F-35 Lightning II Program in Canada
F-35 Lightning II Program in Canada October 2017
Data Analytics
October 13, 2017
Table of Contents Executive Summary
3
Methodology
3
Study Participation by Industry
4
Background: F-35 Lightning II Program in Canada
4
Total Economic Impact to Canadian Industry
5
Future Impacts to Canada
7
Canadian Economic Impact by Sector
8
Canadian Jobs
9
Economic Impact Across Canada: Maps
10
Canadian Economic Impact: Supplier Survey
12
Canadian Supply Chain Tiers
11
Regional Case Studies
12
Infographic
18
Appendix I: Glossary
19
OMX Data Analytics - F-35 Lightning II Program in Canada
2
Executive Summary
OMX performed an economic impact of the F-35 program in Canada for Lockheed Martin in February of 2015 and has once again, in September and October of 2017, been requested to update the study with the most current Canadian F-35 program industrial data. For this report, OMX utilized supplier and contract data from Lockheed Martin and Pratt & Whitney. The data provided to OMX was submitted to the Government of Canada in June of 2017. To further add to this data, OMX directly surveyed Canadian F-35 suppliers. This survey aimed to gain greater insight into the impacts of the F-35 program on its Canadian suppliers such as new business opportunities, increased exports and investments in R&D resulting from the program, as well as information on tier two suppliers to the program. The O MX analysis revealed a broad spectrum of positive economic impacts a cross Canada. The t able below details the total impact on Gross Domestic Product (GDP), e conomic output, 1 and j ob creation resulting from the F-35 program activities in Canada.
$1,088,925,359
$889,431,065
$1,849,853,369
9,459
F-35 CANADIAN CONTRACTS
TOTAL IMPACT ON GDP*
TOTAL ECONOMIC OUTPUT*
JOBS SUPPORTED IN ECONOMY**
* Based on Statistics Canada 2013 National Input-Output Multipliers ** Full-Time Equivalent (FTE) positions defined according to Statistics Canada as the total hours worked divided by average annual hours worked in full-time jobs. Total jobs calculated using Bank of Canada 2016 Annualized conversion rate.
Methodology OMX (theomx.com) is an independent, third-party digital platform utilized to measure, track and report economic impacts from procurement projects. The platform is used to find, track and manage complex supply chains, as well as calculate total economic impacts of programs and companies by leveraging economic impact multipliers from Statistics Canada. These multipliers account for leakages from the Canadian economy and may result in impacts lower than the initial spend. While the OMX software platform is a dynamic tool that manages, tracks and visualizes economic impacts of specific programs for clients, typically government contractors, OMX also has a specialized and separate arm of its business to focus solely on analyzing economic impacts as an independent third party (theomx.com/analyze). The company has established a specific methodology for analytics projects which can be found online (theomx.com/analyze-methodology). This methodology was designed with feedback from economists, the Data Catalyst Group and Statistics Canada. For this specific report, OMX relied primarily on data inputs, including total Canadian 1
All figures are noted in USD OMX Data Analytics - F-35 Lightning II Program in Canada
3
contract amounts related to the F-35 program.2 OMX was advised by Lockheed Martin that this data was submitted to the Canadian Government in June 2017. Statistics Canada 2013 Input-Output multipliers were used to determine the total impact on GDP, economic output and job creation. OMX additionally surveyed the Canadian suppliers involved in the program to ascertain further economic benefits, in line with its published methodology.
Study Participation by Industry
OMX has endeavoured to ensure that the maximum number of Canadian F-35 suppliers have responded to our survey. However, OMX recognizes that there are various reasons for lack of response, including tight deadlines and confidentiality concerns. OMX has used supplier responses to provide case studies on the impacts of the F-35 Lightning II program on its Canadian suppliers.
Background: F-35 Lightning II Program in Canada Canada's participation in the F-35 Lightning II Program began in 1997, allowing Canadian industry to be a part of the international program to build the 5th Generation fighter for the US and allied nations. Even before Canada’s decision to become a program partner in 2002, Canadian industry was already contributing to the Joint Strike Fighter (JSF) project. Fifteen years after joining the program, Canadian industry continues to benefit from Canada’s participation in the development of the F-35 through the localized establishment of advanced manufacturing technologies. As a partner on the F-35 Lightning II program, Canadian industry is actively contributing to the production of the F-35 aircraft. Each of the F-35s produced to date contains about $2.6M CAD of Canadian-made components. In turn, the F-35 is contributing to the Canadian aerospace industry, as well as many other fields identified in this report, by developing indigenous capabilities and bringing new manufacturing and engineering technologies to the country. Currently, 100% of the F-35 work in Canada is an export.
