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The Wednesday Report
Canada's Aerospace and Defence Weekly

Volume 8, Number 10 April 6, 1994

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NATO-mania has swept Europe. Poland has signed a cooperation agreement with Washington to assist that former Warsaw-Pact state develop armed forces trained and equipped in a manner consistent with NATO forces. Poland is frantic to become a full NATO member. Its defence minister Piotr Kolodziejczyk ended an earnest sales trip to Washington and Ottawa last week. Hungary and the Czech Republic are also on the bandwagon. Other nations are moving solidly in the same direction. And where does Russia stand in all this? Well, that politically unstable nation is unofficially furious. It sought and obtained a delay in the conversion of Eastern Europe into full NATO members. NATO's watered down "Partnership for Peace" plan was created in January to appease Moscow. Meanwhile, the whole world is looking to NATO to be all of, or part of, a solution to the Bosnia crisis. Clearly we are entering a new era for NATO — NATO-mania. A time when NATO will be the linchpin for peace. Meanwhile Canada is virtually backing out of the Alliance. Are we not moving in the wrong direction?


North Korea

As the world began to celebrate Easter, the U.N. Security Council issued a terse statement on North Korea's nuclear facilities after the U.S. and China reached an accord and obtained approval from the 15-member Council. Robert Gallucci, U.S. assistant secretary of state for political and military affairs, negotiated the statement in New York with China's deputy envoy, Chen Jian.

One of the main concessions made to China was the removal of a deadline for North Korean compliance with the NPT inspection regime.

A tough-worded resolution (published last week in The Wednesday Report) was proposed by the U.S. China objected to it and the fear of a Chinese veto coupled with fear that abstensions by non-aligned Council members would weaken the resolution, led to the issue of a statement rather than the proposed resolution. Using blander language, the compromise statement (which follows) received unanimous Council endorsement.

"The Security Council recalls the statement made by the president of the Council on 8 April 1993 (S/25562) and its relevant resolution.

"The Council reaffirms the criticial importance of International Atomic Energy Agency (IAEA) safeguards in the implementation of the Treaty on the Non-Proliferation of Nuclear Weapons (the Treaty) and the contribution which progress in non-proliferation makes to the maintenance of international peace and security.

"The Council notes with deep appreciation the efforts of the director-general of the IAEA and the agency to implement the IAEA-Democratic People's Republic of Korea safeguards agreement (INFCIRC/403).

"The Council reaffirms the importance of the joint declaration by the Democratic People's Republic of Korea and the Republic of Korea (ROK) on the denuclearization of the Korean Peninsula, and of the parties to the declaration addressing the nuclear issue in their continuing dialogue.

"The Council welcomes the joint statement of the Democratic People's Republic of Korea and the United States of 11 June 1993, which included the Democratic People's Republic of Korea's decision to suspend the effectuation of its withdrawal from the Treaty and the understanding reached between the Democratic People's Republic of Korea and the United States in Geneva in July 1993, and the progress achieved on that basis.

"The Council welcomes also the agreements reached in February 1994 between the IAEA and the Democratic People's Republic of Korea, and between the Democratic People's Republic of Korea and the United States.

"The Council takes note that the Democratic People's Republic of Korea has accepted in principle IAEA inspections at its seven delcared sites, following its decision to suspend its withdrawal from the Treaty on 11 June 1993, and of the statement by the General Department of Atomic Energy of the
Canada's Aerospace & Defence Weekly
Volume 8, Number 10 April 6, 1994

U.N. Issues Statement On Democratic People's Republic of Korea (S/1994/319).

"The Council takes note also of the IAEA Board of Governors' findings concerning the matter of compliance and the IAEA Director-General's report to the Security Council of 22 March 1994 (S/1994/322), and expresses its concern that the IAEA is, therefore, unable to draw conclusions as to whether there has been either diversion of nuclear material or reprocessing or other operations.

"The Council calls upon the Democratic People's Republic of Korea to allow the IAEA inspectors to complete the inspection activities agreed between the IAEA and the Democratic People's Republic of Korea on 15 February 1994, as a step in fulfilling its obligations under the IAEA-Democratic People's Republic of Korea safeguards agreement and in honouring non-proliferation obligations of the Treaty.

