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The Wednesday Report
Canada's Aerospace and Defence Weekly

Volume 8, Number 3, February 3, 1994

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Comment:

It's time for Canada to leave UNPROFOR. Although many persons within the Canadian Forces correctly assert that the presence of U.N. troops in Bosnia-Hercegovina is helpful to humanitarian relief efforts and contributes to the preservation of innocent lives, we are seriously questioning the whole "peacekeeping" process as being no more than an ill-conceived bandaid solution birthed by political appeasement rather than an unambiguous commitment to fixing the problems of millions of innocent victims in the war ravaged regions. By further supporting UNPROFOR we are helping to mask the real problem and thus its ultimate solution. The time for a military solution is upon us. The aggressor must be given a bloody nose and sent packing. It doesn't matter who fired shells into Sarajevo at the end of last week, the gun emplacements should have been pulverized a long time ago. Canada's EXCUSE for vacillating on NATO air strikes against artillery emplacements surrounding Sarajevo, is based on the fear of reprisals against our lightly-armed, blue-helmeted troops. That's fair, so pull them out. We fear to strike the brutal aggressor for fear of being struck back, but to do nothing is to unfetter cruelty. Enough has been said. We should take our leave.

SHARPENING THE AXE

The Liberal government is moving quickly to fulfil its election promises on defence issues. Almost immediately after taking office, the Chretien government cancelled the EH101 helicopter programme. It is now preparing to make good on its promise to reduce the defence budget by $1.6 billion over four years.

Details of the cuts are expected to be announced shortly as Defence Minister Collenette has stated that the government should begin to achieve the savings in the next fiscal year. He has now acknowledged that reductions could be higher than first anticipated, given that the federal deficit is $10 billion more than the deficit projection the original cut of $1.6 billion was based on.

According to a spokesperson from the Defence Minister's office who was interviewed on January 31, the Minister plans to eliminate "redundancies" in the military so that the current defence infrastructure for 100,000 personnel is brought in line with the current level of 75,000 personnel. We're looking at "smarter, more efficient ways to operate," said the spokesman.

He noted that Canadian Forces bases, part of the overall infrastructure, "are one large package in the deliberations" and that there is yet "no definitive list" of bases to be closed. "Things can change up until the day of the announcement," he said.

Two bases widely speculated to be on the hit list are 1) CFB Downsview; and 2) CFB Cornwallis, which the Liberals had earmarked during the election for conversion to a peacekeeping training centre. "We're looking at the budgetary process — I can't say the status of Cornwallis now," commented the spokesman.

The Minister is addressing cutbacks now — which also are expected to include a number of civilian and military jobs — as a starting point for the defence policy review. His spokesman noted that "there are redundancies in the military and larger defence community which have identified where savings can be achieved, regardless of the defence review".

Preparations to begin the public process of reviewing Canada's defence policy are in the final stages. The defence policy review, beginning this spring, is scheduled to be completed by the end of the year.

Julie Kwiecinski

MND's STATEMENT ON U.S. CRUISE MISSILE TESTING IN CANADA

"Just one year ago, the previous government renewed the Test and Evaluation Agreement between Canada and the United States for a further period of ten years. It is under this agreement that cruise missiles are tested in Canada. In opposition, our party insisted on a full airing of views in Parliament prior to proceeding with any further tests. We believe that last week's debate accomplished this purpose and enabled Canadians to become more aware of the extremely complex issues associated with defence matters generally and with the testing of cruise missiles in particular.

"The previous government agreed last summer to allow the United States Air Force to proceed with planning for two tests of the cruise missile in Canada in the first quarter of 1994. In view of the fact that this planning was already well advanced when our government took office, and that there will be ample opportunity to examine further the matter of cruise testing in the context of the forthcoming reviews of both foreign policy and defence policy, we have decided to allow the tests now planned for next month to proceed.

"I would like to make very clear that while we have advised the American government that these tests may go ahead this year, we have stressed the fact that they should make no presumption about the outcome of the defence policy review and the foreign policy review which will take place over the course of 1994. Given the depth of feeling within the country and within the Liberal Party on this issue it would be imprudent indeed to presume anything about our government's willingness to proceed with further cruise missile tests in Canada. That said, we have indicated we will be reviewing these matters with an open mind and we will do so."

Defence Minister David Collenette — February 3, 1994

PRESERVER LEAVES HALIFAX, AURORAS RETURN FROM THE ADRIATIC

HMCS Preserver departed from Halifax, Nova Scotia for the Adriatic Sea on January 27, the same day that the last crew from 415 (Maritime Patrol) Squadron returned to Greenwood, Nova Scotia following two-and-a-half months patrolling the Adriatic off the former Yugoslavia.

