One of the world’s largest military trade shows kicked off this weekend at the National Exhibition Centre in Abu Dhabi, United Arab Emirates, with more than 1,300 exhibitors from 57 countries showcasing the latest in military equipment, technology and services over five days to an expected 105,000 visitors from more than 170 countries. Like most major shows of its kind, the International Defence Exhibition (IDEX) and Conference is now held every two years, with 2019 being the 14th iteration over 25 years.
Canada is one of 33 national pavilions at IDEX, featuring a variety of countries’ wares rarely (or never) seen at North American shows – including from Belarus, China, India, Russia, Serbia and Sudan.
Companies exhibiting in the Canadian Pavilion at IDEX:
|Aeyron Labs||Eomax Corporation||Nexeya Canada|
|Airboss Defense||Govt of Ontario||NovAtel Inc.|
|CarteNav Solutions||ICOR Technology||Sensor Technology|
|Curtiss-Wright – INDAL||Magnet Forensics||Soucy Int’l Inc|
For those who think CANSEC – the annual tradeshow in Ottawa, organized by the Canadian Association of Defence and Security Industries (CADSI) – is impressively large with a wide representation of countries displaying some of their most advanced military product, then IDEX, would come as a real shock. At 168,000 square meters, the exhibition area is 12 times as big as CANSEC’s space. The largest booth at IDEX – the UAE-based International Golden Group company, at more than 2,000 square metres – is, on its own, one-seventh the size of CANSEC. In Abu Dhabi, defence companies don’t scrimp on displays. For instance, Russia’s Rostec is showing the Pantsir-ME shipborne air defence missile for the first time at a foreign exhibition, and Boeing is featuring an AH-64 Apache, CH-47F Chinook, and a KC-46A Pegasus.
“In the UAE, they go big,” said CADSI president Christyn Cianfarani in an exclusive FrontLine Defence interview. “Canadian companies go to IDEX because establishing a joint venture especially in this region is a long-game play. It can take 10 years before you can establish your Canadian business with an appropriate level of UAE partnership – be it financing, real estate or political – to be able to set up a viable joint venture in-country. Culturally, relationships are critical and you need to build that foundation. There are good business returns, but a long investment cycle and a long-term return on investment.”
Proximity, culture and long-standing relationships naturally mean the U.S. is Canada’s largest defence and security export market, but Cianfarani says the Middle East is the next most important region for CADSI with “business opportunities in the UAE and also in Jordan, Kuwait, Oman, and others in the Middle East.”
Since most European countries like the UK, Germany and France are very protective of their indigenous defence sectors, including state-sponsored corporations, Cianfarani says this can mean more growth opportunity for Canada in the Middle East because countries there have less of an indigenous industrial capability. That is changing quickly though, with many countries represented at IDEX having rolled out national economic modernization visions including for defence industries. Most of the countries in the region “are looking at how they can pivot from being so focused on natural resources, to technology,” notes Cianfarani, and that includes the UAE. "They’ve always had offset policies that encourage or mandate joint ventures,” and going forward, “between Emirati and Canadian businesses, we think this goes beyond just a joint venture, beyond just a make-in-country, but truly into a transfer of technology vision."
At international defence exhibitions, Canadian companies can choose to attend on their own or pay a fee to affiliate with the CADSI-branded ‘Canada Pavilion’, to more directly benefit from the association’s heft at marketing, on-scene support and facilitating meetings with key business and political officials, including in the UAE during the event. According to figures provided by Monique Scotti, CADSI’s communications manager, just 15 Canadian businesses participated in 2013, including four Canadian exhibitors and four non-exhibiting companies (sending a representative for business development purposes, but not having an on-site display) affiliated with CADSI’s Canada Pavilion, their first at this show. In 2019, Canadian participation stands at 51 companies from all regions of the country, including 16 with CADSI (a dip from 2017, when 75 Canadian companies exhibited, 21 under the CADSI banner). This year, the Canadian delegation is more than 150, said Scotti, with as many as 15 trade commissioners and representatives from the Government of Ontario, National Defence, Global Affairs Canada, and the Canadian Commercial Corporation.
