Thales Canada Inc.
The reputation of Thales as a leader in cutting-edge technological innovation is well known to industry professionals worldwide. The past 15 months have been a continuation of tremendous growth in a number of its core business sectors, including cybersecurity and advancements in transportation-related technologies.
After initially speaking with Thales early in 2015, The Canadian Business Journal recently held a follow-up discussion with CEO Mark Halinaty and Siegfried Usal, VP Strategy and Communications, about the company’s continued activities in both Canada and abroad.
With origins in France, Thales employs more than 62,000 people in 56 countries, 20,000 of whom represent some of the top engineering and research minds on the planet. The company’s state-of-the-art rail signalling solutions have been implemented in more than 40 of the world’s largest cities including the likes of New York, London, Hong Kong, Shanghai, Singapore and Dubai, and safely carrying 3 billion passengers each year.
Ontario Rail-Signalling Partnership
A major current project of note is a substantial partnership with the province of Ontario where Thales is providing a new generation of railway signalling for several large metropolitan corridors. Ontario will invest up to $12 million to support the project.
“It’s really an evolution of how we’ve been successful in the past. We have a long track record of providing advanced train control and we’ve had a lot of success internationally,” Halinaty begins.
The integral partnership with the Ontario government will provide Thales an opportunity to evolve train control in a number of critical areas. Increasing efficiencies and cost effectiveness are two vital aspects that Halinaty knows are essential for his company to remain competitive. But perhaps most importantly it’s an ability to introduce new types of technologies into the Thales system, leading to an increased global footprint for servicing transportation clients around the world.
Boundaries that traditionally fell under train control are now opening up for Thales to improve upon, which will enable the company to improve the overall service provided to the operator and experience provided to the traveling customer.
“We can use data coming from our train control to enhance the passenger experience be it in passenger information, planning and interfaces, to automated ticketing,” Halinaty says. “We have a contribution from the Ontario government but we also made a huge internal investment to push this forward. We’re looking at a five-year window where we want to achieve the bulk of what I’ve described.”
Given the enormity of the geographical footprint of Canada there is a copious amount of infrastructure investment spanning the entire country. For now, Thales is focused on Ontario and more specifically Toronto and the GTA where there is currently substantial investment by the Toronto Transit Commission (TTC) and Metrolinx, which serves the broader metropolitan area. While Toronto is clearly a priority, Halinaty is quick to point out that opportunities abound in other regions as well, including a bevy of activity in Quebec, and particularly Montreal.
Thales also has a long, successful history in working with TransLink in British Columbia and its SkyTrain network.
It is the large urban centres that are the primary focus of Thales for the straightforward reason that they have the most sizable population centres and transit infrastructures, such as those in Toronto, Montreal and Vancouver. However, Halinaty says there are optimistic signs of public transit expansion sprouting up in other burgeoning urban centres such as Calgary and Edmonton as well.
“We’re looking to take these opportunities far beyond Ontario and beyond Canada,” he says.
Depending on the requirements of a specific transit system, many of the core technologies are often transferable from one to another with modifications to suit each particular system. In Ontario, Halinaty says the final product will be very much an evolution of those other international systems.
“In its core, it has a commonality with those other systems but what we are always doing is introducing newer technologies and that will also allow the scope of what’s provided to be broadened into other areas beyond what is just a traditional signalling train control,” he says.
“One of the main drivers of these advancements is the customer,” Siegfried Usal adds. “They are the ones looking for enhancements to the technologies we provide.”
With the arrival of a new digital medium and enhancement technologies, the customer is looking for supplementary advanced efficiencies to build upon the core product. Take for example the low-carbon impact; Thales utilizes all the data from the systems they have in place to boost efficiencies and lower the consumption of energy. Data collected from current systems also serve as a base for determining where maintenance requirements will likely be and at what time intervals.
“We always want to be able to enhance the passenger experience by inputting the new technologies into the existing systems based on the needs of our global customers,” Usal says.
