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New research released on understanding Aboriginal business engagement in the marine and aerospace industries in B.C.

By BCShippingNews 18 January 2018
Canadian Council for Aboriginal Business looks at the opportunities for Aboriginal businesses...
Canadian Council for Aboriginal Business looks at the opportunities for Aboriginal businesses...

The marine and aerospace industries in Canada represent a significant, untapped opportunity for Aboriginal businesses because these sectors procure coast-to-coast goods and services, often in the traditional territories of Aboriginal communities. Increasing access to contracts, employment and knowledge transfer within these sectors would help strengthen Aboriginal businesses, communities, and Canada’s economy as a whole. The marine and aerospace industries can also help diversify Aboriginal businesses beyond traditionally successful sectors such as energy, mining and forestry.

Ensuring Aboriginal businesses play an important role in the supply chains of the marine and aerospace industry creates real challenges. While Aboriginal businesses are continuing to grow in number and complexity, there are relatively few at a mature level able to provide the highly technical requirements of some business sectors. For those that are at this level, procurement departments for larger companies higher on the supply chain still struggle to identify Aboriginal partners that can supply tier 1 goods and services. So how can Aboriginal businesses get “caught up” to the level of capacity and visibility needed to be successful in these industries? What level of interest do they have in breaking into these industries? How can trust be built between corporate leaders in these industries and smaller Aboriginal firms? These are the questions explored in this report.

Download the full report.

EXECUTIVE SUMMARY

Current State

To start, CCAB discovered only a small number of Aboriginal firms in the marine and aerospace industries, despite the fact that many businesses in these sectors are located in or close to traditional Aboriginal land. For those firms currently in operation, there are distinct differences between the challenges faced by industrial-focused versus service-focused businesses. One of the major differences is location: many service-focused firms (i.e. pilots and mechanics) are located in remote off highway communities, while most industrial-focused firms settle in southern or coastal areas. As a result, regional considerations are important when considering specific strategies for Aboriginal procurement in these industries.

New Focus

Most Aboriginal businesses are located in tier 4 of the supply chain, supplying raw materials and processing for tier 3 companies. When looking for ways to increase Aboriginal business participation in this sector, finding ways to move these businesses up a tier is a natural conclusion. However, CCAB’s research shows upward movement in the supply chain, even when supported, isn’t realistic because of the resources required to do so (time, finances, certifications etc.). Instead, the focus should be on helping current Aboriginal businesses improve the excellence of core competencies of their existing tier—which helps strengthen their reputation and working relationships—while encouraging any new companies to consider launching in increasingly sophisticated tiers.

Present Challenges

When considering how to expand their expertise, Aboriginal businesses face many barriers. Unconscious bias and prejudice against Aboriginal peoples make corporate Canada hesitant to work with Aboriginal businesses in the first place. When opportunities are available, Aboriginal businesses don’t typically have the established relationships with corporate Canada to learn about upcoming contracts and bid on the work. Additionally, corporate Canada doesn’t have established relationships with Aboriginal businesses to notify them about potential bids. Aboriginal businesses also lack supportive programs that will help cover the certification costs needed to acquire contracts in the marine and aerospace industries. The small number of Aboriginal businesses in this sector suddenly becomes much smaller when relationships and costs prohibit them from competing.

Steps Forward

Based on the current situation and challenges of Aboriginal businesses in the marine and aerospace industries, CCAB has outlined recommendations for the government, corporate Canada and Aboriginal businesses that can open up opportunities for all three groups.

Government

1. To help them qualify for a wider range of projects and contracts in this sector, CCAB recommends that the government create programs that support the certification of Aboriginal businesses in the marine and aerospace industries. This will ensure partnerships between Aboriginal and non-Aboriginal businesses are easily facilitated.

2. To create a more even playing field, CCAB recommends that the government create standard set-asides or procurement multipliers for Aboriginal businesses. The defined incentives and multipliers should also apply to non-Aboriginal suppliers who can demonstrate significant Aboriginal presence within their supply chains. Prime and tier 1 suppliers would have defined incentives to start working with Aboriginal businesses, see the quality of their work and build the trust needing for ongoing relationships. These set-asides should include specific qualifications of the work, to ensure that Aboriginal businesses and their employees are learning new, specialized skills in addition to building on current expertise.

3. To facilitate critical connections between both groups, CCAB recommends that the government support capacity development and marketing for Aboriginal businesses. Initiatives like matchmaking programs could increase the awareness of partnership opportunities for both Aboriginal and non-Aboriginal businesses, setting the stage for knowledge building and future contracts.

Corporate Canada

1. To initiate working relationships with Aboriginal businesses, CCAB recommends that corporate Canada identify lists of potential Aboriginal vendors for the range of products and services the company requires, and then reach out to those firms to explore procurement opportunities.

2. To maximize the impact of these relationships, CCAB recommends that corporate Canada ensure Aboriginal businesses are receiving long-term benefits from these procurements (i.e. improving skills and creating new ones through “on the job” mentoring). To maximize the benefits of these procurements for both groups involved, contracts offered to Aboriginal businesses should grow in scope and complexity from one to the next, allowing Aboriginal firms to develop the specialized skills needed for future contracts.

3. To help mitigate risk for Aboriginal businesses, CCAB recommends that corporate Canada secure contracts pending certification of an Aboriginal business. This would ensure that non-Aboriginal companies meet their government set asides and do so with the confidence of partnering with an Aboriginal business with the most up-to-date certification.

4. To be seen as leaders in the area of Aboriginal procurement and economic reconciliation, CCAB recommends that corporate Canada set key goals for working with and mentoring Aboriginal businesses as a way of tracking progress, outside of the government minimum spend requirements. This would serve as incentive for other companies in the industry to follow suit in order to compete.

5. To create a more even playing field, CCAB recommends that Corporate Canada create set-asides or procurement multipliers for Aboriginal businesses. The defined incentives and multipliers should also apply to non-Aboriginal suppliers who can demonstrate significant Aboriginal presence within their supply chains. Prime and tier 1 suppliers would have defined incentives to start working with Aboriginal businesses, see the quality of their work and build the trust needing for ongoing relationships. These set-asides should include specific qualifications of the work, to ensure that Aboriginal businesses and their employees are learning new, specialized skills in addition to building on current expertise.

Aboriginal businesses

1. To grow the number and scope of clients, CCAB recommends that Aboriginal businesses identify the core competencies of the tier and focus on excellence in those areas. This will build the reputation of the Aboriginal firm, strengthen existing business relationships and help create new ones.

2. To learn specialized, “on the job” skills from larger companies, CCAB recommends that Aboriginal businesses build strong relationships within corporate Canada. These connections will help expand expertise and awareness of upcoming projects, ensuring Aboriginal firms are ready for training when corporate Canada secures contracts pending certification.

3. To create a stronger presence in higher tiers of the supply chain, CCAB recommends that new Aboriginal businesses begin their operations in increasingly sophisticated tiers. This way, the foundation of the business is rooted in the education, experience and the relationships needed to grow in this higher tier from the very beginning.