Article originally published in the April 2008 issue of the Canadian Defence Review online magazine.

Canadian Defence Review:
You are well known in the industry as President of General Dynamics Canada, but in your role as chairman of CADSI you presumably need to look at the industry from a broader perspective. For our readers who may not be already familiar with you, can you please tell us something about your background in the industry?

Watts:
I joined what was Computing Devices Canada, General Dynamics Canada's predecessor, in 1976 with a finance background and no prior defence sector experience. I came up through the finance organization to the position of CFO and then moved into an operational role as Senior Vice-President. I've had a relationship with industry associations for 20+ years.

CDR:
You have been chairman of CADSI for about a year now. How do you assess the performance of Canada's defence and security industry over that period?

Watts:
The Canadian defence and security industry has intensified in the last several years as government organizations at all levels retool, and operational missions continue.

The industry as a whole has really risen to the challenge and responded despite many issues and challenges - ITARs being one example. Canadian industry has been very active in supporting the operational mission in Afghanistan, working with the government to ensure that the reinvestment in new military equipment brings with it a lasting economic benefit to Canada, and engaging on emerging issues like northern sovereignty. We have a tremendous depth and breadth of capability and technology in Canada that can and should be accessed, and we are ready to respond to government's needs.

VOICE OF THE DEFENCE INDUSTRY

CDR:
CADSI has come a long way from the old CDIA days. It now produces Canada's biggest defence show, has a large and growing membership, as well as professional, full-time management. CADSI has been an important voice for the industry as an advocacy group. In your view what are some of the key priorities for CADSI in the future?

Watts:
Thank you for the recognition. We have worked hard to transform CADSI from its CDIA heritage and are proud of the achievements made in a relatively short period of time. We believe CADSI is the voice of the defence and security industries in Canada. Our primary goal is to ensure that the government recognizes the critical economic value and domestic industrial expertise and capacity, and looks to leverage that resource to implement a defence and security industrial strategy. Without that context, the risk is that we will continue to address issues in isolation with sub-optimal results.

CDR:
There have been criticisms about the defence procurement process in this country. What changes, if any, would you like to see in the system?

Watts:
The earlier industry gets involved in the planning process, both on the defence policy and the procurement planning process, the better the outcome will be for Canada. If we can become fully engaged and start to provide our input before key decisions are made-working in partnership with the Crown much earlier in the process that would be a step forward to streamlining, simplifying and ultimately improving the procurement process.

For example, industry will play a critical role in implementing the highly anticipated Canada First policy. We hope that the policy will be immediately followed by the capital investment plan which should include industry as a full partner. We are supportive of the proposed new longer-term accrual accounting process which should provide DND with a vastly improved planning tool.

Early engagement will give industry better insight such that we can better plan investments in support of realistic opportunities. It will also enable us to better direct R&D investment into areas where there is need and opportunity.

WORLD CLASS CAPABILITIES

CDR:
Does the Canadian government have a responsibility to support the Canadian defence industry and how might it do that? As a corollary to that point, do you believe that a strong defence industrial base goes hand in hand with a strong military and national security?

Watts:
If you look around the world, most competitive economies recognize the value and the necessity of a strong defence industrial base. Canada needs to ensure it does as well. As a country we need to take a strategic view of the world-class capabilities of our domestic industry and how they can, and should, be seen as a partner with the military.

CDR:
There have been some mega capital expenditures recently announced by the federal government, namely the C-17 and C-130J aircraft acquisitions, but there have not been a lot of guarantees of offset work for Canadian industry. What is CADSI's position on this?

Watts:
There have been several announcements made with respect to offset work -primarily in the commercial aerospace arena - many of which are extensions of existing supply chain relations. CADSI would like to see a more strategic linkage that would deliver high-value benefits that help develop strategic objectives in support of the defence industrial strategy framework as well.

CDR:
Are you happy with the support Canada's defence industry gets from its own government? If not, what changes could be made?

Watts:
Within the context of the overarching strategy framework, the role of domestic industry in the government's defence planning needs to be defined and clarified. We strongly believe that we have world-class capabilities that provide real value add. There is a lot of room for more open dialogue with all government departments and for improved synergy between departments.

CDR:
By necessity, we know that Canadian defence companies do most of their business as export. Can you give us some numbers on this and do you expect this to change at all going forward?

Watts:
CADSI is currently in the process of collecting this type of data from its membership to clarify the levels of domestic and export business, and will share it as it becomes available. I would say, however, that strong domestic performance is certainly a launch pad for international business opportunity.

NEW VENUE FOR CANSEC IN 2009

CDR:
You have a successful trade show in the annual CANSEC event. What plans do you have for this perennially sold out show? How will the fact that the Ottawa Congress Centre is shutting down affect CANSEC?

Watts:
CANSEC has gone from strength to strength as Canada's premier defence and security exhibition. It has become an ideal forum where all members of the defence and security community can come together and really have the dialogue and engagement I've talked about. DND and other departments have supported CANSEC with strong attendance over the last couple of years, and we look forward to their continued support at the Ottawa Congress Centre on April 9th and 10th.

The 2009 show will be held at Lansdowne Park, where we will have even more facilities available for an expanded show.

CDR:
Much of what you do overlaps with another industry group, AIAC (Aerospace Industries Association of Canada), and you have many members in common with them. How do you differentiate your role from what they do? With their increasing focus on commercial aerospace at the expense of defence, do you see your role as more important?

Watts:
CADSI has a very deep and broad membership base that is represented in 177 federal ridings across the country. Our focus is on all areas of defence and security, which includes military aerospace, whereas AIAC has primarily been focused on the commercial aerospace arena. Where there are common issues, however, such as ITARs, IRBs, SADI and ISS that affect the memberships of both associations, we will collaborate to provide a single voice to government.

CDR:
Finally, can you give us a sense of where you see your association moving in the future? What are your primary objectives?

Watts:
As I've said, our primary goal is to ensure that the government recognizes the critical economic value and national benefits of a strong domestic defence and security industry. We need to ensure that recognition is manifested in our defence strategy and that industry is seen as a key partner. And ultimately of course, we need to keep our customers and members happy.

CDR: Thank you.