Canada's largest military contractors in 2004.

In 2004 Canada's 10 largest military contractors sold over $2.9-billion in equipment and services to Canadian and foreign armed forces. According to public data compiled by Project Ploughshares, 2004 military sales for most of the top companies were higher than those for 2003.

Despite overcapacity in the global arms market, the largest Canadian contractors were able to increase sales to military customers in 2004, boosting the estimated total for the 10 companies from just under $2.5-billion in 2003 to more than $2.9-billion. Indeed, the military sales of the majority of the top suppliers rose in 2004--in some cases substantially. For General Dynamics Land Systems in London, Ontario sales for 2004 increased by a third and for Bell Helicopter Textron Canada of Mirabel, Quebec, they more than doubled over the previous year. Two companies--Magellan Aerospace of Mississauga and Northstar Aerospace of Toronto--saw slightly reduced revenues. Only Bombardier Inc of Montreal experienced a significant drop in revenue from military customers in 2004 and as a result it was not ranked in the top five Canadian military contractors for the first time in at least a decade.

Table 1 provides a summary of Project Ploughshares' latest ranking of Canada's largest armed force suppliers. Column A ranks the largest 10 companies in order for 2004 and Column B lists the same companies' ranking in 2003. Although their relative ranking changed somewhat between the two years, nine companies were on both lists, underlining the stability within this highest echelon of the Canadian military industry. The new member to the top ranking is L-3 Communications Canada. Its 2004 military sales stemmed from two recently acquired subsidiaries: Spar Aerospace based in Edmonton and MAS (formerly Bombardier's Military Aviation Services) based at Mirabel near Montreal. The sole company displaced in 2004 from earlier top 10 rankings is Heroux-Devtek of Longueuil, Quebec.

Columns C and D of the table provide the company rankings among the top 20 contractors according to total equipment or service contracts awarded by, respectively, the Canadian Department of National Defence (DND) and by the Canadian Commercial Corporation (CCC) on behalf of foreign (mostly US) military departments. The columns demonstrate that some companies derived their position in the table largely from Canadian and foreign military prime contracts. For example, General Dynamics Land Systems was the largest recipient of military export contracts in 2004 and SNC-Lavalin was the second largest contractor with both DND and CCC. Other companies were not ranked among the top 20 contractors for either contracting agency, underlining the importance to many Canadian suppliers of earlier multi-year prime contracts and especially the importance of subcontracts. For top-ranked CAE, for example, most military sales came in the form of subcontracts for the supply of training simulators for military aircraft built by major aerospace companies.

The dependency on military sales varied among the largest contractors as it does within the Canadian industry generally, and column E identifies those companies where military sales made up more than one-fifth of total sales. Most Canadian companies undertaking military work also sell to civilian markets and for many (for example, four of the largest 10 companies), military contracting is a relatively small segment of overall income. Conversely, only a small minority produces almost exclusively for military customers. These include General Dynamics Land Systems Canada, which manufactures several variants of armoured vehicles.

Although the largest military customers remain the Pentagon and the Department of National Defence, Canadian companies also ship military equipment worldwide, including to customers in Latin America, the Middle East, Africa, and Asia. Column F identifies the companies that reported sales in 2004 to states in the Third World, including Brazil, Saudi Arabia, Jordan, Pakistan, India, South Korea, and Malaysia.

Finally, Column G identifies the foreign ownership of the largest Canadian contractors in 2004. Half of the top 10 companies were Canadian corporations. The other half were subsidiaries of US corporations and, in particular, of US corporations that also are major Pentagon contractors. Given longstanding Canadian government policy that encourages integration of the North American military industry--supported by the permit-Dee flow of military goods between Canada and the US--US ownership of many Canadian-based military contractors should not come as a surprise.