2
The outputs calculated by OMX, in dollars and jobs, reflect direct, indirect and induced impacts to the Canadian economy. All jobs are reflected as Full Time Equivalent (FTE) over the course of the program. OMX Data Analytics - F-35 Lightning II Program in Canada
4
Total Economic Impact to Canadian Industry
The following report includes a detailed analysis of the specific impacts on GDP, economic output and job creation due to Lockheed Martin’s activities in Canada resulting from the F-35 program. The analysis includes impacts from contracts awarded to Canadian suppliers, including both past and current contracts. The majority of Canadian spending has occurred between 2009-2017.
The following table details the economic impacts due to F-35 contracts with Canadian suppliers since the program’s establishment.
$1,088,925,359
$889,431,065
$1,849,853,369
9,459
F-35 CANADIAN CONTRACTS
TOTAL IMPACT ON GDP*
TOTAL ECONOMIC OUTPUT*
JOBS SUPPORTED IN ECONOMY**
*Based on Statistics Canada 2013 National Input-Output Multipliers to reflect direct, indirect and induced impacts to the Canadian economy **Full-Time Equivalent (FTE) positions defined according to Statistics Canada as the total hours worked divided by average annual hours worked in full-time jobs. Total jobs calculated using Bank of Canada 2016 Annualized conversion rate.
OMX Data Analytics - F-35 Lightning II Program in Canada
5
The following table details the specific impacts resulting from F-35 contracts to Canadian suppliers. SPEND
IMPACT ON GDP
ECONOMIC OUTPUT
JOBS CREATED
$943,441,837
$764,187,888
$1,584,982,286
7,755
$5,470,609
$3,774,720
$9,573,566
39
$36,138
$43,004
$72,999
1
Computer and peripheral equipment manufacturing
$52,429,070
$36,700,349
$84,935,093
476
Computer systems design and related services
$14,763,865
$17,864,277
$30,561,201
249
Electric lighting equipment manufacturing
$78,701
$71,618
$156,614
1
Electrical equipment manufacturing
$249,964
$207,470
$462,433
3
Forging and stamping
$2,880,751
$2,563,868
$6,078,385
37
Iron and steel mills and ferro-alloy manufacturing
$3,364,928
$2,826,540
$7,806,633
31
$33,067,152
$33,728,495
$67,126,319
498
Metalworking machinery manufacturing
$13,575
$13,575
$27,829
Data Analytics
October 13, 2017
Table of Contents Executive Summary
3
Methodology
3
Study Participation by Industry
4
Background: F-35 Lightning II Program in Canada
4
Total Economic Impact to Canadian Industry
5
Future Impacts to Canada
7
Canadian Economic Impact by Sector
8
Canadian Jobs
9
Economic Impact Across Canada: Maps
10
Canadian Economic Impact: Supplier Survey
12
Canadian Supply Chain Tiers
11
Regional Case Studies
12
Infographic
18
Appendix I: Glossary
19
OMX Data Analytics - F-35 Lightning II Program in Canada
2
Executive Summary
OMX performed an economic impact of the F-35 program in Canada for Lockheed Martin in February of 2015 and has once again, in September and October of 2017, been requested to update the study with the most current Canadian F-35 program industrial data. For this report, OMX utilized supplier and contract data from Lockheed Martin and Pratt & Whitney. The data provided to OMX was submitted to the Government of Canada in June of 2017. To further add to this data, OMX directly surveyed Canadian F-35 suppliers. This survey aimed to gain greater insight into the impacts of the F-35 program on its Canadian suppliers such as new business opportunities, increased exports and investments in R&D resulting from the program, as well as information on tier two suppliers to the program. The O MX analysis revealed a broad spectrum of positive economic impacts a cross Canada. The t able below details the total impact on Gross Domestic Product (GDP), e conomic output, 1 and j ob creation resulting from the F-35 program activities in Canada.
$1,088,925,359
$889,431,065
$1,849,853,369
9,459
F-35 CANADIAN CONTRACTS
TOTAL IMPACT ON GDP*
TOTAL ECONOMIC OUTPUT*
JOBS SUPPORTED IN ECONOMY**
* Based on Statistics Canada 2013 National Input-Output Multipliers ** Full-Time Equivalent (FTE) positions defined according to Statistics Canada as the total hours worked divided by average annual hours worked in full-time jobs. Total jobs calculated using Bank of Canada 2016 Annualized conversion rate.