"The Council invites the director-general of the IAEA to report further to the Security Council on the question of completion of the inspection activities agreed between the IAEA and the Democratic People's Republic of Korea on 15 February 1994 when the director-general is scheduled to report on the follow-on inspections required to maintain continuity of safeguards and to verify that there has been no diversion of nuclear material required to be safeguarded, as noted in the director-general's report to the council (S/1994/322).

"The council requests the Democratic People's Republic of Korea and the Republic of Korea to renew discussions whose purpose is implementation of the Joint Declaration on the Denuclearization of the Korean Peninsula.

"The council appeals to those member states engaged in dialogue with the Democratic People's Republic of Korea to continue that dialogue in accordance with the agreement reached on 25 February 1994.

"The council decides to remain actively seized of the matter and that further Security Council consideration will take place if necessary in order to achieve full implementation of the IAEA-Democratic People's Republic of Korea safeguards agreement."


"Minju Choson [South Korean press] today brands the so-called "New Operation Plan No. 5027" made public by South Korean Defence Minister Yi Pyong-tae at a recent "meeting of the National Assembly Defence Commission" as a war plan worked out by the U.S. and South Korean maniacs to start another war — a nuclear war against the North of the Korean peninsula. The analyst says: the Kim Yong-sam group unhesitatingly made public a war plan to invade the North which its predecessors had not dared to do, not concealing its intention to unleash a war against the North.

"This clearly indicates that the Kim Yong-sam group is a clan of more dangerous and heinous warmaniacs than any other rulers of South Korea. By mapping out and making public the "new operation plan", the Kim Yong-sam group shows that it has neither will to have dialogue with the North nor intention to resolve the reunification question in a peaceful way and made it unequivocal that it will not implement the North South agreement and the joint declaration of denuclearization. Now all the Armed Forces of the South Korean puppet Army have been "alerted" and many U.S. troops and sophisticated combat equipment are being carried to South Korea. This reality eloquently shows that the Kim Yong-sam group is attempting to plunge the nation into a nuclear disaster under the manipulation of the U.S. warmongers.

"With the Kim Yong-sam group left alone, the warmaniacs bringing the danger of a nuclear war to the nation, clean indifferent (as received) to the destiny of the Nation, the 70 million fellow countrymen can neither be safe nor can the peace of Asia and the world be ensured. If our nation is to be saved from a nuclear holocaust and the peace of Asia and the world be defended, the Kim Yong-sam group dancing to the nuclear drum-beating of the United States must be removed.

"We [North Korea] will never remain an onlooker to the schemes of the U.S. and South Korean war-thirsty elements to carry into practice the criminal "new operation plan". They must know clearly that we mean what we say."

Editor's note: From Pyongyang KCNA in English, March 30, 1994


Brazil-based Embraer has launched series production of a new Brasilia version designated EMB-120ER Advanced, which from now on will become the standard production model. The aircraft has been in the making for about two years and originally carried the provisional designation EMB-120X. First deliveries of the aircraft are scheduled for August.

The EMB-120ER Advanced incorporates several modifications and some redesign aimed at maximizing passenger comfort as well as dispatchability, while reducing operational and maintenance costs.

Accumulated sales in the EMB-120 Brasilia programme total 465 aircraft including 318 firm orders and 147 options. There are currently 278 aircraft in operation with 26 customers in 14 countries.


Engineers from Spar Aerospace Limited are visiting more than 20 schools in and around Toronto to work with students preparing to create a habitat on the planet Mars as part of the "Marsville" programme.

Marsville is a creation of the Washington, D.C.-based Challenger Centre which uses space exploration as a theme to promote a positive learning experience for students in math, science and technology. The Canadian programme has been adapted to include the mentors programme that brings Canadian scientists and engineers into the classrooms. Mentors from Spar and Richmond, B.C.-based

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MacDonald Dettwiler work with teachers in class as guides and as a resource for the students as they solve a variety of science and technology problems. Corporate sponsorship for the Marsville programme is provided by Spar and Industry Canada.

Spar engineers are also working with students in Edmonton, Alberta and Vancouver, British Columbia, for a total of 60 schools. The Spar employees are linked with students in Alberta and British Columbia through Internet and EdNet, two "information highway" tools that allow students and teachers to share ideas across the country.