Acronyms and Abbreviations

ASAT       Anti-satellite
BMD        Ballistic missile defence
CCC        Canadian Commercial Corporation
CD         Conference on Disarmament
CF         Canadian Forces
CIDA       Canadian International Development Agency
CivPol     Civilian police
CPA        Canadian police arrangement
CPCC       Canadian Peacebuilding Coordinating Committee
DFAIT      Department of Foreign Affairs and International Trade
DND        Department of National Defence (Canada)
DOD        Department of Defense (US)
GGE        Group of Governmental Experts
GMD        Ground-based midcourse defence
HNP        Haitian National Police
IAEA       International Atomic Energy Agency
ICISS      International Commission on Intervention and State
           Sovereignty
IPS        International Policy Statement (Canada)
MDA        Missile Defense Agency (US)
MIF        Multinational Interim Force
MINUSTAH   UN Stabilization Mission in Haiti
MKV        Multiple kill vehicle
MONUC      UN Mission in the Democratic Republic of the Congo
NNSA       National Nuclear Security Administration (US)
NPT        Non-Proliferation Treaty
NSP        National Security Policy
OEWG       Open-Ended Working Group
PAROS      Prevention of an Arms Race in Outer Space
PoA        Programme of Action
PSO        Peace support operation
R2P        Responsibility to protect
RevCon     Review Conference
RNEP       Robust Nuclear Earth Penetrator
SALW       Small arms and light weapons
SSR        Security sector reform
UNTAG      UN Transitional Authority Group
WCC        World Council of Churches
WMD        Weapons of mass destruction

Table 1: Ten largest Canadian military contractors in 2004

Company head office/main plant           A    B   C    D       E

CAE Inc, Montreal                        1    1             [check]
General Dynamics Land Systems            2    2   19   1    [check]
  Canada, London
SNC-Lavalin Group, Montreal              3    4   2    2
General Dynamics Canada, Nepean          4    5   4    7    [check]
Bell Helicopter Textron Canada Ltd,      5    9
  Mirabel
Bombardier Inc, Montreal                 6    3
Magellan Aerospace Corp, Mississauga     7    6        10   [check]
L-3 Communications Canada Inc, Toronto   8        3
Pratt & Whitney Canada Corp, Montreal    9    7        15
Northstar Aerospace Inc, Toronto         10   8             [check]

Company head office/main plant              F         G      H    I

CAE Inc, Montreal                        [check]             E   566
General Dynamics Land Systems            [check]   [check]   T   537
  Canada, London
  SNC-Lavalin Group, Montreal                                R   340
General Dynamics Canada, Nepean          [check]   [check]   E   317
Bell Helicopter Textron Canada Ltd,      [check]   [check]   A   260
  Mirabel                                [check]
Bombardier Inc, Montreal                                     A   260
Magellan Aerospace Corp, Mississauga                         A   201 *
L-3 Communications Canada Inc, Toronto             [check]   A   195
Pratt & Whitney Canada Corp, Montreal    [check]   [check]   A   164
Northstar Aerospace Inc, Toronto                             A   111 *

LEGEND

A Ranking within largest 10 Canadian military contractors using company
financial period closest to calendar year 2004.

B Ranking for financial period closest to calendar year 2003 (see The
Ploughshares Monitor, Spring 2005).

C Ranking within largest 20 Canadian Department of National Defence
prime contractors for fiscal year 2004-2005.

D Ranking within largest 20 military export prime contractors for
fiscal year 2004-2005 as brokered by the Canadian Commercial
Corporation. [dagger]

E Estimated or reported military sales greater than 20 per cent of
total company sales.

F Reported military sales or deliveries from Canada to one or more
Third World countries during 2004.

G Foreign-owned or controlled.

H Commodity-classification of major military products (A--Aerospace,
E--Electronics, T--Transportation, R--Armaments).

I Estimated total value of military sales in millions of Canadian
dollars for 2004 or closest financial period, compiled from Canadian
Military Industry Database data and files.2 For Canadian-owned
companies this includes military sales of foreign subsidiaries
(* indicates the company reported a value for its military sales).

NOTES

(1) The CCC is an Ottawa-based crown corporation that assists Canadian
companies with export sales to foreign governments and international
organizations. Typically, over 60 per cent of CCC-brokered sales are
purchased by military agencies.

(2) It is possible that other Canadian companies have generated
sufficient military sales in 2004 to be included in the table. However,
the lack of public disclosure of financial information precludes the
reporting or estimation of military sales by some privately owned
companies like CMC Electronics or IMP Group, which have appeared in
earlier editions of the table.