Aerospace firm’s strategy takes flight abroad

B.C.-based Cascade Aerospace banks on its engineering skills to win foreign contracts

A C-130K Hercules aircraft from Mexico arrives at Cascade Aerospace in Abbotsford, B.C., for refurbishing.

The principle of evolution is often described as survival of the fittest. But for Cascade Aerospace Inc., a company based in Abbotsford, B.C., it’s the ability to adapt and change that has kept it alive.

It started as the maintenance arm of an aerial firefighting company. When it became a separate firm in 2001, it began repairing larger commercial aircraft in its 230,000-square-foot service center.

It was not until 2005 that Cascade got its big break. Canada’s Department of National Defence hired it to manage the nation’s fleet of C-130 Hercules aircraft. Today, roughly half of the company’s business comes from the government.

At the same time, the company is turning to international markets.

“We as a Canadian aerospace business cannot keep hoping that our paychecks are going to come from Canada and the U.S.A.,” said Cascade’s executive vice-president and chief operating officer, Benjamin Boehm. “We have to move outside of that.”

It took about two years for Cascade to land its first international military contract outside North America. At the end of last year Mexico hired Cascade to upgrade two C-130K Hercules aircraft. The planes will receive an avionics upgrade taking them from steam gauge dials to a full electronic glass cockpit, all designed and engineered by Cascade.

International expansion is a tough proposition for aerospace companies. Governments prefer to give defence and security contracts to homegrown businesses.

“That’s a wall that we have to overcome,” said Mr. Boehm, who plans to tackle this impediment by forming partnerships with local companies in the countries they are targeting. “They would become part of the logistics or maintenance management team, and be our eyes and ears on the ground.”

A lot of countries require foreign businesses to work with local companies when they bid on public contracts. This is the case in Canada, where the Industrial and Regional Benefits policy for procurement has helped Cascade enormously.

For example, when the Department of National Defence bought aircraft from U.S.-based Lockheed Martin, it required the company to bring on Canadian industry for service support. In 2010, the American company awarded Cascade a 20-year maintenance contract for Canada’s new fleet, which led to its designation as one of two Lockheed Martin-authorized Hercules service centers in the world.

Cascade is also authorized under Transport Canada, the American Federal Aviation Administration, and the European Aviation Safety Agency. These certifications are the company’s single biggest advantage doing business abroad.

Another big plus for Cascade, Mr. Boehm explains, is being a Canadian company. Canada has a reputation for being a neutral country, which means Cascade is more accepted in some parts of the world than its American competitors.

Today Cascade is promoting its services in half a dozen countries, mainly in the South Asia Pacific region and South America. Typically, countries there award aerospace contracts piecemeal to five or six businesses, which can be inefficient.

“Consolidating lowers costs and creates responsibility for performance,” said Mr. Boehm. “Multiple companies results in finger pointing.”

The stakes are high for many of these governments, which might have only six aircraft in total. If one is unavailable, it could mean the loss of a humanitarian flight in the event of a typhoon. Cascade is trying to educate governments on the benefit of having one company oversee every aspect of maintaining, upgrading and managing the logistics of their fleet at a fixed price.

During discussions with the Mexican government it became apparent that they would be more comfortable with a deal made at the country-to-country level. That’s when the Canadian Commercial Corporation, under the auspices of the Minister of International Trade, stepped in to act as intermediary.

“Now Mexico can say they have the support of Trade Minister Ed Fast that this is going to be a Canada-to-Mexico deal,” said Mr. Boehm. “It removes some of the uncertainty, or the fear, that some governments have dealing with a Western commercial company,”

The number of employees at Cascade’s engineering organization, which is responsible for designing aircraft modifications and analyzing and planning fleet logistics, has grown by 25 per cent in the past two years, and should continue to grow 5 per cent a year, Mr. Boehm said.

Mr. Boehm sees Cascade moving up the value chain by designing programs with intellectual property built into the contract. In the bigger picture, leveraging value-added engineering is where Mr. Boehm sees Canadian aerospace having an edge in international markets.

“Canada is not going to compete on cheap labour,” he said. “Canada has to compete on intellectual property, and that’s where our growth path will be.”

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