed to pressure from the Trump administration to make sure the playing field was level in terms of evaluation of the economic benefits.
Callaghan steered clear of the politics on Thursday.
“We’re really focused on this competition and providing the information Canada needs to make its decision,” he said.
Critics have often complained that the F-35 — a stealth fighter with advanced sensing technology — will be too expensive to maintain over the long term.
At the moment, it costs $25,000 per hour to fly, according to figures released Thursday by the company.
Callaghan says the plan, using a variety of methods including artificial intelligence and robotics, is to cut that figure in half in the coming few years.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
