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TRADE WARS DEFENCE-STYLE

TRADE WARS DEFENCE-STYLE

The acquisition of military equipment from the US, such as fighter jets,
could be affected if tariff spat continues to escalate

 

As we write this, the trade war between Canada and the US continues to escalate with Trump now threatening to punish the hitherto untouchable auto sector because of his personal feud with Prime Minister, Justin Trudeau.

We’ve seen tariffs now imposed on steel and aluminum and Canada has responded accordingly but the question now is, how will all this affect the defence sector? If Canada’s aluminum and steel are a national security threat to the US, then is buying a US made fighter jet with no access to the associated IP a security threat for Canada?

Canada came out on top in the ruling about Boeing’s claim of dumping by Bombardier on the C Series and Boeing wisely decided not to appeal any further and then, just when everyone thought it was safe to go back in the water, talks on NAFTA stalled and a peeved President Trump made even more threats.

A HARD SELL FOR US COMPANIES

In this kind of environment – and we really do not know how long it could go on with the mercurial Trump at the helm – there does not seem to be any way that Canada could justify handing a US based company many billions of dollars’ worth of business for a new fighter jet while its auto sector comes under attack. So, that would rule out Lockheed Martin’s F-35 and also Boeing’s Super Hornet.

That would leave Saab’s Gripen E (profiled in a Cover Story in CDR’s last issue) and the Eurofighter Typhoon (our Cover Story in this issue) in the running. Rafale from Dassault may or may not still be interested, and while the company had a display at the recent CANSEC show in Ottawa, their representatives were averse to talking about how or even IF they will pursue the Canadian fighter requirement.

So, let’s take a look at what Saab is offering. They would build their state-of-the-art Gripen E in Canada and also transfer all the necessary IP, not a bad deal and it would be a boost for a flagging Canadian aerospace sector. Exactly where Saab would build the fighter jet remains to be seen but although Saab has an existing business relationship with Bombardier through its participation in the Swordfish Maritime Patrol Aircraft, it is Airbus that now has a controlling 51% stake in Bombardier’s C Series so it may very well be the Airbus affiliated Eurofighter that Bombardier chooses to work with.

If that happens, and Saab is left standing at the altar, it may look to a company like IMP Aerospace & Defence which has already indicated to CDR that is has the capability and interest in assembling a fighter jet.

So, in this game of musical fighter jet chairs, we will just have to wait and see who’s left without a dance partner, to mix a metaphor, but sources tell CDR that Saab may be close to making an announcement on just where it might build its Gripen E fighter jet in Canada, so stay tuned to this space for more on that.

The bottom line is that there is now a very good opportunity here for these European dark horses but the question is, are they ready to step up their game and claim the prize?

TYPHOON MAY BE RIGHT FIT FOR CANADA

As you will read in our Eurofighter Cover Story in our most recent issue, the folks at Eurofighter think that stealth (Read: F-35) may be somewhat overrated and it apparently comes at a price too.

And, there is a host of reasons why a nonstealth alternative (such as Typhoon) might be the best option for an air force – especially those with a limited budget. For much more on this topic, we urge you to read our Cover Story on Eurofighter Typhoon in CDR’s most recent issue.

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