On April 16, the students, their teachers and mentors will gather at the Ontario Science Centre, the Edmonton Space & Science Centre and the B.C. Institute of Technology to build their Martian village. Each of the sites will be linked using high data rate networks and video conferencing techniques, the tools of the information highway (see March 2, page 4, "Canada Building "Information Superhighway"").


McDonnell Douglas and E.H. Industries (EHI), a partnership of Westland Helicopters and Agusta, have joined to define a variant of the EH101 helicopter to meet U.S. services medium-lift requirements. The U.S. version of the EH101 would be manufactured by McDonnell Douglas Helicopter Systems in Mesa, Arizona. The company would assume all responsibility for development, production and product support.

The EH101, which has completed more than 2,900 hours of developmental flight testing, is being proposed by McDonnell Douglas as an outgrowth of earlier design studies performed for the U.S. Navy under the Medium Lift Replacement Helicopter (MLRH) contract. The U.S. version of the aircraft will carry 24 personnel and is targeted to have an external load capability in excess of 9,600 pounds.

The U.S. EH101 for the MLRH mission requires only modest modification of the existing aircraft to conform to U.S. requirements. Depending on the timing of a final MLRH award, the aircraft could be delivered in 1999.

Production go-ahead was given last year for the first of 44 aircraft on order for the British Royal Navy and 16 for the Italian Navy. Deliveries of those aircraft will begin in 1996. A Canadian order for 43 EH101s was cancelled last fall by the newly-elected Liberal government.


Rolls-Royce's Trent 800 engine for the Boeing 777 will be certificated three months ahead of schedule. With six development engines now in the programme and testing progressing with consistently high levels of results, the company has decided to accelerate certification from April to January next year.

Fuel consumption is better than specification and the Trent 800 is up to 3,000 pounds per engine lighter than alternative powerplants. Rolls-Royce will certificate the Trent 800 at 90,000 pounds of thrust. The previously planned level was 84,000 pounds.

Approximately 400 hours of testbed experience have been accumulated since the Trent 800's first run in September last year. These engines, the most powerful ever built by Rolls-Royce, are running routinely at thrusts in excess of 100,000 pounds — a Trent undergoing thermal response testing sustained that figure for 15 minutes — and a level of more than 106,000 pounds has been achieved in normal testing.

One development engine recently completed more than 500 simulated take-offs and landings at thrusts up to 98,000 pounds. Tests due shortly include hail and 2.5 pound bird ingestion and performance in severe crosswind conditions.

Illustrating the confidence in the programme, the crucial fan blade containment test was completed successfully the first time, much earlier than originally planned. This involved one of the three-foot-long hollow titanium wide-chord blades being released at red line LP speed by an explosive charge in the root of the blade. The blade and resulting debris were fully contained within the Kevlar-wrapped fan casing.

Thai Airways International will be first into commercial service with the Trent-powered Boeing 777 in January 1996. Other Trent 800 customers are Emirates, Cathay Pacific and Transbrasil.

Meanwhile, the Trent 700 is continuing its successful programme on the Airbus A330 following its maiden flight on January 31. A second Trent-powered aircraft is due to join the programme and airframe/engine certification is on schedule for December of this year by which time 600 flying hours will have been completed.

The Trent-powered twin, the first Airbus to be powered by Rolls-Royce engines, enters service with Cathay Pacific in January 1995. It has also been selected by Garuda Indonesia, TWA, Dragonair and the leasing company ILFC.

Rolls-Royce, through its Aerospace and Industrial Power Groups, is a world leader in gas turbine engines for aviation, marine and industrial use; power generation; and oil and gas industry products.


Space Systems/Loral, a subsidiary of Loral Corp., and Deutsche Aerospace AG (DASA) have agreed to jointly develop, manufacture and market space-borne microgravity laboratories and equipment for government and commercial interests in the United States. The companies will build a 1,200 square foot laboratory at Space Systems/Loral's Palo Alto facility, to begin research and development in such microgravity disciplines as material sciences, biosciences and protein crystallization.