Preserver, a replenishment ship, will provide fuel, food and other support to ships from 13 countries which have, since April 1993, successfully prevented weapons, fuel and other materials banned under U.N. resolutions from reaching former Yugoslav republics by ship. With its two Sea King helicopters from 423 Squadron at 12 Wing, Shearwater, Preserver will be in a support role and will not be directly involved in enforcing the U.N. sanctions. Preserver is scheduled to return to Halifax in six months.

Commanded by naval Captain Phil Young, Preserver carries a crew of 300 and weighs 24,700 tonnes (full load). This is Preserver's third overseas mission in less than two years. Preserver spent four months during the first part of last year supporting U.N. operations in Somalia and 10 weeks last fall enforcing U.N. sanctions against Haiti.

The return of the Greenwood-based Aurora squadron from duties in the Adriatic marked completion of the handover of daily Aurora flights there to 407 (Maritime Patrol) Squadron based at 19 Wing, Comox, British Columbia.

CANADIAN PEACEKEEPERS ATTACKED IN CROATIA AND BOSNIA

According to the Canadian Forces, two Canadian peacekeepers were involved in potentially life-threatening incidents in Croatia and Bosnia during the weekend of January 22-23.

In Croatia, Captain Daniel Massé of Val Belair, Quebec and his French driver were fired upon late Saturday afternoon (January 22) by unidentified soldiers as they were returning to the U.N. Sector South Headquarters in Knin. Their vehicle was hit by six rounds of small arms fire, but neither was injured in the event.

In central Bosnia, a grenade was thrown at 3:00 am local time Sunday (January 23) into an observation post in the Canadian peacekeepers' camp in Visoko. No injuries resulted from the blast. Corporal Michel Gonin, a Sherbrooke reservist attached to the 12th Canadian Armoured Regiment, jumped five meters to the ground just as the grenade exploded behind him. The incident is under investigation by military police and the local police force.

U.S. NAVY ORDERS SHIP PROPELLERS THROUGH CCC

Stone Marine Canada Ltd. of Iberville, Quebec has been awarded a $1.7 million contract by the Canadian Commercial Corporation (CCC) to produce and deliver port and starboard propeller blade sets for the U.S. Naval Sea Systems Command in Arlington, Virginia. This export contract, the first awarded to the company through the CCC, will create six jobs for a period of two years.

MD REPORTS 1993 YEAR-END AND FOURTH QUARTER RESULTS

McDonnell Douglas had 1993 earnings of $396 million, or $10.10 per share. That compares with 1992 earnings of $79 million, or $2.03 per share, excluding unusual items related to the company's adoption of a new retiree health care accounting standard. The increase in earnings was achieved despite a 17 percent decline in revenues caused by continued softness in commercial and military markets for aerospace products.

Highlights for the year included strong performance across most government aerospace programmes, continued profitability in the commercial aircraft business, and a 41 percent reduction in aerospace debt — from $2.767 billion at the outset of the year to a six-year low of $1.625 billion at year end. Aerospace debt fell by $349 million in the fourth quarter, following debt reductions in each of the first three quarters.

The 1993 results were reduced by a fourth quarter pre-tax charge of $450 million, or $275 million after-tax ($6.99 per share). The charge covered both an overall settlement of a range of issues related to the C-17 military aircraft programme and increased cost on the C-17 development and initial production contracts, which was in part interrelated to the overall settlement.

Partially offsetting the C-17 charge, McDonnell Douglas had unusual gains in 1993 from the sale of McDonnell Douglas Information Systems International, the reversal of part of the one-time charge taken in 1992 from the new retiree health care accounting standard, and the successful resolution of tax issues. These gains totaled $220 million, or $5.61 per share.

The charge in the C-17 programme resulted in a fourth quarter loss of $132 million, or $3.36 per share. Excluding the C-17 charge, McDonnell Douglas' earnings for the fourth quarter totaled $143 million, or $3.63 per share, compared with $86 million, or $2.20 per share in 1992's fourth quarter, prior to a retiree health care curtailment gain.

Excluding C-17 charges in both years, operating earnings in the military aircraft segment were $533 million for 1993, compared with $391 million in 1992, which represents a gain of 36 percent. Excluding the C-17 charge in 1993's fourth quarter, fourth quarter earnings were $180 million, up 61 percent from $112 million in 1992's fourth quarter. Revenues for 1993 in this segment were 5 percent lower than in 1992, largely due to reduced volume in the F-15 programme.

