People wait for busses inside a mall with empty retail space, in London, Ontario, December 17th 2015. Globalization and high energy costs have depressed the manufacturing and food processing industries that once drove the economy of Southwestern Ontario.Ian Willms/The Globe and Mail
Political and business leaders in London, Ont., are standing by the company that makes the combat vehicles Canada is selling to Saudi Arabia, describing it as a pivotal component of the region's effort to become a major hub for defence-industry manufacturing.
General Dynamics Land Systems Canada (GDLS) builds the light armoured vehicles (LAVs) at a plant in London that employs 2,100 people, including 650 engineers, and that makes it an "anchor to the defence-industry cluster in Southwestern Ontario," Mayor Matt Brown said.
Like other members of the business community, Mayor Brown did not want to weigh in on the politics of the contract, which is now under close scrutiny following Saudi Arabia's mass executions on Jan. 2 that included a prominent Shia Muslim cleric. The focus instead is on the benefits for a region that, until recently, had suffered from years of a weak economy and severe job losses.
For Southwestern Ontario, the success of companies such as GDLS is seen as key to continuing the economic momentum recently gained as a result of the low dollar and stronger exports to the United States.
But the economic gains go beyond Southwestern Ontario, because GDLS buys components across the county, said Kapil Lakhotia, president of London Economic Development Corp., which is responsible for drawing investment to the region.
"GDLS is critical to the London regional economy, it is certainly an important part of our growing defence sector, and [its work] has a variety of positive economic impacts throughout Canada," he said.
Indeed, from the day it was announced in February, 2014, the Saudi contract has been touted as a crucial economic stimulus for London, Ont., and the region around it.
When then-minister of international trade Ed Fast unveiled the $15-billion deal, he pronounced it the largest manufacturing-export contract in Canadian history. Over 14 years, the contract will generate 44,000 person-years of employment – roughly 3,000 jobs – for GDLS and its suppliers.
That largesse is spread over 500 suppliers across the country, said GDLS spokesman Doug Wilson-Hodge. He would not say what proportion of the company's business the Saudi deal represents, only that "it is a large contract."
Mr. Wilson-Hodge said the company has no comment on the debate erupting over the Saudi deal. "Foreign policy is the purview of the government of Canada," he said.
Stephen Bolton, president of the London-based Libro Credit Union, described GDLS as a "corporate icon" in the city and a "pillar of industry." Mr. Bolton, who serves on the board of the London Chamber of Commerce, noted that it was up to the federal government to decide what countries can be sold the LAVs.
The Saudi contract was brokered by the Canadian Commercial Corp., a Crown corporation, which is the prime contractor in the arrangement.
Unifor, the union that represents about 500 of the workers at the GDLS plant, would not comment on the controversy, other than reiterating the position it took when the Saudi deal came up in an election debate in September.
At that time, Unifor issued a statement saying it is "committed to standing up for jobs and human rights," adding "the bottom line is that the contract has been signed."
Mr. Lakhotia, of the economic development organization, said the London region has been trying for years to diversify its manufacturing into more high-tech areas, such as aerospace and defence. There are now more than 40 companies in the defence sector alone, he said, and they employ more than 10,000 people. GDLS's presence is critical to that, he said, and has helped the region attract other big players such as the Norwegian company Kongsberg Defence & Aerospace, which makes weapon systems, and the U.S. firm Northrop Grumman, which makes surveillance aircraft.