Saudi Finance Minister Ibrahim Abdulaziz al-Assaf and Canadian Prime Minister Stephen Harper attend the G20 Leader's Summit in September in Russia. Harper has directed high-level government officials to prop up Canada's defense exports, which led to a deal to sell armored vehicles to Saudi Arabia. (Getty Images)
OTTAWA — Canada is now using diplomats, government trade representatives and senior ministers to help domestic companies aggressively pursue military exports, a move that industry officials say has paid off with a multibillion dollar armored vehicle deal with Saudi Arabia.
For decades, Canada has lagged far behind other nations that better coordinate efforts between government officials and industry to garner foreign defense sales.
But the Canadian government is intent on changing that, and the behind-the-scenes maneuvering on a new Saudi Arabia-General Dynamics Land Systems-Canada (GDLS-C) deal is a blueprint for future endeavors, say government and industry officials.
The government and General Dynamics announced the contract Feb. 14. The deal is worth CAN $10 billion (US $9.2 billion).
Ed Fast, Canada’s minister of international trade, led trade missions to Saudi Arabia in 2012 and 2013 to promote the capabilities of GDLS-C. In addition, Foreign Affairs Minister John Baird was directly involved in lobbying efforts, said Tim Page, president of the Canadian Association of Defence and Security Industries, which represents more than 1,000 companies.
Page said the new government policy to support defense firms represents a shift in attitude. The initiative, he noted, is coming direct from the office of Canadian Prime Minister Stephen Harper.
“The [prime minister’s office] has said we will do all we can do to improve export success and that has now percolated down into the operational environment of the different departments,” Page said.
He said government officials began working on the industry support initiative two years ago, with the Saudi deal the first significant outcome.
The federal government’s international contracting agency, the Canadian Commercial Corporation, also played a key role in the Saudi armored vehicle purchase. The actual contract is between the commercial corporation and Saudi Arabia; that provides the Saudis with the security of dealing directly with the Canadian government, which will ensure that the terms and conditions of the deal are followed.
“Our government will continue to support our exporters and manufacturers to create jobs, as part of our government’s most ambitious pro-trade, pro-export plan in Canadian history,” Fast said.
Ken Yamashita, manager of corporate affairs for GDLS-C, said because of contractual obligations, the company cannot provide details about the types of vehicles being built or the numbers. The first vehicles for Saudi Arabia will be completed in 2016.
But Yamashita noted the Canadian government’s efforts were crucial to winning the sale. “The ability to offer a government-to-government contract, through the Canadian Commercial Corporation, with a sovereign guarantee of performance, was a significant advantage for us,” Yamashita said. “In addition, the support provided by Canada’s diplomats and the Canadian military has been outstanding.”
Page said that while such support is common in other nations, in Canada the domestic defense and security industry “kind of fell off the radar screen” for the government over the years.
But the government, under pressure to create high-tech jobs, found a new appreciation for the defense industry, which in 2011 exported more than $6.5 billion worth of goods and employed 109,000 workers.
Fast noted that the Saudi deal would create and sustain more than 3,000 jobs each year in Canada over an estimated 14 years.
Under the new government support initiative, Canadian defense attachés and trade commissioners would become more active in promoting Canadian firms. There will also be a governmentwide approach in which departments would coordinate their efforts to help companies target specific markets.
The government has also launched a Global Markets Action Plan. That includes targeting the markets that matter to Canadian businesses, in particular in defense and energy, and ensuring that Canada’s interests are advanced in those markets. The policy concerns 20 nations including Brazil, China, Colombia, India, Israel, Turkey, Saudi Arabia and the United Arab Emirates.
In addition, industry can expect more support from the Canadian military in promoting equipment that is in service, Page said.
He noted that former Canadian Army commander Peter Devlin made a significant effort to talk to his foreign counterparts about proven Canadian capabilities.
“That culture of engagement has continued with the new Army commander (Lt. Gen. Marquis Hainse) and not just in the Middle East but also in Latin America,” Page said. “So we see that as a very positive development and a very important one in the ultimate success of GDLS-C.”
He also said government ministers will play a larger role in exports. “We would anticipate there would be a continuing and perhaps stronger commitment at the Canadian political level to do economic diplomacy, to help move prospective wins to probable wins to achieved wins,” Page said.
As part of the government’s support initiative, on Feb. 19 Public Works Minister Diane Finley announced the creation of the Defence Analytics Institute. That organization will provide analysis to support Canada’s defense procurement process, including gathering information on global export market opportunities, studying trends and issues related to foreign defense markets, and providing insights on technological trends in the international defense market. ■