As the new enhancements in technology are developed by Thales, the core systems have all been designed so that the ones already deployed in the field are able to also benefit from the upgrades through integration. It’s a way of proving to the clients that they are always front and centre, even those with systems already deployed.
“That’s always been part of our strategy,” Halinaty confirms. “Our product-line management philosophy is that we’re not always just looking forward, but keeping in mind our existing customer base. We want to be able to take these new features and have a pathway for existing customers to be able to take advantage of them.”
Thales takes a stance of being a big proponent of using customer feedback to determine what areas need to be focused on in the future.
In late March it was announced that Thales Canada signed a $35 million contract with Seaspan’s Vancouver shipyards.
“When we talked more than a year ago I indicated that the naval domain was one of our pathways to growth. This announcement is the embodiment of that journey we are on in growing our naval business,” Halinaty explains.
Thales is partnered with Seaspan for what is described as the non-combatant part of the national shipbuilding strategy. The first vessel that is really progressing is the Offshore Fisheries and Science Vessel (OFSV). The contract that was announced was to build three of those vessels with Seaspan where Thales will serve as the system integrator, bringing together a number of components from different suppliers and making them all work together in harmony.
Thales has also just recently opened an integration lab in Ottawa where they will have the full system for the bridge of that OFSV ship set up to do all of the necessary in-house acceptance testing prior to sending that out to the west coast to be integrated into the vessel. It’s a very significant factor in terms of moving the agenda forward in a timely fashion.
“Opening that lab in Ottawa and hiring people on the west coast is in anticipation of the next phase when we move the work out there. It’s all part of the overall naval journey because at the same time we’re doing some early contracts on the next Coast Guard vessel which is the OSV. It’s a slightly different mission than the first vessel and as well on the joint support ship for the navy,” Halinaty says.
The Canadian Surface Combatant Program, which is replacing all of the frigates, has yet to be tendered by the Crown but is a project that would most definitely assimilate perfectly with the skillsets repeatedly proven by Thales Canada.
“That’s not in our sights for the future but our journey is progressing very well right now with the Coast Guard and the Joint Support Ship,” Halinaty says.
The National Shipbuilding strategy is a 30-year program from the government to renew the Coast Guard and naval fleets in a structured manner to avoid the historical boom and bust in Canadian shipbuilding. Halinaty expects the work being done by Thales will span well into the 2020s.
“For us, this is a long-term endeavour,” he says. “Following these ships we are currently working on, we anticipate doing work with the polar icebreakers for the Coast Guard and also looking into the long-term support of these vessels once they get out to sea.”
Thales’ impressive presence in the transportation sector led to a record input year approaching $1.5 billion in 2015 due to a number of colossal transportation projects, which spurred impressive growth. The naval expansion also continues and from those two aspects alone, Halinaty foresees potential growth within the company’s existing facilities in Canada. There could be more projects on the west coast through shipbuilding, and possibly more on the east coast as well, depending on the level of success with the Canadian Surface Combatant program, which is a $26 billion endeavour that will see a new fleet built to replace the navy’s destroyers and frigates.
Commitment to Innovation
By constantly seeking out the newest, most innovative technological solutions, Thales consistently ranks in the Top 100 research and development investors in Canada.
“We continue to put in our self-funded R&D on a regular basis, reinvesting in new innovations. In addition to that we continue to strengthen our innovation centre in Quebec City where we really dig into the leading-edge technologies,” Halinaty says.
As part of the overall digital transformation that the world is going through, this is where we are trying to exploit a number of topic areas. One of our most important ones that we are pursuing quite vigorously is in the area of cybersecurity. You can’t have a digital transformation without it. As everything becomes digital the sensitive data must be protected,” Halinaty says.
“We see this as one of our new growth potentials within Canada,” Halinaty says.
At the same time, there are a number of other core areas that Thales is directly involved in such as data analytics, critical infrastructure protection, human sensing and smart mobility.
“Because we have so many customers in many domains what we realized is that the digital landscape is a new paradigm to those customers, which impacts not only their systems and devices and products that they operate, it’s shifting the mindset because it affects more than the products. It impacts regulations, culture and education to a magnitude far greater than we’ve experienced in the past 50 years,” Usal adds.