Microgravity research pertains to the unique attributes available in a near zero gravity such as that encountered by a spacecraft in earth orbit. The near zero gravity environment of space allows the formation of physical and biological material at the molecular level, from which very chemically pure materials can be derived for use in semiconductors, pharmaceuticals and metallurgy.

Research and development under microgravity requires reliable and sophisticated space-suitable equipment supporting

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many different science fields. The required instruments range from high temperature facilities such as furnaces to optical systems, incubators, life support systems and many others that will soon be made available to U.S. customers by the new Loral-DASA team.

The Loral-DASA agreement moves the two companies one step closer to realizing the potential of large scale microgravity processing, and could help produce faster computer chips or stronger and more durable composite automobile frames.

Deutsche Aerospace is a world leader in microgravity research and development, and the primary manufacturer of the German D2 Spacelab, a microgravity research project launched in 1993 by the European Space Agency. It will also supply a significant part of the payload for the international Spacelab mission IML-2 to be launched in July from the Kennedy Space Centre.

Space Systems/Loral is the prime contractor for the next generation of U.S. weather forecasting satellites known as GOES-Next, and is subcontractor to the National Aeronautics and Space Administration in designing and manufacturing batteries for Space Station Freedom. SS/L also is performing spacecraft materials research for the Jet Propulsion Laboratory in Pasadena, Calif.

Space Systems/Loral and DASA are members of the Space Systems/Alliance, a partnership of Loral, DASA, Aerospatiale, Alcatel and Alenia that develops and markets space systems worldwide.

Loral Corp., headquartered in New York City, is a high technology company that primarily concentrates on defence electronics, communications, space and systems integration.


AlliedSignal and Honeywell have announced AlliedSignal's acquisition of Honeywell ELAC-Nautik, a wholly-owned subsidiary of Honeywell AG. Precise terms were not disclosed.

ELAC, an undersea technology business based in Kiel, Germany, had 1993 sales of approximately $30 million. It supplies a wide range of naval acoustic products to military and commercial customers in Germany and worldwide. The company designs, manufactures and markets sensors, echographs, survey systems and underwater communications equipment.

"ELAC will contribute to our global growth strategy," said Daniel P. Burnham, President, AlliedSignal Aerospace. "This transaction strengthens our presence in the European undersea systems market and enhances our existing product lines with new specialties, such as acoustics, front-end systems for torpedoes and surface-ship and submarine sonar.

"The acquisition also permits us to offer our global customers a comprehensive systems approach to undersea operations," Burnham said.

The ELAC operation complements AlliedSignal's Ocean Systems business, a world leader in innovative, high-tech undersea technologies. Ocean Systems produces anti-submarine and mine warfare systems, torpedo defence systems and helicopter dipping sonar. Its customers include the U.S. Navy, NATO and allied navies worldwide.

"This acquisition affords us the first opportunity to apply our defence-oriented Ocean Systems business to the commercial market," Burnham said. "It is just one of the steps we are taking as part of our commitment to expand our European business base and enhance our competitive position in the worldwide marketplace."

ELAC's worldwide customers include ship owners, fishing fleets, survey companies and major shipyards as well as the German military procurement office (BWB) and the naval forces of other NATO countries. The company was founded in 1928.

"The ELAC divestiture is in keeping with Honeywell's strategic direction — which is to establish our undisputed leadership in controls," said Michael Bonsignore, Honeywell Chairman and Chief Executive Officer.

"ELAC-Nautik is a successful business and has always maintained an outstanding reputation for the quality of its products, but its technologies and systems for naval markets do not fit with our strategic plan for the space and aviation business."

Dr. Luder Hogrefe, general manager of ELAC, will continue to oversee the Kiel operation, which has approximately 200 employees.

AlliedSignal is an $11.8 billion company manufacturing worldwide in the fields of aerospace and automotive products, chemicals, fibres, plastics and advanced materials.


Commemorating the first anniversary of the "new" Martin Marietta created by combining the Corporation and General Electric's aerospace businesses, Norman R. Augustine, Martin Marietta Chairman and Chief Executive Officer, characterized the past year as "a momentous period even more successful than anticipated".

"At the time of the merger, we forecasted substantial long-term benefits to our shareowners, employees and customers. Primarily due to the exemplary teamwork of all our employees, I'm strongly convinced we are realizing those benefits," said Augustine.

