$15B General Dynamics deal means big things for London workers
by Norma de Bono (feat. Dave Perry)
London Free Press
April 5, 2018
A $15-billion contract for military supplier General Dynamics in London could keep the plant busy for a long time, its impact rivalling that of a blockbuster sale to the U.S. Army nearly 20 years ago.
Details now are emerging about the Canadian government’s contract to supply the Saudi Arabian government with LAV 6 light armoured vehicles, a deal that includes maintenance and upgrading of the vehicles for at least 14 years, observers say.
The contract, the largest in London’s business history, could have as big an economic impact on the city as a landmark contract to supply more than 2,000 armoured vehicles to the U.S. Army, a deal still going strong after it was signed 18 years ago.
It was that $6-billion contract to supply those wheeled vehicles, later named the Stryker, which helped to transform the former General Motors Defense in London into a manufacturing export powerhouse, with the corporate parent of its partner in the joint venture, U.S.-based General Dynamics Land Systems (GDLS), buying the London company two years later.
Other military suppliers were, in turn, attracted to London, helping create a defence industry hub that today employs thousands of people in the city.
The Saudi deal’s similarly bodes well for London, one defence analyst said.
“This is going to be good for the city, for the local economy,” said David Perry, senior analyst with the Canadian Defence and Foreign Affairs Institute.
“This is not just short term, but it will be sustained over a long period of time. It’s a good sign that it is not just a sale or transaction, but a long-term relationship of support.”
GDLS, a subsidiary of U.S. defence giant General Dynamics, signed the Saudi deal in 2014 under the former federal Conservative government.
Two years later, permits were issued for the vehicles to be shipped overseas with exports beginning last year.
A pattern has emerged in recent years that what begin as initial short-term contracts extend into “multi-decade support,” said Perry.
The agreement, according to some reports, includes 928 LAV 6 vehicles in total.
Of those, 354 are standard troop carriers, 119 are assault vehicles with 105-millimetre canons, another 119 are anti-tank vehicles and a further 119 have a 30-millimetre gun.
This is going to be good for the city, for the local economyDavid Perry
The rest of the order will include ambulances, mobile command posts, transport and recovery vehicles, equipped with cranes to rescue or remove damaged LAVs.
The agreement includes a 14-year support program including training, maintenance and ongoing support.
Bill Pettipas, former executive director of then-GM Defense before he retired in 2003, is familiar with that type of agreement. He said it reminds him of the $6-billion contract to supply the U.S. Army with 2,131 Stryker vehicles from the Oxford Street plant, signed in 2000.
Today, the Stryker is still in operation and the six-brigade U.S. Army deal has grown to become 10 brigades. GDLS has maintained and upgraded the vehicles since they began shipping them out of the plant.
“A big part of that deal was support. They may say 14 years, but I think it will be a lot longer,” said Pettipas, adding the Stryker deal will linger to support vehicles for about 30 years after it was first signed.
“We were very fortunate to have the technology” to support the vehicle. “This sounds very similar to the Stryker.”
It means GDLS and even London suppliers could have a role when the LAV 6 is maintained, repaired and upgraded. In the case of the Stryker, a vehicle that was deployed in Iraq, extra armour was added.
“They are still doing upgrades and they are significant,” said Pettipas, now 82 years old.
As for the details of the Saudi contract, the complement of vehicles is “remarkably similar” to one ordered by the Canadian military in the mid-2000s, Perry added.
“What the Saudis are getting is a full suite of land capabilities out of the LAV, command elements and troop elements and anti-personnel weapons,” he said.
“The Saudis are putting a lot of faith in GDLS products. The fact it will be longer-term support means there will be continuity over time.”
General Dynamics Land Systems Canada declined comment on the deal.
But for the more than 2,100 workers at the plant, most of whom are represented by Unifor Local 27, the deal means long-term work, said Jim Reid, Local 27 president.
“It is absolutely a positive. It means some job security, and not just for GDLS. There are a lot of spin-off jobs. There are a lot of workplaces that supply and support GDLS. The impact of this cannot be overstated.”
GDLS has reported that during the 14 years, the contract will generate 44,000 person-years of employment – roughly 3,000 jobs – for GDLS and its 500 suppliers across the country.
There are about 45 industries in London in the defence sector, employing about 12,000 people.
“I am glad they will be built here, by our members, rather than by others elsewhere,” Reid said of the vehicles. “That (risk) is just the reality; it is the way of the world.”