It is not just the Middle East that offers Canadian defence and security industries real opportunity. Given the region-wide concerns about China and the scale of its military build-up, CADSI identifies Asia as having important growth potential. The defence recapitalization in Asia generally, but particularly South Korea and Japan, have led CADSI to sponsor a Canada Pavilion at a DSEI-sponsored event in Japan this Fall, described by organizers as “Japan’s first tri-service defence exhibition and conference.”
Walking the IDEX show floor, one is immediately struck by the obvious investment and effort by some nations to build, showcase and aggressively market their defence industrial sector, including with the active participation of national military representatives as front-line ‘sales support’. “Canada is still an outlier in the way it behaves towards its domestic defence industry,” says Cianfarani. “Other G-7 nations do this much better than we do. They manage and protect their industry, given the national security implications.”
Cianfarani is quick to add that some important federal Government policy changes regarding Canadian defence industry are having positive effect. “We have the Strong, Secure, Engaged policy, which recognizes the industry as one of the five key priorities for national defence, as well as our own domestic foreign investment offset policy. We have innovation funding entirely dedicated to defence innovation in the IDEaS [Innovation for Defence Security and Investment] program. We have a foreign direct investment arm that is putting work into Canadian companies’ hands thru the value proposition. Larger firms are saying they would not have made those kind of investments in small firms and brought them into their global supply chains – which links to exports – had we not had a drastic shift in policy in 2013-14.”
Still, comparing national efforts at a premium show like IDEX provides a starkly visible contrast of different national strategies and approaches to indigenous defence and security industries. “You can see it here at the exhibition and conference,” said one Canadian business representative. “Some nations don’t look to be trying very hard at all, some look to be trying, some are serious, and some are really serious. At the very least, Canada should wish to move from the ‘look to be trying’ to the ‘we are serious’ category.”
“What we’ve seen in other nations is the nut we have to crack,” says Cianfarani. “We can keep talking about icing all these little cakes that we have now in Canada, but I do not believe they will make the tremendous impact in little bits and pieces that you get with a $15B [General Dynamics Land Systems] sale. The fact is, 80% of the revenues driven by the industry are from less than 10% of the companies.” To make a substantive difference in the industry, she says, “you’d have to pick five to ten major domains or procurements and go after them hard, as a nation. You’d have to go after them like the French do, like the Germans do, like the UK does. You’d have to mobilize the politicians, you have to mobilize the military, to some extent [attachés], as sales people.”
That is particularly the case in Defence, she explains, since that is a marketplace that, by definition, is considerably more managed, compared to other sectors such as IT. “What we would love to see,” asserts Cianfarani, “is a contract that gets awarded under the IDEaS program or any other innovation program that’s happening, that actually gets purchased on an active procurement for Canada under the investment plan and then gets supported and promoted by the Trade Commissioners, Canadian Commercial Corporation, and Global Affairs as a viable export from our country.”
Walking among so much military hardware of every sort imaginable at IDEX, one wonders about Canadian defence industry prospects in the face of both focused competition from other countries, and some of the uncertainties for exports stemming from the Liberal Government’s self-declared “values-based foreign policy”. Neither of these fazes Cianfarani, however. She says that so long as national leaders are clear about countries they have decided they no longer want to do business with, and why, being in the business of defence exports and having a values-based national foreign policy can co-exist.
“There is a lot more work for us to educate the general public about what the defence sector actually is in Canada,” says Cianfarani. “We get a lot of imagery of the American defence sector and we really need to understand what it is we produce in Canada and how much of that are actually dual-use goods. Are you really and truly not going to let a rubber gasket be sold to Nigeria because you think that is something that should be controlled or because we have a values-based foreign policy? These are the kinds of nuances I think we still have a lot of work to do to explain.”
The other key part of doing better, she explains, is being aware of existing and upcoming opportunities in the marketplace. Cianfarani says that is something that CADSI is investing in heavily for its members, “especially to provide more visibility on opportunities in foreign markets, and tools for Trade Commissioners, including to be able to see [Requests for Proposals] that have come out around the world to help companies from an export perspective.”
– Brett Boudreau is a retired CAF Colonel, a Fellow with the Canadian Global Affairs Institute, and former Director of Marketing and Communications at CADSI (2013-14).