Martin Marietta sales for 1993 were a record $9.44 billion, a 58 percent increase over 1992 sales of $5.95 billion. Sales to the civil government and commercial sectors represented a third of revenues, including international customers which increased to approximately 13 percent. The Corporation reported earnings for 1993 of $450.3 million before recognition of accounting changes, representing an increase of 30 percent over 1992 net earnings of $345.4 million. Earnings per share for 1993, reflecting 9 months contribution of GE Aerospace, reached a record $3.80 before accounting changes, up 5.6 percent on a fully diluted basis from the split-adjusted $3.60 reported for 1992. Debt-to-capitalization, which had increased to 44 percent as a consequence of the combination with GE Aerospace, was reduced to 39 percent by year-end and has further declined since that time.

Total year-end 1993 backlog was $16.7 billion, almost double the $8.9 billion backlog at the end of 1992. Not counted in reported backlog are equivalent sales of $11.7 billion associated with management and operations contracts with the U.S. Department of Energy, and $3.7 billion in unexercised contract options.

Shortly after the merger, the Corporation was restructured into seven highly focused business groups. "By maximizing our collective strengths, we're more competitive and able to better serve customers, benefit shareholders, create new business opportunities and preserve jobs," Augustine said.

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The Corporation also implemented a facilities consolidation plan that will eliminate approximately five million square feet of capacity and save more than $1.5 billion in net operating costs over the next five years alone.

"The year was not without disappointments, however. Within our Space Group, the failure of several important space missions interrupted the Corporation's long and proud history of Mission Success," Augustine stated.

"Our response included strengthening systems engineering throughout the Space Group, expanding product integrity engineering programmes and conducting additional employee training in process and procedural requirements. Since this rededicated effort to Mission Success, we've recorded eight consecutive successful space events and continued the excellent record already unde rway throughout the rest of the Corporation," he said.

The consolidation with GE Aerospace in April 1993 was followed in December by an agreement to purchase General Dynamics' Space Systems Division, which will position Martin Marietta to produce vehicles in the intermediate-size payload range. Also, late in 1993, GE Aircraft Engines signed an agreement naming Martin Marietta the sole-source supplier of thrust reversers for GE's CF6 family of jet engines. In addition, a public offering was made of 19 percent of the stock of Martin Marietta Materials, which increased recognition of the value of that asset.

Augustine also noted the positive impact of the merger on investors. "Since the day prior to our announcement of the GE Aerospace transaction in November 1992 to today, total return to stockholders exceeds 60 percent."


Hughes Aircraft Company has launched an internal consolidation of operations as a six-month moratorium on layoffs expired last Friday. Hughes, based in Los Angeles, is a unit of General Motors. It created a new company called Hughes Aerospace and Electronics in order to make the firm more responsive to its government customers.

The move, which did not involve any immediate job cuts, brought together the three aerospace sectors — missiles, satellites and electronics systems — of GM Hughes Electronics Corporation, parent of Hughes.

"The formation of HAEC will strengthen our operations and improve our capacity to compete in the declining defence market," said Michael Armstrong, chairman and chief executive officer of GMHE and Hughes.

Armstrong said the headquarters of HAEC will be in Washington as well as California. "By being in Washington, we will improve our customer focus and satisfaction and hopefully increase our sales, resulting in increased jobs for Hughes and California," he said.

Hughes, like all other major defence contractors, has cut its staffing drastically in recent years. It peaked in 1986 with 80,000 employees and currently has about 50,000.

"We will be taking the next several months to determine how the new company will be structured for operations, and to determine whether there may be a resulting impact on employment levels," Armstrong said.

Hughes announced earlier this year that it had launched a computerized study of its own operations with the goal of reducing costs. The results are expected to be announced later this year.

It has been trying to take its electronics expertise, much of it developed in defence programmes that face declining funding, into such areas as cellular systems and satellites.

GM Hughes Electronics reported in February fourth quarter earnings of $276.3 million, or 69 cents a share, up 17.6 percent from earnings of $234.8 million, or 59 cents a share. Revenues were $3.7 billion, a 6.8 percent increase from $3.46 billion in the 1992 fourth quarter.