The commercial aircraft segment had its third consecutive profitable year with operating earnings of $40 million in 1993, down from $102 million in 1992. Operating earnings in 1993's fourth quarter were $2 million, compared with $34 million in the year-ago quarter. There was a 28 percent reduction in revenues for the year and 21 percent during the quarter due to reduced MD-80 twin jet and MD-11 trijet deliveries.

Operating earnings for the commercial aircraft segment in 1993's fourth quarter included a $41 million pre-tax gain from the sale of McDonnell Douglas' 25 percent interest in Irish Aerospace and offsetting charges of $37 million related to a commercial lease guarantee, a product enhancement associated with a commercial customer, and other items.

The missiles, space and electronic systems segment had record operating earnings of $338 million in 1993, up 77 percent from $191 million in 1992. There were strongly improved earnings from the Harpoon, SLAM, Tomahawk and Delta programmes. Revenues for this segment fell by 19 percent, largely as a result of the winding down of the Advanced Cruise Missile programme and reduced Delta space launches.

Earnings for the 1993 fourth quarter totaled $78 million, despite $19 million in write-offs in several programmes including a laser crosslink programme and a plant closure and relocation. Fourth quarter earnings for 1992 were $47 million and included $29 million in pre-tax write-offs primarily in the laser crosslink programme.

Operating earnings in the financial services and other segment were $31 million in 1993, compared with $20 million in 1992. Revenues for this segment were 18 percent lower than in 1992, reflecting a decision made in 1991 to streamline the finance subsidiary to refocus its efforts on only two markets — aircraft and commercial equipment leasing. Operating earnings in the 1993 fourth quarter were $22 million, compared with $10 million in the year earlier quarter. Most of the increase in 1993's fourth quarter earnings was due to used aircraft and commercial equipment leasing sales.

McDonnell Douglas' firm backlog on December 31, 1993 was $19.379 billion, compared with $24.052 billion on December 31, 1992. Total backlog at December 31, 1993 was $35.698 billion, compared with $41.806 billion on December 31, 1992. The decline in backlog reflects deliveries and a softening of commercial aircraft orders worldwide.

The company's total employment was 70,016 on December 31, 1993, compared with 87,377 a year earlier. One fifth of the total reduction in employment was due to the sale of non-core businesses or outsourcing of certain support services. Employment was further affected by lower production rates in a number of programmes and reductions in force aimed at achieving greater efficiencies.

FAA GRANTS STC TO ALLIEDSIGNAL FOR "ETIPS"

The Federal Aviation Administration (FAA) has granted a supplemental type certificate (STC) to AlliedSignal Aerospace Canada for its Electro-Thermal Ice Protection System ("ETIPS"). The STC approves ETIPS for installation on MD-80 series aircraft.

Developed by AlliedSignal Aerospace Canada of Etobicoke, Ontario, ETIPS prevents ice formation on aircraft wing surfaces. The ETIPS technology consists of thin, lightweight Advanced Fibre Heaters ("AFH"), electronic controllers, temperature sensors and display panels which can be engineered to meet specific anti-icing or de-icing requirements.

Teamed with Continental Airlines, AlliedSignal Aerospace Canada installed ETIPS on three Continental MD-80s in March 1993 (see May 19, 1993, page 5, "AlliedSignal's "ETIPS" Successfully Installed On MD-80"), October 1993 and last month. Continental is currently collecting system operational data on fitted aircraft.

AlliedSignal Aerospace Canada is also pursuing alternate compliance to the FAA's airworthiness directive (AD 92-03-02) using ETIPS. The AD requires a flight crew to ensure that wings are clear of ice prior to takeoff. The FAA approved the company's alternate compliance test plan in December 1993. AlliedSignal and Continental plan to conduct alternate compliance tests for the FAA on an ETIPS-fitted aircraft this month. The tests will demonstrate the capabilities of ETIPS in a variety of weather conditions.

ISRAEL SELECTS McDONNELL DOUGLAS' F-15 EAGLE

On January 27, Israel announced its intention to purchase additional F-15 Eagles from McDonnell Douglas to meet its future defence needs. The newest F-15s for Israel are based on the U.S. Air Force F-15E dual-role fighter and carry the designation "F-15I". Specifics concerning configuration, quantity, price and delivery schedule for the F-15s will be determined in government-to-government discussions. Israel has flown F-15 air-superiority fighters since 1978.

The selection of the F-15 culminates an Israeli evaluation process that began in 1992. At that time, Israel's requirement was for an aircraft that would replace older fighters in its inventory. McDonnell Douglas presented the F/A-18 Hornet in competition with the F-16. The competition between the F/A-18 and F-16 was completed in 1993, but the results were not released. As Israel became more immediately concerned about long-range threats, attention shifted to the F-15 Eagle.

