Not since the heady days of Nortel Networks has Canada seen one of its own invest so much on R&D. Excluding Nortel, Canadian aerospace giant Bombardier Inc has spent more than any other company on research and technology development here over the past 15 years—just shy of $12.6 billion*, most of it related to the development of its C-series airliner.
Bombardier was the only firm to report more than $1 billion of research activity in the last fiscal, earning it the top spot once again on the Top 100 Corporate R&D Spenders list, published by Research Infosource. The last time a company reported that much on R&D on its balance sheet in a single year was 2005 when Nortel’s research spend hit more than $2.2 billion.
Aerospace, by its nature, is more dependent on R&D than most other industry sectors. In 2015, Canada’s aerospace manufacturing industry was five times as R&D intensive as the manufacturing sector average, according to the 2016 State of the Canadian Aerospace Industry, released earlier this past summer by the Aerospace Industries Association of Canada and Innovation, Science and Economic Development Canada.
The joint report found that more than 20% of aerospace manufacturing activity was dedicated to R&D, representing $1.9 billion in 2015. The Top 100 listing found that just five aerospace firms accounted for 23.2% of Canada’s R&D expenditures last year—Bombardier (#1), Pratt & Whitney Canada (#6), CAE Inc. (#22), Lockheed Martin Canada (#72) and Héroux-Devtek Inc (#97).
RE$EARCH MONEY's consulting editor Debbie Lawes recently spoke with Dr. Fassi Kafyeke, Senior Director Strategic Technology and Advanced Product Development at Bombardier Aerospace, on his company’s research priorities and approach to collaborations.
R$: What is Bombardier approach to turning technology development into commercial opportunities?
Kafyeke: We’re just fresh from putting into service the biggest aerospace innovation in Canada, the C-series. That was not easy. We decided not to put out an airplane that is just like any other airplane, but an airplane that will stand the test of time and be there for the next 30 years. It was probably our number one research and development endeavour in the last few years. Now we are working Global 7000 which is another marvelous, high-performing machine from Bombardier.
We try to use every means at our disposal—internal funds but also partnerships. The first set of partners is our suppliers because they have their own R&D and are open to collaborating. It allows us both to accelerate our pace of innovation. The next set of partners is small and medium enterprises (SMEs), research centres and universities. Here is where the CRIAQ (Consortium for Research and Innovation in Aerospace in Québec) and CARIC (Consortium for Aerospace Research and Innovation in Canada) are very important. They provide the ecosystem that allows us to know who’s who in Canada and what they can do.
R$: Are these types of collaborative opportunities something that Canada does particularly well, compared to what happens in other countries?
Kafyeke: Given the funds that are available in Canada we are doing very well. All the other big aerospace countries have access to much larger pools of money for R&D … In the past few years we have done very well (because) we know each other and work together well, and we have associations like CARIC to get as far as we can with the available assistance.
R$: As we’ve often heard, necessity is the mother of invention. In your case, perhaps it’s more accurate to say necessity is the mother of collaboration.
Kafyeke: The future of research is collaborative. Traditionally with research, you could achieve big gains with little research. But as airplanes become more competitive, you now have to spend a lot of research for a small percentage gain. But that small gain sometimes is the difference between making it or breaking it. When we go collaborative, it’s a win-win situation for all the partners.
R$: CARIC was launched just two years ago. Is it too early to point to any successes yet from those collaborations?
Kafyeke: The first projects that have launched with CARIC are not completed yet. But the ability to bring the aerospace community form Vancouver, Winnipeg and Atlantic together, that has been well done by CARIC. Since CARIC was created we have had numerous interactions with people that we never interacted with before.
R$: What advice do you have for companies, particularly SMEs, who are trying to move their technology development into a commercial space?
Kafyeke: We call our technology development ‘strategic technology’ (because) we realize that we cannot do research into everything. We start with a plan of what products we see for the next five, 10 and 15 years in order to sustain the business and gain market share. Then we look at the drivers that will make these airplanes more competitive, and the gaps we have in our capability. That defines our research and technology program.
The SMEs have to know which direction they want to go and make sure they can target properly the technologies they want to develop. One way (to do that) is to collaborate with people like us, or other OEMs or tier 1 companies that will eventually be their customers. That’s the best way to ensure that the technology they are developing is relevant … and they will have customers who are interested in putting it into a product. It’s very difficult for a small company to do research in isolation.
R$: Are more SMEs participating in larger research projects as result of groups like CRIAQ and CARIC?
Kafyeke: Yes, and that’s the benefit because in aerospace, contrary to other fields, especially in the internet business that has a nice product they can develop on their own and can be bought by Google or another company and make a ton of money. But in aerospace, to get a technology on an airplane that you can fly and feel safe in, it’s a big deal; there is a lot of value chain that has to go into that: OEM, Tier 1, Tier 2, Tier 3, so it’s very difficult for a small SME to get to the market alone unless they have all these partnerships
R$: What are your research priorities for the coming years?
Kafyeke: There are three things we look for in our research: designing and building higher performance and economically competitive airplanes; reducing the environmental impact of our product in terms of noise reduction, carbon output and quality of air around airports; and improving the customer experience on our airplanes in terms of passenger comfort and (Internet) connectivity.
R$: What advice do you have for politicians and policymakers for improving innovation and competitiveness in aerospace sector?
Kafyeke: We have a lot of our suppliers and partners in Europe and the USA … We’re encouraging the government to help CARIC find ways to tap into all that by adding an international collaboration framework. We have had good success in negotiating a collaboration framework between CARIC and Europe and there are currently three joint projects going. We are working very hard to have a second call for projects with Europe and to have a framework for collaboration with the US … It’s important for CARIC not to be limited to Canada when it comes to research partnerships.
Editor's note: This interview has been edited.
* Based on companies that have been on the Top 100 Corporate R&D Spenders list for all 15 years, FY2001 to FY2015.