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Budget Woes Affecting Key Canadian Modernization Program

by: Matthew Potter
May 21, 2009

Category: Boeing, Business Line, Canada, Companies, Contract Awards, Countries, Events, Military Aviation, production program, Proposal, Restructuring | RSS 2.0

Canada has suffered from a shortage of internal lift capability both strategic and tactical. The government had decided to purchase sixteen CH-47F Chinook helicopters to provide the tactical lift capability needed in Afghanistan. Operations there require substantial helicopter forces and the high and hot conditions need big, powerful aircraft.

Now there is a report that Canada may look at reducing the number of aircraft procured due to the budget problems facing all of the world’s governments. The contract with Boeing is still in negotiation so a change like this of cutting two aircraft bringing the total to fourteen is certainly easier then after the award. The total cost savings though may not be that much unless other customers can be found for the two aircraft. The more you buy of something the cheaper they are so reducing the buy to save money may cause a slight cost increase in the ones remaining.

Unfortunately Canada is now joining Britain with its Typhoon problems were the lack of money available is starting to affect military procurement programs. Discretionary spending in budgets is limited and weapons spending is one area that may be cut. If the world’s economy doesn’t turn around soon we will see more of these program changes. The start will be nibbling around the edges and then whole programs finally being ended.

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