Quebec’s aerospace industry is clearly not in for a smooth flight. After recovering from the events of 9/11 and the SARS epidemic, which crippled the industry in 2001 and 2003 respectively, it must now come to terms with the meltdown of the U.S. real estate market, which has sent shock waves around the world. We find ourselves in the middle of a credit crisis and on the verge of a global recession. This obviously does not bode well for consumer confidence, corporate activity, and – by extension – air transport. The storm clouds are gathering, but companies are still holding their own, flying on the strength of their order books – which are full.

Last July, at the Farnborough International Airshow, near London, England, participants crowed about the new golden age of the aerospace industry. Order announcements at this gigantic aerospace trade fair totaled almost $90 billion. Quebec companies were not left idling on the runway, collecting their share of the booty: CAE, Héroux-Devtek, and CMC Electronics flew home with millions of dollars worth of contracts. As for Bombardier – not only did it launch its C-Series family of airliners, but it announced a firm order from Lufthansa. What better send-off for this long-awaited program!

What is behind this flurry of activity? In general, air travel has become more accessible. More and more people are joining the middle class and are able to travel: according to IATA, international air traffic will grow by 5 percent annually until 2011, supported primarily by tourists from Eastern Europe, Asia, and the Middle East. Powered largely by China and India, the global economy has performed well in recent years, growing by 5 percent annually. This means that companies are profitable and developing overseas business, thereby stimulating transport. Finally, the tightening of airport security since the terrorist attacks has driven demand for business flying.

The industry does not lack challenges, however. First of all, the global supply chain is shrinking. If they are to continue to find their place in it, Quebec companies will have to reorganize. Major contract givers such as Airbus and Boeing are cutting their supplier numbers, preferring to do business with companies with proven track records to dilute the financial risk associated with developing their programs. Does Quebec have what it takes? Yes, if it manages to produce more integrators.

Another major challenge facing the industry is that of boosting productivity, especially if the loony continues to strengthen. With planes selling in U.S. dollars, but operating expenses paid in Canadian dollars, the margins of Quebec companies are weakened by any rise in the dollar. To increase productivity, the industry will have no choice but to become more innovative and develop leading-edge products, such as the new “green” engine launched by Pratt & Whitney earlier this year.

Finally, the global aerospace industry lacks skilled workers. According to the Centre for Aerospace Manpower Activities in Quebec (CAMAQ), the province will have to fill 3,900 positions by 2009. Recruiting in this cyclical industry, vulnerable to all the uncertainties of air transport, is no picnic. That said, the prospect of joining an industry that, despite the turbulence, seems to be on the point of gaining altitude should attract good candidates.

---