Methodology OMX (theomx.com) is an independent, third-party digital platform utilized to measure, track and report economic impacts from procurement projects. The platform is used to find, track and manage complex supply chains, as well as calculate total economic impacts of programs and companies by leveraging economic impact multipliers from Statistics Canada. These multipliers account for leakages from the Canadian economy and may result in impacts lower than the initial spend. While the OMX software platform is a dynamic tool that manages, tracks and visualizes economic impacts of specific programs for clients, typically government contractors, OMX also has a specialized and separate arm of its business to focus solely on analyzing economic impacts as an independent third party (theomx.com/analyze). The company has established a specific methodology for analytics projects which can be found online (theomx.com/analyze-methodology). This methodology was designed with feedback from economists, the Data Catalyst Group and Statistics Canada. For this specific report, OMX relied primarily on data inputs, including total Canadian 1
All figures are noted in USD OMX Data Analytics - F-35 Lightning II Program in Canada
3
contract amounts related to the F-35 program.2 OMX was advised by Lockheed Martin that this data was submitted to the Canadian Government in June 2017. Statistics Canada 2013 Input-Output multipliers were used to determine the total impact on GDP, economic output and job creation. OMX additionally surveyed the Canadian suppliers involved in the program to ascertain further economic benefits, in line with its published methodology.
Study Participation by Industry
OMX has endeavoured to ensure that the maximum number of Canadian F-35 suppliers have responded to our survey. However, OMX recognizes that there are various reasons for lack of response, including tight deadlines and confidentiality concerns. OMX has used supplier responses to provide case studies on the impacts of the F-35 Lightning II program on its Canadian suppliers.
Background: F-35 Lightning II Program in Canada Canada's participation in the F-35 Lightning II Program began in 1997, allowing Canadian industry to be a part of the international program to build the 5th Generation fighter for the US and allied nations. Even before Canada’s decision to become a program partner in 2002, Canadian industry was already contributing to the Joint Strike Fighter (JSF) project. Fifteen years after joining the program, Canadian industry continues to benefit from Canada’s participation in the development of the F-35 through the localized establishment of advanced manufacturing technologies. As a partner on the F-35 Lightning II program, Canadian industry is actively contributing to the production of the F-35 aircraft. Each of the F-35s produced to date contains about $2.6M CAD of Canadian-made components. In turn, the F-35 is contributing to the Canadian aerospace industry, as well as many other fields identified in this report, by developing indigenous capabilities and bringing new manufacturing and engineering technologies to the country. Currently, 100% of the F-35 work in Canada is an export.
2
The outputs calculated by OMX, in dollars and jobs, reflect direct, indirect and induced impacts to the Canadian economy. All jobs are reflected as Full Time Equivalent (FTE) over the course of the program. OMX Data Analytics - F-35 Lightning II Program in Canada
4
Total Economic Impact to Canadian Industry
The following report includes a detailed analysis of the specific impacts on GDP, economic output and job creation due to Lockheed Martin’s activities in Canada resulting from the F-35 program. The analysis includes impacts from contracts awarded to Canadian suppliers, including both past and current contracts. The majority of Canadian spending has occurred between 2009-2017.
The following table details the economic impacts due to F-35 contracts with Canadian suppliers since the program’s establishment.
$1,088,925,359
$889,431,065
$1,849,853,369
9,459
F-35 CANADIAN CONTRACTS
TOTAL IMPACT ON GDP*
TOTAL ECONOMIC OUTPUT*
JOBS SUPPORTED IN ECONOMY**
*Based on Statistics Canada 2013 National Input-Output Multipliers to reflect direct, indirect and induced impacts to the Canadian economy **Full-Time Equivalent (FTE) positions defined according to Statistics Canada as the total hours worked divided by average annual hours worked in full-time jobs. Total jobs calculated using Bank of Canada 2016 Annualized conversion rate.
OMX Data Analytics - F-35 Lightning II Program in Canada
5
The following table details the specific impacts resulting from F-35 contracts to Canadian suppliers. SPEND
IMPACT ON GDP
ECONOMIC OUTPUT
JOBS CREATED
$943,441,837
$764,187,888
$1,584,982,286
7,755
$5,470,609
$3,774,720
$9,573,566
39
$36,138
$43,004
$72,999
1
Computer and peripheral equipment manufacturing
$52,429,070
$36,700,349
$84,935,093
476
Computer systems design and related services
$14,763,865
$17,864,277
$30,561,201
249
Electric lighting equipment manufacturing
$78,701
$71,618
$156,614
1
Electrical equipment manufacturing
$249,964
$207,470
$462,433
3
Forging and stamping
$2,880,751
$2,563,868
$6,078,385
37
Iron and steel mills and ferro-alloy manufacturing
$3,364,928
$2,826,540
$7,806,633
31
$33,067,152
$33,728,495
$67,126,319
498
Metalworking machinery manufacturing
$13,575
$13,575
$27,829
