November 22, 1963

COMMITTEES OF THE HOUSE

PUBLIC ACCOUNTS-CONCURRENCE IN SECOND REPORT


Mr. G. W. Baldwin (Peace River) presented the second report of the standing committee on public accounts, and moved that the report be concurred in. Motion agreed to.


BANKING AND COMMERCE

ELEVENTH REPORT


Eleventh report of standing committee on banking and commerce-Mr. Moreau.


TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE

LIB

Lester Bowles Pearson (Prime Minister)

Liberal

Right Hon. L. B. Pearson (Prime Minister):

Mr. Speaker, I wish to make a statement about the acquisition of aircraft by Trans-Canada Air Lines, and certain other matters related to aviation and the aircraft industry. This statement is somewhat longer than I and perhaps the house would wish, but I think this is justified in this case by the importance of the matter and the general interest it has aroused.

Trans-Canada Air Lines is today announcing that it is placing an order for six jet aircraft of the DC-9 type with the Douglas Aircraft Corporation. This decision has been reached by the board of directors of T.C.A. after a technical and economic evaluation of five different types of aircraft. A thorough review by the government disclosed no reason for directing T.C.A. to reconsider this decision.

The evaluation by T.C.A. was probably the most complete ever undertaken by an air line company, certainly by a Canadian company. The selection of an aircraft is a complex process in which many matters must be taken into account. The pattern of routes to be served, which is different for each air line, affects the calculation of both capital and operating costs. It also governs the assessment of alternative types of aircraft in relation to the stage lengths and distances, the frequency of service, and many other matters including maintenance, passenger comfort and speed.

If T.C.A. is to provide the best service to the Canadian public at the lowest possible

rates, it needs the type which is best suited to its own economic and operational requirements. T.C.A. has decided that the DC-9 best meets these requirements, on grounds of both cost and service to the public. This, of course, does not mean that the types not selected by T.C.A. are not good aircraft; rather it means that they are not as well suited to T.C.A.'s particular needs in this particular instance.

In studying the decision of T.C.A. the government has considered the impact which each of the alternative choices seemed likely to make on employment and industrial activity, and was concerned that, whatever type might be selected, Canadian industry should share in its manufacture. None of the types under consideration could have been built entirely in Canada; in each case engines and at least a number of component parts would have had to be brought into the country. However, the Douglas Aircraft Corporation had already entered into an arrangement with the de Havilland Corporation of Canada whereby a substantial portion of the DC-9 aircraft is to be produced by de Havilland of Canada.

This does not apply merely to aircraft produced for T.C.A., but to all DC-9 aircraft sold anywhere in the world. There should also be benefits to component manufacturers in Canada, both directly and indirectly. For example, United Aircraft of Canada Limited, in the Montreal area, is expected to receive many millions of dollars worth of business both on the engines installed in the DC-9 and on other work transferred to Canada concurrently by the parent company in the United States.

I am very pleased that the T.C.A. decision will result in the acquisition of an aircraft having an important Canadian component made by a Canadian company and providing substantial employment for Canadian labour. Indeed, with the T.C.A. order acting as a stimulus to the purchase of DC-9's by other air lines throughout the world, there is a very strong likelihood that the benefits to the Canadian economy in terms of labour and production, including foreign exchange gained, will be greater than the value of the T.C.A. order.

At the same time I am aware that much public discussion has centred on the possibility of production at the Canadair plant in Montreal of another type of aircraft for use by T.C.A. In this connection I wish to

Purchase of Aircraft

emphasize that the government has given special attention to the current and prospective levels of activity at Canadair, and I can assure the house that this company will continue to enjoy, as it has in the past, a substantial share of the aircraft production work carried out in Canada. At the present time Canadair is prime contractor to the Department of Defence Production for two major aircraft production programs. One of these is the F-104 Starfighter program. Having recently completed an order for 200 of these aircraft for the R.C.A.F., the firm is currently producing a further 140 for mutual aid, financed jointly by the United States and Canadian governments. The production of these aircraft at Canadair's plant at Cartier-ville is scheduled to continue until the autumn of 1965. In addition to these orders, under arrangements made by the Department of Defence Production, Canadair is sole supplier to Lockheed California Company of wings and tail assemblies for all aircraft of this type sold by Lockheed. The other production program in which Canadair is currently engaged is the CT-114 Tutor jet trainer. One hundred and ninety of these aircraft have been ordered by the R.C.A.F. Deliveries are scheduled to commence in December of this year and to continue through December, 1965.