McDONNELL DOUGLAS CANADA ON DELTA II PROGRAMME

In its first space programme project ever, McDonnell Douglas Canada of Mississauga, Ontario is processing components of McDonnell Douglas Space Systems' Delta II 7925 rocket. The project began in November 1993 and is expected to be completed this month.

The rockets' fuel and oxidizing tanks are assembled in three sections called "skins", each of which forms 120 degrees of a cylindrical tank. MD Canada is currently processing 23 of these skins. The processing involves cleaning and then electrically charging the skin surfaces to permit further processing. Once renovated, the skins are returned to McDonnell Douglas Space Systems Company in California for final processing and machining.

DC-X PROGRAMME TO CONTINUE WITH FUNDS FROM NASA

McDonnell Douglas has been notified that NASA is providing funds for continuation of the Delta Clipper-Experimental (DC-X) programme. (See The Wednesday Report, November 3, 1993, page 5, "DC-X Flight Testing Halted Due To Exhaustion Of Funds".) In an announcement on January 31, NASA administrator Daniel Goldin disclosed his plans to provide almost $1 million to maintain the DC-X vehicle and ground systems in a readiness state for future flight testing.

During the next 60 days, NASA and the U.S. Department of Defence will study options and lay out a plan to complete the original flight envelope testing of the experimental vertical-takeoff and vertical-landing launch vehicle.

BRISTOL AEROSPACE GETS U.S.A.F. CONTRACT THROUGH CCC

Winnipeg, Manitoba-based Bristol Aerospace Limited has won a $3.6 million (U.S.) contract through the Canadian Commercial Corporation (CCC) to supply the U.S. Air Force with support assemblies for the TF 30-P111 and F111F aircraft engines. The contract was let under the terms of the U.S./Canada Defence Production Sharing Arrangements.

DND SMALL CONTRACTS AWARDED IN WESTERN CANADA

Celtic Shipyards (1988) Ltd. of Vancouver, B.C. won a $683,088 contract to provide DND with a vessel that will install and recover sonobuoys, and provide security in firing ranges. The contract maintains 10 jobs until May 31.

CAE Aviation Ltd. of Edmonton, Alberta received a $308,330 contract amendment to install an integrated radar display system on a CC-130 Hercules aircraft for DND.

Mustang Engineered Technical Apparel of Richmond, B.C. received a $288,335 contract to supply DND with buoyancy jackets. Delivery will be completed by March 31.

Combustion Dynamics Ltd. of Medicine Hat, Alberta received a $237,539 contract to continue a study on fuels for DND at Defence Research Establishment Suffield. The contract runs until March 31, 1995.

M.E.T.A. Research Inc. of Richmond received a $199,020 contract to provide technical investigations and engineering support for a study on integrated protective clothing and equipment for DND personnel. The contract runs until November 30, 1995.

DND SMALL CONTRACTS AWARDED IN ONTARIO

Kiley Paving Ltd. of Kingston received a $400,000 standing offer to repair asphalt at CFB Trenton. The offer maintains 10 jobs until October 12, 1995.

Queen's University of Kingston received a $263,773 contract to continue developing physical fitness standards for Canadian Forces firefighters. The contract maintains one job until March 31, 1995.

Quantex Environmental Inc. of Kitchener won a $75,000 standing offer to remove waste oils, fuel and petroleum products from CFB Trenton. The offer maintains one job until December 15.

EMCON's TS10 LEVEL 1 TEMPEST WORKSTATION ENDORSED BY CSE

Canada's Communications Security Establishment (CSE) has endorsed EMCON's TEMPEST version of the "SPARCstation" 10 workstation (TS10) to NSTISSAM TEMPEST 1/92 Level 1. Applications have been made for the TS10 to be listed in the April 1994 editions of the U.S. Endorsed TEMPEST Products List and the NATO Recommended Products List.

The TS10 is a powerful, high-performance workstation which is easily upgraded for even more power, disk capacity or memory. TS10 models 40 and 51 include: 32 MBytes memory (expandable to 512 MBytes), an internal 3.5-inch 1.44 MByte floppy disk drive, two empty bays for optional removable SCSI disk modules, and auto-ranging power supply. SCSI, Serial, Parallel, Ethernet AUI and three SBus system slots are standard interfaces. Both 16 and 19-inch-high resolution colour monitors are available.

CAE-LINK & GDI TO EXPLORE MARKETING OF CELLULAR PRODUCTS

Geotechnology Development Inc. (GDI) of Herndon, Virginia and CAE-Link Corporation of Binghamton, New York have signed a memorandum of agreement to explore the marketing of two CAE-Link products — the "LinkTrak" cellular position locating system and the LinkTrak 911 emergency system — as part of GDI's global positioning and data messaging service.

