MDA promises Canadian jobs push for warship work

Vancouver-based aerospace firm expects to hire 200 to work on electronics systems

An artist’s rendering of the warships proposed by a consortium led by Lockheed Martin Canada and featuring Vancouver-based aerospace firm MDA | Lockheed Martin Canada

When Canadian engineers embarked on developing the Canadarm in the 1970s, they envisioned astronauts harnessing the power of robotics to control payloads for NASA’s Space Shuttle program.

The technology, developed by what’s now Vancouver-based aerospace firm MDA, has since spun off into the medical field with the NeuroArm now used in operating rooms to perform everything from needle insertion to suturing.

“You wouldn’t have necessarily thought that when you were starting,” said Chris Pogue, president of MDA’s eight-month-old government division.

Turning the page in the MDA playbook from outer space to electronic warfare, a multitude of spinoffs are on the horizon following this month’s massive contract signing with the Royal Canadian Navy, Pogue said.

The agreement between Ottawa and the consortium known as Canada’s Combat Ship Team (CCST) covers the initial design phase (valued at $185 million) for 15 of BAE Systems’ Type 26 warships.

And as part of the country’s largest-ever military procurement, the consortium featuring MDA and BAE is poised to benefit from additional contracts worth as much as $60 billion.

MDA is handling electronics systems for the CCST consortium, which is led by Lockheed Martin Canada and includes CAE Inc. (TSX:CAE), L3 Technologies Inc. (NYSE:LLL) and Ultra Electronics (LON:ULE).

The aerospace firm is developing an electronic warfare jamming system for the ships, radar for the weapons system, and laser warning and countermeasures systems.

Design work for the new warships is expected to take three to four years, and construction is expected to begin in the early 2020s.

The consortium expects to employ 9,000 workers in Canada across 40 facilities.

MDA, meanwhile, will need to hire 200 more workers at facilities in B.C., Nova Scotia, Ontario and Quebec for the initial design phase.

The firm’s Richmond facility will focus on systems integration for the overall electronic warfare system.

“We’re leveraging, obviously, the expertise in other sites for some of the product development activities. But the whole program is led out of our Richmond facility with work being distributed across Canada,” Pogue said.

“We are pan-Canadian. So we are going to execute part of the CSC [Canadian Surface Combatant ships] program in the various sites where MDA exists across Canada.”

The B.C.-centric role in the big contract may also soothe some concerns that the company is increasingly breaking from the orbit of the West Coast.

Former longtime CEO Daniel Friedmann, a Canadian, left MDA in spring 2016 to make way for California-based defence contract executive Howard Lance, who possessed the right passport to help the company gain access to valuable U.S. government contracts.

Then in January 2016 MDA and its U.S.-based subsidiary, Maxar Holdings, entered into a security control agreement with the U.S. Department of Defense, allowing MDA to pursue classified government programs as it sought to become incorporated in the U.S.

In October 2017, MDA completed a US$2.4 billion acquisition of Colorado-based DigitalGlobe Inc., setting it on a path to be fully incorporated as an American company by 2019.

Lance then became CEO of the new parent company, Maxar Technologies Ltd. (TSX:MAXR), and by January MDA was being led by group president Mike Greenley out of its Brampton, Ontario, office.

If all that corporate shuffling wasn’t enough, Lance departed Maxar last month, with former DigitalGlobe president Daniel Jablonsky stepping in to oversee Maxar and its subsidiaries as president and CEO from its headquarters in Westminster, Colorado.

Pogue said the economic effects of the navy contract will be felt locally as MDA hires additional workers and looks to other B.C. companies’ expertise to help meet its obligations.

“You’re part of that program for many, many years,” Pogue said. “So it does create a long income-earning potential for the company across Canada.

“We would see great potential for some of the systems that we will develop as part of the CSC program as part of a global product market as we try to sell some of these into other countries and other nations that are also developing their own ship programs or modifying ship programs with new sensors.”