Jim Quick, President & CEO

1. Canada, U.S. and European Collaboration to Strengthen Competitiveness in the Global Supply Chain Aerospace Innovation Forum 2011 December 2011 Jim Quick, President & CEO

2. Today • Canada-USA- Europe working together • Successful partnerships • Future Major Platforms (FMP) Initiative • Canadian Networking Aeronautics Project for Europe (CANNAPE) • What about the future • What Canada is doing • What to do

3. Canada – USA – Europe – Where are we Today? • Free Trade • Border Thinning • Market Development • FMP • CANNAPE Traffic growth is based on RPK. Manufacturing growth is based on forecasted 2020 revenue. Source: Deloitte analysis

4. Canada–USA: Future Major Platforms • Strengthening competitiveness by participating in future commercial aerospace programs • Aligning existing industry portfolio support to facilitate technology development • Prioritizing technologies to participate in current and future platforms • Assisting companies – opportunities on commercial platforms 4

5. Canada–USA: Future Major Platforms • 8 Technology Areas • Product Development • Manufacturing • Environment • More Intelligent Systems • Advanced Materials • Avionics • Electric Systems • Human Performance • 3 Strategic Areas • Structures • Systems • Propulsion 5

6. Future Technology Roadmap Priorities • Product Development • Future configuration development • Multi-disciplinary design optimization • Integrated design and manufacturing • Quality systems and processes • Lean engineering • Virtual prototyping, testing & integration • Advanced product development strategy • Logistics system integration • Life analysis • Prognostics and health management • Manufacturing • Lean • Agile • Special processes • Automated fibre placement • Machining • Joining • Advanced assembly processes • Robotics • Inspection and Repair • More Intelligent Systems • Sensors • Network centric • Morphing systems • Adaptive systems • Autonomous systems • Air transport system optimization • Environment • Noxious emissions reductions • Noise emissions reduction • Fuel burn • Materials of Concern • Alternative fuels 6 6

7. Roadmap Priorities • More Electric Systems • Elec. power generation & distribution • Actuation • Power management • Environmental control systems • Engine technologies • Avionics • In flight entertainment • In flight business • Systems integration • Open platforms • Landing aids • Augmented/synthetic vision systems • Display systems • Adaptive over life cycle • Fly by wire/light • Diagnostics • Advanced Materials • Low cost manufacturing • High temperature composites • Thermosets • Liquid composite moulding • High temperature alloys • Metallics • Advanced metallic alloys • Hybrids • Ceramic Matrix Composites • Metal Matrix Composites • Multi-functional • Human Perf. Augmentation • Synthetic training environments • Advanced diagnostics • Human machine interface • Remote operators • Integrated Electronic Tech Manuals • Environmental databases 7 7

8. FMP: Continuing the Work • Developing supply chain opportunities for the Canadian Industry to connect to the OEMs • Boeing Supply Chain Event in Seattle – March 2012 • Airbus Global Supply Chain Event in Canada - 2012 • Setting up direct connections between Canadian Tier 1s and OEMs • Engaging on a national technology demonstrator project

9. Canada-Europe: CANNAPE Canadian Networking Aeronautics Project for Europe

10. Objective Enhance cooperation on air transport R&D cooperation Networks and partnerships between EU and Canada in technical areas To promote Canadian participation in FP7 activities To develop a technology roadmap that will have clear objectives with identified partners

11. Outcomes – the Other Side Increase networking and partnering  in the aeronautics R&D between Europe and Canada Involvement of key Canadian organizations in joint activities Joint identification of needs and priorities for collaboration Increase in participation in FP7 by the Canadian aeronautics research communities

12. Significant Collaboration • 130 participants from Canada and throughout Europe at each of the first two Workshops: • Paris, June 24, 2011 during Salon Le Bourget • Ottawa, Oct 31-Nov 1, 2011 in conjunction with First Canadian Aerospace Summit Next • Proposal development for “call” 5 and 6 • CANNAPE Canadian road show • Third Workshop planned for Canada in mid-2012

13. What About New/Emerging Markets CIS Traffic: 4.8% Manufacturing: 3.6% Difference: +1.2% Middle East Traffic: 7.1% Manufacturing: 2.5% Difference: +4.6% Asia-Pacific Traffic: 6.8% Manufacturing: 5.5% Difference +1.3% South America Traffic: 6.9% Manufacturing: 5.7% Difference: +1.2% Africa Traffic: 6.8% Manufacturing: 2.8% Difference: +4% Traffic growth is based on RPK. Manufacturing growth is based on forecasted 2020 revenue. Source: Deloitte analysis

14. Canada-USA-EU Readiness “There are two major trends with respect to emerging markets. The first is the high levels of passenger growth and the second is the maturing of state sponsored aircraft OEMs, especially in the regional and narrow-body product categories.”

15. Civil Aerospace Sector Trends (Deloitte 2010) • Positive long-term growth as economies emerge from the recent financial crisis; • Recovering airline profitability moving forward; • Active fleet renewal and expansion; • New aircraft models; • Increased usage of green technologies; • Increases in MRO activity as companies shift to new geographies;

16. Emerging markets becoming competitors and sources of passenger growth; Long-term pilot and workforce shortages; Regulatory shifts as economies emerge from the financial crisis; and Increased private sector demand for satellite and launch services.

17. Military Aerospace Sector Trends(Deloitte 2010) Governments’ focus deficit reduction; Rebalancing of military forces; Growth in Indian and Chinese markets; Aging military equipment; Increasing merger and acquisition (“M&A”) activity; Increasing usage of virtual training and simulation; and Winding down of combat operations in Iraq and Afghanistan.

18. Industry Working to Determine Our Future • Utilizing Future Major Platform (FMP) Initiative to identify and collaborate with OEMs • Canadian Supply Chain is being strengthened through AIAC Supply Chain Development Committee • Created and implemented a new Small Business Strategy • Canadian Government Program and Policy Review 18

19. Working with Government to Determine Our Future Aerospace Program and Policy Review 2011 Federal Budget Commitment “Conduct through a consultative process involving the AIAC and their member firms – a comprehensive review of all policies and programs related to aerospace / space industry to develop a federal policy framework to maximize the competitiveness of this export oriented sector and the resulting benefits to all Canadians.”

20. Program and Policy Review Objectives • Improve Canada’s global position • Build new federal policy framework • Maximize sector competitiveness • Increase economic benefits for Canada and Canadians

21. Program and Policy Areas Potential working groups could include but not be limited to the following: • Space • Small Business • Aerospace-related public procurement • Peoples and skills • Technology development, demonstration and commercialization • Market access and market development

22. Where are the Canada-USA-Europe Opportunities • Individually • Meet the challenges • Optimize competitiveness • International business development strategy • Policy, program competitiveness • National aerospace frameworks • Collectively • Harmonization • Alignment • Prioritization • Mechanism 22

23. Summary • Good work on-going • New challenges and opportunities • How to best take advantage • How do we work together 23

24. Aerospace Industries Association of Canada 255 Albert St., Suite 703 Ottawa, Ontario, Canada K1P 6A9 Tel: (613) 232-4297 Fax: (613) 232-1142 email:info@aiac.ca www.aiac.ca Jim Quick, President & CEO 1-613-232-4297 - jim.quick@aiac.ca Les Aalders, Executive Vice President 1-613-760-4550 – les.aalders@aiac.ca Maryse Harvey, VP, Public Affairs 1-613-760-4562 - maryse.harvey@aiac.ca Vlada Shilina, Director, Supplier andInternational Market Development 1-613-760-4554 - vlada.shilina@aiac.ca AIAC contacts