Hughes has been closing down its missile plants in California and cutting 6,000 employees from those operations since buying the facilities from General Dynamics Corp. two years ago. It has been moving aggressively to expand its commercial business since Armstrong, a former IBM executive, took over in the spring of 1991.


Northrop has won the bidding war for Grumman leaving Martin Marietta's March 6 bid of $55 (U.S.) per share as a piece of trivia for future corporate historians.

At the start of this week the winning $62-a-share bid was announced. The offer is worth $2.17 billion. On Sunday night, Grumman's board of directors approved the offer and urged shareholders to tender their stock. The offer expires on April 15.

Northrop had previously failed in an attempt to merge with Grumman and was completely discouraged when Grumman agreed to sell its shares to Martin Marietta early in March. It then offered $7 per share more than Martin Marietta. Martin declined to raise its bid and the rest is history. Martin will receive from Grumman roughly $60 million as part of a "back-out" settlement.

The new firm is to be called Northrop Grumman Corporation. As to any potential change in its structure and overall strategies, Northrop says it disagrees with the Grumman decision last year to abandon its 60-year tradition of building naval aircraft such as the F-14 fighter and instead to focus on defence electronics, surveillance and information systems. It is thus conceivable that Northrop may choose to sell off portions of Grumman to Martin Marietta. One such unit may well be Grumman's information systems division.


Minister for International Trade Roy MacLaren and Minister of Industry John Manley recently launched Canada's International Trade Business Plan (ITBP) for 1994-95 in Toronto and Montreal. The ITBP is the federal government's consolidated strategy and action plan designed to assist Canadian firms in their pursuit of international business. It was developed in consultation with the private sector across Canada. Provincial governments were also invited to provide input.

The government's approach to international business development will build on three broad objectives including greater

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partnership between public and private sectors; expanded trade participation of export-ready firms, especially small and medium-sized; and increased diversification of Canada's trade relations. This year's ITBP consists of a Strategic Overview complemented by individual sector-specific strategies.


The Chretien government announced on Good Friday that it was offering the Ukraine $15 million to help that country dismantle its nuclear arsenal.

"There is a major task to be performed and we know that the authorities have limited resources," Minister of Foreign Affairs Andre Ouellet said after a two-day visit. "We want to assist Ukraine so that there will be no second Chernobyl. There is an urgency in assisting them to act as expeditiously as possible," he added.


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.

April 17-20 — The 32nd Semi-Annual General Meeting of the Aerospace Industries Association of Canada (AIAC) will be held at Ottawa's Westin Hotel. Speakers from the U.K., France, U.S. and Canada will focus on the theme "Global Partnerships: North America and Europe". For further information contact Belva Neale at (613) 232-4297.

May 28-June 5 — The International Aerospace Exhibition, "ILA '94", will be held at Berlin's Schonefeld International Airport in Germany. The show will feature the "East-West Contact Forum" where members of eastern and western aerospace manufacturers, buyers and trade visitors can establish business partnerships and forge long-lasting trade relationships. AMK Berlin/North America is organizing the U.S.A. Pavilion and the Canada Pavilion. Companies also may participate individually with exhibits, static displays and chalets. For additional information contact Marijayne Rogers at AMK Berlin/North America, (703) 372-3777.

June 6 — The Small Business Committee of the Aerospace Industries Association of Canada (AIAC) will hold its 13th Annual Small Business Day Meeting at the Rivermead Golf Club. For details contact Peter Boag at the AIAC, (613) 232-4297.

July 20-24 — The 1994 U.S. Air & Trade Show (USATS) will be held at the Dayton International Airport in Dayton, Ohio. Trade days are July 20-22 with public air show exhibits set for July 23-24. Contact the USATS office at (513) 898-5901 for additional information.

September 25-28 — The Aerospace Industries Association of Canada (AIAC) will hold its 33rd Annual General Meeting in Banff, Alberta. This meeting will focus on the theme "Global Partnerships: North America, Asia and the Pacific Rim". Contact Belva Neale (613-232-4297) for more details.

Publisher and Editor In Chief: Micheal J. O'Brien

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Patrick McManus (Halifax)

William Kane (Washington DC)

John Reed (London, England)

Moshe Karem (Jerusalem, Israel)

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