It’s estimated that the level of world knowledge doubles every 12 hours. A decade ago it would have taken 10 years to double the world’s knowledge. That is just how powerful systems and technology have become, with knowledge forging ahead at an exponential pace. Because digital technologies have advanced considerably faster than the usage of such technologies by organizations, Thales is consciously closing the gap between those clients in order to ensure they are not left behind when digital technology is already present and irrigating their organization in day to day life.
“The frontrunners are moving fast while most of the others are being left behind. We’re talking about organizations, citizens and infrastructure. Our approach to research and development is specifically focused on closing that gap to ensure that there is an early adoption of those technologies while we are designing their products and solutions,” Usal says.
There are progressive companies that are trying to stay ahead, and there are those that recognize there is a problem but are not sure what to do and then there are still others that are being left behind because they may not realize there is an issue to be dealt with. Usal believes it is quite often not just the companies that must solve these dilemmas. It is a broader-based matter including the states and countries where the ecosystems are not fundamentally ready to fully exploit the emerging technologies that are available to them.
“There are many barriers that are impeding organizations and government bodies from fully exploiting the benefits of the technologies in cybersecurity,” he says. “Those barriers can be cultural and legal but they are not technical. Technology has no frontier right now. That’s why you see more cybercrime being effective. Those organizations cannot keep the pace with protective technologies.”
Thales has identified significant international emerging markets in the transportation sector including the likes of Southeast Asia, India, the Middle East and South America, each of whom have experienced noticeable increases in urbanization and money being spent towards necessary infrastructure improvements.
“Although we are active in all those areas right now, further potential there is really quite huge,” reflects Halinaty.
In terms of defence industry contracts, the success of Thales in Canada can largely be attributed to the fact the business unit in this country constantly capitalizes on the success of Thales as a global defence company and a leader in sensor technology. The ability to develop on the core competencies of each domain in Canada has allowed the Canadian arm to substantiate and capitalize that much more on the technology aspect. There is always encouragement from the executive branch to have engineers file patents, which can generate monumental commercial value. Both Halinaty and Usal have lofty expectations for Thales Canada moving forward.
“I’d like to see us double in size in terms of revenue by 2020. We’ve had significant growth in the last year to where we’re now at about 1,800 people,” Halinaty says. “As we talk about all the digital areas and cybersecurity that’s where we see the potential for maybe even faster growth than in the traditional businesses. We hope to get that accelerated growth from those new areas and expand our footprint within Canada and at the same time export to other parts of the world.
“Our customers are getting smarter as we go forward because the young generation is getting it. One of our challenges is to strengthen our relationship with customers in the way we design, develop and provide our solutions,” Usal says. “A big thing over the next 10 years will be to help the governments, companies and citizens to better define their security strategies and cyber defence policies.”
One of the primary benefits in the consistent advancement of technology is the synergistic capabilities that allow for multi-purpose applications to be executed. Usal envisions accelerated convergence not only in the business markets that Thales currently occupies but others they have identified as ideal candidates for such technologies.
Thales has successfully provided integrated technical solutions for decades in the most stringent environments and challenging platforms, such as aircraft, frigates, satellites and urban rail. The expanded challenge moving forward is to better communicate with those new potential customers and design personalized solutions for them as a means of addressing their own unique requirements.
Halinaty, Usal and the entire Thales Canada team are continuing down a very ambitious path but one that is certainly an achievable growth plan. According to Halinaty, the core of that strategy is essentially two-fold: to continue to expand the company’s traditional businesses in transport and naval in particular but also in avionics and Optronics. The other core piece to the puzzle is a strong desire to expand digital transformation, most notably in cybersecurity, but also in a number of other sectors, which is capitalizing both on Thales’ success and experience in their traditional areas of expertise and with the prodigious success of its innovation centre in Quebec City.
“We’re still on the path we were a year ago, but we’ve made quite a few advancements along the way,” Halinaty says. “I am happy with those advancements, but not satisfied that we’re there yet.”