Ontario emerges as preferred site to build Saab GlobalEye military surveillance plane, sources say

Bombardier BBD-B-T is aiming to secure a production site for the Saab GlobalEye military surveillance plane by the new year and favours expanding its existing factory near Toronto’s Pearson airport, sources say.

The Montreal aerospace company prefers Pearson largely because its Global 6500 business jet – the airframe for the radar-equipped GlobalEye – is already built there, the sources said.

Saab, Sweden’s biggest aerospace firm, last year said it could build the GlobalEye and its Gripen fighter jet in Canada for both Canadian and overseas customers. Because Saab’s domestic factories lack the capacity to meet demand for both aircraft, the company offered Bombardier the opportunity to build either plane under licence, a scenario that would create thousands of defence-related aerospace jobs in Canada.

But the size of the subsidies that may be offered by either the Ontario or Quebec governments could ultimately determine whether the military aircraft is assembled at Pearson or in Dorval, Que., near Montreal, where smaller Bombardier business jets are made, the sources said.

They said Bombardier hopes to begin construction of an expanded factory in 2027.

The Globe and Mail is not naming the sources because they were not authorized to speak publicly about the negotiations.

Bombardier’s chief executive Éric Martel told The Globe in September that the “GlobalEye is our priority right now,” adding that the company is “focused on building and finishing GlobalEye here in Canada.”

A Bombardier team was in Sweden last month. More recently, another Bombardier team met with senior Ontario government officials to discuss possible subsidies to expand the Pearson assembly site. The sources said Bombardier put the expansion costs at about $500-million. Bombardier’s communications office did not comment on the cost of the expansion.

Late last year, Saab delivered new proposals to Ottawa that forecast the creation of 12,600 jobs if both the GlobalEye and the Gripen were built in Canada. At the time, David Morden, senior sales director of the GlobalEye, said building the entire aircraft in Canada would create 3,000 jobs. “We are offering a made-in-Canada solution by building and installing the plane’s sensors there,” he said.

Mattias Radstrom, head of media relations at Saab, told The Globe on Tuesday that “we stand by our previous estimate” for the number of jobs created.

Saab selected the Bombardier 6000-series business jet, which later evolved into the 6500-series, for the platform for the GlobalEye a decade ago. The plane, minus its interior fittings, is flown to Saab’s main aerospace factory in Linköping, Sweden, where it is stripped down and rebuilt into an airborne early warning and control jet with an array of sophisticated sensors.

Its radar is capable of detecting aircraft, missiles or drones as far as 650 kilometres away. It can also detect and identify objects on the ground, such as tanks, and those on the sea, including submarine periscopes that break the water surface.

So far, Saab has firm orders for a dozen GlobalEyes, mostly from the United Arab Emirates, Sweden and France, but expects many more. NATO announced plans in July to buy up to 10 of the aircraft to replace the military alliance’s fleet of aging Boeing E-3 Sentry aircraft, though no contract has been signed.

Saab intensifies pitch to sell Gripen jets to Canada, promising assortment of benefits

Canada last month signed a non-binding term sheet to buy six GlobalEyes, including training and support. Canada would use the aircraft primarily for Arctic surveillance.

Mr. Radstrom said the Canadian production line would have the capacity to produce up to a third of the expected global demand for the aircraft over the next 15 years. “We can confirm that we are in advanced discussions with Bombardier,” he said. “As the provider of the aircraft platform on which GlobalEye is based, Bombardier is a natural partner to build and modify the GlobalEye in Canada.”

Ontario is keen to land the GlobalEye project partly because the tariffs imposed by U.S. President Donald Trump are hammering the province’s once-thriving auto industry. Thousands of auto assembly and engineering jobs have been lost and several plants have been closed, idled or scaled back. A bigger aerospace industry would help offset those job losses.

Ontario typically offers large subsidies to attract foreign companies that want to build factories or assembly plants in the province, especially if they would create advanced technology jobs such as those in battery or electric-vehicle plants. Quebec does the same.

They can take the forms of performance-contingent loans, grants, tax credits, research and development support, or a combination. Often the federal government contributes similar amounts. On big projects, Ontario’s contributions can cover 10 to 20 per cent of the projects’ overall capital costs.

The office of Vic Fedeli, Ontario’s Economic Development Minister, declined to comment.