Compare the global aerospace industry to a tree. Its branches reach into just about every country in the world; but, just like a tree, those branches cannot thrive without a strong, supportive root structure. That support comes from a nurturing environment – and in the case of aerospace, that environment must include several key ingredients. Among them: favourable taxation rates, an educated workforce, a research and development (R&D) focused business climate, and easy access to important markets.

All of those key ingredients for fostering a strong aerospace industry are found in Ontario. Its welcoming business environment delivers the critical success factors outlined above, plus a stable banking system recognized as the soundest in the world, and a #3 ranking in the OECD's Better Life Index which measures well-being across countries, including living conditions and quality of life.

Ontario's thriving aerospace sector is proof that the province is a great place to put down some corporate roots. In fact, the provincial aerospace industry is concentrated around specific clusters of activity, including aerostructures, landing gear systems, avionics and flight management, turbine engines, environmental conditioning/electric power, and maintenance, repair and overhaul (MRO).

A Bombardier jet being assembled
Bombardier
Bombardier's Toronto plant is responsible for final assembly of the long-range, ultra-luxurious Global business jet. Photo credit: Lisa Gordon

Rod Jones, the former executive director of the Ontario Aerospace Council (OAC), explains Ontario aerospace this way: "The real core of the industry in Ontario is actually in our Tier 1 and Tier 2 companies – the systems integrator companies and the ones immediately below them," he said. "They make a device or product of some sort, or provide big work packages (to OEMs)."

Ontario's aerospace industry is the second largest in Canada, employing 17,000 people and realizing more than $5.3 billion in annual revenues.

The province is committed to fostering a culture of innovation and entrepreneurship within a successful, healthy aerospace industry. In fact, KPMG's Competitive Alternatives 2014 report found that it costs less to manufacture aerospace components in Toronto than it does in many larger U.S. clusters, including Seattle and Wichita. The same report also found that aerospace manufacturing costs are lower in Canada than in any other G7 nation, and labour costs are among the lowest in the same group.

Collaborative Environment

More than 200 Ontario aerospace companies specialize in a wide range of aerospace design, manufacturing, and product support capabilities. Their innovation is enhanced by a collaborative environment that includes academia and government.

Aerial view of research facility
DAIR
The Downsview Aerospace Innovation and Research (DAIR) working group includes education and industry partners who aim to create a global hub for aerospace research in Downsview, Ont.

"One of our best assets is Ontario's engineering expertise," says Jones, referring to the fact that 13 Ontario colleges and universities offer courses related to aeronautics, aviation and space. "If you look at the number of schools in Ontario that graduate really well-trained engineers, you will see that offers great support for research and technology development. Innovation is driven through research and engineering."

There is great collaboration between Ontario engineering programs and the province's aerospace sector. A good example of this is DAIR, the Downsview Aerospace Cluster for Innovation and Research, which unites stakeholders from some of Ontario's strongest universities with aerospace industry leaders. DAIR's membership list includes key academic institutions such as the University of Toronto's Institute for Aerospace Studies, Ryerson University, York University, and Centennial College. On the industry side, DAIR also includes prominent companies such as Bombardier, Pratt & Whitney Canada, Honeywell, UTC Aerospace Systems, MDA Corporation and Sumitomo Precision Products Canada Aircraft, Inc.

To further enhance sector-specific collaboration, Jones added that the Ontario Aerospace Council will work with the Ontario Centres of Excellence (OCE) to engage Ontario aerospace companies in CARIC – the Consortium for Aerospace Research and Innovation in Canada. Launched in April 2014, CARIC is a non-profit organization that aims to unite Canadian aerospace stakeholders in order to promote innovation and collaboration across the country.

Made in Ontario

Ontario is home to several aerospace-related firsts and notable accomplishments. Four times out of ten, large airliners are taking off and landing on Ontario-made landing gear systems. Honeywell in Mississauga is recognized for designing and manufacturing integrated environmental control systems for commercial and military aircraft. COM DEV of Cambridge manufactures components that are used on 80% of commercial communications satellites launched worldwide. Bombardier builds its popular Q400 regional turboprop in Downsview, Ont., as well as its Global business jets. And, Neptec Design Group builds 3D tracking systems for NASA.

There are other success stories, too. "If you look at what has happened with Mitsubishi Heavy Industries (MHI), it's amazing," says Jones. "They went from zero to about 600 people in just seven years. They are bursting at the seams and have already outgrown their facility. They brought their own production activity with them. They chose to move it here from Japan, because a lot of it was for Bombardier."

Although MHI brought its own production activity, Jones says there are opportunities for companies that identify existing supply chain gaps and move to fill them.

"For example, there is a big need for aerostructures plating and processing capabilities today," he reports. "There is a shortage, so somebody could bring that capability and fit in there."

A jet component manufacturing plant
MHI
In order to be closer to Bombardier, for whom it builds business jet components, Mitsubishi Heavy Industries opened a Toronto-area manufacturing plant in 2008. In just four years, the company had moved to a new facility and doubled its size.

Location, Location, Location

Equipment for space exploration
Neptec Design Group
Ottawa-based Neptec Design Group is a prime contractor to NASA. The company builds intelligent spaceflight sensors and equipment, as well as developmental test systems to support the Space Shuttle and the International Space Station.

Businesses that locate in Ontario become part of the massive US$20 trillion NAFTA market, which opens the doors to U.S. and Mexican markets as well as lucrative government and military procurement programs. Those businesses will also have the ability to bid on U.S. military projects through special trade agreements, such as defence development and production sharing agreements, and specific exemptions under U.S. International Traffic in Arms Regulation.

In the commercial aircraft sector, Ontario companies are active in 24 of 28 global aircraft programs, noted Jones, who added that Ontario is also home to the large majority of companies in the Canadian space industry. In fact, 2012 revenues from the Canadian space sector indicate that Ontario-based companies contribute the majority of the country's space sector revenues.

In a world where innovation is critical to survival, Ontario has created an ideal environment for aerospace. Access to skilled labour and a mature supply chain, a favourable tax structure, and collaboration across all levels of industry and academia are driving the success of Ontario aerospace.

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