Canadair has also received subcontracts from a number of United States defence contractors, largely as a result of the Canadian-United States production sharing program. An example, which holds excellent potential for continuing production, is the subcontract which the company has received from Convair division of General Dynamics for design and manufacture of part of the airframe of the F 111 TLX aircraft now being developed for the United States department of defence. Subcontracting has also enabled the company to diversify its activities by the manufacture of items ranging from valves for submarines to components for helicopters. In addition to its manufacturing, Canadair performs a continuing large annual volume of repair and overhaul work for the Canadian services under contracts with the Department of Defence Production.

In recognition of the fact that it is only through the development of new products that a company can hope to maintain a stable level of future production, the government has provided substantial assistance to Canadair both through the Department of Defence Production and under the defence industrial research program of the defence research board. Important development projects are under way at Canadair which have been made possible not only by the financial support of the government but also through

negotiations conducted by the Canadian government with other countries.

T.C.A.'s study of the purchase of new aircraft was made against the background of the corporation's forward plans for the next ten years. The effect of this planning is to indicate that much the greater part of T.C.A.'s fleet of turbo-propeller Viscount aircraft will continue to be needed throughout the ten years.

I am therefore now able to announce a change from the previous expectation, which was made known a year ago, that the overhaul and maintenance base in Winnipeg might begin to be phased out early in 1966. For at least as far ahead as planning now extends, that is at least ten years, the Winnipeg facilities will continue to be used.

This decision has considerable importance to the economy of greater Winnipeg. In the view of the government it is very much in the national interest that opportunities for skilled employment of the kind which the T.C.A. base provides should be diversified in different centres to as great an extent as is compatible with industrial efficiency. For this reason the continued operation of these maintenance and overhaul facilities in Winnipeg is to be warmly welcomed.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
PC

John George Diefenbaker (Leader of the Official Opposition)

Progressive Conservative

Right Hon. J. G. Diefenbaker (Leader of the Opposition):

The Prime Minister has made a very lengthy statement and it is, of course, impossible to analyse that statement without having the details before us. However, it indicates that the widespread division which, it has been suggested, existed within the cabinet has finally been resolved in favour of those who represent Ontario constituencies.

With regard to the lengthy explanation as to the benefits which will go to Canadair, all I can say is that it would appear, because the explanation was so long, that the potentialities for Canadair are much less than the hopes expressed today by the Prime Minister.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
?

Some hon. Members:

Oh, oh.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
?

An hon. Member:

Compared with the Avro.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
PC

John George Diefenbaker (Leader of the Official Opposition)

Progressive Conservative

Mr. Diefenbaker:

I am very glad for that intervention, the statement regarding the Avro. Throughout the years we were condemned for the stand we took in connection with the cancellation of the Arrow program. It was a difficult decision to make. We only found out a matter of three weeks ago, when General Foulkes was giving evidence before the defence committee, that hon. gentlemen who now interrupt me had agreed on cancelling the Arrow program but had decided not to do so before the 1957 election.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
LIB

Lester Bowles Pearson (Prime Minister)

Liberal

Mr. Pearson:

I rise on a point of order.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
PC

John George Diefenbaker (Leader of the Official Opposition)

Progressive Conservative

Mr. Diefenbaker:

There is no point of order. The statement which the right hon. gentleman-

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
LIB

Lester Bowles Pearson (Prime Minister)

Liberal

Mr. Pearson:

I rise on a point of order, Mr. Speaker.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
PC

John George Diefenbaker (Leader of the Official Opposition)

Progressive Conservative

Mr. Diefenbaker:

If the right hon. gentleman wishes to rise on a point of order, may I say that it is in keeping with his usual course.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
LIB

Lester Bowles Pearson (Prime Minister)

Liberal

Mr. Pearson:

My point of order is that the statement which the Leader of the Opposition has just made is entirely inaccurate.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
PC

John George Diefenbaker (Leader of the Official Opposition)

Progressive Conservative

Mr. Diefenbaker:

I wonder why the Prime Minister does not take some instructions from the so-called rule expert, the Secretary of State, who might point out to the right hon. gentleman that that is not a point of order. It is simply an interruption designed to cause a detour, but it will not succeed. I repeat what I said; the St. Laurent government had decided to cancel that program but he and his friends, including the present Prime Minister, agreed they would delay taking any action on this course, which they believed in the Canadian interest, because of their fear of the political effect.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
?

Some hon. Members:

Oh, oh.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink
?

Some hon. Members:

Hear, hear.

Topic:   TRANS-CANADA AIR LINES PURCHASE OF DC-9 AIRCRAFT-CONTINUATION OF WINNIPEG MAINTENANCE BASE
Permalink

November 22, 1963