CAE launches major R&D project to keep technologies at the leading edge

TPC to provide $189 million

CAE Inc has launched the largest R&D initiative in the company’s 58-year history to update its existing line of aircraft simulation and visualization products and expand into related markets. The six-year, $630-million Project Phoenix will see CAE partner with up to 10 universities, the National Research Council and several smaller Canadian firms as it begins to execute a new strategic direction following a major reorganization and downsizing earlier this year.

With Project Phoenix, CAE was also successful in securing the largest assistance package in the history of the sunsetting Technology Partnerships Canada (TPC) with assistance totalling $189 million. TPC greenlighted the repayable loan after seven months of negotiations and completion of due diligence through an independent third party. The funds will be paid out over the duration of the project. CAE is also in negotiations with the Quebec government for assistance, but as it currently stands, CAE will provide $441 million of its own resources.

“This is our largest R&D program and it involves all of CAE to look at the next generation of our legacy business and products in adjacent markets,” says Dr Adolfo Klassen, CAE’s senior VP R&D. “We’ll be looking at disruptive technologies to allow us to move ahead in this market.”

Project Phoenix was launched in June and will largely focus on software technologies for simulation and visualization as well as analytical software for modelling and simulation. CAE will integrate its technologies with best-of-breed, third-party software, much of which will be sourced from Canadian suppliers.

Planning for the project began shortly after the arrival of president Robert Brown from Bombardier and the decision to sell off the Marine Controls unit to L-3 Communications Corp for $328 million. A subsequent reorganization included a major write-down, a reduction in CAE’s workforce and realignment of the business into three segments: civil training and services, military simulation and training and simulation products. Earlier this year, the company’s headquarters was moved from Toronto to Montreal. Project Phoenix incorporates all of CAE’s planned R&D expenditures for the next six years. “It’s a new approach. We want to stay ahead of the game so we have to invest in our technologies in a significant way,” says Klassen. “We’re going to spend our R&D in a more focused and disruptive way.”

UNIVERSITY COLLABORATION

Carleton Univ figures prominently among CAE’s university partners as the company has invested in the university to establish modelling and simulation laboratories. But McGill Univ and other Quebec-based universities will also play a major role, primarily through the Consortium for Research and Innovation in Aerospace in Quebec (CRIAQ). In Ontario, CAE will enhance its collaboration with McMaster Univ and the Univ of Waterloo.

Project Phoenix also will expand CAE’s R&D workforce, which currently includes 1,200 engineers making it the largest software engineering group in Canada.

The CAE assistance is likely TPC’s last major aerospace and defence project before its ceases operations and is replaced by two new programs — the previously announced Transformative Technologies Program (R$, September 20/05) and the Aerospace and defence Technology Development program (see related article above). The latter was officially confirmed November 25 as part of the federal government’s 20-year National Aerospace and Defence Strategic Framework, developed in conjunction with the Canadian Aerospace Partnership (R$, September 20/05).

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