CAE-Link's LinkTrak integrates the Navistar Global Positioning System (GPS) with local cellular systems to provide highly-accurate position information. The 911 application is an emergency notification service. These products are well-suited to the GDI "Tracker" service which is dedicated to providing low cost, global position location and data messaging services for shipping containers and vehicles.

QUEBEC COMPANY GETS U.S. ARMY CONTRACT THROUGH CCC

The Canadian Commercial Corporation (CCC) has awarded a $40.6 million contract to 138170 Canada Inc. (Remcor) of Chambly, Quebec for the production and delivery of M969 semitrailers to the U.S. Army's Tank Automotive Command in Warren, Michigan.

Remcor recently completed a previous contract it had received through the CCC for the supply of semitrailers to the U.S. Army. This sale, which represents the first of several more orders which may be placed against the new three-year contract, will help to maintain up to 40 jobs within the company.

PEOPLE: CAL CORPORATION APPOINTS NEW AMT SALES MANAGER

CAL Corporation of Ottawa has announced the appointment of John Menard as sales manager for its Aeronautical Satcom programme. Menard has over 17 years of experience in the commercial and business aviation industry. He has held key positions in sales and marketing at Innotech Aviation in Montreal, including, most recently, director of technical sales.

"CAL's AMT-100A Satcom system, now proven to be a top contender in the airborne satellite communications industry, is ready to be presented to international firms seeking to stay in touch while airborne, using a lightweight, dependable and affordable system," said Menard.

HMCS ANNAPOLIS TO SAIL TO HAITI

Her Majesty's Canadian Ship Annapolis, a West Coast-based helicopter-carrying destroyer, will deploy to the Caribbean in early March. Annapolis and a helicopter detachment from 443 Helicopter Squadron based in Sidney, British Columbia are scheduled to sail on March 10 and proceed to the Caribbean in support of a United Nations embargo against Haiti. Plans call for Annapolis to relieve HMCS Fraser which has been on patrol since mid-January. Annapolis should be on-station by March 26.

Under the command of Commander Serge Bertrand, HMCS Annapolis is 112 meters long, 13 meters wide and has a complement of 265 men and women.

CALENDAR

February 14-15 — The 46th Annual Technical Conference/9th Annual Canadian Shipbuilding & Offshore Exhibition (CSOE'94) of the Canadian Maritime Industries Association (CMIA) will be held at the Ottawa Congress Centre. To reserve a booth in the exhibit hall contact Mrs. Joy MacPherson, (613) 232-7127.

February 15 — The Canadian Defence Preparedness Association (CDPA) will hold its February luncheon meeting at the RCAF Officers' Mess in Ottawa, commencing at noon. The speaker will be Colonel J.J.R. Marleau, DND Project Manager for the Light Armoured Vehicles (LAV) programme. Contact the CDPA at (613) 235-5337 to reserve a seat.

February 23 — The Industrial Benefits Association of Canada will host a seminar/meeting at the Ottawa Congress Centre from 9:00 am to 3:00 pm.The meeting is open to members and non-members. For further information contact Robert Brown at (613) 733-0704.

April 13-14 — AFCEA Canada '94, the seventh biennial AFCEA Canadian conference and trade show, will be held at the Ottawa Congress Centre. The event will feature exhibits, paper presentations and speakers focusing on the theme "Global Operations: Responding to Change". Dr. Desmond Morton, Principal, Erindale College and Vice-Admiral L.E. Murray, Deputy Chief of Defence Staff will be the keynote luncheon speakers. Contact conference manager Marion G. Fuller at (613) 594-8788 for details.

EMCON's TS10 LEVEL 1 TEMPEST WORKSTATION ENDORSED BY CSE

Canada's Communications Security Establishment (CSE) has endorsed EMCON's TEMPEST version of the "SPARCstation" 10 workstation (TS10) to NSTISSAM TEMPEST 1/92 Level 1. Applications have been made for the TS10 to be listed in the April 1994 editions of the U.S. Endorsed TEMPEST Products List and the NATO Recommended Products List.

The TS10 is a powerful, high-performance workstation which is easily upgraded for even more power, disk capacity or memory. TS10 models 40 and 51 include: 32 MBytes memory (expandable to 512 MBytes), an internal 3.5-inch 1.44 MByte floppy disk drive, two empty bays for optional removable SCSI disk modules, and auto-ranging power supply. SCSI, Serial, Parallel, Ethernet AUI and three SBus system slots are standard interfaces. Both 16 and 19-inch-high resolution colour monitors are available.


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